lu -^u^i^^ym^<}'■ A A sou RNR 7 7 7 n ■■ o BRARY F THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW niiiiliiiiimiiiiin;i)litiMMiiiiiriiii;iii'. • ■ ' ^-nr- " ^'^ :.ib..:..ii[iiiiiLiiillMiiii'i!llSilliml'im Vv I ^ ^ 1,= ^ 01 40M LAW BOOKS^ THE LAW OF NEGOTIABLE INSTRUMENTS STATUTES, CASES AND AUTHORITIES EDITED BY ERNEST W. HUFFCUT PROFESSOR OF LAW IN CORNELL UNIVERSITY COLLEGE OF LAW Second Edition Revised and Enlarged BY FREDERICK D. COLSON OK TJIK NEW YORK llAR {Formerly of the Fii'ttlty '/ .'he Comlt 'Jrivfrsity Collej^e of Law) NEW YORK BAKER, VOORHIS & COMPANY 1921 T \9i| copyright, t898 By Ernest W. Huffcut copyright, iqio By Lillian L. Huffcut 5* it Tk PREFACE TO FIRST EDITION. ^ The enactment of the Negotiable Instruments Law in several ^ American States and its probable enactment in others, renders neces- sary a familiarity with that Code on the part of all law students. Founded as it is upon the Digest of Judge Chalmers, afterward enacted into the English Bills of Exchange Act, it presents the best statement available of the results of English and American judicial decisions. Even before its adoption by the legislatures in Great Britain and the United States, Judge Chalmers' Digest had been edited for use in law schools, and had met with much favor for purposes of study and instruction. A Digest or Code is, however, but a set of abstract rules. The student needs to see the rules in operation upon concrete facts in order to appreciate their force and effect. It is the purpose of this book to set over against each important rule a case or a selection of cases from which the rule might be deduced did no Code exist and in which the rule, as embodied in the Code, may be studied in its application to concrete facts. In this way it is hoped to give vitality and interest to what are otherwise mere abstract propositions of law. As to the relation of the cases to the Code, the reader is referred to Judge Chalmers' remarks, found on page 119 [5] of this work, and to the opinion of Lord Herschell on page 127 [126], and of Lord Russell of Killowen on page 442 \:V.)(\\. Under the sections of the statute will be found references to the " Cases and Authorities " which make up Part II [I] of this work. Conversely there is set opposite the title to each case the section nnml)er of the statute which is applicable to it. Under this arrange- ment the student has constantly before him the enactment of the legislatures and the decisions of tho ronrts. In Article I, dealing mainly with matters of historical interest, the editor has made free use of the Introduction to Chalmers' Digest and of the first two chapters of Mr. Scrutton's Elements of Mercantile Law. Elsewhere in the book, two or three chapters of Byle?<' Troatifio on Bills of Exchange have been reprinted, where a Belection of cases would have occupied space out of proportion [iii] 734015 It preface to first boition. to the importance of the subject. The topics of " Guaranty," " Non- nogotiable Notes," and some others of minor interest, have been added to those inchided witliin the Negotiable Instruments Law. In the preparation of the book the editor has derived the greatest assistance from the well-known works of Sir John Byies, Mr. Daniel, and Professor Ames, and from the article on Bills of Exchange in the second edition of the American and Knglish Encyclopedia of Law. The book is intended primarily for students. It constitutes, however, a somewhat complete annotation of the Negotiable Instruments Law, and as such may prove of value to practitioners. On many points, editorial notes have been added, in order to give greater completeness to the subject treated, and to indicate any conflict of authority that may have preceded the enactment of the statute. E. W. H. Cornell University, February, 1898. PREFACE TO THE SECOND EDITION. At the date of the preface to the first edition of this work only four states had passed the Negotiable Instruments Law and there had been no cases decided under it. Since that time this act has been adopted in thirty-eight states and territories. The main purpose of this edi- tion is to bring the first edition down to date by incorporating into it such cases decided under this enactment as seem desirable in order to present the case law on negotiable instruments as it exists to-day. The effort, of course, has been to select those cases where it is held that the Negotiable Instruments Act has changed the pre-existing law or at least has resolved a conflict existing among the earlier authorities. So far, however, as the cases in the first edition, no matter how old, are satisfactory illustrations of the provisions of the statute, they have not, in general, been displaced simply in order to get more recent cases or even cases citing the Negotiable Instruments Law. A few cases not decided under the statute have been added where the treat- ment in the first edition of the subjects involved seemed inadequate. Practically all of Mr. Huffcut's notes have been retained. These are followed by the letter " H," while the notes added by the present editor are followed by the letter " C." Permission was very kindly given by Mr. McKeehan and the Amer- ican Law Register to reprint the extracts from the article on " The Ames-Brewster Controversy," and by Professor Williston and the Harvard Law Review Association to reprint the article entitled " An Ambiguity in the Negotiable Instruments Law." It is regretted that the limitations of space forbade the reprinting of more of Mr. McKee- han's article, for it remains to-day, in the opinion of the editor, the best exposition and general survey of most of the troublesome parts of the Negotiable Instruments Law. The list of states and territories which have enacted this statute was compiled largely, with the kind permission of the draftsman of the act (J. J. Crawford, Es<|.), from the list given in the third edition of his work on the Negotiable Instruments Law. Albany, New York, F. D. C. September, 1910. w TABLE OF CONTENTS. PART I. Cases and Authorities. ARTICLE I. General Provisions. PAQE. I. Codes governing bills, notes and checks 3 1. The Enprlish Bills of Exchange Act 3 2. The American Neorotiable Instruments Law 9 3. Continental Codes 13 II. Constriction of codifying statutes 15 III. The law merchant 15 1. The Law Merchant and its history 15 2. History of negotiable instruments 24 (a) Bills, notes and checks 24 (b) Other negotiable paper 31 ARTICLE II. Form and Interpretation. (t) Form Required. I. Writing and signati'BE 34 II. I ncoNDITIONAL promise or order to I'AY A SUM CERTAIN IN MONEY, 37 1. A note must contain a promise 37 2. A hill must roiitaiii an order 44 3. The [)romisc or order nuist be unconditional 46 (o) Conditional promises or orders not negotiable 46 (6) An order or promise to pay out of a particular fund is con pay costs of collection or attorney'a fees, 78 6. Must be payable in money 81 (a) Payment must be in money 81 (b) What cun-titutes eurrent money 82 [vii] nU Ia£L£ of CONTlUITa. FA&L t. Mait BOt order or pnauae any act in addition to ^jmtmt of (•) Efect ai additioBal stipolatioBS 90 (t) Exeeptioas: (1) Aat^orizaBg ode of eoUateral 91 \2) Aotborizii^ eonfessioK of judgment, 93 { 3 ) WaiTiag exenptioiis 94 (4) Ekctioa to req[nire 3o na c t hing in lien o€ Boaey 94 TTT. Pataale o:!( ocmaxd ob at a oeiESMrsABLE Fvmc tuck 96 1. Wben pajAUe on dfimnd 96 («> Parable at si^ 96 {h) No tine for pbjblbI expresaed 96 (c) lasoed. aeeepted or iadwad vkea orerdne 97 S. When pavable at a fixed or d^eraunable fatnre time 97 («> A fixed time after date or s^t 97 (h) Ob or before a fixed detvaunate tine ^Kofied 97 (c) On or at a fixed period afto- tbe oujuiu ee of a speci- fied eTen* 102 3. When payable on a eoBti ngtnty 103 IT. Patasiis to onaex on ^:akeb 106 1. Parable to m^er of a specified person 107 (•) Payee nnst be certain 107 (h) Payee nay be \1) One not maker, drawer or drawee. . 113 (2) Drawn- or maker 113 (3) Drawee 114 (4) Two or more payees jointly 115 (3) One or taar^ d several payees. ... 118 (6) The holdo- of an office for the time l«iiig 121 2. Parable to benro- 122 (•) Payable to poson named or bearer 122 (i) Payable to order of fietitioas person 123 (c) Payable to name not pur p orti ng to be name of any person 144 (tf) When only or last indors^oent in blank 144 V. DkaWIZ JCUST be CEETAUr 148 YL IteXITEBT ESSEVrlAl. 151 VTL NOB-CBSBSTLLI^ ... 158 {%%) Interpretation. vnL Dati 161 H. Bla^xs, acthobitt to Fin, 163 I. AlfBiCrOCS I^^GTAfiE 192 1. Dtserepnaey between words and figures 192 2. Intocat, how eompnted 194 3. iBstrvment not dated 195 4. Coaffiek between written and printed prorisiOBS 195 fi. DoBht wheOer KH or note 196 6l Irregnlar ^natures 196 7. Joint and aereraJ liability 196 XL AicBiecors sieyATnts 197 UT. IXWJBSXKETr BT KFTATT 02 COEPOBATHEf 228 THT FcaOQ) SIfiXATTrBBS 221 TABLE OF CONTESTS. AETICLE ni. COKSIDEEATIOK OF NEGOTIABLE IkSTEUMEBIB. Pi I. Pbesumptios of co^^sideratiox - • • 234 II. What coxsTmrrES oosbiweratiok 23f III. HOLDEB FOE VALUE *♦' IV. EtFECT of want of COSSIDEaATIOK 253 V. LlABILITT OF ACCOMMODATION PABTT 2*4 AETICLE IV. Negotlitios. I. What coxs 111 lie s sexjotiatiox ob tssssfem ' 29§ 1. Transfer by delivery 2i# 2. Transfer by indorsement and delivery 261 I a ) Transfer by indorsing assignment 261 ( b } Transfer by indorsing guaranty 263 IL IlfDOHSEMEyT : FOBM EEQLIBED. 266 1. Must tie written on instrument or allouge 266 2. Must be of entire instrument 267 III. IXDOESEMEXT : KINDS OF 268 1. Si>ecial indorsement 2K 2. Blank indorsement 268 3. Restrictive indorsement 271 4. Qualified indorsMMBt 284 5. Conditional indora^nent 287 IV. IXDOBSEMEXT : METHODS AND EFFECT 288 1. Indorsement of instrument payable to bearer 288 2. Indorsement where payable to two or more persfwa 288 3. Indorsement where payable to cashier, et« 288 4. Indorsement where name misspdled, eic 3wl 5. Presumption as to time of indcwse^wat. 6. Presumption as to place of indorsement. . 7. Continuation of negotiable character ^_^____^ 8. Striking out indors^noit ** V. TbaNSFEB WITHolT LNDOBSEMKST 307 \T. PlE-TRANSFEB to prior PARTY. !10 ARTICLE V. Rights of Holder. I. To SUE AJfD RECEITE PATMEXT 51* II. Holder i\ die cotrse ■. 518 1. Requisites to constitute holder in due course 318 (a) Instrument must be complete and regular 318 ( b ) Instrument must not be overdue 328 (c) Must be taken in good faith and for valtie 337 (d) Must be taken witbaut notice of infirmity or defect 348 ( r ) Notice before full amount paid 357 2. Holder deriving title from holder in due conme 388 3. Right of holder in due course to recover full amoHBt 381 4. Burden (f procf 388 m. DKTUfCES TO KEOOTIABLE I5STRrMX3rT8 878 t TABLE Ol' CONTENTS. ARTICLE VI. LiAiui.iTY OF Parties. PA.GE. I. MaKKR: ABSOMTh:, I'KIMAKY 1,1 Altll.ITY ; ADMl.SSIONS 400 1. Presentment for payment unnecessary 400 2. Liability on lost or (iestroyeil instrument 400 3. Admission of existence and capacity of payee 401 II. ACCKPTOR: Alt.SOLlTE, I'KIMAKY LIAKILITY; ADMISSIONS 403 1. Presentment for payment unnecessary 403 2. Admissions as to drawer and payee 403 ITT. Drawkr; skcondary, con'ditional liability 418 1. Conditions: presentment, notice, protest 418 2. Admissions as to payee 418 IV. Seller : warranties 419 1. Instrument genuine and what it purports to be 419 2. Title of seller 433 3. Capacity of prior parties 434 4. Knowledge of invalidity or valuelessness 435 5. Indorser: instrument valid and subsisting 437 6. Liability of agent as seller 441 V. Indorsf:r: secondary, conditional liability 442 1. Indorser's contract as seller 442 2. Indorser's contract as assurer of payment 442 3. Irregular indorser 446 4. Order of indorsers' liability 459 VJ. Acceptor for honor 466 VII. Guarantor 466 1. (a) Does guaranty-indorsement by holder transfer title?... 466 (6) May a guaranty be written above a blank indorsement? 466 2. Is a transferee a holder in due course? • 467 3. What is the contract of the guarantor? 467 4. Is the guaranty transferable? 471 (c) Is it negotiable? 471 (6) Is it assignable? 472 5. Defences available to guarantor 474 ARTICLE VII. Duties of Holder: Presentment for Payment. I. Necessity of presentment 477 1. Not to charge acceptor or maker 477 2. Presentment necessary to charge drawer or indorser 480 II. What constitutes sifficient presentment 480 1. By holder or authorized representative 480 2. At the proper time 483 3. At the proper place 508 4. To the proper person 516 5. By exhibiting the instrument 518 III. When delay in presentment excused 518 IV. When presentment dispensed with. 520 1. When no right to require or expect it 520 2. Accommodation indorsers 523 TABLE OF CONTENTS. XI PAGE. 3. When impossible 624 4. Waiver 527 V. Payment in due course 62B ARTICLE VIII. Duties of Holder : Notice of Dishonob. I. Notice necessary to charge drawer or indorser 530 II. What constitutes sufficient notice 533 1. By whom notice must be given 533 2. Form of notice 539 3. Mode of notice 542 ( a ) Personal delivery 542 (6) Mail delivery 543 4. To whom notice may be given 546 5. Time within which notice must be given 548 (a) Where parties reside in the same place 548 (fc) Where parties reside in different places 554 (c) Successive notices 561 6. Place at which notice must be given 565 III. When delay in giving notice excused 573 IV. When notice may be dispensed with 575 1. When notice need not be given to drawer 57^ 2. When notice need not be given to indorser 577 3. When notice to drawer or indorser dispensed with 580 ( a ) Due diligence 580 ( b ) Waiver 580 (c) Notice of non-payment where acceptance refused 586 id) Effect of omission to give notice of non-acceptance.. . . 587 V. DUIIES of holder : PROTEST 589 ARTICLE IX. Discharge of Negotiable Instruments. I. Discharge ok the in.strument 591 1. Payment and re-transfer 591 2. Cancellation or renunciation 699 3. Alteration «08 II. I)lSfIIAR(;E OF I'AKTY SECONDARILY LIABLE 626 III. Payment hv i'akty hecondabily liable 639 IV. Payment for honor 641 ARTICLE X. Bills of Exchange: Form and Interpretation. I. Form 642 1. Formal requisites generally 642 2. The drawee or drawees 642 ( a ) Must Ik- certain 642 (6) May be joint, but not alternative or Hucceasive 642 3. Referee in "lyto of ne<'d 643 II. Interpretation 644 Xii TABL£ OF CONTlilNTS. PAQC. 1. Bill not an nsaipnmont of funds 644 2. Inland and foreign bills 646 3. Hill treated as promissory note 647 ARTICLE XI. Acceptance of Bills of Exchange. I. Form anb kffect 648 1. Acceptance must be in writing and signed by drawee 648 (o) Writing and signature 648 (6) Only the drawee can accept 649 ( c ) Delivery necessary 650 2. Acceptance by separate instrument 651 3. Promise to accept must be in writing 654 4. Acceptance by refusal to return the bill 658 5. Acceptance of incomplete or dishonored bill 666 II. Kinds of acceptances 668 1. General acceptance 668 2. Qualified acceptance 673 (a) Conditional acceptance 673 ( b ) Partial acceptance 675 (c) Local acceptance 675 (d) Acceptance qualified as to time 676 (e) Acceptance by one or more drawees, but not by all 676 3. Effect of qualified acceptance 677 (a) Holder may refuse qualified acceptance 677 (6) Qualified acceptance discharges non-assenting antecedent parties 677 ARTICLE XIL Presentment of Bills of Exchange for Acceptance. I. In what cases presentment fob acceptance necessaby 679 II. What constitutes sufficient presentment 685 Til. When presentment fob acceptance excused 688 IV. Duty of holder where bhx not accepted 689 V. Effect of dibhonob of bill pbesented fob acceptance 689 ARTICLE XIII. Protest of Bills of Exchange. 1. What instruments must he protested 691 II. What constitutes sufficient protest 691 III. By whom protest should be made 698 ARTICLE XIV. ACCEPTAKCE FOB HONOB 701 ARTICLE XV. Patmcnt fob Howob TOT TABLE OF CONTENTS. lUl ARTICLE XVI. PAGE. Bills ih a srr 709 ARTICLE XVII. Promissory Notes and Checks. I. Pbomissobt notes 714 1. Origin and history 714 2. Form and interpretation 714 3. Non-negotiable notes 715 II. Checks 722 1. Check distinguished from bill of exchange 722 2. Presentment of check 725 (o) Effect of delay upon drawer's liability 725 (ft) Effect of delay upon indorser's liability 734 3. Certification of check 743 (a) Effect upon drawer's liability 743 ( b ) Effect upon indorser's liability 748 4. A check not an assignment of funds 762 6. Forged or raised checks: reciprocal obligations of bank and depositor 758 6. Liability of drawee to drawer for wrongful dishonor 772 PART II. List or the states and tebritories which have enacted the Negotia- ble Instruments Law 776 The New York Neootiable Instruments Law 779 The English Bills of Exchange Act 845 Index 876 TABLE OF CASES REPORTED. Where n is prefixed to the page number, the case is digested in a note. PAOB Adams v. King n. 113 Adams v Wright 548 Adrian v. McCaskill 310 Apawam Nat. Bank v. Downing. 593 Almich V. Downey 161 American Express Co. v. Pinck- ney 195 American Nat. Bank v. Junk Bros 579 American Nat. Bank v. Sprague. 105 Anderton v. Shoup 197 Anon ( 12 Mod. 447 ) 643 Armstrong v. National Bank.. 123 Arnd v. Sjoblom 383 Arpin v. Chvens 250 Atlantic Nat. Bank v. Davis. . . 772 Aungst V. Creque n. 209 Aymar v. Beers n. 684 Bank of Commerce v. Chambers 571 Bank of England v. Vagliano Bros 125 Bank of Geneva v. Ilowlett. . . . 5()6 Bank of Houston v. Day 165 Bank of Michigan v. Ely..... 654 Bank of Orleans v. Whittemore. 513 Bank of the Republic v. Millard. 752 Bank of Rocliestfr v. Oray... 58:t Barnes v. Vaughan 512 Bartlett v. Robinson 565 Beauregard v. Knowlton. . . : . . 520 Bolden v. TIann 269 Birspnthall v. Williams n. 45 Birket v. Elward 244 Bissell V. Dickerson 361 Bitzer v. Wngar 260 Blake v. Hamilton Dime Sav- ings Bank n. 748 Blake v. McMillen 617 Blenn v. Lyford 640 Boehm v. Garcias 677 Bollos v. Stearns 301 Bornnph of Montvale v. People'n Bank 352 Boston Steel and Iron Co. v. Steuer 174 Brick V. Freehold Nat. Bank.. 633 Bristol V. Warner 234 Brooks V. Elkins n. 40 Brook & Co. V. Vannest 276 Brooks V. Higby 508 Brown v. Butchers, etc.. Bank . 37 Brown v. Curtiss 467 Brown v. Jordhal 159 Brown v. Montgomery 435 Brown v. Reed 625 Brush v. Administrators of Reeves 443 Bull v. Bank of Kasson. ..... 83 Burgettstown Nat. Bank v. Nill 582 Bussell v. Tobin 157 Campbell Printing, etc., Co. v. Jones 19-,' Carlon v. Kenealy 72 Carnwright v. Gray 716 Carroll v. Sweet 740 Carter v. Union Bank 698 Casco Nat. Bk. v. Clark 205 Castor V. Peterson n. 402 ( atlicll V. Goodwin 576 Caulkins v. Whisler 168 Cayuga, etc.. Bank v. Hunt. . . . 694 Central R. v. Fir.st Nat. Bk... 274 Challiss V. McCrum 427 Clianoino v. P'owler 533 Chapman v. Keane n. 535 Chapman v. Ro.sc 391 Chcevor v. Pittsburgh, etc., R. . 346 Chemical Nat. Bank of N. Y. v. Kellogg 302 Chester v. Dorr 328 Chestnut v. Chestnut n. 194 Chicago Ry. Co. v. Merchants' Bank. . .' 73 Chipman v. Foster 204 Choate V. Stevens 58 Chrysler v. Renois 86 xn TABLE OF CASES REPORTED. PAOI Citizens' Nat. Bk. v. Piollot . .«. lOfi Clark V. Pease [MO Clarke v. Patrick 270 Cook V. Fellinvs 2()() Collins V. Drificoll H\2 Columbian Bankini;; Company v. Bowen 490 Commcroial Nat. Bank v. Zim- niernian 483 Commonweal til v. Butter ick . ... 113 Continental Life Ins. Co. v. Bar- ber 631 Cooke V. Horn 67 Cooper V. Dedrick 472 Coulter V. Richmond 446 Critten v. Chemical Nat. Bank. 758 Cromwell v. Hewitt 720 Crouch V. Credit Foncier 259 Currier v. Lockwood 42 Curtis V. Sprague 144 Cushman v. Haynes n. 63 Dabney v. Stidger 547 Daniels v. Hammond n. 346 Dart V. Sherwood 196 Davies v. Wilkinson 90 Davis V. Garr 121 Davis Sewing Machine Co. v. Best 319 De la Torre v. Barclay 586 Dennistoun v. Stewart 691 De Witt V. Perkins 337 Deyo V. Thompson n. 720 Dilley v. Van Wie n. 63 Dodge V. Emerson 60 Drcs.ser v. Missouri, etc., Co.. . 357 Dunavan v. Flynn 650 Dunn V. O'Keefe 587 Dwight V. Pease 298 Edelman v. Rams 715 Eldred v. Malloy 243 Elgin City Banking Co. v. Zelch. 265 Eng. &. Scot. Amer. Mort. etc. Co. V. Globe Loan & Trust Co. 207 Erwin v. Downs 434 Evans v. Freeman 285 Evans v. Gee 268 Emerson v. Gere 473 Fall River Union Bank v. Wil- lard 686 Farnsworth v. Allen 494 Fields V. Fields n, 80 First Nat. Bank, etc. v. Bijttery 98 First Nat. Bank v. Farnernan. . 566 First Nat. Bank v. Forsyth. . . . 335 First Nat. Bank v. Lightner..M. 54 First Nat Bank v. Millcr..M. 79, 558 First Nat. Bank v. Slette 81 First Nat. Hank of Atchison v. Commercial Savings Bank... 651 First Nat. Bank of Detroit v. Currie 748 First Nat. Bank of Farmeraville v. Greenville Nat. Bank ft. 82 First Nat. Bank of Lisbon v. Bank of Wyndmere 403 First Nat. Bank of Richmond v. Richmond Elec. Co n. 768 Flanders v. Snare n. 35 Floyd Acceptances, The 219 Folger v. Chase 266 Ford V. Brown n. 355 Fox V. Citizens' Bank 354 Frazier v. Massey 220 Freeman v. Exchange Bank. . . . 282 Freeman's Nat. Bk. v. Savery..n. 346 Funk V. Babbitt 150 Gardner v. Beacon Trust Co. . . 324 Gardner v. Maynard 639 Gay V. Rooke 37 Geary v. Physic 34 George Alexander & Co. v. Hazelrigg 376 George v. Bacon 461 German-American Bank, etc., v. Milliman 497 Germania Nat. Bk. v. Mariner.. 210 Gilpin v. Savage 510 Gordon v. Anderson 115 Gordon v. Lansing State Bank. 107 Gove V. Vining 580 Gowan v. Jackson 575 Grange v. Reigh 725 Greene v. McAuley 317 Greenway v. Wm. D. Orthwein Grain Co 254 Gregg V. Beane 727 Grey v. Cooper 418 Grocers' Bank v. Penfield 243 Guerrant v. Guerrant n. 182 Haddock, Blanchard & Co. v. Haddock 463 Hall V. Toby 263 Hal stead v. Skelton 676 TABLE OF CASES REPORTED. IVll PIOI Hamilton v. Vought 340 Hammett v. Brown 169 Hannum v. Richardson 432 Harriaburg Trust Co. v. Shu- feldt 477 Harrison v. Nicollet Nat. Bank. 722 Harrison v. Ruscoe n. 535 Hart V. Smith 679 Haslach v. Wolf n. 77 Hastings v. Thompson 74 Hatcher v. Stalworth 676 Havana Cent. R. Co. v. Knicker- bocker Trust Co n. 352 Hays V. Hathorn 314 Head v. Hornblower 743 Herrick v. Bennett 96 Herring v. Woodhull 266 Hibbs V. Brown n. 54 Hickok V. Bunting 236 Hillsdale College V. Thomas 151 Hobbs V. Straine 642 Hodges V. Shuler 94 Hoffman v. Bank 225 Hogue V. Williamson 88 Holbrook v. Payne 644 Hook V. Pratt 277 Hopps & Co. V. Savage 666 Horn V. Newton City Bank .... 60S Horowitz V. Willowitz 437 Horstatter v. Wilson n. 96 Hoyt V. Lynch 44 Hughes V. Kiddell 267 Hull V. Myers 577 Hunter v. Wilson 249 Huntington v. Shute n. 238 Hussf'y V. Winslow 41 Hyne v. Dewdney n. 40 Jackson v. Hudson 642 James v. Wade 573 JarvJH V. St. Croix Mfg. Co. . . . 560 Jarvifl V. Wilkins n. 58 Jefferson Rank v. Chapman- White Lyons 362 Jenkins v. Mackenzie 627 Jennings v. Roberts n. 536 Jerman v. Edwards 306 Johnson v. Barrow 287 Johnson v. Buffalo Center State Bank 299 Johnson v. Conklin 447 Johnscn v. Hnight 483 Johnson v. Mitchell 280 Jones V. fJordnn 338 ^I^aOT. IH8TRDMKNT8 — 2 PA8I Jordan v. Tate .... 97 Joseph v. Catron n. 106 Joslyn v. Eastman 629 Josselyn v. Lacier n. 50 Keenan v. Blue n. 142 Keiden v. Winegar 201 Kelley v. Hemmingway 103 Kimball v. Costa n. 194 Kimball v. Huntington n. 40 King v. Ellor 45 King V. Hurley 539 Kinyon v. Wohlford 152 Laird v. State 82 Lancaster v. Baltzell 221 Lancey v. Clark 597 Lane v. Stacey 466 Larkin v. Hardenbrook 599 Ijeask v. Dew 601 Leavitt v. Putnam 272 Le Due v. First Nat. Bank of Kasson 320 Lent V. Hodgman n. 63 Leonard v. Mason 91 Lewis V. Clay 394 Light V. Kingsbury 97 Lindcnberger v. Beall 554 Linn v. Horton 561 Little V. Slackford 45 Lloyd's Bank, Ltd. v. Cooke... 185 Lomax v. Picot 367 Long V. Stephenson 442 Lyndonvillo National Bank v. Fletcher 605 Lysaght v. Bryant 53»i MacBeth v. North and South Wales Bank 131 McCormick v. Shea 628 .McCregory v. McOregory 400 .Mcintosh v. Lylio n. 107 MrMann v. Walker 401 McNeely Co. v. Bank of North America 769 Madden v. Gaston 101 Madison Square Bank v. Pierce. 594 'larket and P'niton N. B. v. Sar- gent 170 Mnrkey v. Corey 261 Marling v. .Tones 333 Marshall v. Sonneman 530 Massachusetts Nat. Bk. v. Snow. 164 .Matteson v. Moulton 658 XVlll TABLE OF CASES REPORTED. rAOi Maynnrd v. Mirr 7!> Mepowan v. IVtorson n. 2().'5 Mchllwr^; v. Tisher 158 Merrill v. Hurley 65 Merritt v. Ronton 363 Meyer v. Richards 41fl Meyer & Co. v. Decroix, Verley et cie 668 Miller v. Austin 43 Mills V. Bank of U. S 539 Minot V. Russ 743 Montgomery v. Elliott 478 Moore v. Cushing 490 Moore v. First Nat. Bank. . . .n. 277 Moreland's Adni'rs v. Citizens Nat. Bank 696 Morris v. Birmingham Nat. Bk.. 523 Morris Co. Brick Co. v. Austin.. 257 Morris v. Husson 565 Moskowitz V. Dcntsch 726 Munger v. Shannon n. 50 Musselman v. Oakes 118 Nat. Bank of Commonwealth v. Law 345 National Bank of Michigan v. Green 363 National Bank of Rolla v. First Nat. Bank of Salem n. 410 National E.xchange Bank v. Lester 616 National Exchange Bank v. Lubrano 458 Newark, etc., Mfg. Co. v. Bishop 495 Nixon V. Palmer 220 Noll V. Smith 624 Northern State Bank of Grand Fork V. Bellamy n. 63 Noxon V. Smith 120 O'Bannon, J. W. v. Curran 527 Ohio Life Ins. etc., Co. v. Mc- Cague 538 Oothout V. Ballard 443 Oppenheim v. Simon Reigel Cigar Co 256 Osborn v. Hawley 93 Osgood V. Artt 307 Page V. Cook 239 Page V. Morrel 163 Palmer v. Ward n. 63 Pardee v. Fish 84 Parker v. Kellogg 515 rioi Parker v. Plymeil 64 Parker v. Reddick 488 Parsons v. .laekson 63 Parsons v. Itica Cement Co. . . 365 Pearce v. Langfit 545 Petit V. Ben.son 675 Peto V. Reynolds n. 150 Phillips V. Mercantile Nat. Bk.. 134 Pier V. Heinrlch.shofTen 518 Plato V. ReynoMs 680 Plover Savings Bank v. Moodie. 735 Power v. Finnic 27 1 Putnam v. Crymes 122 Putnam v. Schuyler 474 Railroad Co. v. National Bank.. 239 Ranger v. Cary 302 Ransom v. Mack 580 Reamer v. Bell 268 Redman v. Adams n. 54 Rendall v. Harriman n. 201 Reg. v. Harper 35 Rice V. Stearns 2S4 Rijchardson v. Carpenter ... .n. 49 Richardson v. Ellett 195 Rider v. Taintor 288 Riker v. Sprague Mfg. Co 68 Robertson v. Kensington n. 287 Robinson v. Ames 681 Rockfield v. First Nat. Bank of Springfield 447 Rock vi lie Bank v. Holt 629 Ruff v. Webb 45 Sackett v. Palmer 105 Salley v. Terrill n. 153 Saloman v. Pfeister & Vogel Leather Co 541 Saunders v. McCarthy 207 Schlesinger v. Lehmaier 378 Schmittler v. Simon 50 Schmitz v. Hawkeye, etc., Co.. 41 Schofield v. Bayard 704 Scott v. Calkin" 270 Sharpe v. Drew 685 Shaw V. Camp 102 Shaw V. McNeill 584 Shaw V. Smith Ill Sheldon v. Benham 543 Shipman v. Bank n. 135 Siegel V. Chicago Truf?t, etc.. Bank 55 Simon v. Merritt 360 Simpson v. Griffin 364 TABLE OF CASES REPORTED. Simpson v. Turney Slade V. Mutrie Smith V. Allen Smith V. Bayer Smith V. Crane Smith V. Kendall Smith V. Prosser Smith V. Poillon Souhegan Nat. Bank v. Board- man Spear v. Pratt Spragne v. Fletcher n. Stacy V. Kemp Stafford v. Yates Stagg V. Elliott Stainback v. Bank of Virginia.. Stapleton v. Louisville Banking Co State Bank v. Solomon State Bank of Chicago v. First Nat. Bank of Omaha Start V. Tupper Stevens v. Androscoggin Water Power Co Stewart v. Eden Stinson v. Lee StockweK V. Bramble Stoddard v. Burton Stoddard v. Kimball Sullivan v. Rudisill Sussex Bank v. Baldwin Taylor v. Dobbins Taylor v. Snyder n. Times Square Auto. Co. v. Rutherford Nat. Bank Toby V. Maiirian Tombeckbf'o Bank v. Dumell... Traders Nat. Bank v. Jones... Troy City Bank v. Lauman. . . . True V. Fuller Trust Co. v. National Bank. . . . Trust Co. of Amer. v. Hamilton Bank Union National Bank v. Marr's Adm'r United States v. Amer. Exch. Nat. Bank PAOX 563 600 40 280 66 715 171 556 214 648 586 253 537 219 559 544 409 734 673 546 516 667 591 252 611 480 36 515 746 516 687 536 672 471 263 137 United States v. Barber. Valley Nat. Bk. v. Crowell. . . . Van Buskirk v. State Bank of Rocky Ford Vander Ploeg v. Van Zuuk. . . . Violet V. Rose Vogel V. Starr Walker v. Bank Walker v. Ebert Wallace v. Agry n. Wallace v. Tice Walsh v. Blatchley Walton V. Williams Waring v. Betts Warren v. Smith Watrous v. Hallbrook Watson V. Evans Wellington v. Jackson Wells V. Brigham West Branch State Bank v. Haines Western Wheeled Scraper Co. v. McMillen Wettlaufcr v. Baxter Wheeler v. Webster White V. dishing Whitwell V. Johnson Willard v. Crook Williams v. Tishomingo Sav. Inst Williamsburgh Trust Co. v. Turn Sudem Wilson V. Hendee Wilson V. Peck n. Wintermute v. Post Winthrop v. Pepoon Wisner v. Trust Nat. Bank. . . . Witte V. Williams Witty V. Michigan, etc.. Ins. Cn. Wnlsfonlmlnii' v. Smith Worden Crocer Co. v. Blanding. Wordcn v. Dodge Worth V. Case Worthington v. Cowles Vale v. Ward 439 Zimmerman v. Anderson. PAfll 689 91 755 179 368 567 677 387 684 612 711 649 524 224 148 119 223 193 731 199 145 150 46 554 221 433 417 463 532 677 690 660 114 192 (V.li 60 4!) 277 441 646 94 PART I. CASES AND AUTHORITIES EXPLANATORY NOTE The section numbers opposite the titles of cases and elsewhere refer to the sections of the New York Negotiable Instruments Law. Where cases ir other jurisdictions cite the Negotiable Instruments Law, the corresponding sections of the New York Act are given in the foot- notes, except where the context renders this cross-reference unnecessary. CASES AND AUTHORITIES ON NEGOTIABLE INSTRUMENTS. ARTICLE L General Provisions. I. Codes governing bills, notes and checks. 1. The English Bills of Exchange Act. A Digest of the Law of Bills of Exchange, Pbomissoby Notes and Cheques. By M. D. Chalmers, i M. A., of the Inneb Temple, Ba&bis- TEB AT Law. London, 1878. [From the Introduction to the First Edition.] As far as form goes, tlie present Digest is modeled on the Indian Codes. * * * It is almost needless to point out, that the similarity between the Indian Codes and a Digest like the present is merely reseinhlance in form. There all analogy ends. In a code the sub- ject in hand is treated completely and finally. A code states metliod- ically tlie law as the legislature is of opinion that it ought to be. This Digest is an attempt to state methodically the law as it is. In a code, propositions and illustrations are alike authoritative. In this Digest, the illustrations taken from decided cases are alone authorita- tive. The general propositions are only entitled to weight in so far as they are ((nnplcte and legitimate inductions from decided cases which are unf|iicstioned law. A general proposition, supported by reference to cases, merely amounts to a verifiahle hypothesis as to wliat tlic law is. In the theory of Knglisli law, there exists in nuhihus a coni{)lete set of princi[)les aj)])licable to every conceivable state of factft that can arise. Tlieoretically the judges do not make law. They only interpret it. They are merely the conductors by which the principlf is brought down from the clouds and made available to » Now his Honor Judge Chalmers. [3J 4 CODES. [art. I. men. rrnctioally, liowovor, llioir functions are frequently and of necessity K^irislalive. If a wide subject be investigated systematically, four states of tlie law will be found to exist. First, tbe law on a given point niav l)e reasonably jcertain. All authofTIy7or~tl^"great weiglit of autliority, uiiiy be in favor of a given proposition. Secondly, a propositi(Ui on a giviMi jioint can only be stated as probal)ly bolding good. For instance, it nuiy rest merely on uneliallenged ubilvr dicta, or there may be a decision in favor of it, and weighty obiter dicta opposed to it. Thirdly, the law on a given point may be uncertain. Decisions may be in dirnt conlliit, or again there may be a decision in point which has never been directly questioned, but the ratio decidendi of which seems entirely opposed to the princinle of later cases. Fourthly, there may be an entire absence of airtlrority on a given question. Such being the state of the materials available for forming a Digest, it is clear that if the subject is to be treated method- ically, many propositions can only be stated tentatively. Many of the articles, therefore, are qualified with a (probably) or a (perhaps), and the reason of the qualification is then stated in a note. On doubtful points frequent reference is made to American cases and Continental Codes and writers. In mercantile matters when the law is uncertain or authority wanting, there is an increasing tendency to refer to foreign codes and laws in order to see how other nations have solved the difficulty. This is especially the case as regards negotiable instruments, the most cosmopolitan of all contracts. Mr. Justice Story, in his judgment in Swift v. Tyson (16 Peters, 1), gives forcible expression to the principle. He says, " The law respecting negotiable instruments may be truly declared, in the language of Cicero, adopted by Lord Mansfield in Luke v. Lyde (2 Burr. 887), to be in a great measure, not the law of a single country only, but of the commercial world. Non erit lex alia Romce, alia Athenis, alia nunc, alia post hac, sed et apud omnes gentes et omni tempore una eademque lex obtinehit." An American decision, it is needless to say, is not a binding author- ity in this country, but, if well reasoned, it is always considered with respect by our courts. Many of the American judgments are very valuable as expounding and testing the principles of Englisli decisions. An English case there, like an American case here, is only an authority in so far as it appears to be a correct deduction from the general prin- ciples of the common law and the law merchant which prevail in both countries alike. When the subject matter of an article of this Digest is dealt with by the French " Code de Commerce," or the " German General Exchange Law, 1849," their respective provisions are compared. I. 1,] BILLS OF EXCHANGE ACT. [From the Introduction to the Third Edition.] Soon after the publication of the Second Edition of this Digest the law relating to bills, notes, and cheques was codified by the Bills of Exchange_Act»-lfiiiS- For the most part the propositions of the //"^ Act were taken word for word from the propositions of the Digest. / V In the introduction to the Second Edition it was pointed out that r< the general propositions of the Digest could only be considered as law, ^'"lA^ in so far as they were correct and logical inductions from the decided cases which were cited as illustrations. Now the position is reversed. The cases decided before the Act are only law in so far as they can be shown to be correct and logical deductions from the general propo- sitions of the Act. The illustrations, therefore, must always be tested by the language of the Act itself. In the notes to the Act I have carefully pointed out the few pro- visions which were deliberately intended to alter the law. When a proposition in the Act appears to be of wide scope, I have added illustrations taken from decided cases. WHien a proposition appears to be of narrow scope, I have merely given a reference to the cases which were before me when drafting it. It may be said that the Act should be left to speak for itself. T am well aware that there is no necessary connection between the intention of the draftsman and the intention of the Legislature as deduced by the Courts from the terms of a statute. Still, in the present case, there will be a strong disposition on the part of the Courts to construe the Act as declara- tory ; and it may be useful to the profession to be referred from the abstract propositions of the Act to the concrete facts which gave rise to them. As Mr. Justice Holmes, in his admirable work on the Com- mon Law, observes (p. 27), "However much we may codify the law into a series of seemingly self-sufficient propositions, those propositions will 1)0 but a phase in a continuous growth. To understand their scope fully, to know how they will l)e dealt with by judges trained in the past which the law embodies, we must ourselves know something of that past. The history of what the law has been is necessary to the knowlfdge of what the law is." The Bills of Exchange Act, 1H82, was the first enactment codifying any branch of the Common Law which found its way into the Statute Book. It has now been followed by the Partnership Act, 1890, which was originally drafted by Sir Frederick Pollock.'' But as a Code is 2 For an account of this Act, st-e the Introduction to the 6th edition of Pollock on Partnership. 6- CODES. [aUT. 1. stil! somewhat of a novelty in tlie l"'n^'lisli law, it may be of interest to refer to tiie conditions under wliieli llie experiment was successfully carried out, and to consider liuw I'ar it can or ought to be repeated as regards other portions of the law. Of late years several attempts at codification have been made but from various causes they have mostly proved unsuccessful. The success of the Bills of Exchange Bill depended on the wise lines laid down by Lord Ilerschell. He insisted that the Bill should be introduced in a form which did nothing more than codify the existing law, and that all amendments should be left to Parliament. A Bill which merely improves the form, without altering the substance, of the law creates no opposition, and gives very little room for controversy. Of course codification pure and simple is an impossibility. The draftsman comes across doubtful points of law which he must decide one way or the other. Again, voluminous though our case law is, there are occasional gaps which a codifying bill must bridge over if it aims at anything like complete- ness. Still in drafting the Bills of Exchange Bill my aim was to reproduce as exactly as possible the existing law, whether it seemed good, bad, or indifferent in its effects. The idea of codifying the law of negotiable instruments was first suggested to me by Sir Fitz- James Stephen's Digest of the Law of Evidence, and Sir F. Pollock's Digest of the Law of Partnership. Bills, notes, and cheques seemed to form a well isolated subject, and I therefore set to work to prepare a digest of the law relating to them. 1 found that the law was con- tained in some 2,500 cases, and 17 statutory enactments. I read through the whole of the decisions, beginning with the first reported case in 1603. But the cases on the subject were comparatively few and unimportant until the time of Lord Mansfield. The general prin- ciples of the law were then settled, and subsequent decisions, though very numerous, have been for the most part illustrations of, or deduc- tions from, the general propositions then laid down. On some points there was a curious dearth of authority. As regards such points I had recourse to American decisions, and to inquiry as to the usages among bankers and merchants. As the result, a good many propositions in the Digest, even on points of frequent occurrence, had to be stated with a (probably) or a (perhaps). Some two years after the publica- tion of my Digest, I read a paper on the question of codifying the law of negotiable instruments before the Institute of Bankers. Mr. John Hollams, the well known commercial lawyer, who was present, pointed out the advantages of a Code to the mercantile community; and. mainly I think on his advice, I received instructions from the Institute of Bankers and the Associated Chambers of Commerce to prepare a bill on the subject. The draft of the bill was first submitted to a I. 1.] BILLS OF EXCHANGE ACT. t Bub-committee of the Council of the Institute of Bankers, who care- fully tested such portions of it as dealt with matters of usage uncov- ered by authority.^ The bill was then introduced by Sir John Lub- bock, the President of the Institute. After it had been read a second time in the Commons, it was referred to a strong Select Committee of merchants, bankers, and lawyers, with Sir Farrer Herschell as chairman.* As the Scotch law of negotiable instruments differed in certain particulars from English law, the bill was originally drafted to apply to England and Ireland only. The first work of the Select Committee was to take the evidence of Sheriff Dove-Wilson of Aber- deen, a well-known authority on Scotch Commercial Law. He pointed out the particulars in which the bill, if applied to Scotland, would alter the law there. With three exceptions the points of difference were insignificant. The Committee thereupon resolved to apply the bill to Scotland, and Sheriff Dove-Wilson undertook the drafting of the necessary amendments. Eventually the Scotch rules were in three cases preserved as to Scotland, while on the other points the Scotch rule was either adopted for England, or the English rule applied to Scotland. A few amendments in the law were made when the Committee was unanimous in their favor, but very wisely no amendments were pressed on which there was a difference of opinion. Sir Farrer Herschell reported the bill to the House, and it was read a third time and sent up to the Lords without alteration. In the House of Lords it was again referred to a Select Committee with Lord Bram- well for Chairman.^ A few amendments were there inserted, mainly at Lord Bramwell's suggestion. These were agreed to by the Com- mons, and tbc bill passed without opposition. The Act has now (1801) been in operation for more than eight years, so that some estimate can be formed as to its results. Mer- chants and Bankers say that it is a great convenience to tliem to have tbe wliole of the general j)rinci])les of the law of bills, m)tes, and cheques contained in a single Act of 100 sections. As regards par- ticular cases which arise, it is seldom necessary to go beyond the Act itsf'lf. It must also be an advantage to foreigners wlio have English liill transactions to have an authoritative statement of the English law • Mr. BillinghurBt, of the London and WpBtminBter Bank, and Mr. Slater, of th«> Ivondon and County Bank. iindprt«X)k the brunt of the work. ••The pommittec incliuicd Sir Farrer Herschell, Q. C; Sir John Lubbock; Mr. Asher. Q. ('.; Mr. Cohen, Q. C.; Mr. Reid, Q. C; Mr. Whitley, Mr. T. C. Baring. .Mr. R. B. Martin. Mr DrrKwinR. Mr. .lackaon. and Sir Charles Milli. • The committee included the Lord Chancellor (Selborne), Lord BraXD« well, Lord Fitzgerald, Lord Balfour of Burleigh, and Lord Wolvertoa. 8 CODES. [aBT. I. on the subject in an accessible form. If I could do the work over again, I certainly could do it better and siiould profit by past experi- ence. But as it is, the Act, as yet, has given rise to very little litiga- tion. 1 am sure that further codifying measures can be got through Parliament, if those in charge of tliem will not attempt too much, but will be content to follow the lines laid down by Lord Ilerschell. Let a codifying bill in the first instance simply reproduce the existing law, however defective. If the defects are patent and glaring, it will be easy to got tliem amended. If an amendment be opposed, it can be dropped without sacrificing the bill. The form of the law at any rate is improved, and its substance can always be amended by subse- quent legislation. If a bill when introduced proposes to effect changes in the law, every clause is looked at askance, and it is sure to encounter opposition. Assiuuing then the possibility of further codification, the question arises whether its extension is expedient. All the continental nations have codified their laws, and none of them show any signs of repenting it. On the contrary, most of them are now engaged in remodeling and amplifying their existing codes. In India a good deal of codifica- tion has been carried out, and public and professional opinion seems almost unanimous in its favor. The Bills of Exchange Act, 1882, has been adopted by New Zealand, Victoria, New South Wales, South Australia, Queensland, Tasmania, and with slight modifications by Canada.® IProm the Preface of the Seventh Edition.] The Bills of Exchange (Crossed Cheques) Act, 1906, has for the first time amended the Act of 1882. It interprets section 82 of the principal Act, and overrides Gordon v. London and Midland Bank (1903), A. C. 242, H. L., in so far as that case turned on the con- struction of that section. Tlie Bill was drafted by me in 1903, under instructions from Lord Halsbury, but it failed to pass the House of Commons till 1906. « It has now been adopted by forty of the English colonies and depend- encies. See Art. by E. Dove-Wilson, on Codification of Commercial Law, in 8 Jurid. Rev. (1896), 329. — H. [In the 7th edition (1909) of Chalmers' Digest of the Law of Bills of Exchange, etc., the author gives on pages 401-402 a list of forty-three British colonies which have enacted laws relating to bills, notes, and checks, giving also the citation to these laws. He remarks, however, that " The above laws ^re not necessarily frair'^'l on the same lines as the Imperial Act." — C.J i. 2.] negotiable instruments law. 9 2. The American Negotiable Instruments Law. Laws of New York, 1890, Chapter 205. § 1. Within thirty days after the passage of this act, the governor shall appoint, by and wii.h the consent of the senate, three commis- sioners, who aie heieby constituted a board of commissioners by the name and style of " Commissioneis for the Promotion of Uniformity of Legislation in t';e United States." It shall be the duty of said board to examine the subjects of marriage and divorce, insolvency, the form of notaiial ceitificatcs and other subjects; to ascertain the best means to elTcct an assimilation and uniformity in the laws of the States, and especially to consider whether it would be wise and prac- ticable for the State of iS^ew York to invite the other States of the Union to send representatives to a convention to draft uniform laws to be submitted for the approval and adoption of the several States, and to devise and recommend sucii other course of action as shall best accomplish the purpose of this act.^ The Negotiable Instruments Law. (A Review of the Ames-Brewster Controversy.) By Charles L. McKeeuan, of the Philadelphia Bar. The Amkrran Law Rilgister, Vol. 41, N. S., Nos. 8, 9, 10, Alglst, September, October, inO'J. [Pages 43S-U2.] At the Annual ('onferenoe of the Commissioners on Uniform State Laws, helrl in Dotrnit in 1805, a resolution was passed requestins: the Committop on rnmmoroial Law to proruro, a'? soon as praoticablo, a Hrnft of a bill rolatin'^f to oommorcial paper based upon the English Hills of Exchange Act and upon such sources of information as the Committoo mieht doom proper to consult. The matter was referred to a puh-rommittoo ronsisting of .Fudge Lyman D. lirowster, of Con- necticut; Henry C ^^'ill(■()\, of New York, and Frank Bergon, of New Jerspy, who sorurod ^T^. .lolm .T. Crawford, of the Now York bar, n well-known export on tlio hiw of bills and notes, to draft the proposed hill. The Knglisb ad bad folbiwod Ibo continontal codos as to form. t. r. it dealt primarily with hills of cxchanfro, and then applied thoso pro- visions, so far as they were a[)plif'alilo, to proniissorv notos, adding provision'' which wore poniliar to tho latter class of instriiments. Deemini? this ♦"orm to ho unsuitod to Amoriran conditions — the use T Similnr notn hnve h«>pn passed in many of the A'^ierican States, and coin- misBionrrH appoinU^d. — H. 10 roHRs. [akt. I. of hills of excluinsj^e brini,' pro])Oiti()ii;itt'lv If'ss exionpivo here than in l'liiio(H' --- M 1 . ( inwioid ;i(i(ijiu'(i ;i hum of his own, which <^i()U|)('(l loiioiliiM" the [iu)\isi()ns jipitluahlc to all kinds of ni'^otiahle instni- nienls. anvl hieii loiii'i'lnl. iukkm' scparali' artii'k'S, the provisions spivialii ailVfiinu: lie diiifccnl classes. Mr. I lawionl s dial'l \\;i< iaid licl'ore the sid)-coniniittee. each section being annotaled wiih iclciciice to the decisions of the Courts, the eonimenls of icxi-linok wiilns, and tli(> statute laws of the st'veial states. This iliai't (sli^ldlv auu'nded hy the suh-coniinittee ) and the draftsman's noics were |)iinle(l along with the English bill for coui parison, and copii's were sent to each member of the Conference, to many pioniim-nt lawyers and law [)rofessors, and to several English judges and lawyeis, with an invitation for suggestions and criticisms. The draft was then submit led to the Conference at Saratoga in 189(i. The twenty-seven Corumissioners who were in attendance — represent- ing foui'teeu different states — went over it section by section, and made some amendments to it, "most of which," says Mr. Crawford, " were such changes in tlie existing law as I had not felt at liberty to incorporate into the oiigiiuil draft."'' The draft as thus amended was adopted by the Conference, and in such foim has been submitted to the various state Legislatures. The most impoitant contribution that has been made to the act is the Ames-Brewster contioversy. In the Fourteenth Harvard Law Review, Professor James Karr Ames, Dean of the Harvard Law Faculty, for some years lecturer on Bills and Notes in the Harvard Law School, and the author of the leading case book on the subject, published an article criticising some twenty-three sections of the new- act, and expressing the opinion that notwithstanding the act's many merits, " its adoption by fifteen slates must be regarded as a mis- fortune, and its enactment in additional states, without considerable amendment, should be an ini|)ossibility." Professor Ames' criticisms were answered by Judge Lvman 1). Brewster, I'resident of the Na- tional Conference on Uniform State Laws, and a member of, the sub- committee which drafted the, act. The discussion consists of two articles in the Harvard Laiv Rrvinr. by Professor Ames," and two articles by Judge Brewster, one ])ublished in the Yale Law Journal and one in the Harvard Law Review.^ In a pamphlet recently pub- lished by the Harvard Law Review Publishing Association, containing the text of the act, together with these articles, there are added- a 8 Crawford's An. N. T. T,. Prffnrc »14 Harrnrd ham ffrririr, 241: 14 nnrrnrd f^nir Rrvit^ir, 442. 1 10 Yale Law ■Journal, 84; 15 flnrvard hnir lirricv:, 26. I. 2.] NEGOTIABLE INSTRUMENTS LAW. li supplementary note by Professor Ames criticising two additional sec- tions of the act — a reply thereto by Judge Brewster, and a letter containing comments on some points of the discussion by Mr. Arthur Cohen, Q. C, a member of the committee which framed the English act, who was recommended by Judge Chalmers as one of the three best authorities in England on the law of bills and notes.' As Judge Brewster remarks, " No keener weapon than that wielded by the accomplished Dean of the Harvard Law School could be turned against the Negotiable Instruments Law." Professor Ames knows more about the law of bills and notes from the student's standpoint than any one else in this country. Whatever one's conclusions may be as to the soundness of his criticisms, there is little doubt that few, if any, of the vulnerable points in the act have escaped his notice, and that the sections he criticises are those most likely to come up for construction. A familiarity with his criticisms and with Judge Brewster's replies cannot but aid both the bench and bar in giving Bome sections of the act their proper meaning. This consideration, together with the difficulty of understanding the discussion in its present form, where the criticism of each section, the answer, replica- tion and rejoinder are spread out through four separate articles, has prompted me to write a review of the controversy. Two general observations may be made, which should be borne in 2 The articles contained in the pamphlet referred to, together with Mr. McKeehan's " Review of tlie Anies-Brcwster Controversy," are reprinted in Professor .J. D. Brannan's work on the Negotiable Instruments Law, published by the Harvard Law Review Association in 1908. Sep also "The Negotiable Instruments Law, a Reply to the Criticisms of James Barr Ames," by .John Lawrence Farrell, of the New York bar, in The Brief of Phi Delta Phi, Vol. III., No. 2, First Quarter, 1901; and "The Negotiable Instruments Law: Its History and Practical Operation." by Amasa M. Eaton, in The Michigan Law Review, Vol. II., No. 4, January. 1904. See the article by Professor .lulian W. Mack in 1 III. Law Rev. 592 (April, 1907), entitled "Some suggestions on the proposal to enact the ' Tiniform Negotiable Instruments Law ' in Illinois," advocating certain changes from the Act as drafted by the Commissioners on Uniformity of Laws. This article should be read in connection with the articles on the " Ames-Brewster Con- troversy " because as Professor Mack says (p. 605), "Many of the changes advocated in the foregoing suggestions are taken from Professor Ames' articles. The reasons in support of them will be foun9), is important in two respects. First, it is the most elaborate and carefully worked out of the foreign codes, and it appears to he the model to which the other continental states (with the exception of France) are now assimilating their laws. Secondly, it is an interna- » CoHp Ho rommorrp, 1807. Thin is availnhip in tranRlntion in a work by L. Goirauf] nn the French Code of Commerce, London, 1880. Articles 110-18!) deal with bills and notes. Checks are dealt with in separate Acts (1865 & 1874). — EL 14 CODES. [art. I. tioiial and not merely a national Code. All the German States, iiu'lutling Austria, have adopd'd it, and the tcrnis of its adoption are these: Each Siato is at lilu'ity to supplement it hy a(klitional laws of its own, but such laws a if not in any way to contradict or over- ride it. M. Nouuuicr. in I lie work above referred to, gives in P"'rench the text of the l-AihaDirc Law. and a]so the -various supplementary laws passed by tlic dill'ci'cut States." It would probalily be xciy ad\ autageous to the commercial world if this principh' of an intci'iialionnl Code could be further extended. The diflicultics of carrying it out do not seem insuperable, though, doubtless, they would be great. The provisions of such a Code would have to be settled by agreement, and then each State would enact it for its own territory. In the case of England it would probably be necessary to confine its operation to foreign bills, that is to say, to bills drawn or payable abroad. Our law, as regards foreign bills, does not widely diverge from the law of other com- mercial countries, and it diverges chiefly by allowing greater latitude than is adopted in practice. Occasional reference is also made to the Indian Code (Act XXVI, of 1881, as amended by Act II of 1885) which in substance reproduces- the English law as it stood in 1881. In a work like the present, it is thought it would be waste of space to carry references to foreign laws or authorities any further, but it may be worth while to mention where they can be found. Borchardt ( Vollstandige Saninilung der geltenden Wechsel-und Handels Gesetze aller Lander, 1871), collects the statutory enact- ments of all countries relating to Bills of Exchange. Part I gives a German translation, Part II the original text. More than forty countries have codified their law on this subject; in fact, some Eng- lish colonies and the United States seem to be the only civilized nations which have not done so. Since Borchardt's work was pub- lished, however, several continental states have re-cast their laws relating to negotiable instruments. A new Commercial Code has been enacted for the Netherlands, and an official translation of the part relating to negotiable instruments has been published in England. (See Commercial, No. 30, of 1880, c. 2609.1 M. Nouguier, in a supplementary chapter to his work on Bills (Des Ivettres de Change, 1875), compares the laws of the chief commercial nations with the French Code. The Comite de Legislation P]trangere, under the direction of the French Ministry of Justice, are preparing cheap French translations of the various foreign laws relating to commercial matters. Several volumes have already been published with excel- «See Art. by E. Schuster on the German Civil Code, 12 Law Q. R. (1896), 17. — H. III. l.J HISTORY OF THE LAW MERCHANT. Of lent introductions and notes. Having regard to our own insular isolation, 1 fear it will be long before any English government de- partment undertakes similar useful work. M. Masse's " Droit Com- mercial et des Gens" is a valuable work on the conflict of laws, es- pecially as regards bills. II. Construction of codifying statutes, BANK OF ENGLAND v. VAGLIANO BROTHERS. [Reported herein at p. 125.] m. The law merchant. I. The L.\w Merchant and its History. The Elements of Mebcantile Law. By Thomas Edwabd Scrutton. London, 1891. [From Chapter /.] (Books recommended. — The best, and almost the only satisfactory sketch of the history of the Law Merchant with which I am ac- quainted, is the introduction prefixed by Master Maedonell to the tenth edition of Smith's Mercantile Law. See also the Prefaces to Chalmers on Bills of Exchange, and Lowndes on Marine Insurance; and Scrutton on the Influence of the Roman Law on the Law of England, chapters xiii, xiv.l I. The fact that so wide a meaning is given * * * to the term " Common Law," may properly call your attenfion to tlie different meanings thnt \ho. term " Common Law," itself has. In the first place "Common Law" is used in distinction to "Equity." The Common Law alone was administered by the King's Courts in this country, and suitors who complained of the rules of the law addressed petitions to the King, as the fountain of justice, asking for " Equity." The King, if he had time or inclination, dealt with these petitions him- self; but when, as generally happened, he had not time or inclina- tion, he referred them to his Chancellor, and the Chancellor dealt out "Equity" to petitioners injured by the stringent rules of the Common Law. The Equity administered at first was variable; as Selden said, it "varied with the length of the Chancellor's foot." but by degrees Equity itself came to settle down to rigid rules, until with the same case you might know beforehand that you would be Buccessful on the Common Law side of Westminster Hall and unsuo- 16 THE LAW MERCHANT. [aRT. I. ccssful on tlic Equity side. At last under tlie Judicature Acf tlu' rules of iMiuity j)rev;iiUHl over the rules of Conunon Law, and tlie (lisiinetion hecaiui' abolished execpt in as far as certain sub- jeets were assi.uiud to the Court of Chancery, and that certain sub- jects were assiirned to the Queen's Bench Division. .\ sei'ond nieaninsx of the term ''Conunon Law" is when it is used in opposition to " Statute Law." In that sense Common Law is the unwritten law of the kinfjdom which exists in grvniio legis, in the bosom of the judfjes, which they brinjj forth fiotn (hat mysterious recess when new points have to he dealt \vith ; while the .Stat\ite Law is the written law of the kinrrdom as it has been laid down by the Legislature in Acts of Parliament. Another sense in which the term " Common Law " is used is when it is distinguished from the " Civil Law," and in that sense the Common Law is the law of England; the Civil Law is the law of those countries who have founded their system upon the Roman Law. For instance, if you go north of the Border to Scotland, you find a system administered differing from the Law of England, and founded upon the Civil Law. If you cross the Atlantic to the United States you find the States in the North, such as Massachu- setts, administering a system founded on Common Law; and if you go to Louisiana, in the South, you find a system founded on the old Roman T^w, and known as a Civil Law system. II. There was yet another distinction which leads me to the subject of this course of lectures. If you read the law reports of the seven- , teenth century you will be struck with one very remarkable fact; either Englishmen of that day did not engage in commerce, or they appear not to have been litigious people in commercial matters, each of which alternatives appears improbable. But it is a curious fact that one finds in the reports of that century, two hundred years ago, hardly any commercial cases. If one looks up the Law of Bills of Exchange, " the cases on the subject are comparatively few and unimportant till the time of Lord Mansfield." ^ If you turn to Policies of Insurance, and to the work of Mr. Justice Park on the subject published at the beginning of this century, you find him saying: "T am sure T rather go beyond bounds if I assert that in all our reports from the reign of Queen Elizabeth to the year ^7^)(y when Lord Mansfield became Chief Justice of the King's Bench, there are sixty cases upon matters of insurance."® If you come 1 3fi and 37 Vic. c. 66, § 5, ss. 11. sfhalmors. Rills, Pref. p. 36. » Park, I. Pref. 43. 111. l.j HISTOKY OF THE LAW MERCHANT. 17 to Charter Parties and Bills of Lading, which have always been productive of litigation, you find Sir John Davies in the seventeenth century saying that " until he understood the difference between the Law of ^Jerchants and the Conmiou Law of England, he did not a litth' marvel what should be the cause that in the books of the Common Law of England tliere should be found so few cases con- cerning merchants and ship?, but now the reason was apparent, for that the Common Law did leave these cases to be ruled by another l.iw, the Law ^lerchant, M'hich is a branch of the Law of Nations." ^ The reason why th.ere were hardly any cases dealing with com- mercial matters in tlie Reports of the Common Law Courts is that such cases were dealt with by special Courts and under a special law. That law was an old estiiblished law and largely based on mercantile customs. (lorard ^lalynes, who wrote the first work on the Mer- chant T:aw in England, called his book, published in 1638, " Com^iie- ivdo rcl Lex Mcrcnton'fi," or the Ancient Law Merchant; and he said in his preface: "I have cntitiilcd the book according to the ancient name of Lex Morcainria and not Jus Merraiorinn, because it is a customary law approved l)y the authority of all kingdoms and com- nionweales, and not a law established by the sovereignty of any prince." And Blackstone, in the middle of the last century, says: "The affairs of commerce are regulated by a law of their own called the Law Merchant or Lex Mercatorin, which all nations agree in and take notice of, and it is particularly held to be a part of the law of England which decides the causes of merchants by the gen- eral rules which obtain in all commercial countries, and that often even in matt<'r.'i relating to domestic trade, as for instance, in the draw- ing, tlie acceptance, and the transfer of Bills nf Exchange."^ Later tlian Blackstone, Lord Mansfield lays down llial " i\rercnntile Law is not the law of a particular country, luil llic Inw of all nations:"^ while so recently as 1883 you find Lord Blackburn saying in the Ilr)use of Lords that " Ihe general Law Merchant for many years has in all countries caused Bills of Exchange to be negotiable; there arc in some cases difTercnces find poculinritics which hy the municipal biw of ciich connliv nrc gniftcd on it, luil the gen- eral rules of tlu- L;iw Merchant arc the same in all counlries." * Now if we follow the growth of this Law MrrdiMnt nr Mcrcantili' Law, which was two hundred years ago so distinct from the Com- > Zoiich, .Turimliction of tlic Ailtniralty (lORfi). p. 89. J Rlnrk^tono. ('nnimont.'irif^. T. 27^; TV. 07. » iMhr V. Lyilr. 2 P.iirr. fit (i. H«7. * M'Lfun V. Ch/drsdalt llniilc. !) .\p|i. C, at p. 105. HKOOT. INBTROMENT8 — 2 18 TllK l.AVV MKUCHANT. [aRT. I. mon Law, we iind it iu Knglaud ^oinjf through three stages of development.'' The lirst stage may be lixed as ending at the appointment of Coke as Lord Chief Justice in tlie year 1606, and before that time you will find the Law Merchant as a special law administered by special Courts for a special class of people. In tlie lirst place as to the special Courts. The greater part of the foreign trade of England, and indeed of the whole of Europe at that time, was conducted in the great fairs, held at fixed places and fixed times in each year, to which merchants of all countries came; fairs very similar to those which meet every year at the present time at Novgorod in Russia, and at other places in the East. In England, also, there were then the great fairs of Winchester and Stourbridge, and the fairs of Besangon and Lyons in France, and in each of those fairs a court sat to administer speedy justice by the Law Merchant to the merchants who congregated in the fairs, and in case of (1oul)t and ditficulty to have that law declared on the basis of mercantile customs by the mercliants who were present. You will find tlus Court mentioned in the old English law books as the Court Pepoii- drous, so called because justice was administered " while the dusr. fell from the feet," so quick were the Courts supposed to be. " This Court is incident to every fair and market because that for contracts and injuries done concerning the fair or market there shall be as speedy justice done for advancement of trade and traffic as the dust can fall from the feet, the proceeding there being de hora in horam." ^ Indeed, so far back as Bracton in the thirteenth century, it had been recognised that there were certain classes of people " who ought to have swift justice, sucli as merchants, to whom justice is given in the Court Pcpoudrous." '^ The records of these Courts are few, for obviously in Courts for rapid business law reporters were rather at a discount. As a consequence, " there is no part of the history of Englisli law more obscure than that con- nected with the maxim that the Law Merchant is part of the law of the land." ® We are, however, fortunate enough to have one or two records of the Courts of the Fairs. The Selden Society has succeeded in unearthing the Abbott's roll of the fair of St. Ives held in 1275 and 1291,^ containing a series of cases which show how the merchants administered the Law Merchant in the Courts of the fair, and why such cases did not come into the King's Court. For instance: — "Thomas, of Wells, complains of Adam Garsop that sMacdonell, Preface to Smith's Mercantile Law, p. 82. « f'oke, Inst. IV. 272. [" Pypowder " courts appurtenant to fairs were authorized in New York in 1692. — 1 Col. Laws (ed. 1894), p. 298. — H.] T Bracton, f. 334. » Blackburn on Sale 1st Ed. p. 207. » Selden Society, Vol. II. pp. 130 et seq. III. 1.] HISTORY OF THE LAW MERCHANT. 19 he unjustly detains and deforces from him a coffer which the said Adam sold to him on Wednesday next after Mid Lent last past for sixpence, whereof he paid to the said Adam twopence and a drink in advance" — (it appears to have been a very good mercantile cus- tom, still existing, to " wet a bargain," and the drink was a matter to which great importance was attached by the merchants present) ; " and on the Octave of Easter came and would have paid the rest, but the said Adam would not receive it nor answer for the said coffer, but detained it unconditionally to his damage and dishonour, 2s., and he produces suit. The said Adam is present and does not defend. Therefore let him make satisfaction to the said Thomas and be in mercy for the unjust detainer ; fine 6c?. ; pledge his over- coat." The next defendant was not so fortunate so as to have an over- coat. " Reginald Picard of Stamford came and confessed by his own mouth that he sold to Peter Pedhood of London a ring of brass for 5y2d., saying that the said ring was of the purest gold, and that he and a one-eyed man found it on the last Sunday in the churchyard of St. Ives, near the cross." (One fancies one has heard that tale about the brass ring before.) "Therefore it is considered that the said Reginald do make satisfaction to the said Peter for the b^id. and be in mercy for the trespass ; he is poor ; pledge his body." The next case introduces the Law Merchant. " Nicolas Legge com- plains of Nicolas of Mildenhall for that unjustly he impedes him from having, accordinfj to the usage of merchants, part in a certain ox which Nicolas of Mildenhall bought in his presence in the village of St. Ives on Monday last past to his damage 2.s., whereas he was ready to pay half the price, which y)rice was 2. Black Book of Admiralty, Rolls Series, TT. 23. 2 Sir .J. Fortescue. 3 E. g. the Court established by 43 Eliz. c. 12, of which eight "grave and discreet merchants " were to be members, who were to determine all insurance cases in a brief and summary course, without formalities of pleadings or proceedings. * Vide post, pp. 29, 30. [Herein at p. 27. — H.] III. 1.] HISTORY OF THE LAW MEECHANT. 21 time when Lord Mansfield became Chief Justice in 1756, and during that time the peculiarity of its development is this: That the special Courts die out, and the Law Merchant is administered by the King's Courts of Common Law, but it is administered as a custom and not as law, and at first the custom only applies if the plaintiff or defend- ant is proved to be a merchant. In every action on a Bill of Exchange it was necessary formally to plead "secundum usum et consuetudinem ^fercatorum " — according to the use and custom of merchants ; '' and it was sometimes pleaded that the plaintiff was not a merchant but a gentleman." And as the Law Merchant was considered' as custom, it was the habit to leave the custom and the facts to the jury without any directions in point of law, Avith a result that cases were rarely reported as laying down any particular rule, because it was almost impossible to separate the custom from the facts ; as a result little was done towards building up any system of Mercantile Law in England. V. The construction of that system began with the accession of Lord Mansfield to the Chief Justiceship of the King's Bench in 1756, and the result of his administration of the law in the Court for thirty years was to build up a system of law as part of the Common Law, embodying and giving form to the existing cus- toms of merchants. When he retired after his thirty years of office, Mr. Justice Buller paid a great tribute to the service that he had done. In giving judgment in Lirkbarrow v. Mason,'' he said: "Thus the matter stood till within these thirty years. Since that time the Commercial Law of this country has taken a very different turn from what it did before. Lord Ilardwicke himself was proceeding with great caution, not establishing any general principle, but d(!creeing on all the circumstances put together. Before that period we find in Courts of Law all the evidence in mer- cantile cases was thrown together; they were left generally to the jury, and they produced no established principle. From that time we all know the great study has been to find some certain general principle, not only to rule the particular case under consideration, but to serve as a guide for the future. Most of us have beard those principles stated, reasoned upon, enlarged, and explained till we have been lost in admiration at the strength and stretch of the human understanding, and I should \>c sorry to find myself under the necessity of differing from Tjord Mansfield, who may truly be said to •Chalmers. Rills. Pn-f. 44. •Cf. Harsfield v. Withcrby (1692), Cartliew, 82. T 2 T. R. 73. 22 TlIK LAW MKKCHANT. [aRT. I. he the founder of the C'ommereial Law of tliis country." Lord Mansfield, with ii Scotch training;, was not too favourable to the C'onunon Law of England, and he derived many of the principles of Mercantile Law, that he laid down, from the writings of foreign jurists, as embodying the custom of merchants all over Europe, For instance, in his great judgment in Luke v. Lyde,^ which raised a ijuestion of the freight due for goods lost at sea, he cited the Koman Pandects, the Consolato del Mare, laws of Wisbury and Oleron, two Englisli and two foreign mercantile writers, and the French Ordon- nances, and deduced from them the principle which has since been part of the Law of England.^ While he obtained his legal princi- ples from those sources, he took his customs of trade and his facts from irereantile Special Juries, whom he very carefully directed on the law ; and Lord Campbell, in his life of Lord Mansfield, has left an account of Lord Mansfield's procedure. He says:* "Lord Mansfield reared a body of special jurymen at Guildhall, who were generally returned on all commercial cases to be tried there. He was on terms of the most familiar intercourse with them, not only conversing freely with them in Court, but inviting them to dine with him. From them he learned the usages of trade, and in return he took great pains in explaining to them the principles of jurispru- dence by which they were to be guided. Several of these gentle- men survived when I began to attend Guildhall as a student, and were designated and honoured as ' Lord Mansfield's jurymen.' One in particular I remember, Mr. Edward Vaux, who always wore a cocked hat, and had almost as much authority as the Lord Chief Justice himself." Since the time of Lord Mansfield other judges have carried on the work that he began, notably Abbott, Lord Chief Justice, afterwards Lord Tenterden, the author of " Abbott on Shipping," Mr. Justice Lawrence, and the late Mr. Justice Willes ; and as the result of their labours the English Law is now provided with a fairly complete code of mercantile rules, and is consequently inclined to disregard the practice of other countries. Tn Lord Mansfield's time it would have been a strong argument to urge that all other countries had adopted a particular rule; at the present time English Courts are not alarmed by the fact that the law they administer differs from the law of other countries. Tn a recent case before the Court of Appeal, Lord Esher says:' " Tt was urged that even if the 8 2 Burr. 883. 9 Cf. the judgment of Willes, J., in Dakin v. Oxley, 15 C. B. N. S. 646, for similar aiitliorities. 1 Campbell's Lives of the Lord Cliief Justices, II. 407, note. 2 Svendsen v. Wallace, 13 Q. B. D. 73, cf. per Willes, J. in Lloyd v. Guibert, L. R. 1 Q. B. 119, 123. III. 1.] HISTORY OP THE LAW MERCHANT. 23 proposition is stated in terms larger than have hitherto been recog- nised in English Law, yet it ought now to be adopted in order to bring the principle of English Law on the subject into consonance with the laws -of all other countries. But to this I cannot agree. It is useless to inquire whether the law is, as stated, the same in all European countries. For if it is, yet no English Court has any mission to adapt the Law of England to the laws of other countries; it has authority only to declare what the Law of England is." Lord Mansfield would have found out what the Law of England in mer- cantile matters was by considering what was the law of other countries, if there was no English decision laying down any clear rule. The Courts of the present day in the wealth of English com- mercial law, feel entitled to disregard the law of other countries. VI. Further than this, the Law Merchant, which was originally based upon the usage of merchants, can now be extended by new usages which have sprung up, may be constantly added to by proof of fresh usages of the mercantile world. That is very clearly and strongly laid down in the case of Goodirin v. Roharts.^ It was a case involving the question whether a particular form of debenture scrip was negotiable, and it was alleged that by the custom of merchants it had been so for the last twenty years. It was answered to that, relying upon the judgment of Mr. Justice Blackburn,* that no addition could be made to the Law Merchant by so recent a usage as twenty years, but that it must be shown to be part of the ancient Law Merchant; but Chief Justice Cockburn, in delivering the judg- ment of the Court of I^lxchequer Chamber in Goodwin v. Roharis, said: " Having given the fullest consideration to this argument, we are of opinion that it cannot prevail. It is founded on the view that the Law Merchant is fixed and stereotyped, and incapable of being enlarged 80 as to meet the wants and requirements of trade in the varying circumstances of commerce. It is true that T^aw Merchant is some- times spoken of as a fixed body of law forming part of the law, ami, as it were, coeval wifli it. biil as a lualter of legal history this view is altogether incorrect. * * * 'p})p [^.j^^r Merchant is of com- paratively recent origin: it is neither innre or less than the usages of merchants and traders in the difTerent departments of trade rati- fied by the decisions of the Conrts of Law, which, upon su(>li usages being proven before tbeni, have ii(lr)pted flieni as .setlled law with a view to the interests of trade and public convenieiu-e, the Court proceeding herein on the well-known principle of law that, with «L. R. 10 Ex. .340. 352. ♦ Crouch V. Credit Fonder, L. H. 8 Q. iJ. 38G. 24 THE LAW MEIiCUANT. [aUT. I. rrs[H'ct to transactions in the dilTereut departments of trade, Courts ol Law, in jjiving ellect to tlie contracts and dealings of the parties, will assume that the latter have dealt with one another on the foot- ing of any custom or usage prevailing in that particular department." Thus it is tiiat Courts of Law continually take notice of customs of trade, only to the word "customs" they give a much wider meaning than it bears in the Common Law. A well-known lawyer said rather cynically once that he had heard a good many customs found by juries, but he had never heard one proved yet; and it is so that the evidence on which a mercantile jury, who know a great deal more about the matter than the lawyers or witnesses, very often will find that a custom exists, is such as would not suffice to establish any custom under the strict rules of the Common Law. For according to the Common Law a custom must have six attri- butes. In the first place it must date from time inmiemorial, which has been conveniently fixed by the Common Law as when our Lord Richard returned from Palestine, in 1189. Now, obviously, when our Lord Richard returned from Palestine, the amount of mercantile custom existing in England was of the very slightest description, and if one is to trace all one's mercantile customs back to his return from Palestine, or if a custom is liable to be defeated by proof of a later origin, very few mercantile customs can possibly be proved. The custom must be continuous from that date in the second place. In the third place it must be universally acquiesced in. In the fourth place it must be reasonable. In the fifth place it must be certain ; and in the last place it must be binding. Now in proving a mercan- tile custom you can dispense with our Lord Richard at once; it is sufficient for you to prove that the custom is certain, so that people know what it is; that it is reasonable; that it is fairly universal (of course it is not quite universal, because somebody is disputing it in the action in question) ; that it has existed for some time (five years may suffice) ; and that merchants in the trade consider it binding; and on those lines the law is continually being added to by the find- ing of customs by special juries. 2. HisTOHY OF Negotiable Instruments. (a) Bills, notes and checks. ScBUTTON. Elements of Mercantile Law. 1891. [From Chapter II.] [For authorities, see the Preface to Mr. Chalmers' work on Bills of Exchange; the notes to Miller v. Race in 1 Smith's Leading Cases, III. 2.] HISTORY OF NEGOTIABLE INSTRUMENTS. 25 9th ed. p. 491 ; and the judgment of Cockburn, C. J., in Goodwin V. Eoharts, L. E. 10 Ex. 346.] Many of the rules of Mercantile Law, the Law Merchant, are directed to evade inconvenient rules of the Common Law^ Another rule of the Common Law which is found inconvenient by merchants is the old rule that a " chose in action " is not transfer- able. A " chose in action "' is a right to recover a thing, as dis- tinguished from the thing itself. A bill of lading, as distinguished from the goods it represents, is such a " chose in action." If you [X.] had a right to recover property from A., and wanted to assign that right to B., so that B. could recover such property from A., you could not do it by thiL old common law. Equity would have recog- nised that you had transferred the right to B., but even then B. must bring his action in the name of X., who had given him the right; he could not sue in his own name. And further, when the " chose in action" was~Tranpferrcd, such a transfer passed no better title than the transferor had. Xow the Law Merchant dealt with many " choses in action," and it would have been very inconvenient, for instance, that the man who took a bill of exchange should not be able to sue on it in his own name, but should have to sue in the name of the man whose name was mentioned as payee in the bill of exchange. It would have been slightly inconvenient that the indorsee of a bill of exchange should have to inquire into the title of all previous indorsers, to see that there was no defect in any of their titles. As a result the Law Merchant establishes certain instruments or " choses in action," which were transferable by delivery or indorsement, so that the holder could sue in his own name, and which passed a good title to a transferee who took them in good faith, notwithstanding that the transferor or his predecessors had no title. These documents had thus two distinguishing features: They could be sued on by the holder in his own name; and they were not affected by previous lack of title; and instruments of this class are called Xcgotiable Instruments.' To illustrati^ the general doctrine I have been explaining to you, a bill of exchange is by the custom of merchants transferable either by delivery, if it is to bearer, or by indorsement, if it is to order, and the indorsee or person who takes it can sue in bis own name, and is not afTected by the fact of previous want of title in an indorsor if he was not a party to that defect. The indorsemont of a bill of lading by the custom of merchants passes such property in the goods represented by it as it was intended » See the lenHin^ <^«»p of Millfr v. Facr., 1 Smith L. C. nth ed. 491, and per Bowcn, L. J., in Picker v. I^nndnn and County Hank, 18 Q. B. D. 519. ?ti TUli LAW MKIU'IIANT. [ART. I. to pass;' but it neoded a statute, the Bills of Lading Act/ to get a further etTect and allow a holder of a hill of lading to sue in his own name on the contract contiiined in the hill of lading. Thus the bill of lading obtained a similar position to that of a negotiable instniiufiit by the double etfect of the custom of merchants and of the statute. A j)olicv of insurance does not by assignment pass goods insured under it, although the assignee may by statute sue in his own name, and therefore it is not a complete negotiable instru- ment. For to make a negotialde instrument you must have two marks; that the holder gets a title, though his transferor had no title, and that the holder can sue in his own name — each of these nuu-ks meeting one of the rules of the Common Law already referred to. The law of negotiable instruments is, with some few exceptions depending on statutes, entirely built upon the custom of merchants, and the history of that law as applied to particular classes of instru- ments you will find best stated in the judgment of Lord Chief Justice Cockburn in Goodwin v. Roharts,^ which I. recommend to your care- ful reading. The earliest form of negotiable instrument was the bill of exchange." Originally bills of exchange were used solely for the purpose of foreign trade. It was an instrument by which an Eng- lish merchant contrived to avoid sending money out of the country or bringing money into the country by giving an order on his foreign debtor to pay a third person, or by accepting an order to pay a third person from his foreign creditor.^ It was purely a trade transaction for the purpose of avoiding sending money out of the country, and the French Law has adhered to that idea of a bill of exchange to this day, and treats it merely as a trade transaction. The English Law has treated it as an instrument of credit. Bills of exchange seem to have been introduced into England by the Vene- tians or Florentines, and there were bills of exchange for foreign trade known to England as early as the reign of Richard II. The first reported case in the English Courts is in the year 1603,^ and the Courts, in developing what was originally simply a bill in a transaction of foreign trade, have followed the custom of merchants. Chief Justice Treby, in the case of Bromunch v. Lloyd,^ explained the stages by which a bill of exchange was developed. " Bills of Exchange," he said, " at first extended only to merchant strangers 8 Vide post. p. 153. 7 18 & 19 Vic. c. 111. 8L. R. 10 Ex. 34f5. • Defined in Rills of Exohanpe Act. 1882, § 3. and post, pp. 40, 41. 1 See f'hnlmers, Bills. Pref. p. 46. 2 Martin v. Boure, Cro. .lac. 6. 8 (1698) 2 Lutwyche's Reports, p. 1585. III. 2.] HISTORY OF NEGOTIABLE INSTRUMENTS. 27 trafficking with English merchants; and afterwards to inland bills between merchants trafficking the one with the other in England; and afterwards to all traders, and then to all persons whether traders or not ; and there was then no need to allege any custom of merchants." So beginning with the necessity to allege an English merchant and a foreign merchant, you dispense with the foreign merchant and allege two English merchants trading; then you dis- pense with the particular transaction of trade; then you drop the trader, or the allegation that there is any merchant at all, and simply produce the bill. But in a case in 1613 * there was a plea that an acceptor of a bill of exchange was not a merchant, and it was held a good answer. A bill of exchange could not be made at that time by people who were not merchants. In 1692, however, the Courts had got a little further.'" There was a plea then that the acceptor of a bill of exchange was a gentleman and not a merchant, and the Court of Queen's Bench, following the earlier case, held that a good defense; but the Court of Appeal, the Exchequer Chamber, reversed the decision, " having consideration to the inconvenience that might ensue and the suspicion which might increase among foreign mer- chants," and they laid down very sensibly that if " gentlemen " took upon themselves to accept bills they ought to pay them. The custom of merchants has gone on developing bills of exchange until the law with regard to them is now all but settled; they pass by indorsement or delivery the right to the indorsee to sue in his own name; they pass title to a bona fide holder for value though the indorsor's title is bad ; and it is not necessary to allege any consideration for the bill, for consideration is presumed until the contrary is proved. The only trace of the former history of bills of exchange is the HifTerence between inland and foreign bills of exchange, which is, in the words of Tvord Holt, " All the difference between foreign and inland bills is that foreign bills must be protested before a notary before the P/ drawer can he charged; but inland hills need no protest,"" notice of fy' W dishonor being Rufficient. ^^ft'-\ The next document which obtained the ffntures of negotial)ility ^^<-V was a promissory note. In a bill of exchange there are, after accept- ance, two pfople who offer security to the holder, the drawer and the acceptor; in a promissory note there is at first only the single security, / - that of the person who promises in the note to pay. The first case in ^. which promissory notes were recognized bv the Courts as negotiable uut^j ^^ instruments was the case of Shrldrn v. firnllri/.'' in 1680, where the Court held a promissory note to be a negotiable instrument, expressly « Oa/itr V. Tnylnr, 1 Pro .Tac. 306. » RavRfirld V. Withrrhy, farthrw, 82. • Bullrr V. Cripps. (\ Mori. 29. T 2 ShnwerH, p. 160. 28 THE LAW MERCHANT. [ABT. I. saying that " it was the custom of incrchants tliat made that good.'* That ikrision for sonu' years afterwards was followed in other cases till Holt became Chief .liistiee. Lord Holt set his face against the custom of merchants and against promissory notes as negotiable instruments. Tn the case of Clark v. Martin'* the reporter says: " But Holt, C. J., was with all his strength against this action, (on a promissory note), and said that this note could not be a bill of excliaiige; tliat the maintaining of these actions upon such notes were innovations upon the rules of Common Law, and that it amounted to setting up a new sort of specialty unknown to the Common Law, and invented in Lombard Street, which attempted in these matters of hills of exchange to give laws to Westminster Hall; that the con- tinuing to declare upon these notes upon the custom of merchants proceeded from obstinacy and opinionativeness, since he had always expressed his opinion against them." It appears that Lombard street and the merchants therein thought that the " obstinacy and opiniona- tiveness " was upon the side of Lord Holt, for they continued to use these documents and to sue upon them ; and in the next year, in another case of Buller v. Crisped Lord Holt again expressed his opinion in strong terms, and said that these notes were not in the nature of hills of exchange, but were only an invention of the gold- smiths in L()ml)ard Street, who had a mind to make a law to bind all that did deal with them. " At another day Holt, C. J., declared that he had desired to speak with two of the most famous merchants in London, to be informed of the mighty ill-consequences that it was pretended would ensue by obstructing this form, and they had told him that it was very frequent with them to make such notes, and that they looked upon them as bills of exchange, and that they had been used for a matter of thirty years; that not only notes but bonds for money were transferred frequently, and endorsed as bills of exchange," and the reporter w^nds up significantly, "the Court at last took the vacation to consider of it." Parliament stepped in and saved them from considering it any further, for by an act of the year 1704 ^ it was expressly provided that promissory notes should be deemed as negotiable as bills of exchange. The preamble of the Act began; "Whereas it hath been held that promissory notes are not indorsable over, within the custom of merchants, therefore to encourage trade and commerce be it enacted." So in this case also the custom of merchants introduced an innovation into the law of Westminster Hall, although it needed the sanction of Parliament to induce Westminster Hall to recognize it. 8 (1702) 2 Lord Raymond, 758. » 6 Modern Reports, p. 29. 13 4 4 Anne, c. 9. in. 2.] HISTORY OF NEGOTIABLE INSTRUMENTS. 29 The next step in the history was that bankers and goldsmiths who held money on deposit began to issue promissory notes payable on demand, that is to say they began to issue Bank Notes. To these again the custom of merchants very speedily gave negotiability, and in the leading case of Miller v. Race.'' Lord Mansfield decided that bank notes also were negotiable instruments, holding that it was necessary for tlio purposes of commerce that their currency should be established and secured. And by the custom of merchants, bank notes have acquired a superior position to promissory notes. They are payable to any holder who may present them without the necessity of his indorsing them. There is a legend that the Bank of England always required persons presenting their bank notes to indorse them, and that on one occasion when the clerk of the bank behind the counter epoke in rather a cavalier manner to a gentleman who came in, telling him that he could not be paid unless he wrote his name on the back, the gentleman with the note walked out and promptly sued the Bank of p]ngland for dishonoring their promissory note, and of course sued tbem successfully, with the result of altering the custom at the Bank. Bank of England notes are now legal currency and tender, and in the case of country banks their notes may be, under certain circumstances, treated as currency and payment. The next step was when the banks, besides issuing their promis- sory notes payable on demand, or bank notes, accepted and honored bills of exchange drawn on them by their customers, payable on demand; that is to say when the system of Cheques came into exist- ence, for a cheque is a bill of exchange drawn on a bank by its cus- tomer, payable on demand. ^ To cheques, also, the practice of mer- chants has affixed certain incidents, as for instance the practice of crossing cheques, which originated partly in the usages of commerce and partly in the Clenring House; and has now been dofmitely recog- nized by Act of Parliament. Banks, by the custom of merchants, are also bound to honor cheques if they have funds of tlio customer in their hands; though a drawee, even though be had funds in his hand, would not be bound to accept a bill of exchantre. So far. the law of negotiable instruments, (bills of exchange, promissory notes, cheques, bank notes), has been codified by Parlia- ment in the Bills of Exchange Act, 1882; "an Act to codify the law relating to bills of exchange, cheques, and proniissorv notes,"* and on all matter treated on by that Act tlw Law Merchant is now to be found in its clauses, and not in the cases and customs on which those clauses were founded. 2 1 Smith's T-onflinp f'nflos, 9tli n]. p. 400. a Hills of KxriinriKP Act (1882), § 73. < 45 & 46 Vic. c. 01. 30 TIIIC I.A^' MKUCHANT. [aRT L Chalmers' Digest of Bills of Exchange, etc. [From the Introduction to the Third Edition.] The results of this formation of tliu law by custom are instructive. A reference to Mariiis' treatise on Bills of Exchange, written about 1670, or Beawes' Lex ^lercatoria, written about 1720, will show that the law, or perhaps rather the practice, as to bills of exchange, was even then pretty well (leiiiu'd. Comparing the usage of that time with the law as it now stands, it will be seen that it has been modified in some important respects. Comparing English law with French, it will be seen that, for the most )iart, M'here they difTer, French law is in strict accordance with the rules laid down by Beawes. The fact is, that when Beawes wrote, the law or practice of both nations on this subject was uniform. The French law, however, was embodied in a Code by the " Ordonnance de 1673," which is amplified but substan- tially adopted by the Code de Commerce of 1818. Its development was thus arrested, and it remains in substance what it was 200 years ago. English law has been developed piecemeal by judicial decision founded on custom. The result has been to work out a theory of bills widely different from the original. The English theory may be called the Banking or Currency theory, as opposed to the French or Mer- cantile theory. A bill of exchange in its origin was an instrument by which a trade debt, due in one place, was transferred in another. It merely avoided the necessity of transmitting cash from place to place. This theory the French law steadily keeps in view. In England bills have developed into a perfectly flexible paper currency. In France a bill represents a trade transaction ; in England it is merely an instrument of credit.^ English law gives full play to the system of accommodation paper; French law endeavors to stamp it out. A comparison of some of the main points of divergence between English and French law will show how the two theories are worked out. In England it is no longer necessary to express on a bill that value has been given, for the law raises a presumption to that effect. In France the nature of the value must be expressed, and a false statement of value avoids the bill in the hands of all parties with notice. In England a bill may now be drawn and payable in the same place (formerly it was otherwise, see the definition of bill in Comvns' Digest).® In France the place where a bill is drawn must ''This passage was writton in 1878. when the first edition was published. The theory it advances is independently confirmed by the excellent introduc- tion to the Portuguese Commercial Code in the French edition, published by the Comite de Legislation fitrangfire. See p. xxix. « "A bill of exchange is when a man takes money in one country or city upon exchange, and draws a bill whereby he directs another person in another coiintry or city to pay so much to A, or order for value received of B., and subscribes it." III. 2.] HISTORY OF NEGOTIABLE INSTRUMENTS. 31 be SO far distant from the place where it is payable, that there may be a possible rate of exchange between the two. A false statement of places, so as to evade this rule, avoids the bill in the hands of a holder with notice. As French lawyers put it, a bill of exchange necessarily presupposes a contract of exchange.' In England, since 1765, a bill may be drawn payable to bearer, though formerly it was otherwise.* In France it must be payable to order; if it were not so, it is clear that the rule requiring the consideration to be expressed would be an absurdity. In England a bill originally payable to order becomes payable to bearer when indorsed in blank. In France an in- dorsement in blank merely opera'tes as a procuration. An indorsement, to operate as a negotiation, must be an indorsement to order, and must state the consideration; in short, it must conform to the con- ditions of an original draft. In England, if a bill be refused accept- ance, a right of action at once accrues to the holder. This is a logical consequence of the currency theory. In France no cause of action arises unless the bill is again dishonored at maturity; the holder, in the meantime, is only entitled to demand security from the drawer and indorsers. In England a sharp distinction is drawn between current and overdue bills. In France no such distinction is drawn. In England no protest is required in the case of an inland bill, notice of dishonor alone being sufficient. In France every dis- honored bill must be protested. Grave doubts may exist as to whether the English or the French system is the soundest and most beneficial to tlie mercantile community, hut this is a problem which it is beyond the province of a lawyer to attempt to solve. (b) Other negotiable paper. ScBUTTON, Elements of Mercantile Law. 1891. [From Chapter If.] There are, houfvfr, other ucgotiablo instruments besides tlioso wliirh have been dealt with by the Act of 1882, and to such instru- ments the rules of the Common Law and the customs of the Law Merchant are still applicable. F^reah usages may be introduced, or new documents may be proved by the usage of merchants to have tlic two marks of negotiability already stated." The usage that is proved must, however, be a usage of English merchants. In the case of Picker V. The London and County Banh,^ an attempt was made to T ThJH niln is saiH to he now ohsolotp; but the Code remains unaltered. •See SIrunrt v. flntlqrs (1092). 12 Mod. .Ifi. • Ante, p. 2r.. f irrrejn pp. 25-2fi. — TT.] > 18 Q. n. D. p. 515. 38 THE LAW MERCHANT. [aRT. I. treat certain Prussian bonds as nefjotiahle instruments in England; but the only evidence tliaL was oll'ered was that those bonds were ui'gotialiie by the ciisloiu ul" rrussian iiR'rehants, and the Court unauiinously rejected the evidenee as insulliciL'ul. As it was pointedly put. the faet that in Africa cowries are Jicuotiabli' instruments (hjes not therefore bind tbe bhi^lisli ("(Uirts to accept cowries as negotiable instrunuMits in Ijtgland, and the same principle has always been applii'd in any attempt to |)rove the negotiability of instruments in England ; tbe usage pro ved must be i\ nmgo oF FinHrh' merebiints. It is not necessary thnTlliat usage should be from time immemorial. Mr. Justice Blackburn did, indeed, in one case - lay down that such a usage, existing as part of the ancient Law Merchant was neces- sary; but in the later ease, Goodvin v. Roharts.^ l)otb the Court of Appeal and the TTouse of Lords hebl tbat to ho ton narrow a limita- tion, deciding tbat tbe T^aw Merchant might he ad(U'd to by proof of recent usage, and thus tbat new negotiable instruments might be from time to time created. We find in tbe IJepoiis a series of illus- trations of these principles of law in the various (hxunients that have been from time to time proved or not proved to l)e negotiable instru- ments. Eor instance, in the ease of (Ih/nn v. Hnker* East India bonds were held not to be negotiable in the absence of any evidence that they customarily passed by delivery; but the decision in the Courts was immediately remedied by Tarliament, who passed an Act giving to I'^ast India bonds the character of negotiability.'" In Dixon V. Bovill,'^ a document called an "iron warrant," running "I will deliver oiu' hundred tons of iron when required after Sept. ISth to the pni'ty lodging this document with me," was held by tbe House of Lords not to be a negotiable instnihietit, and not fherofore to pass by delivery, there being no evidence before the Cfinrt of any mer- cantile usage affecting such documents: it is, liowever. very |)robable tliat if tlie fpiestion of iron warrants came before the Court at the present day. they could he abundantly proved to he negotiable. To come to more recent cases, in 7'hr Fine .1/7.s Sofirfi/ v. The Union Banl,-^ it was held that Post OfTiee orders crossed for collec- tion by a bank were not negotiable instruments: and in Crnvrh v. The Crrdit Fovcirr^ debenture bonds of an Englisli enrnpanv were held not negotiable because the only proof of usage tendered was ^Crouch V. Credit Fnncirr. T>. R. 8 Q. B. 374, fnlldwrd on this by Manisty, J., in 20 Q. v.. 1). nt p. 230, »L. R. 10 Ex. at p. 3.55; 1 App. C. at p. 494. * 13 East. 509. •■■'51 Ofio. III. c. 04. 8 3 Alnrrniorn''* Roports, p. 1. T 17 Q. R. D. 705. «L. R. 8 Q. B. D. 374. III. 2.] HISTORY OF NEGOTIABLE INSTRUMENTS. 33 one originating in the last twenty years. On the other hand, in (lorgier v. Mieville,^ certain foreign bonds were held to be negotia- Lle instruments on proof that bonds of that description were sold in ti:e English market, and passed from hand to hand daily like I'^xchequer bills. And that case was followed in Goodwin v. Robarts^ in which certain scrip, which on the payment of all instalments due was to be exchanged for bonds, was held a negotiable instrument on proof of usage of the English Stock Exchange.' There is one other case I wish to mention to you as an illustration of the Common Law maxim I have already reminded you of, that a man cannot give what he has not got. and therefore if he has not got a title cannot give it. The recent case of Barton v. The London and North Western Railway ^ is at the present time exciting very great apprehension in commercial circles. Mr. Barton held certain shares in the L. & N. W. Railway which passed to his executors, and one of the executors by forging the signature of the other executor sold those shares some twelve or thirteen years ago. The purchaser took the transfer with the forged signature to the L. & X. W. Railway Company, who regis- tered it, and for the twelve or thirteen years the purchaser has been registered for those shares and has received the dividends. The executrix whose signature was forged — for a lady was concerned — did not find out the absence of these shares for the thirteen years, but on finding it out and on proof of the forgery, the L. & N. W. Com- pany were ordered to replace her name on the register, and the unfortunate piircliasors have had to give up their shares, and to pay back the dividends which thoy have received during the thirteen years. A man cannot give what he has not got. The people who purported to pass these shares had not got them to give. At present agitation, if one may use such a word, is taking place on every English Stock Exchange for an Act which will pro- tect the people whose transfers have been registered by Railway Companies against the rules of the Common Law.* ~ ^-i*— • 3 B. 4 C. 45. 1 L. R. 10 Ex. 2 For rpcont rasps in wliifli (lio f|iif'stion of nopof inl)ility was rniscH sop T,nrd f^hrffirhl V. I.niuinn Joint Storh linnk. I.. R. 13 App. (\ .1^1. nnH Colonial Rank V. Willinnifi. l.*) App. (". p. 207. »L, R. 2 4 Q. B. n. 77. * See also on tlip sulijpct of nppoliahlp instnimonfs. otiicr tlinn hilN. notos nnfl phprk«. rhnlnxTs' RilN of Explinnpp Art (.'ith od.). pp. :?12 327: 2 Amps' (•aip« on RillH and N'otPH. pp. 71R-7H4; 2 Daniel on N**;?. Inst., pp. 406-595, 730 7H.^ - H. NBOOT. IN8TKDMBNTH — 8 ARTICLE 11. Form and Interpretation. ({) Form Required. 1. Writing and signature. §20 GEARY V. PHYSIC. 5 Baknkwali. & Creswell (K. B.) 234. — 1826. Assumpsit by tlie plainiill' as indorsee against the defendant aa maker of a promissory note for the sum of 80/. payable two months after date to the order of one Folder, and indorsed by him, Folder, to one Kemp, who subsequently indorsed the note to the plaintiff. At the trial before Abbott, C. J., at the London sittings after Hilary term, 1825, it appeared that the indorsement by Kemp to the plain- tiff was in pencil, and it was thereupon objected that the plaintiff could not recover: an indorsement in pencil not being such an indorse- ment as the law and custom of merchants recognizes to be sufficient to pass the interest in a bill of exchange, and promissory notes being by the statute 3 and 4 Ann, c. 9, § 1, assignable or indorsable in the same manner as unpaid bills of exchange are according to the custom of merchants. The Lord Chief Justice thought it sufficient, and directed the jury to find a verdict for the plaintiff, reserving liberty to the defendant's counsel to move to enter a nonsuit, if the court should be of opinion that the indorsement of the promissory note in pencil was not a good and valid indorsement. Abbott, C. J. — There is no authority for saying that where the law requires a contract to be in writing, that writing must be in ink. The passage cited from Lord Coke shows that a deed must be written on paper or parchment, but it does not show that it must be written in ink. That being so, I am of opinion that an indorsement on a bill of exchange may be by writing in pencil. There is not any great danger that our decision will induce individuals to adopt such a mode of writing in preference to that in general use. The imper- fprHnn of \]]\s, mnrlo nf writjj^nr ^ jts bclng SO sub jcct to "bWiJeratlon, and the i mpossibility of nroving it when it is obliterated, will pre- vent it being generally adopted. TTiefe being no authority to show that a contract which the law requires to be in writing should be written in any particular mode, or with any specific material, and the law of merchants requiring only that an indorsement of bills of exchange should bo in writing,' without specifying the manner with > See custom stated in Lutwyche, 878. [34] WRITING AND SIGNATURE. 35 which the writing is to be made, I am of opinion that the indorse- ment in this case was a suflicient indorsement in writing within the meaning of the law of merchants, and that the property in the bill passed by it to the plaintiff. Bayley, J. — I think that a writing in pencil is a writing within the meaning of that term at common law, and that it is a writing within the custom of merchants. 1 cannot see any reason why, when the law requires a contract to be in writing, that contract shall be void if it be written in pencil. If the character of the handwrit- ing were thereby wholly destroyed, so as to be incapable of proof, there might be something in the objection ; but it is not thereby destroyed, for, when the writing is in pencil, proof of the character of the handwriting may still be given. I think, therefore, that this is a valid writing at common law, and also that it is an indorsement according to the usage and custom of merchants : for that usage only requires that the indorsement should be in writing, and not that that writing should be made with any specific materials. Holroyd, J., concurred. Rule discharged.* § 20 REG. V. HARPER. L. R. 7 Queen's Bench Division, 78. — 1881. [Court for Crown Cases Reserved.] Indictment for forging an indorsement to a bill of exchange. John Watson & Son drew a bill on Harper, but did not sign it. Harper accepted it, forged the indorsement of John Hunt, and returned it. "Accord: Brotin v. Butchers, etc.. Bank, 6 Hill (N. Y.) 443, po.^ § 20 ScHMiTZ V. Hawkeye Gold Mining Co., 8 S. Dak. 544, 67 N. W. R. 618. — 1896. "Time Check, No. 189. $98.65. General Managers' Office, Hawkeye Gold Mining Company. Pluma, So. Dak., June 10th, 1803. Due W. C. Robinson the sum of ninety-eight dollars and sixty-five cents ($98.65), payable at this office, on the 20th day of June, 1893, to him or order. David Hunter, General Manager, by L. A. Fell. W. C. Ro])inson." [Indorsed] " W. C. Robinson." Fuller, J. — "As the writing before us is negotiable in form, and the signer, in legal effect, promises to pay a specified sum of money, we conclude that the instrument is a promissory note, and that appellant's fRobinson'sl liability was only that of an indorpor. The w ords * payable to \V\ C. Robin son or order,* unconditionally, nt ;i sprcifird time find place, a certain arnouTrT'of — money, i mpo rt a pr miii.-i,' ; and the instrument contains every essen- tiSniTement of a promissory note. * * ♦ There was no allega- tion in the complaint nor proof at the trial by which to charge appellant, as an indorser or otherwise." §20 HiiRSET t'. Wtnrlow, 59 Maine, 170. — 1R70. " Nobloboro, Oft. 4. 1869. Nathaniel O. Winslow. Cr. Wy labor 16.1^ days @ $4 per day, $67.00. (lood lo liearcr. William Vannab." Pan- forth, J. — "It would spom tliat the only possible eonstruetion which ran be given to this instrument is, substantially, tins: In consideration of 16)4 days' labor, performed by Nathaniel (). Winslow, at $4 per day, amounting to $67.00, T promise to pny bim, or bearer, that Slim on fleniand. Signed. William ^'annab. Here we have every element of a negotiat)le yiromissory note; a maker, a payee, a promise or engagem ent to pay a certain sum of flToncy at a specified <>i» i r, al)SM l Ut<^ l y and unronditionnlly, and the word bearer to mak» it negotiable.** ^ v^ ^ r/^ 42 FOUM UEQUIKED. [ART. II. §20 CURRIKK v. L()(^KWOOD. 40 (.'ONNKCTicirr, 349. — 1S73. Assumpsit upon a written iiistrunu'iit. wliich the plaintiffs claimed was a proinissorv note, ^ iiun-net.n)tial)k\ ami was not barred until seventeen years Inun its dale. The trial court held it not a promis- sorv note and that it was barred by the statute of limitations. Skymoiik. C. .1. — The tiist (piestion in this case is whether the writing sued iipun is a promissory note within the meaning of those words in ibr statute dI' limitations. The statute is as follows: " No action shall be bioui^dil on any bond or writing obligatory, contract under seal, oi' promissory note not negotiable, but within seventeen years next after an action shall accrue." The instrument sued upon is as follows : Bridgeport, Jan. 22nd, 1863, $17.14. Due Currier and Barker seventeen dollars and fourteen cents, value received. Frkderick Lockwood. Promissorv notes not negotiable are by the statute above recited put upon the footing of specialties in regard to the period of limita- tion, and for most other purposes such notes have been regarded as specialties in Connecticut. The instrument, however, to which this distmcHorT has been attacbi'd is the simple express promise to pay money in the stereotyped form familiar to all. The writing given in evidence in this case is a due bill and nothing more. Such acknowledgf T T iLula o f .- ikbl ait* LUJU mon and [)ass uBcler the name of due bills. They are informal memoranda, sometimes here as in • // England in the form " 1. 0. T." They arc not the promissory notes which are classed with specialties in the statute of limitations. The law implies indeed a promise to pay from such acknowl edg ments, but th(> prnniisc is simply implied and not express. Tt is well said by Smith. J.,n\'lSmWiv.'Alten (5 Day, 337). "Where a writing con- tains nothing more than a hare acknowledgment of a debt, it does not in legal construction import an express _iiromise to pay; but where a writing imports not only the acknowledgment of a debt but an agreement to pay it. this amounts to an expre^K33int*flct.'' In that case the words " on demand " were held to import and to be an express promise to pay. '^Phat case adopts the correct prin- ciple, namelv, that to constitute a promissory note there must be an express as contra-distinguished from an implied promise. The words "on demand " are here wanting. The words "value received," which are in the writing sierned by the defendant, cannot be regarded as equivalent to the words " on demand." The case of Smith v. Allen went to the extreme limitTh holding the writing there given to be a promissory note, and we do not feel at liberty to go further in that direction than the court then went. II. 1.] NOTE MUST CONTAIN A PROMISE. 4? The writing then not being a promissory note, the plaintiff's action is barred by the six years" clause of the statute, unless revived by a new promise to pay. A new trial is not advised.' Park and Carpenter, JJ., concur. Foster and Phelps, JJ., dissent. O^ ^*^ ^U/ ^'^^ § 2D MILLER v. AUSTIN. 13 Howard (U. S.) 218. — 185 , - ^- Action by indorsee against indorser, alleging due presentment, demand, notice and protest. Judgment for plaintiff. Defendant '-^^JLy brings writ of error. y '^ Mr. Ji'STiCE Catron delivered the opinion of the court. The only question this case presents that we deem worthy of notice is. whether the paper sued on is a negotiable instrument ; it is as follows : No. 959. Afis.sissippi Union Bank, Jack.son. (Miss.) Feb. 8, 1840. I hereby certify, that Hujrh Short has de- posited in this bank, payable twelve months from 1st May, 18.S9, with 5 per cent, interest till due, fifteen hundred dollars, for the use of Henry Miller, and payable only to his order upon the return of this certificate, .751.500. William P. Grayson, Cashier. The suit was by the last indorsee against his immediate indorser, and brought in Ohio. The statute of that State declares all promis- sory notes, drawn for a certain sum, payable to any person or order, or to any person or his assigns, negotiable by indorsomont. The established doctrine is, that [I piVWIliSf^-^o deliver, or to be accoimtablo fr)r. so much money, is a good bill or note. FTere the sum is certain, and tlif promise direct. Every reason exists why thp indorser of this paper should be hold responsible to his indorsee, that fan prevail in cases where the pnpor indorsed is in the ordinary form of a promissory noto : and as such note, the State courts cren- prally. have treated certificates of deposit payable to order; and the principles adopted by the State courts in coming to this conclusion, arp fully sustainod by the writers of treatisps on bills and notes. Rping of opinion that the Circuit Court propprlv held the paper V indorsed, negotiablp, it is ordered (hat the judgnicnl be affirmed.* / / • Contra: Jacquin v. Warrm, 40 III. 459; Hrndy v. Chnntlhr. 31 Mo. 28. For critici.sni of Currier v. l.nrkwood, see 14 .Am. L. Rej;. N. S. 20. — Fl. ♦ Accord: Pnrdrr v. Fixh. fiO \. Y. 205; Frank v. ^^^r!tsr1n. fi4 N. V. 155 Prnrfftlry v. Wrhhrr. 101 Vieh. 88; h'ukirnoff v. Firfit \nt. /?/,".. 40 Soh. 4S4 Klnuhr.r V. fiig/jcrataff, 47 Wj.k. 551. The certificate of depoBit is to be din 44 FORM REQUIRED. [ART. II. 2. A Bill Must Contain an Order. §20 TIOYT V. LYNCH. 2 Sandfokd's SiTPicuioR Court Ricr. (N. Y.) 328. — 1840. Assumpsit o n mi order drawi) u]n)u fho Hprt'iidniit. with the com- innii counts. At tho tri.il. it ;i[)[)(';nt'(l lli.it Smith and Woe negotiable under the Negotiable Instru- ments Law, see Forrest v. t^nfety Bankinq d Trust Co.. 174 Fed. 345; Kava- nagh v. Bank of Ameriea. 230 111. 404; Dickey v. Adler, 127 Southwestern (kanBas City Ct. App., Mo.) 593. — C] II. 2.] BILL MUST CONTAIN AN ORDER. 45 By the Court. Oakley, Ch. J. — [After disposing of another matter.] There was another question argued, whicli must arise on a new trial, and it is right that we should express our views upon it at this time. It is said that the order upon which the suit is founded, is a billof exchange, and that there is no written acceptance of the same. On consideration, we have come to the conchision that this is a bill of exchange. It is an order in writing, drawn by one party on another, requesting the latter to pay a certain sum of money to a third party, at all events; depending upon no contingency, and pay- able out of no particular fund. It comes within the reason of the statute requiring a written acceptance to charge the drawee. It is true this order is not negotiable, but that is not necessary to mak^ it a bill of exchange.'* /. ,' ^ C^C^ ^ A'^v ■ -' ( >^ l-^ '' f New 4rial granted §20 The King v. Ellor, 1 Leach, Crown Law, 323. — 1784. " Messrs. Songer, — Please to send £10 by the bearer, as I am so ill I cannot wait on you. Elizabeth Wery." Ellor was indicted for forging a bill of exchange. The Court. — " This appears to be a mere letter, rather requesting the loan of money than ordering the payment of it. The terms of it do not import anything compulsory on the part of the drawee to pay it?'" /V -{^^- y^^^ '•vv*'^ fV-^-t ^ 20 Ruff v. Webb, 1 Espinasse, 129. — 1794. " Mr. Nelson will much oblige Mr. Webb by paying J. Ruff, or order, twenty guineas on his account." " Lord Kenyon said, that he was of yO opinion, that Ihe paper offered in evidence was a bill of exchange; /~) that it was an order by one person to another, to pay money to the 7^' plaintiff or his order, ^ijii^'h Hfi^^p'^ilitniif f^^"^ ^ ^^'^' of exchange." ^20 Little v. Slackfohd, Moody & Malkin, 171. — 1S28. "Mr. Little: — Please to let the bearer have seven pounds, and place to my account, and you will oblige, your humble servant, R. Slackford." — LoKi) Tentkrd?:n, C. J. — "The paper does not purport to be a demand made by a party having a right to call on the other to pay. The fair meaning is, 'you will oblige me by doing it.'"" » Rrp Mrhlhrrq v. Tishrr, 24 Wis. fiO?. poitt. — H. « " Thnmns WillinrriH, Esq. — F'loaBo lot. tho boarpr hnvo Jp.'iO. T will arrange it with yoTi this noon. Yours, most obedient. S. R. Hir'scnthali." was held to be a hill of exchange. Biesenthall v. Williams, 1 F3uval! (Ky.) 320, 1864. 46 FORM REQUIRED. [ART. II. 3. The Promise or Order Must be Unconditional. (a) Conditional promises or orders are not negotiable^ § 20 WHITE V. GUSHING. 88 Maine, 339.— 1896, Assumpsit on an order. Tlic trial court ruled that the order was negotiahle and the action could he maintained in the name of White hy a simple indorsement hy Lawler. Defendant excepted. Foster, J. — The plaintilfsues as indorsee of an order signed by the defendant of the following tenor: rjj $120. Dover, Oct. 27, 1893. Piscataquis Savings Bank. /. Pay James Lawler. or order, one hundred and twenty dollars, and charf^e to I ,,/C«-*"'v^^ my account on book No. — . J. N. Cushino. Witness The bank book of the depositor must accompany this order. The order was indorsed in blank on the back by James Lawler and Samuel Lewis, and the plaintiff claimed to recover against the defend- ant as upon a negotiable instrument. The-^eaL ^luestion jyesented is whether the instrument declared on is negotiable, so tliat an action may be maintained upon it in the name of the indorsee. To constitute a negotiable draft or order, it must be a written order from one party to another for the payment of a certain sum of money, and that absolutely, and without any contingency that would embarass its circulation, to a third party or his order or bearer. It has often been held that a bill or note is not negotiable if^made payable out of a particular fund. Rut there is a distinction between such instruments made payable out of a particular fund, and those that are simply chargeable to a particular account. In the latter case, the payment is not made to depend upon the adequacy of that fund, the only purpose being to inform the drawee as to his means of reimbursement, and the negotiability of the instrument is not affected by it. The objection that^s raised to the negotiability of this instrument is, not that it is made payable out of a particular fund, but that it is subject to such a contingency as necessarily embarrasses its circula- Wordsof civility do not prevent the instrument from being an order.' "WHeail-y v. Wirul/b, II Cal. SS: By the law merchant a bill of exchange need not he payable to order or bearer, or have the words value received, or be payable at a day certain or at any particular place. Thus: "To Hoxie & Rich: I'lease pay to ("lias. Mehl- berg the sum of $69.20, and charge to me. Chas. Tisher," is a bill of exchange by the law merchant. Mehlherg v. Tisher, 24 Wis. 607, post. See § 25, post. — H. 7 See note in 125 Am. St. Rep. at p. 192. — C. (I. 3.] MUST BE 'unconditional. 47 tion and imposes a restraint upon its negotiability, by means of these words contained upon the face of the order: "The bank book of the depositor must accompany this order." Although these words are upon the face of the order below the signature of the drawer, they were there at the time of its inception, became a substantive part of it and qualified its terms as if they had been inserted in the body of the instrument. (Littlefield v. Coombs, 71 Maine. 110; Gush- ing V. Field, 70 Maine, 50, 54; Johnson v. Heagan, 23 Maine, 329; Barnard v. Ctishing, 4 Metcalf. 230; Heyuwod v. Perrin, 10 Pick. 228; Benedict v. Cowden, 49 N. Y. 396; Costelo v. Croivell, 127 Mass. 293, and cases there cited.) Was the order negotiable? The answer to that depends upon the effect of the words " The bank bcok of the depositor must accom- pany this order." If not negotiable, the plaintiff as indorsee cannot maintain an action upon it. (Noyes v. Oilman, 65 Maine, 589.) If their effect is such as constitutes a contingency in relation to the ~p dmn j ut o f the n mjefTtiependent upon the pioducllun uf the dpnwor' ft, bank book by the holder or indorsee of the order, then they must be regarded as such an emba rassment to the_ _iiesati»tie«-of the— p^^„ order, and such restriction li^pon its circulation for commercial /^^ purposes as to render it non-negotiable. . v/ Without these words the order is payable absolutely, and there is,, '' ^ no apparent uncertainty affecting its negotiability. With thorn, the ^ ^^ order is payable only upon contingency, or condition, and that is' ' '' upon the production of the drawer's bank book. This is rendered q imperative from the language employed, and the bank upon which ^^"^.-^ the order is drawn, would have the right to insist upon such produc- J?X, tion of the book in compliance with the ierms of the order; and the""^^ v ^ case shows that it has refused payment irpfm— presentation of the >, order for the reason that it was not accompanied by the bank book. It cannot, therefore, be regarded as payable absolutely and without *-<_ any contingency that would embarrass [ts _firf iil;if inn 'I'ho drawer V* ,y^ has it in his power to defeat its payment by withholding the bank "^^ book. C!ertainly the bank book of the depositor is within his own control rather than that of the indorsee of this order. It was the necessity of certainty and^iTTrnHkauiii^rnercaritilc affairs and the inconveniences which would result if cornnier(i;iI paper was /P"^ incumbered with conditiftns and contingencies, that led to the estab- ^ ^ lishment of an inflexible rule that to be negotiable they must be payable absohitely and without any conditions or contingencies to embarrass their circulation. (American Et. Bank v. Blanrhnrd. 7 Allen, 33.'i. ) In ih;ll mse the words, "subject to the policy," being included in a promissory note, were held to render the promise con- ditional and not absolute, and so the note was held not to bo nego- tiable. (Noye/t V. Oilman, 65 Maine, 589, 591 ; Jfnhhard v. Mnxrly, 11 Gray, 170.) 48 FORM REQUIRED. [ART. II. A cape in ovory essential like the one we arc considering was before the Supreme Court of Pennsylvania in 1801. A fnr simile of the order is given in tlu> opinion. No two cases could be nearor alike. There, as here, the order was drawn on a savings bank. The suit was In- the indorsee against the drawer as in this case. There, as here, the order contained a statement upon its face, but below the signature of the drawer, that the " Deposit book must be at bank hcffirc money can be paid." In discussing the question of its nego- tiability cases are cited from the courts of Maine, Vermont, Massa- chusetts and New York, as well as from Pennsylvania. In the course of the opinion the court says: " It suflkiently appears from the memoranda on its face that it was drawn on a specially deposited fund held by the bank subject to certain rules and regulations, in force between it and the depositor, requiring certain things to be done before payment could be required, viz.: previous notice of depositor's intention to draw upon the fund, return of the notice ticket with the order to pay, and the presenta- tion of the deposit book at the bank, so that payment might be entered therein. * * * j^^ jg^ [^ substance, merely an order on the dollar savings bank to pay J. W. Quinn, or order, nine hundred dollars in nine weeks from date, or February 1, 1888, provided be or his transferee present to the bank, with the order, the notice ticket, and also produce at and before the time of payment the drawer's deposit book. As already remarked, these are undoubtedly pre- requisites which restrain or qualify the generality of the order to pay as contained in the body of the instrument. They are also pre- requisites with which it may be difficult, if not sometimes impossible, for the payee, transferee, or holder of such an order to comply." (Iron City Nat. Bank v. McCord, 139 Pa. St. 52, 23 Am. State Rep. 166.) The order in question was drawn upon a savings bank, and it is common knowledge that all such banks in this State have a by-law which all depositors are required to subscribe to, that " no money shall be paid to any person without the production of the original book that such payment may be entered therein." This court in the case of SuJIivan v. Lewiston Inst, for Savings (56 Maine, 507), has considered the purpose and necessity of these salu- tary regulations. We should be slow to countenance any departure from this rule needed for the protection of depositors in our savings banks now numbering more than 160,000, and where deposits aggre- gate nearly $60,000,000. Inasmuch as this order is not negotiable and no suit can be main- tained upon it by the plaintiff as indorsee, it becomes unnecessary to consider the other exceptions. — " "^ Exceptions sustained. U. 3,] MUST BE UNCONDITIONAL. 49 (b) An order or promise to pay out of a particular fund it conditional.^ §22 WORDEN v. DODGE. 4 Denio (N. Y.) 159. — 1847, Assumpsit. On the trial the plaintiff gave in evidence an agree- ment, signed by the defendants, bearing date October 12, 1839, by which, fofHraTue received, they jointly and severally promised to pay to the plaintiff, by his name or order, $250, with interest, payable one-half in two years and the other half in three years from the day of said agreement, " out of the net proceeds, after paying the cost and expenses of ore to be raised and sold from the bed on the lot-this dav conveyed by K-dward IMadden to Edwin Dodge, which bed is to be opened and the ore disposed-^ as soon as conveniently may be." On reading the agreement th<^ plaintiff rested, and the defendants moved for a nonsuit, as the plaintiff had not shown that the defend- ants had received enough from the_ ore to pay the note, nor had they shown any default or negligence on their part. The judge held that the plaintiff could noTTecover without proving that the defendants had received funds from the ore to enable them to pay, or had neg- lected to work the ore bed, and directed a nonsuit. The plaintiff excepted. / '-^-J ■'" ' ■"/■■-.'- — j^-^ <^J -i.^.^ ^^ By the Court, Beardsley, J . — The nonsuit was proper. A prom- ^^ issory note must be payable ahso hitely, an d not upon any contin- ^^ / gency as to time or event. (3 l^Tni, rA\\ ed. p. 74; HmHh on Merc. . - Law, 113, lUiTVTori/ on Prom. Kotes, g§ 1, 22 to 26; Id. on Bills of Exch. §§ 46, 47; Chit, on BilLs, 10th Amer. ed., p. 132 to 139.) This was not such an engagement, for although the promise was to make payments at certain specified times, the payments were to be made "out of the net proceeds" "of ore to be raised and sold" from a cerTairrorc bed. Here was a contingency; the fund might turn out to be inade(|uate, in which case there would be no obliga- tion to pay at any time. It is not a promise to pay "absolutely and at all events," as a promissory note always is. New trial denied." ■ Spp notf in 125 Am. St. Rep. at page 190. — V. »" PU-a'if pay A. B., or ordpr, •f.'jdO, for value rcceivi'd, . . . nut f)f the prooJ'fdH of the plaim afjainst the Peahody Kstate, now in your handw tr> rollect, when the Hame sliall have Ix-en eolh-eted hy you," Ih not a neills and Notes, §158; see also Parsons on Merc. Law, 87; f'liilh/ on Bills, 158.) Dwight, Com., in Munger v. Shannon (61 N. y. '^5.")), says: "A bill is an order drawn by one person on another to [lay a third a certain sum of money absolutely and at all <-i events. T'nder this definition the order cannot be paid out of a particular fund, but must be drawn on the general credit of the drawer, though it is no objection, when so drawn, that a particular fund is specified from which the drawee may reimburse himself." Judge Kjipallo in Tirill v. Tntile (81 N. Y. 457), says: " Tf a draft - ^wKy be drawn generally upon the drawee, to be paid by him in the first instante. (tn the credit of the drawer and without regard to the Bonrce from which the money used for its payment is obtained, the designation liv the drawer of a particular fund, out of which the drawee is to subse(|nently reimburse himself for such pavment, or a pirticubir account to which it is to he charged, will not convert the (Jnift into an assignment of the fund, and the payee of the draft can have no action thereon against the drawee unless he duly accepts." In that case the drawee refused to accept and the action was sought to be maintainerl upon the theory of an equitable assignment. Ft was held under the [leeuli.-ir eireiimstances of the case, and the form of the instrument, that it did transfer the fund. -y / 52 FOliM HEl^UlKED. [aKT. II. It is thus s een that tho move inontiou of a fund in a draft, does uormvessarily cloprivr it of the cluiructer of connnercial papur.^)ut if II. . liii 1 ;i|i|)r:ir, in (irdiT to' iiavo tluit (■(Tcci, tliat it contains oillur .ui r xpic's.^ o i iiii|tli((l direction to pay it therefrom, and not othrnrise. a v.. /i I T]\o question, tlierefore, to| l ie iK'Irniiiiicd licre is, \vheih.gx,the fund 'in question is referred to a? the ineasuiv of liahility or the means of" roi mburs eniont. Wliilc llic poiiil i~ iii»t free from doubt, we think a reasonahk"' oonstnutioii of llio dral't favors the conelusion that it is mentioned only as tlic souicc of iciinttiirscmctit. No express hniiruage in it can he pointed out as re(|uiring its payment from the fund mentioned, and none from which that requirement can be implied, except such as exists in all drafts where a fund is referred to. Its language is to " charge the amount against me and of my mother's estate " and contains no provision for delay until the amount is realized from the estate, or for payment pro tanto in case the estate should prove insufficient to pay the whole amount. There is no language importing a transfer of the fund to the payee, and nothing from which such an intention can he inferred. The draft contains an absolute direction to pay a fixed sum, at a specified date, with interest. It imports a present indebtedness of a sum named, from the drawee to the payee, and an absolute direction to pay that sum at a fixed date, subject to no contingency either as to time or amount. In express language he directs the amount when paid"^ be charged against him individually, and adds the words, plainly implying, as we think^ihat the fund for the acceptor's reim- bursement would be found in an amount eventuall}', or immediately payable to i-he~dTa"i;reT f ronTTiTs motlnr's estate. We think, also, that the insertion of words ex])rcssly making the paper negotiat)1e, was quite significant and indicated an intention orTlTm-^ftrt of all parties, that it would be transferable, and partake of the character of commercial paper. Any contingency inferable from the language of the draft, making the amount payable thereon indefinite and uncertain, would tend largely to depreciate its value for such purpose, and defeat the intention with which it was appar- ently made. If the language of the paper could be considered at all ambiguous, if was tlie diity of the defendant to limit liis liability by apt words of acce[)tan( e wlirn it wa-; presented to hiiiC but as"if Ts, he has unqWlifiedlv pi(uiii.-((] to |»ay a fixsit 'and definite sum at a specified time, and v.c Ihink. -liould he held to the contract which other pa^-ties were authorized by his acceptance to infer he intended to make. The case of Tassey v. Church (4 Watts & Sergeant, 346), seems quite in point. The instrument there read: "Y II. 3.] MUST BE UNCONDITIONAL, 53 $555.48. Alleghany, 1st July, 1840. Please pay Church, McVay & Gordon $555.48 and eharge the estate ol Thomas C. Patterson. Adam Flemming, Trustee. To John Tassety-, Adminislrator. [Indorsed] : Accepted. John Ta.s.sey, Administrator. Fleming was the trustee of j\lrs. Patterson, wlio was the heir at law of Thomas C. Patterson ; Tassey was the administrator of Patter- son's estate. It was held that the promise of the acceptor was unconditional and bound him absolutely. In Childs v. Monins (6 Kntr. C. L. 228), the defendants, as executors of the estate of Thomas Taylor, promised to pay £200 on demand with interest, siffning as executors. It was held that they became personally liable, and that the plea of plene administravit was no defense. It was fur- ther held that the promise to pay interest made the debt that of the administrators personally. In Kelly v. Brooklyn (4 Hill, 263), the action was upon an order dra\\Ti by the ma^'or upon the treasurer of tlie defendant in the following words: "Pay Alexander Lyon or order $1,500 for award Xo. 7, and charge to Bedford Eoad Assess- ment." It was held that it was a bill of exchange and not payable from a particular fund. For further illustration of the point under discussion we would refer to Hollister v. Hopkins (13 Hun, 210) ; Redman v. Adams (51 Me. 429) ; Luff v. Pope (5 Hill, 413). The case of Tooker v. Arnoux (7G N. Y. 397), is referred to by the respondent as sustaining the views of the court below; but we are of the opinion that it cannot be so regarded. The order there directed the drawee to pay a certain sum out " of the money to be realized from the sale " of certain houses. This order was accepted, and it was held that a sale of the houses was a condition precedent to any liability on tbe part of the acceptor. This was the plain language of the contract. In all the cases examined by us where an order has been held to operate as an e(|uitable assignment of a fund, there were either special phrases contained in the instrument, indicating an intent to liave it so operate, or ambiguous language used, whicli, construed in the liglit (if siirroimding circumstances, justified the inference of a limitation of liability. (Parker v. Syraruae, 31 X. Y. 370; Ahjer v. Srotl, 54 id. M ; Mungcr v. Shannon, Gl id. 251 ; Erirhs v. De Mill, 7') id. 370; I-lrilt v. Tiitllr, supra.) Here, however, there is no 8uch_ (lu^^ liirigiJii[;e^ iind lliis font nut in in ^f ^y a tJxcd amQlj pt aL^a- .flpflflifiQd-^| ^"-v" |i(i.|y iirii] wni-ifitdi|]£iiijLUjh_^ ^ , therefore, of the opinion that the instrument in question of exchange and rendered the parties executing it liable absolutely for the amount stated therein. ^ V"- i 54 FoijM i;i:i^>i ii;i:i». [akt. ii. Tlic jiulgniont of V.w louits below slioiild he I'cvorsi'd and ii new trial onltMiHl, with costs to abide tlie event. All eoncur. J udgment_j:iiK«rsed.' s" Please pay to order of G. V. and (". W. Tildon forty dollars, and charge same against whatever amount may Ix' diu' nic for my share of tish eanght on board schooner "Morning Star' for the lisliing season of IHdO." Held negotiable in li'tiliiian v. Aihinis, /jl Me. 429. " In tliis case the order re(|uiies the drawees to |iay to tlie order of (!. V. and ('. W. 'lilden the sum of forty dollars, absolutcl\ and without contingency. .\ means of leimbursement is indicated to tlie di;(\\('es in the words appended, ' and charge the same against whatever amount may be due me for my share of fish,' etc., but the pay- ment of the order is not made to depend upon his iiaving any share of fish, nor is the call limited to tlie proceeds thereof." Baukows, J., on p. 433. A bill reading, pay to the order of A, .$1,500, "on account of contract between you and the Snyder Planing-mill Company" signed by the com- pany, held to be negotiable. "Section 10 (N. Y. § 22) of our negotiable instruments law, which is merely declaratory of the common law upon the subject, reads as follows: . . . Tlie controversy is thus narrowed down to whether the words ' on account of contract between you and the Snyder Mill t'onipany ' amount to a direction to pay out of a particular fund, or, on the other hand, are to be considered as simply indicating the fund from which the drawee, Lightner, might reimburse himself. . . . The weig/it of authority and reason supports the proposition that the words amount to no more than an indication of the fund from which the drawee is to reim- burse himself. The words used are substantially the same as though the orders read ' and charge to account of contract with Snyder I'laning-mill Company,' or ' credit to account of contract,' etc." Porter, J., in First National Bank v. IJ(ihtner, 74 Kan. 736, 742. See this case with notes in 8 L. N. S. 231. 118 Am. St. Kep. 353, and 11 Am. and Eng. Ann. Cas. 596. See also note in 7 Col. Law Rev. 210. In Hibbs v. Brown, 190 N. Y. 1G7, the action was to replevy stolen coupons originally attached to a bond issued by the Adams Express Company, an unin- corporated joint stock association, and appellant's right to recover turned on the question whether said bond and cou|)ons were negotiable. The bond was issued by the Express Company in its association name and was secured by a trust indenture conveying and pledging for its payment a large amount of securities and property. Among other clauses was one providing that " no person or future shareholder, oilicer, manager or trustee of the Express Com- pany shall be personally liable as jiartner or otherwise in respect to this bond or the coupons pertaining tliereto, but the same shall be payable solely out of the assets assigned and transferred to the said Trust Company or out ot other assets of the Express Company." Appellant claimed that this clause rendered the bond non-negotiable as it prevented the bond from being collected from the individual property of the members of the association and therefore made the remaining profierty from which it could be collected a particular fund. He jiointed out the difference between a joint stock association and a corporation, contending that the individual liability of the memtjcrs of the former is as essential a character- istic as it is in the case of a partnership, and that, therefore, it could not be eliminated without materially affecting the contrP"t of the association. Hi.senrK. .!.. held that " so many of the attributes and characteristics of a corporation have been impressed upon the modern joint stock association that II. 3.] ilUST BE UNCONDITIONAL. 55 (d) statement of trans action which gives rise to instrurnent does not rentter' promise conditional ^ § 22 SIEGEL V. CHICAGO TRUST & SAVINGS BANK. 131 Illinois, 569. — 1890. Mr. Chief Justice Shope delivered tbo opinion of the Court. This was an action of assu mpsit j^ by appellee, against appellants, upon the following instrument : $300. Chicago. March 5, 1887. On July 1, 1887, we promise to pay D. Dalziel, or order, the sum of three hundred dollars, for the privilege of one framed advertising sign, size — .v — inches, one end of each of one hundred and fifty-nine street cars of the North Chicago City Railway Co., for a term of three months, from May 15, 1887. SiEGEL, Cooper and Co. — which was indorsed by Dalziel, the /payee, to appellee, for value on the day of its execution. — / ■ . / ' - ', . ' ■ The first question presented is, is this instrument negotiable ? — and this case has been answered affirmatively by the Circuit and Appellate Courts. The Appellate Court having affirmed the judg- nif'nt in favor of the plaintiff, the case is brought here by appeal, upon certificate of importance, granted by that court. It appears, that before the time when the privilege of advertising was to commence Dalziel forfeited any right he may have acquired to u.se the cars in the ma nner indic ated, and the privilege specified never was furnished appellants; and it is insisted that the instru- Trient is a simple contract, only, and that therefore the same defense, — failure o" consideration, — is available against the indorsee of the paper for value, and before due, as might be inter- posed against such paper in the hands of the payee. It is also insisted, that the instrument shows, on its face, that payment depended upon a c ondition p recedent to be performed by the paycv, and tliereffire tlie indorsee took it with notice, and by the failure of in my opinion, for the purpoaes of the question now before ua, we are amply jiiHtified in regarding simply the joint, r/i/frsi corporate, entity, and in saying that an ohligation issued in its nanir upon its general credit, and liindijig all its assets, complies with (he re<|iiiniin'nts for a negotiable instrument, even tlioiigh the pr.'ictically unitnporliiiit individual liability of members is ex- cluded." \\ 177. (M.LLE.N. C. ,1.. and W K.KNKK and I'.AUTIK'n. .1.1.. held that if the elau«e were effective it would reniler the bond non ii<.gotiable, but held, further, that the clause was void, nnil tluit the born! wa'* therefore negotiable. ftRAY anil IfAKMtT. .f.I.. concurred with IIiscock. .1.. and ^'Hiukn, .1., con- curred with HisrotK. .1.. in opinion, thus making the views in th<'se opinions the holding of the majority of the court. See note on " Vegotiability of joint stock asMociiit ion ImuhIs exem[)ting shareholders' liability " discussing thr- llibbs case in 8 Col. Law Rev. 215. See also 19 Uarv. Law Rev. GJ money at the time stipulated. Nor is there anything in the recital (^_L_- of the consideration to put tin; indorsee upon incjuiry at the time the indorsement was made. Indeed, it is clear tiiat at that time no inrpiiry would have led to notice that Dalziel would fail to comply with his contract^n the 15th of May thereafter, when the term was to com mence . AH that the recitals would give notice of was, that the note was given in consideration of an agreement on the part of the pnyoe tbnt the privilege of advertisement name.l should be enjoyed by the makers for three months, from May IT), 1887. (living to the language employed its broadest possible meaning, it cannot be construed as notice to the indorsee of the future breach of the contract by Dalziel. The presumption of law would be, that the 58 FORM It Ki^i; iur.it. Iakt. ii. contract would be (.arriod out in good faith, and tlie consideration porforniod as stipulated. The makers had j)ut their promissory note in the hands of Dalziel upon an express consideration wliich they were thereafter to receive, and for the performance of which they had seen tit to rely upon the un dertakin<;^ of Dalziel, and we are aware of no rule by which they can hold this indorsee for value, befoR^dnr"iTTid before the time of performance was to begin, charge- able with notice that the promise upon which the makers relied would not be kept and performed. (Wndc on Notice, § 94a ; Loomis V. Maury, 15 N. Y. 312; Davis v. McCready, supra.) * * * The judgment of the Appellate Court will be affirmed. Judgment affirmed.* § 22 ^CHOATE uy STEVENS. / 116 Michigan, 28. — 1898. Hooker, J. — The defendants have appealed from a judgment upon three written instruments, substantially alike, of one of which the following is a copy: "$115.00. Detroit, July 25. 1893. For value received, March 16, 1895, after date, I promise to pay to the order of T^ow's Art Tile Soda-Fountain Co., one bundled and fifteen dollars, with interest 6 per cent. The consideration of this and other notes is the soda-draught apparatus described in contract of sam(> date as this and other notes, which soda-draught apparatus (he imdersigned has received of said Ijow's Art Tile Soda-Fountain Co. Nevertheless it is understood and agreed by and between the ini'lci- signed and the said Low's Art Tile Soda-Fountain Co. that llic tifl" to the above-mentioned property does not pass to the undcrsimicd. and that, until all said notes are paid, the title to the aforesaid si.: II remain in the said Low's Art Tile Soda-Fountain Co., who shall hnvc the right, in case of nonpayment at maturity of either of said notes. without process of law, to enter and retain immediate possession of said property, wherever it may be, and remove the same. Payable at the Preston National Bank." Each bears, as an indorsement, the name of the payee. The de- fendants say that they were improperly admitted in evidence, for the reason that they are not promissoFy-Jiotes, an(Lif_the indorsements are to be treated as an assignment of the ^KoscHn action, it should have been alleged trt-the declaration ; and, further, that there was * Accord: Chase v. Behrwnn. 10 Daly (N. Y.) 344. Contra: Jnrms v. Wil- kins. 7 M. & W. 410, where the instrument read: " I undertake. to pay A. B. the sum of £6 4s., for a suit of, ordered by Daniel Page." Fletcher v. Thomp- son. 55 N. H. 308. — H. J f II- 3.] MUST BE UNCONDITIONAL. 59 no evidence that the plaintiff was the owner of the notes sued upon. Both briefs indicate that the (juestion considered most important, if not decisive ^f the case, is that of the negotiability of tlie notes. The instruments^-tcrTlTe~ena~of"fhe^ fifth line ^ — are in form promis- sory notes. If there were nothing more, they would be as perfect and complete promissory notes as it is possible to make. The writ- ing proceeds to state the consideration for said notes, which, though not essential, was harmless. {Wright v. Irwin, 33 Mich. 32.) This is followed by the statement that the parties agree that the title to the property for which the notes were given shall remain in the payee, who, in case of nonpayment at maturity of either of said notes, " may enter and retain immediate possession of the property, without process of law, wherever it may be, and remove the same." If it can be said that this writing shows a sale of the soda fountain, as contradistinguished from a contract to sell, the provisions as to title amount to no more than a chattel mortgage. Mr. Justice Harlan said in the case of Chicago Ry. Equipment Co. v. Merchants' Bank, 136 U. S. 280, 10 Sup. Ct. 1002 : " The fact that, by agreement, the title is to remain in the vendor of personal property until the notes for the purchase price are paid, does not necessarily import that the transaction was a conditional sale." In that case the court was able to find from the evidence that the parties intended to effect a sale, and that the title reserved was merely the title of a mortgagee. The distinguished jurist added that "each case must depend upon its special circnmstances." which proposition is emphasized by the ease of Harkness v. Ryssrll, 118 IT. S. 6fi3, 7 Sup. Ct. 51. where the facts were held to show a conditional, and not an absolute, sale. If we can place this construction on this transaction, — i. e. that it was a sale, — there is no difliculty in sustaining the negotin])ilitv of this note, under our own decisions. See Brooke v. Struthrrs (110 Mich. 5fi2; Wilnon v. Campbell, id. 580.) The record shows that the soda fountain was furnished under a written contract, and that these notes were given .some davs later after dcliverv, in accordance with its terms. If we were to consider the provisions of this contract, we should not hesitate to say that this was a sale with a reservation of title by way of security. As said in Brooke v. Struther.s (110 Michigan, 5(52), there are cases which hold that a contemporaneous writing may be examined to de- termine the negotiability, or non-negotiability of a note. See cases cited. While, perhaps this contract is not strictly a contemporaneous writing, it was one of the surrounding circumstances under which the notes were made. But we find it unnece.s.sarv to pass upon that question, as we think the same is implied by the notes. These being 'Through thr worriB: "With interest fi ix-r cent.' 60 FOUM REQUIRED. [ART. II. negotiable notes, a declanition upon the common counts was suffi- cient under our well-settled rule. * * * We find no error in the record, and the judgment is affirmed. The other justices concurred." § 22 WORDEN GROCER CO. v. BLANDING. 126 NOBTHWESTEBN REPORTER (MiCH.) 212. — 1910. Action on the following note: $150. Coral, Mich., April 2, 1903. Sixty (lays after date, for value received, we promise to pay to the order of Fred Smiles, one hundred and fifty dollars, at the bank of O'Donald & Scott at Howard City, Michigan, with interest at 7 per cent, per annum until paid. This note is given sutjJ MMt t o tlic jijjp roval of Fred Soules, Coral, Michigan, for a stock of groceries invoiced at $933.00 tins day received of Fred Soules; the title to the said stock of groceries to remain in said Soules until this note is fully paid. W. A. Blandino. James Blandino. There appeared on the hack of the note the indorsement " Fred Soules, Coral, Mich." Judgment for defendants, and plaintiff brings error. Blair. J. — * * * First. The principal question in this case is whether the note in question is negotiable on its face. Counsel for plaintiff contend 8 See this case reported with note in 43 L. R. A. 277. "The real purpose of this clause (namely, § 22, subd. 2), as we learn from Mr. Crawford (Crawf. An. Nog. Tnst. L., p. 12), who drafted the act, and from Judge Brewster (10 Yalo L.tw .Tour., p. 87), is to cover the case of a note which contains a statement that it is given for a chattel, which is to be the property of the owner until the note is paid. Such notes are usually regarded as negotiable (citing the Choate case and Chicago Co. v. Mcrch. Blc, 130 U. S. 268; IJoirnrd v. f^impkirts. 69 Ga. 773; Heard v. Dubuque Blc, S Neb. 10; Mntt v. Havana Bk.. 22 Hun. 3.54; Nat. Bk. of Royer.sford v. Davis, 6 Montg. Co. 99; Kimball v. Mellon, 80 Wis. 133). Several states, however, have taken the opposite view, holding that such notes are non-negotiable (citing F!loan v. McCarthy, 134 Mass. 24.5; South Bend Co. v. Paddock, 37 Kan. 510; Third Xat. Bk. v. .irmfitronff, 25 Minn. 530; Deerivg v. Thorn, 29 Minn. 120). and it was to bring the latter states into accord with the more general view and unify the law on this point that this clause was in.serted." McKeehan. 41 Am. Law Reg., N. S., p. 443. See further in Mr. McKoehan's article for a statement of the doubts which have been raised as to whether this stibdivision of the law will accomplish the above result. In tiiis connection note the following case of Worden Grocer Co. V. Blanding. See also Kimpton v. Htudcbakcr Bros. Co., 14 Idaho, 552, where a title retaining note was held non-negotiable under §§ 20 and 24 of the Negotiable Instruments Law. The eflPect, howver, of § 22, subd. 2, was not di8cus.sed. See the authorities pro and con in the notes to this case in 125 Am. St. Rep. 194, and in 14 A, & E. Ann. Cas. 1129, — C. n. 4.] MUST BE TO PAY A SUM CEKTAIN. 61 that it is, under the alleged general rule that a reservation of title does not destroy the negotiability of a note; citing 4 Am. & Eng. Ency. of Law, p. 127, and authorities cited in footnote 4. Reliance is also had upon the case of Choate y. Stevens (116 Mich. 28); as approved in }'an Den Borch v. Bowvian (138 Mich. 624). We are unable to agree to the plaintiff's contention that this case is ruled by Choate v. Stevens. So far as this record discloses, the note in question contains the entire contract of the parties, and it is obvious from a consideration of its terms that it presents the ordinary case of a conditional sale in which the title never passed to the de- fendants, and not a completed sale with a reservation of title in defendants by war of security only. {Bunday v. Cohimbns Machine Co. 143 Mich. 1"). On the other hand, the case of Choate v. Stevens was held to present a case of a completed sale with reservation of ititie by way of ggcurity only, and the judgment of the court pro- cee3ed~T5pon that basis. We are of the opinion that this case falls within the rule of Wr-igTit v. Traver (73 Mich. 493). In that case the court said: "The instrument before us has more the appear- ance of a contract of sale, with the title reserved in the property to the seller until paid for, than it has of a promissory note." And it was held that the condition contained in the note that, " if not paid when due, the property for whieli it is given shall be the prop- erty " of the payee, destroyed its character as a promissory note, and reduced it to a mere contract. The precise question involved here was before the Supreme Ju- dicial Court of Massachusetts, and it was held that an instrument otherwise a promissory note was converted into a mere contract by the condition, " Said horse to be and remain the entire and abso- lute property of the said Sloan until paid for in full by me." Sloan V. MrCarty (134 Mass. 245). We are of the opinion, therefore, that the court did not err in treating the instrument in question as non- negotiable. [On other grounds, however, the judgment was reversed and a new trial granted]. 4. Tiric St'm to nK Paid Mr\sT be Tertain. (a) What amounts to certainty generally.^ § 20 DODGE V. EMERSON. 34 Maine, 90. — 1852. Assumpsit, by the i ndorsee^ a gainst the makers of a note payable to the Protection Insurance Company or order, for "$271.25, with T Bee note in 125 Am. St, Rep. at p. 203. — f. 6v^ FORM IIKQUIIIED. (aRT. XI. 6Uch additional premium as may arise on policy No, 50, isaued at the Calais agency." Ari'LETON, J. — No principle of law is more fully estahlislied by authority and the universal concurrence of the couimercial world, than that to make a wiittcn protuise a valid promissoiy note, it iiuist be for a I'lwd and certain, iind not for a variable amount. In 1*' ranee it is so deTmTTtTiT'Tr"t)y the provisions" Of the Code Napoleon. It is I the recognized mercantile law of continental Europe In England and in this country, it has received the sanction of repeated and well-considered adjudications, {Story on Promissory Notes, § 20,) Without tliis essential requisite, a written promise, though in terms ,^-r payable to order, is to be regarded as a simple contract and not negotiable. ~~" f ' . , ' , C-'' The defendants in this ease have promised to pay two several sums; one certain and definite, the other uncertain and contingent. The defendants' liability being for both these sums, is obviously for an unascertained and ind<'tinite amount. It is insisted in argument, thai the piaintifT may abandon all claim for the additional premium, which is uncertain, and proceed only for the certain sum expressed in the contract. Undoubtedly he may take judgment for any sum less than the amount due, nnd in that mode abandon a portion of his legal claims, but that still leaves the contract in its original state, and can in no way afl'ect its legal con- struction. Tie could not erase the clause relating to the additional premium, without thereby making such an alteration in the instru- ment declared on, as would discharge the defendants. In Smith v. Nightingale (2 Stark. K. 375), the promise was to pay the payee sixty-five pounds and all other sums that may be due him, and it was claimed for the plaintiff, fo whom the interest in the con- tract had passed by indorsement, that he might disregard the hitter clause and recover on tlie certain simi set forth in his contract as indorsee, but the CourjL^decided otherwise. (Dnris v. ]Vil!,-iiison, 10 Adol. S: El. 08.) ^~~^^~^ The inquiry is made by the counsel for the phiintiff. whether tlie clause providing for the payment of nn addition;il sum, inl i-odnccd after the promise to pav the sum fixerl and eertnin, controls that sum BO as to make it in anv event uncertain. Thp amount due to the plaintiff is uncfirtain. Whether the contract is to be regarded as a promise to pay one sum, which shall be the aggregate composed of a certain and of an uncertain sum, the amount of which is to be ascertained at some subsequent time, or as a promise to pay two Bums, one fixed and the other uncertain, is perfectly immaterial. In either case there is no precise and ascertained amount due by the contract, and it cannot be regarded as a promissory note. If it was not in its origin "' ""annot be made one ~by any abandonment, II. 4.] MUST BE TO PAY A SUM CERTAIN. 63 which the plaintiff may deem it advisable to make, of an}' portion of the sum due Jiini. The contract declared on not being iu its rharar ter negotiable, the action cannot be maintained by the present plaintiff. ^ Plaintiff nnnsiiit.i ^ 20 Mr. Justice Bradley in PARSONS v. JACKSON. 99 United States, 434, 438. 440. — 1878. Each bond, on its face, certifies " that the Vicksburg, Shreveport, and Texas I^ailroad Compan y is indebte d to John Kay, or bearer, for value received, in the sura of either £225 sterling or $1,000 lawful money of the United States of America, to wit, £225 sterling if the principal and interest are payable in London, and $1,000 lawful money of the United States of America, if the principal and interest are payable in New_jLiaik_o r New Orleans," etc. This is the oliliga- tory part of tlhe instrumerit^ and is necessarily indeterminate in its character without some further designation of the place at which it is to be paid. Tvich bond, further, on its face declares that "the president of said company is authorized to fix, by his indorsement, the place of payment of the j^rincipal and interest in conformity with the terms -of this obligation." And on the back of the bonds is indorsed a pnntod blank in the following words, to wit, " T hereby agree that t he wnthin bond and th e interest coupons thereto attached shall be payable The iinfcrtninty of the amouni payable, in llio absence of the requircfl indorsement, is of itself a defect wliieh deprives these instru- ments of the char acter of ne gotiability. As they stand, they amount to a promiseTopay so many povinds. or so many dollars, — without saying which. One of the first rules in regard to negotiable paper • "$350, and nlsn such additional premium as may becomt dup on ."aid policy," iw uncertain. F'ninirr v. Wnnl, (i Cray (Ma.ss. ) 340; Marrrtt v. EquHnhlr Ins. Co., 54 Me. 537. ".$1,000. or what mi(;ht Ik- duo after deducting; all a<]vancps and expenses." is uncertain. Cushmnn v. Uni/ms. 2(t I'iek (Mass.) 132. "$300, subject tf> tlie pr<>visi»)ns contained in an an. fHlhif v. IVi/i Wir, Wis. 20r>. .$00. but .'}!50 if paid by .Ian. |s(, is uncertain. I'rnUch v. \nrlon. 12 Mich. 130. $200, award of nssessfir of daniapes to be snlilr- pff.(]_ and on payment of award note delivered up, is uncertain, and in the nature of a fienal bond. Ellrtt V. Ehrrln, 74 Iowa 507. " Pay .\ P. for OK bii. wheat in stor<' ;it three cents b( low first rpialitV wheat." is uncertain. I.rnt v. Ilrxliiintnt. I.'i f!;n b, (N. Y,) 274. — II. 64 FORM REQUIRED. [aRT. II. is that tho amount to be paid must be certain, and not be made to depend on a lontiniioni-y. (I Daniel, Nog. Inst., § 53.) And altliougli it is lield that id cerium est quod cerium reddi potest, — a maxim whieh would liave given the bonds negotiability in this instance, had the requisite indorsement been made, — yet^j^jvithout such indorsement, the uncertainty remains, and operates as an in- trinsic defect in tlie security itself. < '-^^ tr' (6) Engagement' to pay interest: contingency.* § 21 PARKER V. PLYMELL. 23 Kansas, 402. — 1880. J.iiD£LMEy.T..f-Or _defendantsjind jplaintifif appeals. ^ Brewer, J. — This was an action on two notes, and for a fore- closure of the mortgage given as securitv_for_them. The plaintiff was a bona fide holder for value, before maturity. No actual notice of any defenses was shown. The notes were n(!gotiable, unless and save as afTected by the following matters. The promise was to pay interest at twelve per cent., after maturity; and after this promise were these words: "If this note is not paid at maturity, the same shall bear twelve per cent, interest from date." As a fact, there was usury in the inception of the notes. As a conclusion of law, the court held, that by reason of the words above quoted, the purchaser took the notes, charged wi'th notice of Jhe^usury ; and this presents the sole question for our consideration,- — Clearly, these words do not destroy the negotiability of the paper. They do not leave uncertain either the fact, the time, or the amount of payment. Indeed, up to and including the maturity of the notes, they are entirely without force. They become operative only after the notes are dishonored and have ceased to be negotiable, and then there is no uncertainty in the manner or extent of their operation. They create, as it were, a penalty for non-payment at maturity, and the penalty the amount of which is definite, certain and fixed. *^ * * The judgment will b° reversed, and the case remanded with in- structions to render judgment for the full amount of principal and interest due upon the face of the papers. All the justices concurring. ^„^ »See note in 125 Am. St. Rep. at p. 204. — C. 1 Accord: Crump v. Brrdan, 07 Mich. 297; Hope v. Barker, 112 Mo. 338. An option on tbr part of the dobtor to pay interest in paper money at 7 3-10 per cent, or in gold at 6 per cent, does not destroy negotiability. Dinsmore r, Duncan, 57 N. Y. 573. — H. ri- 4.] jIUST IJE to I'AV A SUM CMiHTAlN. 65 § 21 MEREILL v. HURLEY. 6 South Dakota, 592. — 1895. Question was as to tlie negotiability of a note reading in part as follows: "we promise to pay * * * six hundred dollars, with interest thereon at the rate of seven per centum per annum, payable semi-annually. * * * jf any part of the principal is not paid at maturity, it shall bear interest at the rate of twelve per cent, per annum, payable annually ; and, if any interest remains unpaid twenty days after date, the principal shall become due and collectible at once without notice, at tbe option of the^holder." Fuller. J.— * * * Upon the authority of Hegler v. Corn- stock (1 S. D. 138), tbe respondents' counsel contend that the fore- going is not a negotiable instrument. * * * rpj^^ provision in the note in the case of Hegler v. Comstock, considered by this court and found to be sutficient to destroy its negotiability, is as follows: " With interest from date until paid at the rate of ten per cent, per annum ; eight per cent, if paid when due." While, in the opinion of the writer a prrrmissory note, otberwise unobjectionable, meets the requirements, and stands the test of negotiability, when there is no date at which th e^ exact a mount then due cannot be ascertained by inspection and computatioiTTniTs'court has placed itself in line with' a class of authorities which require such a degree of certainty that tbe exact amount to ix-como due and payable at any future time' is clearly ascertainable at the date of the note, uninfluenced by any conditions not certain of fulfillment ; ■antTTtTTr rule thus established must control cases subsequently arising, where the facts are sub- stantially the same. But, in our opinion, the note in suit is clearly distinguishable from the note in the case of IJeqcler v. Comstock, supra. That note is inherently uncertain as to the rale of interest that will be paid for the use of the money.^ TIkmv is nothing from which the payee f)r purchaser can determine with certainty the amount which he will realizr- u[)on his loan or investment, or tbe rate of in- terest that tbe note is drawing, until by reason of its dishonor it has lost every element and incident of negotiability. The same can- not be said concerning tbe note befor?^ us. If the maker of this note fails to perform his contract, he becomes absolutely liable to pay 12 per cent interest after a defiiult exists; but tbe rate of interest before^ dishonor i^ ^\TIico xu]\\^ou-A\\y f\\e(] _aL~7'-f»^ cent., and no act or omi.ssion oT^either party" can change the stipulated rate of interest, which is, in effect 7 per cent, from date till due. and 12 per cent, thereafter, and, as there seems to be no condition not certain of fulfillment, we characterize and regard the note as a negoti able instrum ent, it was said in Towne v. Rice (122 Mass. 67), that " an instrument which in its terms and form is a nego- KEOOT. INSTKUMENTfl — 5 66 FOKM KKgUIHKD. [aRT. II. liable promissory note does not lose that eharacter because it also recites that an additional rate of interest will be paid after due." {De Ilass v. Roberts, 59 Fed. 853; Crump v. lU-nlan, 97 Mich. 293.) In our opinion, ihere is no provision in the note in suit which, under tiie statute or nienaiitile law, destroys its negotiability. ^J I §21 , , SMITH V. CRANE. 33 Minnesota, 144. — 1885. Action by indorsee against maker. Court charged that " the instrument oll'ered in evidence is not a promissory note, but is sub- ject to all equities existing between the defendant and D. M. Osborne & Co., whetlier it was assigned before or after maturity." Defendant has a verdict, and plaintiff appeals from an order refusing a new trial. Berry, J. : — $100. Good Thunder. July 24, 1882... For value received on or before the first day of January, 1884, 1, or we, or either of us, promise to pay to the order of D. M. Osborne and (.'o. the sum of one hundred dollars, at the office of Gebhard and Moore, in Mankato, with interest at ten per cent, per annum from date until paid; seven, if paid when due. "~ W. J. B. Cbane. A negotiable promissory note must be certain as to amount. (Jones V Radatz, 27 Minn. 240.) It is so certain when the sum to becomo absolutely payable upon it at any given time is ascertainable upon its face. __p- Daniel, Neg. Inst., § 53; Towne v. Rice, 122 Mass. 67; Jones V. Radatz, supra.) The defendants' position is that the foregoing instrument is rendered uncertain as to amount by the interest clause, and therefore is not a negotiable promissory note.-^s to the legal effect of such a clause the authorities disagree. _Some hold that the contract reserves the higher rate of interest, with a provision for its abatement , upon a condition to be performed, and that, therefore, the difference between the two rates is not a penalty, but the contract is to be enforced according to its literal terms. The cases holding this view rest upon NichoUs v. Maynard (3 Atk. 519). (See Walniesley v. Booth, Barn. Ch. 47.S, 481 ; Bonafous v. Rybot. 3 Burr. 1370; Waller v. Long, 6 Munf. (Va.) 71.) Other authorities hold that the clause is the same in effect as if it had reserved the lower rate of interest, with a provision that if the indebtedness is not paid at maturity, interest shall run at a higher rate. (Seton v. Sladc, 7 Yes. 2r»5, and see Stanhope v. Manners, 2 Eden. 107: Brockway v. Clarl:, 6 Ohio, 45; Lonrjivorth. v. Aslcren. 15 Ohio St., 370; Brown v. Barkham, 1 P. Wms. G52.) If this be the 11. 4.] MUST BE TO PAY A SUM CERTAIN. o7 true construction of the clause, it is generally agreed that the difference between the two rates is to be treated as a penalty. (Talcott v. Mars- ton,. 3 Minn. 338, (339) ; Newell v. Houlton, 22 Minn. 19; and cases last cited.) In our opinion the view taken by the authorities last mentioned as to the legal effect of the interest clause under consideration, is the more sensible, and most in accordance with what would seem to be the real object of the parties to the contract. What the payee really wants is his money at the due date of the contract, and to secure this he holds an increase of the rate of interest over the debtor's head. In other words the increase is a penalty for the debtor's delinquency. Treating the increase as a penalty, it follows, under the decisions of the court before cited, that the note in suit will in law draw the same rate of interest before as after maturity, — that is to say, 7 per cent., — and that, therefore (whatever might be the case if the interest clause were upheld according to its literal terms), the sum absolutely payable upon the instrument at any given time is thus made certain, as the principal, and 7,per_cent. interest. * * * Order reversed and new trial directed.* (c) Engagement to -pay by stated instalments ; contingent instalments' §21 COOKE V. HORN. 29 Law Times, N. S. (Q. B.) 369. — 1873. This was an action upon a promissory note, tried before Hony- man, J., at the Yfjrk^ Siuiimcr Assizes. A verdict of 175/. 55. lOd. was found for the plaintiff, leave being reserved to the defendant to move to enter a verdict for him, on the ground that the note was not good. "^^----_ The form of the note was as follows : — £17(». - 25U\ April, 1S72. We |iro!nisf' to pay to Mossrs. M. II. ("nf)kf' and Co. 170/., with interest thcrfon at the rate of .5/. i>er cent, per annum, as IoIIowm: the tirst payment, to wit, -Ki/., or more, to he maih- on the 1st Keh. 1873, and 5/. on th«' lirst day of each month followinj/ until this note an In Conn. Mut. Life Inn. Co. v. Wcstcrhoff, 5R Neb. 379, it was held that a provision in a note that in default of the payment of the semi-annual interest instalment the whole deht will hear interest at a higher rate than it would by its terms otherwise Ix-ar, is in the nature of a p<'nalty and will not be enforced. Followed in Kendall v. Sclby, 06 Neb. 60. — C. *Sec note in 125 Am. St. Rep. at p. 204. — C. 68 FORM KKQUlllKI). [ART. II, The note was signod by tlio dofeiidant and one .Tolin Horn, since deceased. Blackbuun, J. — I do not think there should be any rule in this case. Tlie objection to the note is, that if the lirst payment were more than 40/., which tlie note provides it might be, the subse(|uent instalments and the final time of payment would be indefinite. The amount of the note, however, is certain, and any variation in the time will depend only upon the defendant. No case has been cited which is an authority against this note; and by analogy with other objections, this one, as it seems to me, ought not to prevail. T do not see why a stipulation which enables the maker of a note to reduce his liability for interest, should prevent the instrument containing it from being a promissory note. -^^^^ Quain and Archibald, J J., concurred. Rule refused. § 21 RIKER V. SPRAGUE MANUFACTURING CO. 14 Rhode Island, 402. — 1884. TiLLiNGHAST, J. — This case and the following one ^ are actions, this case against the maker and indorsers, and the following one against the indorsers only, of a large number of promissory notes, set out and declared on by the plaintiffs as negotiable, and are tried together, by agreement of parties, upon the defendant's petition for a new trial, in each case on the ground of certain alleged misrulings by the court at the jury trials, and also that the verdict was against the evidence in each'case. The questions raised by the exceptions to the rulings of the court in this case, in so far as they were relied on at the trial, are first, whether the notes declared on are negotiable; and second, whether there was a waiver by the indorsers of demand and notice, which excused the plaintiffs from proofs thereof at the trial to the jury...^ The notes are all in the following form, which is a copy of one of the notes in suit : E. No. $1,000 Providencf:, November 1st, 1873. Three years from January 1st, 1874, for value received, the A. & W. Spra.^ not negotiable, and tliis action, as against the indorsers at least, cannot be maintained ; for it is elementary law that amongst the essential requisites of a negotiable promissory note are certainty as to the_amount to be paid, and certainty as to the time when the pay- menl is to be made. First, then, are the notes certain as to the amount? They are each for a definite, fixed, and certain sum, and the payment of this sum is not subject to any un eertaint ^^or contingency. But the defendants urge that by reason of the reserved right on the part of the maker expressed in the body of the note, to pay the same before maturity, in instalments of not less than five per cent, of the principal thereof, at any time the semi-annual interest becomes payable, the amount ot the note is rendered uncertain. We fail to see how the amount to be pairPF)eoomes any less certain by reason of this reservation. Suppose part payment to be mane at one of the stated periods provided there- for: that is a payment on the principal of the note, and simply reduces said principal by so much as is paid, leaving the note as definite as to amount as it was before; so that although the amount actually due L , upon the principal of one of these notes at a given time in its existence / "Sl might be ditferent fro ni the amount due aJ —i^me other time, yet it / i would always be a fixecTlind certain amount, and the total sum payable -'^ /L/ wo uld not be, changed. The object of the law, therefore, in re(]uiring ^"^ certainty as to amf)unt as well as to time of payment, which is to give '^^ d thwe\n,'ii is sufficiently certain US tU time." In oLl'ier words, it must not depend upon any contingen?yT"as to "when A. shall marry." {Pearson v. Garrett, 4 Mod. 242; or when a certain ship shall arrive {Coolidge v. Ruggles, 15 Mass. 387; Grant v. Wood. 12 Gray, 220; Palmer v. Pratt, 2 Bing. 185) ; or when a certain suit is determined {Shelton v. Bruce, 9 Yerg. 24; see, also, Woodbury, Williams and English v. Roberts, 59 Iowa. 348.) And here the maxim, Id cerium est quod cerium reddi potest, is applicable, although perhaps it is not as to the amount. So in Cola v. Buck (7 Met. 588), it was held, Shaw, C. .1., deliver- ing the opinion of the court, that a note in the following form, namely: "For value received I promise to pay J. P., or bearer, $570. .'iO. it being for property I purchased of him in value at this date, as being payable as soon as can be realized of the above amount for the said property I have this day purchased of said P., which is to be paid in the course of the season now coming." was a negotiable promissory note, on the ground that it was payable at all events within a limited time, namely, " the coming season," and that whether that meant "harvest time or the end of the year, it must come by the mere lapse of time and that must be the ultimate limit of the time of payment." So, also, in Curtis v. Horn (58 N. H. 504), a note payable "on or before the first day of May next," was held to be negotiable. In * See Neg. Tn«t. L., § 2.3. — H. "7 -Ci^ II. 4.] MUST BE TO PAY A SUM CERTAIN. 71 delivering the opinion of the court in that case, Justice Bingham said : " It is now the common law, that where the payment is made to depend upon an event that is certain to come, and uncertain only in regard to the time when it will take place, the note or bill is negotiable. In Mattison v. Marks (31 Micli. 421), it was held that a promise to pay " on or before " a day named stated the time for payment with sufficient certainty. In that case Cooley, J., said; " The legal rights of the holder are clear and certain ; the note is due '"^ C^.^ y ^ at a time fixed, and is not due before. True, the m aker may pay , ^-^ sooner if he sh^ ll phnng|p^ hut thii npti^n^ it' "y^r^r^fl irruM be |i payment in advance_of__tlj£jeg*il liahilit\ tn pa\, and nothing more. N t)tcB - lik L LltlH a l'e common "m commercial transactions, and we are | ^^ '^ iTot aware" tnat th^ir negotiable quality is ever questioned jjCL-biisineBS dealings." (See, also, Edwards oil Btlls niitl Xotcs, 142; Story on Protiiiisory Notes, §27; Wheatlcy v. WilUuius, M. »!t \V. 533; Ernst V. Steckman, 74 Pa. St. 13; Daniel on Neg. Inst., §§ 43, 48.) Indeed, the cases have gone so far in this direction as to hold that a note payable within a limited time after the death of a person named is sufficiently certain as to time. {Cooke v. Colehan, 2 Strange, 1217; Colchan v. Cooke, Willes, 393.) So, also, it has been repeatedly held that notes payable in instalments at fixed dates are negotiable. (Van Huskirk V. Day, 32 111. 2G0; Carlon v. Keneahj, 12 M. & W. 139.) The cases of Way v. Smith (111 Mass. 523), and Stults v. Silva (no Mass. 137), cited by the defendants, seem to support their posi- tion in the case at bar; l)ut we prefer the reasoning of the court in Cuta V. Buck, ante, to that given in the subsequent case of Hubbard v. Mosely (11 Gray, 170), upon which these cases seem to rest. The case of Carlos v. Fancourt (5 Term Rep. 482), cited by the defendants, was one in which the note was made payable out of a fniHJ that should arise from the sale of certain property, and was therefore held not nc^gcjtialilc because not payable at all events. It is in harmony with nearly all of the more modern decisions upon that point, and doubtless states the law correctly. (Story on Prom. Notes, §25.) But we do not understand it to be seriously claimed in the case at bar, nor do we lliink it could be successfully claimed, that the notes are necessarily payable out of any particular fund or property; or, in other words, that the payment thereof is based u|)()m any con- tingency whatever. The notes in suit are made payable three years from January 1, 1H74. with the reserved right on the part of tlie maker to pay the flame before maturity, in part or in whole, at any time when the semi-annual interest becomes payable. They are payable :il all events within a limited time, and payment cannot be enforced until the expiration of that time; but the maker reserves an ofjtion within that limit of which he mav avnil himself if lie sees tit. Hut even this 72 FORM UKciUlUED. [ART. II. option cannol be pxerciscd fxccpl at certain pt'i-iods which are definitely exprossoii in tlie notes. We think that a note is negotiable if one certain time of payment is tixed, although the option of another time of payment be given. As the notes in suit come clearly within both the letter and spirit of the rule wliich we have stated, we decide that tlioy are negotiable promissory notes. (Omitting portion on waiver of demand and notice.] It therefore follows that the notes were properly admitted in evi- dence against the indorsers ; and, there being no other defense than that concerning the negotiability of the notes, which we have already disposed of, that it was tlie plain duty of the court to direct a verdict for the plaintiffs. The petition for a new trial must, therefore, be denied, and judgment entered on the verdict. Petition dismissed.'' r 7; -^ H y /^^' ■ ■ ' >■ (d) Engagement that on default tlie whole sum shall become due. § 21 CARLON V. KENEALY. 12 Meeson & Welsby (Exch.) 139. — 1843. Assumpsit by the indorsee against the maker of a promissory note. The declaration stated, thaFTlie defendant on, etcV made his promis- sory note in writing, and delivered the same to T^-G., and thereby promised to pay the said T. C, or order, 52Z, 10s., by two equal instal- ments, on the 1st of May, 1843, and the 1st of November, 1813, and that the whole amount, 521. lOs., should become immediately payable on default being made in payment of jthe^,-£rst instalment. The declaration then averred, that T. C' endorsed the note to the plaintiff; that the defendant made default In payment of the first instalment, and that he had not paid the amount of the note. Special demurrer, on the ground that, the second instalment on the said promissory note being made payable by way of condition and penalty immediately on default in pavment of the first instal- ment, the note was not made according to the custom of merchants with regard to inland bills Trf exchange, and consequently the title thereto, and the right of action thereon, could not pass by endorse- ment. Joinder in demurrer. Lord Abinger, C. B. — Suppose the case of a note payable ten B $50, to be paid in such instalments and at such times as the directors of said company may, from time to time assess or require, is a promissory note. White V. fimith, 77 HI. 351; (Joshen Trirnpikc Co. v. Hurtin, 9 Johns. (N. Y.) 217. But see McClelland v. Norfolk Southern R. Co.. 110 N. Y. 469, 475-6.— H. II. 4.] MUST BE TO PAY A SUM CERTAIN. 73 days after sight — there the subsequent parties do not knov when they are to be called, upon. 1 think there is no ground for saying the defendant is not liabla.___ Parke, B. — Now, to hold that actions could not be maintained upon such notes as this, would be to impugn all the established prac- tice. Almost every note payable by instalments has such a condition. It is not a contingency — it depends on the act of the maker himself; and on his default, it becomes a prdinissiuy note for the whole amount. The point was in effect determined in Oridge v. Skerborne (11 M. & W. 374). GuENEY, B., and Eolfe, B., concurred. Judgment for the plaintiff.' § 21 Mr. Justice Harlan in CHICAGO RY. CO. v. MERCHANTS' BANK. 136 United States, 2G8, 285-6. — 1889. Upon like grounds it has been held that the negotiability of the note is not affected by its being made payable on or before a named date, or in mstalnu'iits n{ a particular amount. In Arkley School Dist. V. Hall ( 1 lo L . -S. i;i.:), 140), it was held that municipal bonds, issued under a statute providing that they should be payable at the pleasure of the district at any time before due, were negotiable ; for^ the court said : " By their terms, they were payable ill U titne which must certainly arrive; the holder could not exact payment before the day fixed in the bonds ; the debtor incurred no legal lia- bility for non-payment until that day passed." In Mattison v. Marks (31 Mich. .124-)-, which was the case of a note pnyable "on or before" a day named, it was said : " True, the maker may pay sooner if he shall choose, but this option, if exercised, would be a payment in advance of the legal liability to pay, and nothing more. Notes like this are common in commercial transactions, and we are not aware that their negofiable g unlitv is ever que £.tiamul-i44-b4>RiT>psR dealings." {Cnrlon v. KrnrnVtf/\2 M. 9, N. H. 504; ffovarrf v. Simkins. fiO Georgia, 310; f'rolrrfiov /?(.<;. Co. v. /?i7/, 31 Conn. .')34, .538; Cinorflor v. Taylor. .3 Hawks, 4.^)8; Rikrr v. Sprapue Mffj. Co.. It W. I. 40-i.) [n I he last named case it was said that if the time of payment named in the note must certainly come, although the precise d«te may_nat-bc specified , it is .sufficiently certain as to time. It wrtg.Tfohsequently, held that a reservation in a note of the « Se« Clark v. Hkecn, 61 Kan. 520. — C. 74 FORM RKQUIRKD. | ART. II. right to pay it boforo iii;ituritv m iiistaliiu'iits of not less than live per cent, of the principal ;it any lime the sciiii-ainuial interest becomes payable, did not impair ils iiL'^olialjiiily ; the court observing that a note it;~7ie<;\)lial)le ii one eeriain liiiie of payment is lixed, although the option of another time of payment be given. In view of these authori- ties, as well as upon principle, we adjudge that the negotiability of the notes in suit was not affected by the provision that upon the failure of the maker to j)ay any one of the notes of the series to which those in suit belonge d, the rest shou jd become due and payable to the holder. (e) Engagement to pay exchange^ §21 HASTINGS v. THOMPSON. 54 Minnesota, 184. — 1893. Action by indorsee against maker to recover on pro missory notes.. Defendant answered setting iip a good defense, unless iKfi^ were negotiable and in the hands of a bona fidejn d o r see-io r value. Plain- tiff demurred, and the sole question presented was, whether the inser- tion in the notes of the words, " with current exchange on New York City," rendered the notes non-uegofiable and open to the defense. It was admitted that the plaintilf was a bo7ia fide holder fw^ value before maturity. The trial court overrule ^e demurrer -•J and plaintiff appeals. \ ■ . / > ,-^ ^(-/^.^.c, Mitchell, J. — The\ only point raised on this appeal is whether the instruments sued on are promissory_notes. for, if they are, they are unquestionably negotiable under the law juerchant. They are promises to pay specified sums of money in St. Paul, " with current exchange on New York City ; " and the only question is whether this provision as to exchange renders the sums required to discharge them uncertain, within the meaning of the faniiliar rule that one of the essential qualities of a promissory note is that the amount to be paid nnist be fixed and certain and TTot contingent. In the definitions of a promissory note or l)ill of excTiange' Tf is generally, if not always, stated that the amount necessary to discharge it must be ascertainable from the face of the paper itself, without having to refer to any extrinsic evidence. Construing this definition literally, it must be admitted that the instruments in question do not strictly fall within it, for, of course, extrinsic evidence must be resorted to in order to ascertain the rate of exchange at a given time between two places. Upon examination of the reports and text-books it is surprising T See note in 125 Am. St. Rep. at p. 212. — C, II. 4.] MUST BE TO PAY A SUM CERTAIN. • 75 how little direct authority of any value is to be found as to the effect of the addition of such a provision to an instrument for the payment of money. Daniel, Randolph, and Tiedeman state in general that such ^Tprovision does not affect the commercial or negotiable character of the paper, but none of them discuss it at any length, and all of them Jreat of the question as if it only went to the negotiability of the instruments, whereas the real question lies back of that, and is whether they are proniissorjiJaates'or bill? of exchange at alL (Tied. Com. Paper, ^^KdJ'^aml. Com. Paper, §200; Daniel, Neg. Inst., § 54.) We have found no English case directly in point, and none bearing on the question, except Pollard v. Harries (3 Bos. & P. 335), where such an instrument was declared on as a promissory note. If the question was authoritatively settled in the leading com- mercial states of the Union or in the federal courts, we would be inclined, for the sake of uniformity, to follow their decisions; but we have been unable to find that the Supreme Court of tbe United States, or of either Massachusetts, New York, or Pennsylvania, has ever passedjipon the question. The only cases, state, federal, or colonial, which we have found which may be considered as having passed on the question, are the following, which may be classified thus: That such instruments are not promissory notes: (Lowe v. Bliss, 24 111. 168; Read v. McNulty, 12 Kich. Law, 445; Carroll Co. Sav. Bank v. Sirother, 28 S. C. 504, G S. E. Rep. 313; Palmer v. Falmcsioclc, 9 Up. Can. C. P. 172; Saltan v. Stevenson, 23 Up. Can. C. P. 503; Phila- delphia Bank v. Newkirk, 2 Miles, 442 ; New Windsor Bank v. Bynum, 84 N. C. 24; Russell v. Russell, 1 MacAr. 263; Fiizharris v. Lcggatt, 10 Mo. App. 527; Hughilt v. Johnson, 28 Fed. Rep. 865; Windsor Sav. Bank v. McMahon, 38 Fed. Rep. 283). That such instruments are promissory notes: [Smilh v. Kendall, 9 Mich. 242; Johnson v. Frishie, 15 Mich. 286 ; LeqgrU. v. Jones, 10 Wis. 35 ; Morgan v. Edwards, 53 Wis. 599, (11 N W. R(-p. 21) ; Bradley v. LiU, 4 Bliss, 473). In very few r»f Ihose cases is the question discussed at any length, or considered on principlf. Some of them were docicled by courts of inferior jurisdiction, anrj in olliers the renuirks of the court were^oAt7er. Many f)f those which hold that such inslniinents are not promissoty notes rest, without discussion, upon ;i si till literal con- struction of the rnlf that tbe sum to l)e paid must appear from the face of the paper without resort to extrinsic evidence. About tlie only cases where the question is discussed a I ;iny length upon principle or authority are Smith v. Kendall. Bradley v. /////, Morgan v. Edwards, and Windsor SaV/Brnhh-Y-. Mr M ali on , supra. In view of this state of tbe decisions, while in mere numbers tlie decided weight of authf)rity may be in favor of the eonlention of the defendant, we feel at liberty to decide the (piestion in the way we deem most in accordance with principle and business usages, and FORM REQUIRED. [art. II. in accordance with the rule which, in view of such usages, the lead- ing courts of thi' couiiLn arc nio.sl. liki'ly Id linally settle down upon. The fcllowiug arc, in hrief the consiilerations which have led us to the conclusion tiiat such instruments ought to he held to he promis- sory notes under the law merchant : 1. The reason and purpose of the rule that the sum to l)e paid must be cfr twin i s that the parties to the instrurrietit may know the amount nct'cssary to diPcbarui''Trr~wTFhoTrt * tnv'osfigating facfs nof wtTtTTTr+hT'''!jcii('ral kimw Inl^c of rvcryone, and which may he suhjoct to mM|-i' (M- li -s ui)( erf ;i iiil w (M' nnu'c or less under the ijifIuen£.C-_ar control of oiii' or nllicr of flic [lai'lics to Ihc iii'^trum«»t^ The pro- V IS ion for tli<> p:iviii(Mit of tin- cnrrcut rate of exchange between the place of payment and some other place is not within the reason of this rule, or subject to the evils or inconveniences which it was designed to prevent. While the rate of exchange is not always the same, and while it is technically true that resort must be had to extrinsic evidence to ascertain what it is, yet the current rate of exchange between two places at a particular date is a matter of co m- mon ^oii iaierci^l knowledg e, or at least easily ascerFalh'aBTeljy any one, so that the parties can always, without difficulty, ascertain the exact amount necessary to discharge the paper. It seems to us that within the spirit of the rule requiring precision in the amount to he paid a provision for the payment of the current rate of exchange in addition to the principal amount named does not introduce such an element of uncertainty as deprives the instrument of the essential qualities of a promissory note. A provision for the payment of exchange is very different from one for the payment Of reasonable attorneys' fees^iti^casc of suit, as in Jor?r,s v. Eadatz (27 Minn. 240, 6 N. W. Eep. 800). The latter introduces an element of uncertainty very different both in kind and degree from that introduced by the former. Not only is the amount of the attorneys' fees incapable of either easy or definite ascertainment, but the amount of it is more or less under the control of the holder of the instrument. More- over, such a provision has never been considered in business circles as properly ancillary or incidental to commercial paper, or any part of its legitimate " luggage." 2. The law merchant, including the law of negotiable paper, is founded upon, and is the creature of, commennal usage and custom. Custom and usage have really made thelir^^and court?, in fheitlJcIeGift — ions, merel,julefcUTe^iL The.Taw^l)T rTego t i a 1 1 1 c |>:ipcr is uol only founded on commercial usage, but is designed to be in aid of trade and com- merce. Its rules should, therefore, be construed with reference to and in harmony with general business usages, and, as far as possible, with the common understanding in commercial circles. This was the Tery purpose of the statute of Anne placing promissory notes on the /■^ ^ II. 4.] MUST BE TO PAY A SUM CERTAIN. 77 same footing as bills of exchange, and thus setting at rest a question upon which there had been some difference of opinion in the courts. Now, we think we are safe in saying, and justified in taking notice of the fact, that if bankers or other business men accustomed to dealing in commercial paper were asked whether such an instrument is a promissory note, and whether they would deal with it as negoti- able paper, the answers would, in almost every instance, be unhesitat- ingly in the affirmative. We have no doub t but that thi s is the way in which such paper is genci*.iHv h iuKuil LTpon and Ij-pafQ/TTiV oommercial arid (Mlier Dusiness circles; and, if so, the courts should, as far as pQgsibJ£.r-Hwky Iheir decisions to "inform to this general custom and understanding. We recognize the importance of simplicity arf'd certainty in the terms and conditions of cojauiiecG^ial paper; and appreciate the ol)jections to permitting it to be loaded down with'*^ /- unnecessary " luggage," but we cannot see, under all the circum- -^ stances, and especially in view of what we believe to be the commercial usage, that any practical evil will result from permitting the addi- tion of such a provision for the payment of current exchanKc on the principal amount. JNor are we disposed, as a rule, to extencTTlie quality of negoirable paper to contracts for the payment of money beyond the strict limits of the already established rules of law; but to exclude from that category paper like that under consideration would be to exclude the very class of paper which ought to be hold negotiable, if any promissory notes ought to be so held,- — paper given and taken in commercial transactions, properly so called ; for rarely, if ever, would a provision for exchange be incx)rporated in any other. j ^i J^JLo^"'-^'^ l/f ,yVJW^S ^ fr"^ / fP^Orderr reversed." Application for ro-arrrimiont) dcnifil July 2iV. 1S93.- — '. u : « See othor cases, pro and con, cited in Haslach v. Wolf, 66 Neb. 600, and in th<' note to this case in 1 A. & E. Ann. (as. 385. "The whole matter turns upon the r|uestion whotlier sucli a stiimlation renders the amount iineertain, so as to destroy one of tlie essential elements of no;;oti ability. While it is trne that in a sense an nneortain element is imported into the instrument by the apreemeiit to pay exchan^'e, the diHicuKy is more spr-eious than real. Rusiness is carried on more or less in subordina- tion to eertain finanfial centres, to which and from which money is constantly flowinp. When a note is made [)ayable in Lincoln with riiicajio exchan-re, the practical biisinesa effect is the same as if it had been |iaynble in Chicapo, but, for convenience, the parties had afrn-ed that it miplit be paid at Lincoln, with the cost of transmission. . . . Looked at in this way, the exchange liecomes a mere incident, not afTectinp the amount of the debt itself, and anaIof,'oiis to fluch matters as attorneys' fees and costs of collection, which do nf)t affect negotiability." I'ound, C, in Haslach v. Wolf, 66 Neb. 600, 60L — C. 78 FOHM HEQUIRED. [aRT. 11. (/) Engagement to pay costs of collection or attorney's fees.* § 21 STAPLETON v. LOUISVILLK HANKING CO. 95 Georcia. 802. — 18!)5. Simmons, C. J. — 'Vhv rontiolliii^^ (luostion in this case is, whether a promissory note is reiulLMcd non-ncgotiablo by a stipulation to pay " all costs and ton per cent, on amount for counsel fees, if placed in the han^s of an attorney for suit." There is no prior decision of the court upon U]^^ question, and the decisions of other courts as to the effect of sucii stipulations are conflicting. We think the better view, and the one su[)ported by the weight of authority, is that such a stipulation does not impair the negotiable character of the paper. Our code defines a promissory note to be " a written promise made by one or more to pay to another, or order, or bearer, at a specified time, a specific amount of money, or other articles of value." (§ 2774.) It is defined by Story to be " a written promise by one person to pay to another person therein named, or order, a fixed sum of money, at all events and at a specified time, or at a time which must certainly arrive." {Story, Prom. Notes, p. 2). The note in question con- forms to all these requirements. It is certain as to the payee, as to the time of payment, and as to the amount. The stipulation as to costs and attorney's fees is not a part of the main engagement, but relates to the remedy in case of failure to comply with the contract, and is in- tended to compensate for the expense resulting from its breach. It does not become effective unless there is a failure to pay at the time specified ; and it cannot then affect its negotiability, for negotiability in the full commercial se nse cea ses at maturity. ,As has been well said by Mr. Daniel in his work^oiT Neg. Iiisli'illncnts (vol. 1, § 62a, 4th ed.), "it seems paradoxical to hold that fnstruments evidently framed as bills and notes are not negotiable during their currency, be- cause when they cease to be current they contain a stipulation to defray the expenses of collection." So far from tending to check the cir- culation of the paper, such a provision adds to its value and thus renders it more available for commercial purposes. In support of these views, see the followTng authorities: (1 Daniel, Neg. Inst., 4th ed. § 62 ct seq.; 1 Randolph, Com. Paper, §§ 205, 206; Parsons, Bills and Notes, 146, 147; Tierhman, Com. Pap., § 28& ; 2 Am. & Evfj. Enr. of Law, 324; Montr/omrry v. Crossthnmii, ?)0 Ala. 553; Farmers' Nat. Bank v. Sntton Mfg. Co.. 6 IT. S. Appeals, 312, 331; Shenandoah Nat. Bank v. Marsh, 89 Iowa, 273; Second Nat. Bank v. Anglin, 6 Wash. 403; Dorsey v. Wolff, 142 111. 589, affirming 38 111. App. 305; Stoneman v. Pyle, 35 Ind. 103; Prortor v. Baldwin, 82 Ind. 370; Gaar v. Louisville Banking 9 See note in 125 Am. St. Rep. at p. 207. — C. II 4.] MUST BE TO PAY A SUM CERTAIN. 79 Co., 11 Bush (Ky.), 180; Seion v. Scovill, 18 Kans. 433; Nick- erson v. Sheldon, 33 111. 373; Dietrich v. Bayhi, 23 La. Ann. 767; Trader v. Chidester, 41 Ark. 242 ; Farmers' Nat. Bank v. Rasmussen, 1 Dak. 60; Heard v. Dubuque Bank, 8 Neb. 10; Howenstein v. Barnes, r> Dillon, 482; Bank of Commerce v. Fuqua, 11 Montana, 285. See also Towne v BtVe, 122 Mass. 67 ; Arnold v. Boc^ Bivsr FaZ/ey R. Co., 5 Duer, 207; Adams v. Addington, 16 Fed. Rep. 89; Hughitt v. Jo/jn- son, 28 Fed. Rep. 865.' It was complained that the court erred in directing the jury to find in favor of the plaintiff the amount of attorney's fees stipulated in the note, in addition to the principal and interest, the objection being that there was no evidence to show that the note had ever been placed in an attorney's hands for collection. We think the fact that the plaintiff was represented in this action by an attorney was sufficient, without further evidence, to authorize the court to so instruct the jury. (See No. Atchison Bank v. Gay, 114 Mo. 203.) Judgment aflBrmed. § 21 MAYNARD t;. MIER. 85 Indiana, 317. — 1882. Woods, C. J. — Appeal from a jud^Mncnt on a promissory note, a copy of which was filed with the complaint. It contains a promise in the ordinary form, to pay a sum named, "with interest at the 1 Contm : Fxri^i Nat. Jik. v. Bahcock, 94 Cal. Ofi; Marylnnd FertiJizinp Co. v. Xnnman. fiO Md. .584; Mtman v. Rittershnfcr, 08 Mich. 287; -fonc! v. Rndnfz, 27 .Minn 240; AtrVoy v. Green, 8.3 Mo. 626; Dccorah rir.it Nat. Bk. v. Lauflh- lin. 4 N. Dak. 391; Woods v. North, 84 Pa. St. 407; Stillwater I'^irst Nat. Bk. V. Lamrn. 60 Wis. 200.— II. fSee note in 4 A. & E. Ann. Tas. 203, onlitlcd " Np<;o(iahiIity of note con- taininp stipulation for attorney's fees and costs of collection." givinp a larpe niiniher of autlioritii's pro and con. In Firat Sat. Hank v. Miller, 13fl Wis. 126, Mar.siiam,. .1., said that the Nf;r"tia''le InKtnirticnts Law "was considerately df ">i^ncd to supersede the judicial rule in Morf/an v. EdwardK. 53 Wis. Sflft; Fivfit Nat. Bk. v. Lnrsen, 60 Wis. 206; I'etrrfton v. Ntouf/liton St. Bk.. 78 Wi.s. 113; W. W. Kimball Co. V. Mellrn, 80 Wis. 133, and similar cases. . . . Wlien the Nenotiable Instru- ments Law was enacted a conflict of judicial authority on the subject in hand and others existed. In some states a clause similar to that here was held to render the amount payable on the instrument uncertain and to destroy its nepotiability. In many other states the obligation as to costs of collection waa held to Ik coni iuj/cnt iipnn collection after dishonor, to appertain to the remedy for a breach of the primary contract, not to the debt itself, and, there- fore, not to render the amount uncertain, militatinp against nefrotiability. To supersede the conflict by a general rule the provision of the Negotiable Instr\iment8 Htatute quoted was incorporat«d therein." P. 127. — C.J 80 FORM KEQUIRED. [ART. II. rate of ten per cent., after maturity, and ten per cent, attorney's fees." It is claimed tliat the court erred in overruling' the defendants' demurrer to tlie complaint. The entire argument on the point is in these words: "The complaint is not sufficient in this, it is not detinite and certain, nrul the copy of the note shows that the agree- ment (is) to pay ten per cent, aliorney's fees, which we insist is void, and that, therefoi-c. the note is usurious as to that amount, arul should be held void, and the judgment reversed." If the stipulatfon for attorney's fees were conceded to be void the validity of the note would not be otherwise affected, and conse- quently the deniurrer was properly overruled. Judgment affirmed, with costs.^ - Tliere are three views as to the validity of the stipulation as to attorney's fec«: (1) The stipulation is valid. Bouie v. Hall. 0!) Md. 433; Dorsey v. Wolff, 142 Til. 5S9. (2) The stipulation is void. RuUock v. Taylor, 30 Mich. 137; Rixey v. I'carre, 89 Va. 113; Security Co. v. Eycr, 36 Neb. 507; Witherspoon v. ilusselman, 14 Bush (Ky. ). 214. (3) The stipulation to pay such fees as the court ailjudges reasonable, is valid, but a stipulation for a. specific sum is void. Levens v. Brigp.i. 21 Ore. 333. Most courts hold that the amount stipulated is not conclusive, but there must be proof of the actual value of the services. First Nat. Bank v. Larson, 60 Wis. 206; (loss v. Bowen, 104 Ind. 207. There are four distinct holdings as to the result upon the negotiability of a bill or note of the insertion of a stipulation as to payment of attorney's fees: (1) The stipulation is valid and enforceable, and does not affect the negotia- bility of the instrument. Dorsey v. Wolff, 142 111. 58!). (2) The stipulation is valid and enforceable, but it destroys the negotiability of the instrument. Jones V. Radatz, 27 Minn. 240; Johnston Harvester Co. v. Clark, 30 Minn. 308; First yat. Bk. v. harsen. 60 Wis. 206. (3) The stipulation is void, and as it may therefore be disregarded, it does not affect the negotiability of the instru- ment, (lilmore v. Hirst, 56 Kans. 626; Chandler v. Kennedy, 8 S. Dak. 56. (4) The stipulation is void, but nevertheless it destroys the negotiability of the instrument. Bulloek v. Taylor. 30 Mich. 137; Altman v. Rittershofer, 68 Mich. 287; Tinsley v. Hoskivs. Ill N. C. 340; New Windsor First Nat. Bk. v. Bynum, 84 N. C. 24. It is difJicuIt to support this view upon principle. — H. [A note contained a provision to paj' " ten per centum attorney's fees in case of collection by suit." Held, the note was negotiable but the provision unenforceable as being a penalty. Fields v. Fields, 105 Va. 714, citing Rixey V. f'earre Bros, and Co., 89 Va. 113. In Elmore v. Ruqely. 107 S. W. (Tex. Ct. Civ. App.) 151, it was held that such a ])rovision is a contract of indemnity and not for liquidated damages, so that the maker is only liable to the holder for the amount of attorney's fees actually contracted for, or, in the absence of a special contract for fees, for the reasonable value of the services rendered. In a note to the Fields case in 7 Col. Law Rev. 67, it is said: "The two grounds for holding the stipulation invalid are usury and penalty. . . . The N. Y. Negotiable Instruments Law. while declaring that siich a note is negotiable, § 21, is silent as to the validity of such a stipulation." — C] 11. o.j must be to pay money. ^ 81 5. Must Be Payable in Money; But Particular Kind May be Designated. (a) Payment tniist be in money. § 20 FIPST XATJOXAL BAXK OF BROOKLYN v. SLETTE. 67 Minnesota, 425. — 1897. Action on an instrument set out in the opinion. Verdict for pliiintiff. From nn order denying a new trial, defendants appeal.- Start. C". .1. — This action is based upon an obligation, which is siib=tantinllv in the.se words: $].r>TA. H.\L.STAD, Minn., Jiih/ 26. 1894. For value ipceived, we pionii=e to pay to the order of the John Good Cordage ami Machine ( ompany the .sum of .sixteen hundred and seventy-three dollars, a> fdllows: Payable by New York or Chicago exeliange, $560. Nov. 15th, 1894; $560. Dec. l-t."l894: $560, Dec. 15th, 1894. Without interest, if paid as due; if not. then legal rate from date until paid. The only (piestion on this appeal is whether this is a negotiable instrument under the law merchant. It is al)Solutely essential, in order to constitute a promissory note under the law merchant, that the promise be to pay in money. If this intrument can be con- strued ns an absolute promise to pay in money $1,673, with exchange, it is negotiable; otherwise, not. {Hastinqs v. Thompson, 54 Minn. 184. r,5 .\. W. 9(JH.) The case oi Bradley v. Lill (4 Biss. 473, Fed. Cas. .\o. 1,783), is the only one to which our attention has been called, wilt-re the language of the instrument was similar to the one under consideration. In the case referred to the note was made in Chicago, and was payable at New York, "in" e.vchange; and it was held that the note was negotiable, upon the ground that the promise was to pay llie sum named in tlie note, "with" e.vchange, which was a mere incident to the debt. In the case at bar the note is not payable at any |)articiilar place, and the promise is, not to pay ft given number of dollars in money "with" — that is, plus — the current rate of exeliange, but it is to pay the sum named in the note by New \in-k or Chicago exchange. The holder of this instrument cannot demand in payment thereof $l.fi73 in money, plus the cost fif exchange; for the maker is not bound to discharge his obligation except by means of inbuul bills on New York or Chicago. _ Nor can the maker tender in p;«^•■n..Ilt .*) r;*'! i^ m oney, wit h the cn'--t of change; for his prom imnf by inbiiiil In IN, wliic Tk^ nui3T jTiirchaso in flii iii..'i-i. llic instrument, then, is not pay- 'Jlfllf trr" Ilinill'V, nflfl IsT llni. inn-, not a promissory note, within the law merchant. (Enstnn v. Hydr. 13 Minn. 90 (C.il. 83); Jones v. Fnln;. 4 Mass. 'M5; Irvine v. Lowry. \A Pet. 203; 1 DanirL Neg. Inst., §§ 55, 56; Tied. Com. Paper, § 29; 1 Rand. Com. Paper, § 90). NEOOT. INBTRDIIENTB — 6 -/ ,u 82 FORM IlEQUIRED, [aKI'. II. lu roachiug this couclusion wo havf not Ix'cn uiunindful of tii«; fact that, iu commercial usage, bills of txrliaiii,^^ arc regarded as substi- tutes for moucv ; but this usage cannot make them sucli. Order reversed, and a uew trial granted.' ■^1 ^i-J-i (b) What constitules current money.* LAIRD V. STATE. 61 Maryland, 309. — 1883. Robinson, J., delivered the opinion of the Court Tlie plaintiff in error was indicted for forging and uttering a hill of exchange, which is set out in the indictment as follows: SiwUiNTON. Va., September 4, 1882. Aufiusta N.itiona! Bank, pay to .T. Edwin Laird or bearer, tlie sum of seventy-five dollars ($75) current funds. G. G. Goocn. Correct, \\ . V. Tarns. Cashier. [And endorsed] J. Edwin Laird. A demurrer was filed to the indictment, which was overruled, and the prisoner was tried before the court and found guilty. Motions for new trial, and to quash the indictment were made, and both overruled, and the prisoner was sentenced to the penitentiary for five years. The record comes before us on petition setting forth the points and questions, by tlie decision of which the plaintiff in error feels aggrieved. * * * In the next place it is argued, that the paper writing set forth in the indictment, is not a bill of exchange because it is payable " in current funds." Bills of exchange pass by delivery or indorsement, and it is essential that the instrument purporting to be one, should be payable in money. A direction to pay out of certain funds, or notes of a particular hnnh, or the currency of a particular place or state, have been held to destroy its negotiability, because the medium of payment is fliirtuatinp- and jinr-f^rfnin The many and conflicting decisions on tliis subject, willbe~TnTTnd collected in 1 Daniel on Nefj. Inst., sees. 01-3, and note. All the cases, however, agree, if the in- 3 "A B has deposited in this bank .$2,180 in cks., payable to the order of him- , eclf, on the return of this certificate properly indorsed." is not nej»otiable because it does not appear that the bank promises to pay in money. — First yational Rank of Farmersville v. Greenville }iational Bank. 84 Tex. 40. An order " to pay rents as they become due " is not a bill of exchange because (1) it is payable out of a particular fund, and (2) it is not payable in money on its face. " It is to pay rents, which may be due in wheat, fowls, or ser- vices, as well as money." — Morton v. Nnylor. 1 Hill (N. Y.),583 (1841). — H. * See Nejj. Inst. L.. § 2.5. suV)sect. .5. — H. [See note in 125 Am. St. Rep. at p. 197. — C.J II. 6.] MUST BE TO PAt MONEY. 83 strument be payable in current money, it is sufficient, because legal tender money will be •presumed to be intended. The words " cur- rent funds," as used in the paper before us, mean nothing more or less than " current money," and so construed the instrument was negotiable. * * * 1^,^ li^*^^ ------^ ^ ^.^..^^^.^jL^ ^ y^ Judgment affirmed. § 25 Mr. Ji stt'ceFieA in BULL v. BANK OF KASSON. 123 United St.^tes, 105, 112. — 1887. The certificate of division of opinion presents to us only one ques- tion, and yet, to answer that correctly, we must consider whether the negotiability of the instruments in suit was affected by the fact that they were payable " in current funds." Undoubtedly it is the law, that to be negotiableT-ff^bili, promissory note or check, must be payable in money, or whatever is current as such by the law of the country^liere the instrument is drawn or payable. There are numerous cases where a designation of the payment of such instru- ments in notes of particular banks or associations, or in paper not cur- rent as money, has been held to destroy their negotiability. (Irvine V. Lowry. h' Pet. 293; Miller v. Ansfen, 13 TTow. 218, 228). But within a few years, commencing with the first issue in this country of notes declared to have the quality of legal tender, it has been a common practice of drawers of bills of exchange or checks, or — makers of promissory notes, to indicate whether the same are to be ' paid in gold or silver, or in such notes; and the term "current ^^Oy^ funds" has been used to designate any of these, all being current <-^ and declared, by positive enactment, to be legal tender. It was ^^ intended to cover whatever was receivable aTTrTcurrent by law as- * money, whether in the form of notes or coin. Thus construed, we do not think the negotiability of the paper in (|iiestion was impaired by the in.sertion of these words.'" ^ 5 f'lRBFNT Fi;ni)H. — Tn the followitif; cases " currpnt funds" was held the fipiivalpnt of "nionr-y:" />«';/ v. Ilolbroak, 4 Ala. 88; I'hornix Inn. Co. V. Mlrn, 11 Mich. 501; H. r., 13 Midi. 101; White v. Rirhmoud. 10 Oli. 0; Ihtizrtifi' Sat. Hk. v. Brown, 45 OJi. St. 3» ; Telford v. I'ntton, 144 III. Oil. In the follnwiiii.' caHCH " fiirrf-nt funds" was held not tlip ('(|uival('nt f)f " money:" Lafayrtte Itnnk v. Ifiiif/il, r>l Ind. 303; John.ion v. Hrndrr.'ion, 70 N. Car. 227; Wrifiht V. Hart, 44 Pa. St. 454; Trxa.s Land, etc., Co. v. Carroll, 03 'iVx. 48; I'latt V. Flauk Co. Hank, 17 Wis. 230. Currency. In tlie fojlowinj; casfs " nurrency " was held the fqtiivalcnt of nioney: Sutft v. U/ii/iin/, 20 III. 144; Plirlpit v. 7'oirn. 14 Mich. 374; Mitrlirll 1). HeuHt, 13 MisH. 301; Puiiau v. Cnniphrll, 1 Oh. 115; Howe v. Ilnrtnr.ss. 11 Oh. St. 449; Hutlrr v. I'ninr, H Minn. 324; Frank v. Wr.t.trls, 04 N. Y. 155 ("paper rurreney," when there is a le)»al tender paper currency); h'lnuhrr v. BiggerstafJ, 47 VVis. 551; Wright v. Morgan (Tex.), 37 S. W. 627. In the fol- 84 FOUM KE(^U1KED. [aRT. II. § 25 Miller. .)., in rAUDl^^E v. FISH. (iO Nkw Vouk, '2(iS.- 1H75. It is further urgud thai the inslruuiL'ut lu quesliuu is uot com- mercial paper for the reason that it is made payable in current bank mjt*»~insteail of iiutiiey. Tlio authorities in this state, 1 tliink, are adverse to this position. In Kvith v. Jones (9 Johns. 1^0), the note upon which the action was brought was declared to be payable in " York- State I)ills or specie," and it was said that it " is the same thing as being made payable in lawful current money of the state, for the bills mentioned mean bank paper, which is here in con- formity with common usage and common understanding regarded as cash." In Jiidali v. Harris (19 Johns. 144), a promissory note payable " in bank notes current in the city of New York," was held to be a negotiable note within the statute. Tt is said that these \ f decisions were placed upon" the ground that the court could take judicial notice that such bills are equivalent to specie. The same rule may well apply here, as " current bank~notes " are notes or bills used in general circulation as money, and constituted the general currency of the country recognized by law at the time and place where payment was to be made and demanded. These notes which were in circulation when the certificate was given and payment demanded, were almost entirely of one kind authorized by the gov- ernment as currency. They thus being lawful money of the United States, the courts were bound to take judicial no tice of tha t fact. The cases of Lieher v. Goodrich (5 Cow. 186), and Thompson v. Sloan (23 Wend. 77), are not in conflict with Heath v. Jones and Judah v. Har- ris (supra). Although the doctrine of the latter was doubted in 3 Kent's Tommentaries. pp. 75-76, and in some of the state courts it is held that a note payable in current funds is not negotiable, it is safe ^^ to follow the adjudications in this state as settling the law npon the subject. Even although a demand was necessary upon the bank X- -f < J^v'lowinw cases "currency" was hold not the equivalent of "money:" Mobile 1^*- r Bank v. Brown. 42 Ala. 108; Dillard v. Evans, 4 Ark. 175; Rindskoff v. Bar- f rctt, 11 Iowa, 172; Huse v. Hamblin, 29 Iowa, 501; Chambers v. George, 5 Litt. (Ky.) 3.35; (otherwise of "Kentucky currency," Ijumjiton v. Ilagf/ard, 3 Monr. (Ky.) 14!)) ; Farirell v. Krnnett, 7 Mo. 595; IJicklin v. Tucker, 2 Yerg. (Tenn.) 448; f''ord v. Mitchell, 15 Wis. 334. — H. [" We are aware that many courts have held that such a clause [payable ' in current funds '] does not require payment in money, and destroys the negotiability of the instrument. The cases so holding are either cases arising at a time when many forms of bank notes and bills were in use. varying in their values, or cases decided upon tlie authority of that class without regard to changed conditions. With regard to existing conditions, we tliink the Supreme T'ourt of the T'nited States has declared the law correctlj' in Bull v. Bank of Kasson." Irvine, C, in Kirkwood v. First Nat. Bank, 40 Neb. 484, »t p. 492. — C] II. 5.] MUST BE TO PAY MONEY. 85 before an action could be brought against it on the instrument, thu3 distinguishing the case from that of a promissory note, where th e maker may be ^u cd with '^nf ^"y ^'t^FUMnJ i dn npf t|^inif th at tins fact^tsiies UU'iiy ilie negotiable charactep- of the instrument unBer the decisions cited, and it must, therefore, be considered as possess- ing all the features of a negotiable promissory note.° | §25 CHEYSLER v. RENOIS. 43 New York, 209. — 1870. Action by indorsee on a draft for 1,205 gold dollars. Judgment for plaintiff. Allen, J. — [AtTer disposing of another matter]. Tlie bill in suit was drawn in Montreal on a business firm at Whitehall in this state, payable in New York in dollars, the money of account of the state, and in gold dollars, a coin authorized by Congress, and made a legal tender in the payment of debt. It was, therefore, negotiable as a bill of exchange. ( { K. S., 611, § 1 ; 9 U. S. Stat, at Large, 397.) It is enough that~lt is for the payment of money and money only, i cash and not something that may differ in value from cash. (Leiher V. Goodrich, 5 Cow. 180.) It is agreed that bills payable in mer- chandise or anything but money are not good bills of exchange, but the ca.ses are not agreed in all respects as to what shall be deemed money. In this state it is held that a promissory note, payable " in bank notes current in the city of New York " or " in New York state bills or specie," are negotiable notes within the statutes (Kcifh V. .Jours, !) Johns, 120; Jiidali v. llarris, 19 Johns. 144), while a note payable ''in Canada money " is jiot_ji_iie^iable note. {Thompson V. Sloan, 23 Wend. 71.) The first cases were decided upon the ground that the court might take judicial nolice that bank notes, current in the city of New York, were customarily considered and « Bank Notes. TIip followitiR wore lu-ld P(|uivalpnt to " money:" " The bank nfitf'M fiirrr-nf in thp pify of Now York." Juflahv. flarris. in.Tolms. (N. Y.) 14^. " fiirrent hank notos." I'tirdrr v. Fish, stuprn ; Flrminq v. \'a//. 1 Tex. 240. "(iirrpnt hank notfs of ( inciiuiiit i." Murris v. Milliards, 1 Oh. IHil; Sirrrllanil V. f'rriffh. If) Oil. I IH. Thf folIf)\vinf; wt-ro hohl not pqiiivalont to " monoy." " rurrrnt hank |)apfT." Cnmphell v. WriHtrr, 1 I.itt. (Ky.) 30. " Notos rcpoivahlo in hank." lirrrlin ri(If/r V. h'nIlH, 4 Monr. (Ky.) fi.'i.'i. "Current notes of North Carolina." Wnrrrn v. liroun, CA N. Car. .181. "Current hank notes." dray v. Dcmalior, 4 Watts. (F'a.) 400; (himblr v. llntlon, IVck (Trnn.). 130; Kirkpatrirk v. MrCuUnufih. 3 Ilnmph. (Tenn.) 171; MrDoirrll v. KrIIrr, 4 Coldw. (Tenn.) 25H. "Current hills." CoIHhh v. Lincoln. 11 Vt. 208. — M. [See note in 4 A. & E. Ann. Cas. at p. 032 on " negotiability of note payable in bank note.s." — C] 66 i"\)i{iM uKyuiuioi)< [akt. li. troated as equivaloiit to inoiu-v. uliiili could noi be predicated of a uote payable in Canada nioiiej. Coin current in C-anada niiglit not be current in this state, aiul fori'ign bills are not regarded as money. {Jones V. Falcs, 4 Mass. '34-5.) in other states a dili'ereut rule pre- vails; and bills payable in bank bills, even of the state where pay- able, are held not negotiable. {McConnick v. Trotter, 10 Serg. & R. 1)4.) In this aetion^tlie bill is for 1,205 gold dollars, that is $1,205 in gold coin, and, as is claimed, in coin of a particular denomination; but it is nevertheless, payable in a coin known and recognized as a ,^i^^y^ pai't of the currency of the country, coined by authority of Congress and made receivable in all })ayments (9 Stat, at Large, 397). If the bill luul called for $1,205 without specifying the coin or currency it j>-' would have been payable in any lawful currency, and the acceptors might have discharged their obligations by tendering payment in " gold dollars." The tender would have been in money ; but if ."gold dollars" are but an article of merchandize, a commercial com- modity. aS'Tlainied, a tender of these in satisfaction of an obligation for the payment of money would not be good, and a debtor could not by such tender relieve himself from his obligation. The laws have not been repealed which declare the money value of the gold and silver coin of the United States and make them a legal tender (in the payment of dj;bts. Tlje bil l has all th e qualities of a nego- tiable bill of exchange; it is payahlfi apoluiely; &Hd In money , and " n"ot oufoTaparticular fund. There are twodescrTpftnns of lawful money in use under acts of J Congress (assuming the validity of the "legal tender" acts, so called, as applicable to any contract calling for money), and it does not destroy the negotiability of commercial paper or change its character, that it is in terms made payalde in any description of money that is recognized and known as money current in business, and which is made a legal tender in payment of debts. {Ihillcr v. Horwitz, 7 Wall. 258; Bro7ison v. Rodes, 7 Wall. 229.) Bills of exchange are favored as valuable instruments in commerce, and merchants must be permitted to make them payable in any money lawful and current in the place where payable; and if more than one description of money is recognized by the law of the place, to select that which is most convenient to the parties, without changing the character and legal incidents of the instruments and destroying their negotiability. But the referee has found, as a question of fact, that the contents of the said bill of exchange or draft were expressed in the money of account and currency of the province of Canada, and has awarded damages for non-payment upon that theory, that is, has given Judg- ment for the value of the amount called for in Canada coin in Montreal on the day the bill matured. In this tlie referee erred. The contract, interpreted by the law of the place where payable, II- 5.] MUST bh to pay money. 87 called for payment in money there current and the construction of the contract was one of law not of fact. The error of the referee \v?»*ui4Tried into the judgment in the assessment of the damages. Upon this construction of the contract, and an allegation in the complaint, that the value in New York of a draft on Montreal for $1,205 was at the time of the default in payment, $l,83 ]L60,_jiot flenied by the answer, the referee reported in f av^F-©l-t4;e~pla i n t i ff Jfor that amount, with interesi (o tlic date of the report, and the [plaintiff._liiijcL4uilgjiiCjit ;K(nr(liTii:ly. Tlie plaintiff was entitled to a Judgment following the (oii tract, and payable in coin for the amount to which the law entitled him upon the dishonor of the bill. Xhat specified in thp bil1^ with intprpgf thp|-f>^yi^ at the ratei rant for an allowance of damages for the non-pay- ment of money beyond the interest. given by statute, neither can the courts compel a party, who has stipulated for the receipt of money in coin, to accept of an equivalent in depreciated currency. So long as the inferior currency, which is excluded from the operation of the contract, and cannot be paid, or tendered in satisfaction, fluctuates in value, absolute justice cannot be done to the parties by adjudging payment in the depreciated currency of a debt due in coin, with an addition for the difference in value. The only way in which effect can be given to the contract, is by a judgment in terms payable in the better currency to which the creditor is entitled, and an execution following the judgment, and so long as the law recogni/es the two currencies of different values, judgments upon contracts for the payment in the better currency, must of necessity, be given in this form, or the distinction between the two kinds of money as affecting the rights of parties, vanishes when the contract is merged in the judgment, and the rights of a creditor under a contract for payment in coin are of no value. This form of judgment is sanctioned by precedent, and has the warrant of the Supreme Court of the United States. (Bromon v. Rodes, 7 Wall. 229; Chmnykee, v. Vvilrd Slnlrs, .T Td. 320.) The judgment must be modified, and reduced to the amount to which the plaintiff was entitled, payable in coin, witli costs of the court below, payalile in currency, without costs to cither parly upon the appeal. All the judges concurring, judgment modilied iu accordance with the opinion of Allen, J, 88 FORM UEQUIHED. [ABT. II. §25 I10Cii:E r. WILLIAMSON. 85 Tkxas, 553. — 1893. Gainks. As.soriA'i'K .Iistkm;. — Tliis is a question certified to ua for (U'tcnuiiiMtioii liy the Court of Civil Ai)peiils for tlie Third Su- preiiu' .lvuliii:il Distriil. The eertillciite is ;is follows: " 'i'iii' plaiiilill', llu^uc, liiou^ht suit airaiust defendant, William- son, upon a urilti'U ol(lii;atioii. wliirli reads as follows: Sai.tii.lo, laniiary 'if), 1888. Oti or before .May I, 1888, I pKjmise to pay ( . C. liogue, or order, one thou- sand Mexican silver dollars. $1,000, MeX. <^EO. S. WlIJ.IAMSON.-,__ The petition alleges that on May 1, ISSS, Mexican dollars were each worth 85 cents in 'American' coin, and plaintiff asks judgment for $850. He states in his petition that the note is payable in Mexi- can silver dollars. The defendant filed a general denial, and also averred in his answer, under oath, that the note sued on was given for money which the plaintiff had won from defendant in a game of cards, and was therefore illegal and void. ■ Upon the trial in the court below, the plaintiff put in evidence the written obligation sued on, and proved that on May 1, 1888, Mexican silver dollars were worth 80 cents each. The plaintiff then rested and the defendant introduced no testimony. The court instructed the jury to return a verdict for defendant, which was done, and judgment entered accordingly. ^^^^ If the instrument sued on was a promissory note, thi^^ in error. (Newton v. Newton, 77 Texas, 511.) With this explanation, the Court of Civil Appeals for the Third Supreme Judicial District certifies and submits to the Supreme Court, for decision as a part of the law of this case, as a new or novel question, the following proposition : Was the burden of proof on the plaintiff, after the introduction of the instrument sued on, to show non-performance of its obligations bv defendant? In other words, is the written obligation sued on a promissory note, obligating its maker to pay a certain sum of money; or is it an ordinary contract for the delivery of a certain commodity; and must the plaintiff, by affirmative testimony, show a breach of the contract ? " We are of the opinion that the instrument in fpiestion is a promis- sory note. It is such in form and substance, unless the fact that the sum payable is expressed in Mexican silver dollars should make a difference. Speaking of the sum for which a ])ill of exchange must be drawn, Mr. Chitty says: "It may be the money of any country." (Chitty on Bills, 160). Judge Story says: "But provided the note be for the pavment of money only, it is wholly immaterial in tne cur- rency or money of what country it may be payable. It may be payable II. 5.] MUST BE TO PAY MONEY. 89 in the money or currency of England, or France, or Spain, or Hol- lajid, or Italy, or any other country. It may be payable in coins, such as pounds sterling, livres, tomnosis, francs, florins, etc., for in all these and the like cases the sum of money to be paid is fixed by the par of exchange, or the knoAvn denoininntion of the currency with reference to the par." (Story on Prom. Notes, § 17.) The same rule is distinctly laid down in 1 Daniel on Neg. Inst., § 58, and in Tiedeman on Com. Paper. § 2%. In view of the opinion of these eminent text-writers, it is remarkable that we have found but two cases in which the question is discussed or decided. In Black, v. Ward (27 Mich. 191). it is held, that a note made in Michigan, payable in Canada in " Canada currency," is pavable in money, and is therefore negotiable. But in Thompson v. Sloan (23 Wendell, 71), a note made in New York and payable there in " Canada currency" was held not negotiable. The court, however, say; " This view of the case is not incompatible with a bill or note payable in money of a foreign denomination, or any other denomination, being negotiable, for it can be paid in our own coin of equivalent value, to which it is always reduced by a recovery. A note payable in pounds, shillings, and pence, made in any country, is but another mode of expressing the amount in dollars and cents, and is so under- stood judicially. The coursje therefore in an action on such instru- ment is to aver and prove the value of the sum expressed in our own tenderable coin." This decision wa s mndo in 1^10. and it is to ho infprrod tlint a ^ thai Irtiii' Ihe dollnr wng not a denominnt j nn "f th? Invfnl riTri'v n\ C^^HTnTtTr Wn also infer, that when the "Michigan case arose, this ha(j ^ hpon changpd and tho donomination of Canada monev correspond with that of the United States. Upon this theory, it would seem that the cases may he reconriled. The language quoted from the opinion in Thompson v. Sloan, supra, indicates clearlv. that if the rnonfy named in the note had beon the denomination of ('anada money, the ruling wouM liave been different, unless, perchance, the word " currency " would have affected the question. The n(»te we have under consideration is for Mexican silver dollars — coins recog- ni/.ed by the laws of the United States as money of the Ifopublic of Mexico. (V. S. Rev. Stats., g 3r,C>7.) We conclude that the note sued upon in Ibis case was a negotiable promissory note, and that when the j)laintifT offered it in evidence, and proved the value of the Mexiean dollar at the lime of its maturity, he had made a prima facie case, and our opinion will be certified accordingly.^ T A noff> payable in Npw Rniriswirk in " U. S. nirronry " i.s nopofiahlp. " It 13 not nfrpssary that tho nioriry ftnyahlr by a note should be currrnt in the [ilare of payment or where the bill is drawn; it may be in the money of any 90 FORM REQUIRED. [ART. II. 6. Must not Cont.\in a\ Oijoer or Promise to do Any Act in Addition to I'aymknt of Money. (a) Effect of additiunal utipiUations. § 24 DA VIES V. WILKINSON. 10 Adolphus & Ellis (Q. B.) 98. — 1839. Od the trial tlie plaintiff gave in evidence tlie following doeumeni: " I agree to pay to Mr. Charles Davios, or his order, the sum of 695/., at four instalments, viz., the first instalment to he paid on Monday next, .lune 10th, 18.^3, beinjz 200/.; the second on the sottlinj]; day at Doncaster after the St. Leger. being 150/.; the third on the settling day at Doncaster, after Epsom, 1834, being 150/.; and the fourth on the settling day at Doncaster, after the St. Leger. 1S34, being 100/.; the remainder, 95/., to go as a set-off for an order of Mr. Reynolds to Mr. Thompson, and the remainder of his debt owing from C. Davies to him. (Signed) James Wilkinson." The defendant's counsel objected that the instrument was a promis- sory note, and should have been stamped accordingly^ Lord Denman, C. J. — The first objection is. that this instrument was improperly received in evidence, being a promissory note not duly stamped. It is a note, up to a certain point but it ends, " 95/. to go as a set--ofF for an order of Mr. Eeynolds to Mr. Thompson, and the remainder of his debt owing from C. Davies to him." I think that takes from it the character of a promissory note, and makes it an agreement, and that it was properly received.^ country whatever. . . . And may it not be assumed that ' United States currency' means the money of the United States, aiid that tlie note is for the payment of three hundred and seventy-one dollars of tlie I'nited States. [Citing statute recognizing United States coinage.] This is a legislative recognition that the eagle of the United States and the divisions thereof are coins; or, in other words, the currency of that country." — St. Stephen Branch Ry. Co. V. Black, 2 Hanney (N. B.)", 139 (1870). — H. [".A note payable in pounds .sterling or British .sovereigns is payable in ' money ' just as much and as certainly as if it was payable in dollars. The case is different from a note payable in ' currency,' which may be ' money ' only conventionally, but not legally. But where a note is made payable in a par- ticular denomination of foreign money, as pounds sterling, it is payable in money the same as if it was payable in a denomination of domestic money." Deady, D. .7., in King v. Hamilton, 12 Fed. Rep. 478, 479. — C] 8 An order directing the drawee to pay .$400, and take up the drawer's note given to A B, is not a bill. " The essential (jualities of a bill or note are (1) that it be payable at all events; not dependent on any contingency, nor payable out of any particular fund; and (2) that it be for the payment of monev only, and not for the performance of some other act, or in the alter- native." — Cook v. Salterlcc, 6 Cow. (\. Y.) 108. Accord: Killam v. Schoeps, 26 Kans. 310; Bunker v. Athearn, 35 Me. 364, — H. II. 6.] MUST NOT PROMISE ADDITIONAL ACT. 91 § 24 LEONAED v. MASON. 1 Wendell (X. Y.) 522.— 1828. Error from the Onondaga Common Pleas. A. Leonard sued Mason in a Justice's Court, on an order for tbe payment of monev accepted by Mason. The phiinliff held a promissory note against one N. Leonard for -^oj^S. undeineatli which was written an order or bill of exchange, in the.>^e words: "Levi jMason, Esq., please pay the above note, and hold it against me in our settlement. .N. TiConard." The justice gave judgment for the defendant, and the plaintiff ap- pealed to the Onondaga Common Pleas. On the trial in that court, the note, with the order written thereunder, were produced, and a presentment to, and a parol acceptance and promise to pay by, the drawee proved. The Common Pleas nonsuited the plaintiff, hold- ing the promise of the defendant to be within tTJe" stafTTEe of frauds. /?// the Court, Savagk. Ch. J. — The only question is, whether the order which the defendant accepted is a good bill of exchange: if so, a parol acceptance is good.'' It is supposed that this case depends on the same principle?f-9^ the case of Cooke v. Satierlee & SailerUe (fi Cowen. 108). The rule there recognized is, that a bill of exchange must be for the payment of money, and nothing else. In that case, the drawees were required to pay a certain sum of money, and take up a note given by the drawer to a third person. Here it is to pay a note, which is referred to merely to ascertain the amount: andTTrrretaining the note as a vou cher is no more the'\.-tf performance of another-m^''^side the payment of the money than the retaining the order itself for the same purpose. "Xi,^ The court erred. The judgment must be reversed, and a venire ' de novo is awarded to Onondaga Common Pleas (h) ETrrpiions: (1) Aulhorizinrj f;n^n of coffateral f!nU of cona r:i^--v..-jH §24 VALLEY NATIONAL RANK v. CPOWELL. 148 Pennsylvania State. 284. — 1802. Actions on promissory notes. The defense set up by tbe affidavit was that there was no technical liability as indorsers on the part of defendants, because of the non- negotiability of the notes .t^^prf-TTn. These notes contained, in addition to the ordinary form of noteTTKeTTause which is quoted in the opinion of the Supreme Court. i . I , i .1 jLu'^A L ^ \ a» ,^^ /^^^-^^> \ •But Bee Negotiable Instnimmt!' Law. § 220. —J H. 02 FORM REQUIRED. [aRT. II. The court below. Sadler, 1'. .F., of the Ninth judicial district, specially presiding-, iiiaiir the riiirs ahsoiiifc in both cases, and de- fendants appealed. Errors assii^iied were inakiii<; the rule alisolute and entering judg- ment. Pkii CiitiAM. Mar. 'JS. 1892: The only question in this case was whether the note in controversy was ncirotialilc. I( is in the usual form of nejjotiable paper, but it is contended that its nepfotiability is destroyed by reason of the following provision contained therein : " Havinp deposited herewitli a like amount of Crowell Company mortRape bonds as collateral security, which we authorize the holder of this note, upon the nonperformance of this promise at maturity, to sell either at the broker's board, or at public or private sale, witliont demanding j)ayment of tliis note or the debt due thereon, and without further notice, and apply proceeds, or as much thereof as may be necessary, to the paynient of this note and all necessary charges, hokiing us, as makers and indorsers, responsible for any deficiency." We find nothing in this to destroy the negotiability of the note. While it has been truly said that a promissory note is a courier without lugfxfige, we find nothing in the language quoted beyond t the note is accompanied with certgjii-eottftteral. iving of collateral^/'^e clirity' with a_ proTffissory note does ts negotiability^ J^jfFnbld v. RorJc River Vnlle.y^lTnion , _ _uefr^82; Towne v. Rice, 122 Mass. 67.) In Woods v. \jf^^^ \ North (84 Pa. 407) ; Johnston v. Hpeer (92 Pa. 227), the amount of - ■ the note was held to be uncertain. In Bank v. Foillct (126 Pa. 195), t. the court refused to hold the indorser liable, because the time of pay- ment was not fixed, and in Bank v. McCord (139 Pa. 52), the pay- -{.-- ment was made dependent upon certain conditions. In the case in hand, the amount of the note is not uncertain, nor is there any ques- tion about the time of payment. And the pay ment is not made de- pendent upon any condittrm-^iuLtever.^ ^— — ■ yj J The agreement, that if the collateral proves insufficient for the pay- r, •'*^ ment of the note, and all necessary expenses and charges, the makers ^/yL will be responsil)le for any deficiency, neither increases nor decreases \ the responsibility of the makers. Tt merely requires them to do what the law would compel them to do without such an agreement.' We are of the opinion that the afTidavit of defense was insuffi- \\' cient, and the judgment properly entered. Judgment aflfirmed. 1 See especially, Arnold v. R. /J.,'5 Duer (N. Y.), 207. — H. \ IL 6.] MUST NOT PROMISE ADDITIONAL ACT. 93 (b) Exceptions: (2) Authorizing confession of judgment. § 24 OSBORN V. HAWLEY. 19 Ohio, 130.— 1850. Caldwell, J. — The action in the court below was assumpsit. The plaintiH' declared as indorsee of a promissory note made by defendant for $80.00. The declaration also contained the common counts. The case being at issue, the plaintiff offered the note in evidence, which was ruled out by the court, and the plaintiff non- suited. T he refu sal by the court to pt^r jiiit t|i e _jiote to go in e_W-j dence is assigned lor error. Nu aTgurnent is presented on eitherk i sicle, aTld thi bill of I'.acptions only shows that the court docidea that the note was not proper evidence in the cause. / On examination of the record, we do not see any objection to the note being in evidence, and we think the court erred in ruling it out. The note has attached to it, and forming a part of the instru- ment, a power of attorney to confess a judgment, and we presume the court may have held that that fact would prevent its negotia- bility^ And on that prosumplinTi. wo would nicrely remark that the power o7~~attorney, being added to the note, does not in any way , change the legaj. character of the note, except that it f TJvps a m orft h \ summary proceeding for its collection. I t is still a promis sory note l ' I and hpnifT paynj^jp tO '''''d^'i 'v- iipur'ii iwldp bv indorsem ent. TTTe powef,--^ iable, and when the legal title lo the note is / <<\_y /of attorney is not negotiable, and when the legal title lo the note is //' I transferred, the power of attorney becomes invalid, and no power i i^L. whatever can be exercised under it, for tlie benefit of the indorsee; ' Z'*^ ;ind he holds the note as if no such power bad ever been attached to it. r. -j^^ The judgment of the Court of Common Pleas will be reversed, and y"^^^ the cause remanded for further proceedtnjfs^ 1 I 2 Contra: Overton v. Ti/l^r. 3 P.nrr. (Pn.) .?tri. ^TT. ^■^*~* fit is qjiitf rcrtnin lliiit tlif iidtc was iml n(<;<)(ialil(\ bopatisr hy tho power of attornpy which it contained, judpniont ootild hp «'nt«'rrcl upon it at any tinio aftrr its dato, whether flue nr not,. Thus the lin)i' of payniont dopptuls upon thr whim or raj)ri(c of tlif holder, anil i>< ui)solntcly uncertain. 'Ihis deprives the notp of its negotialiility. . CI). '^^^^\. F^aws of 18!(1) (the \ej;otial)le . InHtrnment Law), provides that tho nepotiahie rharacter of ,in iM-^tninient in not affiTted l>y a provision ntithori/.inp a confession of jiidpnient if tho j instrument is not paid nt inaluritif. Sec. 107.5 5. sultd. 2 fN. ^'., S '-^4. 8)ibd.ii|. t'pon familiar prinriples of statutory construction this provision niakos a ' noto like tho pro-ent rion neptH ial)!e." WiNSLOW, J., in Uwcon«tn Yearly Meeting v. fiablrr, 11,5 Wis. 289. 2»2. — C.J 5< '. \ij^ vy^ 94 FOUM UEQUIKED. [ABT. II. (h) Exceptions : (3) Waivitig exemptions. ^24 ZIMMERMAN v. ANDERSON. 07 Pk-nnsyiaanta State, 421. — 1871. Tn an notion on a note the court cliarged that " the note offered in evidence not being negotiable has been rejected, and consequently there is no evidence to sustain the action, and you will find for defendant." Judgment for defendant and plaintiff appeals. I\i:.\D. J. — The paj)er in this case comes within all the definitions of the best text-writers of a promissory note, for it is a written promise by the defendant to pay E. W. I.owe or order one hundred and twenty-five dollars, six months after date, for value received with interest, absolutely and at all events. But it is urged that the words " waiving the right of appeal, and of all valuation, appraisements, stay and exemption laws," destroy its negotiability. In what way? They do not contain any condition or contingency, but after the note falls due and is unpaid, and the maker is sued, facilitate the collection by waiving certain rights which he might exercise to delay or impede it. Instead^ of clog ging^ j ts ne gotiabili ty it adds to it, and gives addi- tional value to the iiote^ Judgment reversed and new trial ordered. V-*^ (b) Exceptions: {4) Election to require something m lipu of money. § 24 HODGES v. SHULER. 22 New York, 114.— 1860. The action was against the defendants as indorsers of the follow- ing instrument or note: Rutland and Burlington Railroad Company. No. 25.3. $1,000. Boston, April 1, 1850. In four years from date, for value received, the Rutland .Tnd Burlington Railroad Company promises to pay in Boston, to Messrs. W. S. & D. W. Shuler, or order, $1,000, with interest thereon, payable semi-annually, as per interest warrants hereto attached, as the same shall become due; or upon the surrender of this note, tojjetlier with tlie interest warrants, not due, to the treasurer, at any time 'jt'' ''•^ m"r^'' ^ ^f '^^ mnfiirii-v . he shall issue to the holder thereof ten shares in the capital stock in said company in exchanp^e therefor, in which case interest shall be paid to the date to which a dividend of profits shall have been previously declared, the holder not being entitled to both interest and accruing profits during the same period. T. Follf.tt, President. Sam. HEifSHAW, Treasurer, II. 6.] MCrST NOT PROMISE ADDITIONAL ACT. 95 The court decided that the plaintiff was entitled to recover against the defendants, and gave judgment accordingly. "- -- Wright, J. — The single question is, whether the defendants can be held as indorsers. It is insisted that they cannot, for the reasons: 1st. That the instrument set out in the complaint, is neither in terms nor legal effect a negotiable promissory note, but a mere agreement ; the indorsement in blank~oft he defe ndants, operating, if at all, only as a mere transfer, and not as an engagemnet to fulfill the contract of the railroad company in^asel)f its default; and 2nd. That if it be a note, the notice of its dishonor was insufficient to charge the defendants as indorsers. _* * * The instrument on which the action was brought has all the essential qualities o f a negotiable promissory note. It is for the unconditional payment of a certain sum of money, at a specified time, to the payee's order. It is not an agreement in the alterna- tive, to pay in money or railroad stock. It was not optional with the makers to pay in money or stock, and thus fulfill their promise in either of two specified ways; in such case, the promise would have been in the alternative. The possibility seems to have been con- templated that the owner of the note might, before its maturity, surrender it in exchange for stock, thus canceling it and its money promise ; but that promise was nevertheless absolute and uncon- ditional, and was as lasting as the note itself. In no event could the holder require money and stock. It was only upon a surrender of the note that he was to receive stock ; and the money payment did not mature until six months after the holder's right to exchange the note for stock had expired. We are of the opinion that the instru- ment wants none of the essential requisites of a negotiable promis- sory note. It was an absolute and unconditional engagement io pay money on a day fixed : and although an election was given to the promisees, upon a surrender of the instrument six months before its maturity, to exchange it for stock, this did not alter its character, or make the promise in the alternative, in the sf^nso in which that word is used respecting promises to pay. T ^p i'r\ y ^ ( ron\<']]f of— U4^>- r ailrond company was to pay the sum of $1.000 in four vGara from] date, and its [)romiso coulij niily ~htrTu TTiTTf'd by the payment of the[ money, at the day narrredT' ^ ;' ^^""VV (Omitting the question of notice.] ; ^ y I am of the of)inion that the action was well brought against/Ahe ^"^-^v-v defendants as indorsers of a negotiable promissory note, and that the notice of its dishonor was suflicient. The judgment of the Supreme Court should be affirmed. All the judges agreed that the instrument in suit was a promissory note; Denio and Welles, JJ., dissented on the ground that the 1)6 FORM REQUIRED. ( ART. II. notice of non-payment was insufficient in omitting the niimlier upon 'ho margin of tlio noW.^ Jud^iiu'iiL allirmed.* V ■ \\ III. Payable on demand or at a determinable future time. 1. When Payablic on Demand. §26 (n) Payable at sights (b) No lime for payment expressed. §26 HERRICK r. BENNETT. 8 JoHiNSON (N. Y.) 374.— 1811. Assumpsit on a promissory noto. The first rount of tho plaintiff's declaration stated, that the defendant, on May 2.5, 1800, at, etc., n)ade his certain promissory nolo in writinir, subscribed, etc., and then and there delivered the same to the plaintiff, by which said note the defendant proniisod to |)ay to the ptaiiititf, or order, $112. .53; by reason whereof, etc. Thero was a demurrer to this count of the declaration, which was submittetl to the court wijiimit argument. Per Curiam. It is to be presumed that the plaintiff has stated the note in his declaration, according lo the terms of it, and that is sufficient. The cnnchision of the _law is, J _hfi' >'1ioj . -h nn fitno nf pay- ment is s pecified in aTToto. itlspavnMo immfdi nli'lv. The fii-«| count, then, shows acausc of action, and the plaintiff is entitled to judgment. v__ ... - JudgnLent^^f£>i:~l-hg^plaintiff.'' 3f^e ?§ 166-167, post. — If. •» " I promise to pay to the orrirr of W. .$.5.5 at iiiv store (or in jioods on demand)," is a promissory note. HonstatUr v. Wil.Hon. 'M\ Rarb. (N. Y.) 307. Contra. Drnnrtt v. Goofhrin, 32 Me. 44. — TI. '• " Piv the law merehant there are some distinetions between instruments payable on demand and those payable at sipht : as, for example, in the matter of days of grace. See Daniel on Negotiable Instrument.'', §§ 617-619. [Demand hills or notes were not entitled to days of grace, but there wa.s a conflict of authority as to instruments payable at sight, the wciglit of authority holding that thev were so entitled. — C] This was also the effect of former statutes in .some of the states. Walsh v. Dart, 12 Wis. 63.5. The new statute abolishes all these distinctions." f'rawford's Negotiable Instruments Law, 3d cd., p. 18. Days of grace are abolished by § 14.5 of the New York act. — C. « Accord: Bnmn v. Pnqr. 1 Conn. -tO-l : .fntira v. Brnirn. 11 Oh. St. 601 ; Mess- more V. Morrison. 172 Pa. St. 300: Bank v. frier. 52 Iowa, ,570; lAbby ▼, Mikelborg, 28 Minn. 38; Roberts v. Unow, 27 Neb. 425. — H. Ill] PAYABLE AT ASCERTAINABLE TIME. 9^ (c) Issued, accepted or indorsed when overdue. §26 LIGHT V. KINGSBUKY. 50 Missouri, 331.— 1872. AD.\]\r.s, Jl'dgr. * * * But it is unnecessar}- to review any of the positions assumed by counsel in this case, as the petition on its face does not state facts sufficient to constitute a cause of action against the defendants as indr>rsers^of this note. It is a negotiable note, indorsed after dueC Such indorsement is equivalent to draw- ing a new bill at sight, and the same diligence in making demand and giving notice is required to charge the indorsers. (See Davis V. Francisco, ilTTo. 572, opinion of Scott, J. ; also Moody et al v. Mack, 43 Mo. 210; Berry v. Robinson, 9 Johns. 121; McKinney v. Craivford, 8 Serg. & R. 351 ; Rugby v. DaviU^n, 2 Mills Const. 33.'') The petition alleges that the indorsement was made about the 19th of April, and alleges a demand and refusal on the 3d of July following, and gives no excuse whatever for the delay. Even if this petition could be held good after verdict, there was nothing in the evidence to justify the delay in presenting the note for payment, and the indorsers were discharged by such delay.* Judgment affirmed. The other judges concur. 2. When Payable at a F^xed or DetekjIiinable Future Time. (a) A fixed time after date or sight. § 23 SIEGEL V. CHICAGO, ETC., CO. [Reported herein at p. 190.] (b) On or before a fixed or determinable time specified. ^ 23 JORDAN V. TATE. Ifl Ohio Statf, 586. — 1869. Motion for leave to file a petition in error to revorso a judgment of the District Court of Montgomery county, affirming the judgment of the Court of Common Pleas. T "A neffotialdf instriiiiicnt indorHcrl aftpr maturity i« reparripd rh i'(|iiivalent to opf pay!il>I<- on ilfiiiaml. Surli » liill or notf, tlumph nvprdue, continues to l>p nfpotinhlf. and i* in thn nature of a new hHI jmyaMe on demand. Daniel on Neg. Inst., §§ 01). !)nfi: Herr v. Clifton. 9H Cal. 3'26. .13 Vnc. 204." TIabt. .1.. in WHIh v. Booth. 6 Cal. App. 197. 201. "Ab between indnr.ner and indorsee, siieh note is to be treated as a note on demand, dated at the time nf tiie transfer, ho f.-ir as demand and notire are concerned. " Rick. .T., in fiooHiHn v. Dnvrnport. 47 Mc. 112 116. — C. • Accord: HasnenhorHt v. Wilhy, 45 (Mtio St. 33;{ (delay from .Fuly 30 to Nov, 21). See Neg. Inst. L.. § 131. — H. RKOOT. INHTRD1CENT8 — 7 98 FouM ui:ciuiKED. [aut. II. By the Court: The negotiable eliaraeter of a promissory note is not all'eeted by the fact tliat it is made payable by its terms on or before a future da^ tlieniii uanieti. 'riH)ugli the maker has a right to pay such note at any time after its date, yet for all purposes of negotiation it is to be regarded as a note payable solely on the day therein named. . Motion overruled.* ~ § 23 RIKER V. SPRAGUE MFG. CO. {Reported herein at p. 68.^ § 23 FIRST NATIONAL BANK OF POMEROY, IOWA, V. BUTTERY. 17 NoBTH Dakota, 326. — 1908. Judgment for defendant, and plaintiff appeals. Spalding. — This is an action on a promissory note. The note was sued on by the indorsee for value before matu rity , and the court found that there was a failure of consideration, and that the contract was not a negotiable note, and entered judgment for the dismissal of the action. Only one question requires consideration. If the instru- ment in question is a negotiable promissory note, the judgment should be reversed ; otherwise, it should be affirmed. — The note was made in this state, and is payable at Sioux City, Iowa, and the clause which the trial court held rendered it non-negotiable reads: "The makers and indorsers herein, severally waive present- ment of payment and notice of protest, and consent that the time of payment may be e xtended without notice." There is an apparent conflict of authorities as to whetheiHlTis or similar agreements render the note non-negotiable. The note is, by its terms, made payable on or before the 1st of October, 1903. Without the paragraph complained of, it would unquestionably be a negotinhle instrument, and the indorsers would be released by any extension of time of payment with- out their assent. We are of the opinion that this provision does not extend the time of payment indefinitely or render it uncertain. The time of payment is already fixed. It is strenuously argued that the use of the word "makers" in the waiver admits of an extension being made at any time on the part of the holder, by a mere secret mental process, unknown to any other 'Accord: Mattiaon v. Marks, 31 Mich. 421. Contra: Stulta v. Silva, 119 Mass. 137. — H. [Accord: Leader v. Plante, 95 Me. 339. — C] Ill] (payable at ascektainable -^im^) 99 party. This may be true as a psychological fact, but we do not deem it so as a matter of practice in commerce and banking. To us it is clear that it lias the same ett'ect as though the note read "■ on the 1st day of October, ]!)().■). or thereafter on demand." in which case there would be no question of its negotiability, jlolders of notes do not by a secret mental pm r-ppg '^^^K*^ '^" «^v^p psion of the tim e of payment, nui sucb extensio n, if made a t nil. is made by an agreemenf between tKe~|jrnK'lt>al dt^btor and the Jiohler of the paper, either with or with- nu^lif tmistjld of the in dnrseis. This provision seems to us to have been myyrlyd IJTprotect tbe iioldcr against any release of indorsers or others, by an extension without their assent, and the word "makers" is evidently included to prevent any misunderstanding or miscon- struction of the contract or failure to distinguish between makers, indorsers, sureties, and any other parties who might be or become liable thereon under_,cerjam contingen cies as makers. 7 Cyc. G14. This phrase does not express an agreenTent to extend time, but leaves the matter of extension optional with the holder, and not obligatory upon him, and the note on its face fixes the time when it becomes due. In this respect it must be distinguished from a provision to the effect that the time of payment shall be extended indefinitely, in which case the uncertainty of the time renders the instrument non-negotialde. We feel that tlie reasoning in the National Banh of Commerce v. Kenney, OH Tex. 2\r.\, s;3 S. W. 368, is not only satisfactory, but con- clusive of this point Tbe note involved in that case contained this provision: "The makers and indorsers hereof hereby severally waive protest, demand, and notice of protest and non-payment in case this note is not paid at maturity.: and ^gref? to all extensions and partial payments before qr.^ftej iviata-rity;. withqut. prejudice to the holder." In holding tOat this provision did not remlifir t-f^*? note non-nent of the jiolder, or to the holder without the consent, of the maker to appoint another date of payment, and thereby e.vrcnd the -time.' it may be thai it would render tbe instrument non-negotiable. I{ii| we do not think it capable of that construction. It does not say tbat either tbe bolder or the maker may extend the note. 1 1 siinpiv makes n provision in case (lie time of payment may be extcndr.j, II„w ,.vl,Mi()r<| ? K s.cnis to ns tliat the extension meant is tbat wliidi lakes pbicc wben fbe debtor and creditor make an agreement upon a vahiable consideration for the payment of the debt on some day subsequent to tbat previously stipulated. Tbe obvious purpose »f the stipulation taken as a whole was merely to relieve the holder of the paper from (he burdens made necessary by the rigid refpiircments of the mercantile Inw in order to secure the continued liability of the indorsers ;ind sureties on the paper. Therefore what was nmanl by the stipulation as to extension 100 FORM HKQUIRED. [art. II. Ar*^-^^' of time was simply tlml in caso tlio liolder and maker should agree upon an extension (he sureties and indorsers should not he discharged. The holder and maker of a note may at any time agree upon an extension ; therefore, the fact that they have that right does not alfect the negotiability of the jjaper. It is usually said that, in order to make an instrument' negotiable under the law merchant, the time of payment must iu* certain. But a note payable on or before a certain date is negotiable. The maker of such a note has the right to pay before the date named, but the holder cannot demand payment before that date. So, in this case, the time at which the maker may elect to pay is uncertain, but the time at which the holder may demand pay- ment is certain. It follows that if the holder has the absolute right to demand payment at a certain date, the note is negotiable. This is but an illustration of what we understand to he the general rule. There being nothing in the stipulation under consideration, which gave any one the right to demand of the holder of the note an extension of the time of payment, we think the time at which he could demand payment was fixed, and that, therefore, it was a negotiable note." * * * [After discussing Jacobs v. Gibson, 77 Mo. App. 244, Banlc v. Com- mission Co., 93 Mo. App. 123, and Farmer v. Bank, 130 Towa, 467, the court continues:] We are, however, of the opinion that, under tlie plain terms of the negotiable instruments act of this state, this note is negotiable, with- out reference to other authority. Section 6486,^ Eev. Codes 19(15, defines a negotial)le promissory note as follows: "A negotiable promissory note within the meaning of this chapter is an unconditionar promise- in "v^riting, made by one person to another, signed hy the maker, engaging "to pqy on demand, or at a fixed or a determinable future time, a certain sum of money, to order or to bearer." Section 6309 ^ provides that an instniment is "payment on demand.- * * * 3. In which no time for payment is expressed." Section 6422 ^ provides how such ah instrument is "discharged against a person secondarily liable thereon." Paragraph 6 thereof provides that it is discharged by any agreement binding upon the holder to extend 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 to recourse against such party is expressly reserved. If, as is contended l)y the respondent in the case at bar, this instru- ment, taken as a whole, expresses no time for payment, then, under section 6309, it is an instrument payable on demand, and according to IN. Y.,§320. — C. »N. Y., §2G. — C. »N. Y., §201. — C. III.] PAYABLE AT ASCERTAINABLE TIME. 101 section 6486 the negotiability of a promissory note is not destroyed by its being made payable on demand. On the other hand, if it does express a time for payment, the 1st day of October, 1903, is a fixed and determinable future time as required by section 6486, supra. This note was executed and dated within this state, and we are satisfied that the paragraph complained of as rendering it non-negotiable was drawn for the express purpose of protecting it within the terms of paragraph 6, § 6422, above quoted, and in accordance with other statutory provisions providing for waiver of presentment, notice of dishonor, and protest. Notes containing clauses similar to the one in question have been in almost universal use in this state for years, and the identical waiver complained of has been in common use, and the instruments containing them have been regarded and treated by the tr ade and ban kers as negotiable. For the reasons stated, the judgment of the District Court is reversed. / Pollock, District Judge, concurs. - -c^ FiSK, J., disqualified ; Hon. Chas. A, Pollock, judge of the Third Judicial District, sitting by request. Morgan, C. J. (dissenting). I am unable to concur in the con- clusion reached by my associates in this case. My reasons for reach- ing an opposite conclusion may be briefly stated. The statute in express terms requires that the time of payment must be definitely stated in the note or that it can be definitely deter- mined therefrom when it becomes payable, or it will be rendered non- negotiable. From tlie face of the note, it seems to me conclusive that it does not show when the note may become due and payable in view of the fact also stated therein that an extension may become operative and binding. It does not seem to me to be a sound conclusion to say that the note states a fixerl day of payment when it also states that the day stated may not represent the dale of payment if the stipulation aa to an extension that follows is put into effect. The note cannot be said to be a demand note, as by its very terms it is not such. It fixes day of payment, subject to extensions. So far as having no fixed day of payment is concenu-d, the time is rendered as uncertain bv reason of possible extensions as it would be if it provided for extensions in- definitely, and is therefore fairly within the principles of the Iowa cases cited in the opinion. In liatik v. Cluiilrr, 67 Kan. 237, the note contained this stipulation : " The makers and indorsers hereby severally * * * agree to all extensions * * * before or after maturity without prejudice to the holder," and in reference to the effect thereof upon the negotiability of the note, the court said: "In the note in question, payment is first fixed at 182 days after tlie date, but as will be obsen'ed, a later provision ni;ike« flu- time indefinite bv stijiulnting that it mav be chnntred and extended either before or after maturity. If the time is to remain fixed until maturity, when another time is to y 102 FOILM UEliUlKKD. [aKT. II. be fixed by the parties, or if pnviiieiit is made to depend upon events wliieh necessarily must oeeur, and the time of payment is ultimately eertain, other considerations would arise; but here payment is not ultinuitely certain, for the time stated in the paper is subject to change at any time at the volition of some of the parties to the action." In Coffin V. SpviH-er (C. C.) 39 Fed. 3G2, the court said in reference to a similar stipulation: "Every successive taker of the paper is, of course, bound to take notice of the stipulation, and, instead of looking only to the face of the instrument for the time of its maturity, as in case of commercial paper he must, ^s put upon inquiry whether or not any agreement for a renewal or extension of time has been made by his proposed assignor or by any previous holder." In Oyler v. McMurmy, 7 Ind. App, 645, the court said in speaking of a like stipulation : " The holder was not bound by the stipulation in either case to extend the time of payment. The material and con- trolling fact is that the holder had the option, at any time Ijcfore as well as after the time of payment stated in the note, to extend to the drawers and indorsers, or either of them, the time of payment." The following authorities specifically liold that stipulations like the one contained in the note in suit render the note non-negotiable: 7 Cyc. 600, and cases cited; Daniel on Neg. Inst. (5th ed.) p. 49; Eaton & Gilbert on Commercial Paper, p. 220; Smith v. Van Blarcom, 45 Mich. 371 ; Woodbury v. Roberts, 59 Iowa, 348; Hodge v. Farmers' Bank of Franl-fort, 7 Ind. App. 94 ; Oyler v. McMurray, 7 Ind. App. 645; Glidden v. Henry, 104 Tnd. 278; Rosenthal v. Ramho, 28 Ind. App. 265; Id., 165 Ind. 584; Evans v. Odem., 30 Ind. App. 207; Second National Banh v. Wheeler, 75 Mich. 546; Lamb v. Story, 45 Mich. 488 ; Oyler v. McMurray, 7 Ind. App. 645 ; Citizens' Nat. Bank V. Piolirt, 126 Pa. 194. On principle and authority, the note should be held non-negotiable.^ *>A- \ (c) On or at a fixed period after the occurrence of a specified event. § 23 SHAW V. CAMP. 160 Illinois, 425. — 1896. Mr. Justice Cartwrigiit delivered the opinion of the court: Appellee filed a claim in the County Court of Piatt county, against '--•" the estate of Kdward Swaney, deceased, and the claim was rejected. > In the Circuit Court, on appeal, there was a trial by a jury and a ,0_kC ' verdict for the claimant for $852.50, upon which judgment was entered. The judgment was affirmed by the Appellate Court and a certificate of importance granted, under which the case is brought 1 See note to this case entitled " Kffect on nepotiahility of promissory note of rirovi^ion pfrmittinir fxtcnsion of time," in IG L. N. S. 878. See also note in 125 Am. St. Rep. 201. — C. III.] PAYABLE AT ASCERTAINABLE TIME. 103 to this court. On the trial the claimant offered in evidence the instrument upon which his claim was founded, together with proof of the signature of the deceased. The instrument was as follows: $750.00 Bement, III., Dec. 27, 1890. After my death date I promise to pay E. Hanson Camp, or order, the sum of $750, without interest at per cent, per annum from date, value received. Following the above there was a power of attorney, in the usual form, to confess judgment, and the signature of Edward Swaney. To the introduction of this instrument objection was made and overruled, and it is insisted that the ruling was wrong, for the reason that the instrument was not a promissory note. It is conceded that a promissory note may be made payable on the death of a certain person, or at a fixed time thereafter, or on demand after such death ; but it is claimed that this instrument was not payable at a time fixed, and that the words " after my death date " should be construed to mean some uncertain time after that event. We do not regard the instrument as subject to the objection made. It did not become due until the death of the maker, which was an event certain to occur, but by its terms it became due at once after the occurrence of that event." There is nothing in the language to indicate that the money was to be paid at some uncertain time after the maker's death. The objection was properly overruled." 3. When Payable on a Contingency.^ § 23 KELLEY v. HEMMINGWAY. 13 Illinois, 604. — 1852. Treat, C. J. This was an action brought \\y llcmiiiingway against Kelley before a justice of the peace, and taken by appeal to the Circuit Court. On the trial in the latter court, the plaintiff offered in evidence an instrument in these words: Castleton, April 27, lS-(4. DiK' Henry D. Kclliy fifty-three dollars, when he is twenty-one years old, with interest. David Kelley. (On the bark of irliirh irnit this infiorsrmmt] HocKTON, May 1. 1S10. Signed the within, payahle to Moses llenimingway. IIenky Kelley. 2 A bill or note payable ho many dayrf after the death of a party ia certain aa to time, because the time is sure to arrive. Colrhan v. Vooke, Willes. .10.3; afTimied 2 Str. 1217; Hristol v. M'arner, 19 Conn. 7, post; Conn v. Thornton, 46 Ala. Ml; Price v. .lonen, in.'i Tnd. 543; Carmi^ifiht v. (}ray, 127 N. Y. 92; liegeman v. Morm, 131 N. V. 462; ante, p. 41; Martin v. Stone, 67 N. H. 367.-11. • See note in 125 Am. St. Rep. 202. — C. 104 FORM UKQUIRKI). [aRT. II. The plaintiff proved that the payee lieeame of ago in Aup^ist, IS 11). The defendant objected It) tTreilUicHluetion of the instrument because it was not negotiable, but the eourt admitted it in evidence and ren- dered judgmtMit for the phiintitT. Our statute makes promissory notes assignable by indorsement in writing, so as absolutely to vest the legal interest in the assignee. Was the instrument in question a promissory note? To constitute a promissory note, the money must be certainly payable, not dependent on any contingency, either as to event, or the fund out of which pay- ment is to be made, or the parties by or to whom payment is to be made. If the terms of an instrument leave it uncertain whether the money will ever become payable, it cannot be considered as a promissory note." (Chitty on Bills, 134.) Thus, a promise in writ- ing to pay a sum of money when a particular person shall be married is not a promissory note, because it is not certain that he will ever be married^ (Pearson v. Ganet, 4 Mod. 342; Beardesley v. Baldwin, 2 Strange, 1151.) So of a promise to pay when a particular ship shall return from sea, for it is not certain that she will ever return. (Palmer v. Pratt, 2 Bing. 185; CooHdge v. Ruggles, 15 Mass. 387.) In all such cases, the promise is to pay on a contingency that may never happen. But if the event on which the money is to become payable must inevitably take place, it is a matter of no importance how long the payment may be suspended. A promise to pay a sum of money on the death of a particular individual is a good promis- sory note, for the event on which the payment is made to depend will certainly transpire. (Colehan v. CooJce, Willes, 393; s. c. 2 Strange, 1217.) In this case, the payment was to be made when the payee should attain his majority — an event that might or might not take place. The contingency might never happen, and therefore the money was not certainly and at all events payable. The instrument lacked one of the essential ingredients of a promissory note, and consequently was not negotiable under the statute. The fact that the payee lived till he was twenty-one years of age makes no difference. It was not a promissory note when made, and it could not become such by matter ex post facto, .^^he plaintiff has not the legal title to the instrument. If it presents a cause of action against the maker, the suit must be brought in the name of the payee. The case of Goss V. Nelson, (1 Burr, 22G), is clearly distinguishable from the present. There, the note was made payable to an infant when he should arrive at age, and the day when that was to be was specified. The court held the instrument to be a good promissory noto, but expressly on the ground that the money was at all events payable on the day named, whether the payee should live till that time, or die in the interim ; and it was distinctly intimated, that the case would be very III.] PAYABLE AT ASCEKTAINABLE TIME. 105 different had the day not been stated in the note. It was regarded as an absolute promise to pay on the day specified, and no eflect was given to the words that the payee would then become of age. The judgment must be reversed. Judgment reversed.* §23 Sackett v. Palmer, 25 Barbour (N. Y.), 179. — 1857. Action on a note payable " ninety days after the dissolution of the partnership between A. B. and C. D., and the settling of the books of said firm." Johnson, J. The instrument on which the action is ^^ , brought is not a promissory note. It is payable ninety days after the / happening of two events, one of which may never happen. The general rule is, that an instrument payable only in money, is not a promissory note, unless it is payable at all events, not depending on any con- tin gency.. Though if the event on which the instrument is to become payable must inevitably happen, it is no objection that it is uncertain when it will happen ; nor is it of any importance how long the pay- ment may be in suspense ; it will still be regarded as a promissory note, {Ckil on Bills [8th Am. ed.], 155, 156.) It is not shown by the evidence how long the partnership was to continue by the agreement of the partners. It was certain, however, that there would at some time be a dissolution, by the death of one of the partners, if not other- wise. That event was sufficiently certain. But the settling of the books of the firm was an event wliich might never happen. It would not inevitably happen. H iuig]tt,M>tl probably would, after a disso- lution, in due course of law. But that is not enough ; if it might not happen the instrument is not_ A. promissory note. §23 AMERICAN NATIONAL BANK v. SPRAGUE. ^ 14 Rhode Island. 410. — 1884. Action against indorsors on an instrument similar to the one in Riker v. Sprague Mfg. Co., (nnlr, p. 68), except that it was indorsed as follows: ♦ A noto rrnflinp " T'jmn oonfirmafinn by thr fonpross of tho T'nitod Rtntos of the cortain laixl prant known hh . . . I [ironiisr to pay," otr., held non- ncpotiahlo winrc it was not rortainly an< to 1k> jndpcd by tho front siplit, not by tho bark sipht. Tho moral on fainty nm^t bo proscnt at tho tinio of its oxooiitioii and not be a matter of relation accruing by reason of subsequent events. If it b« 106 FOKM KKgnitKn. [art. ii. " Issued as collateral to A. &. W. Spra^aie IMfjjj. Co.'s draft accepted by liovt, kSpraguos ^: Co., 2so. 080li." TiLLiNGiiAST, J. ^' * * it will at once be seen that these notes differ very niateriall}' fioiu tliose declared on in the former case, and also that under th.e rule therein adopted they are clearly not negotiable. Tlicy were i^su^d as collateral to certain drafts therein specifically designated, and obviously are not payabh* at all events; it being evident that the payment of the drafts would at once discharge both the makers and indorsers of the notes, and render said notes null and void. So also a partial payment on the drafts would at once reduce the amount collectible on the notes pro ianto. The undertaking of the defendants, therefore, was at most a con- tingent one. and the sum which might become due at the expiration of the notes was uncertain. * * * Without considering the other points raised by the petition, we must, therefore, grant a new trial. Petition granted.'^ rv. Payable to order or to bearer. - 1. Must be Payable to Order or Bearer to be Negotiable.® § 20 WETTLAUFER v. BAXTETJ. [Reported herein at p. J'/J.] not a bill or note ah inilio, no subsequent event can make it so." Pope, J., in Joseph V. Catron. 13 N. "M. 202, 22.3. See tbis case reported with note in 1 L. N. S. 1120. See also to the sanie effect Eldrcd v. Malloy, 2 Colo. 320. — ('. 5 In Citizens' Kat. Bank v. Piollet, 126 Pa. St. 194, a note containing a memorandum (liat "Tbis noto is pivi-n for ndvnMc^'rr-nls and it is tli" mvler- standincr it will not be renewed at maturity" was held non-negotiable. "The statement that it is given for advancements does not affect the certainty of the note, and it coubl easily be regarded as a mere memorandum not changing the contract and therefore not material. Fiut tlie remainder of the writing is an agreement that the note will be renewed at maturity. As the bank is the holder and discounted the note when it was given, it . . . must be con- sidered as having agreed to renew the note at its maturity. Tbis being so, the obligation of the note is not an absolute, unconditional contract to j)ay the money at maturity. It is a rjuiilified obligation to pay, with a condition that, instead of j)aying, the holder may give another note in its place which the bank would be bound to accept instead of money. This being so, the case comes within the rule that commercial paper, to be negotiable, must be certain, unconditional, and not contingent." Grkex, J., at p. 197. — C. 6 It is to be observed that the Neg. Inst. Law applies only to instruments containing words of negotiability. An instrument not containing words of negotiability may be a bill or note, but it is not covered by this Act. The English Bills of E.xcbange Act makes negotiable any l)ill or note wliicli dors not contain words prohibiting transfer; but tliis changes the law. Chalmers, Bills of Exchange Act (5th ed.), p. 2.5. — II. iv.] payable to order or to bearer. 107 2. Payable to the Order of a Specified Person. (n.) Payee must be certain. §27 GORDON c. la::.sixc; state savings bank. liiS :.in.Hi(.A.N, 143. — 1903. Judgment for plaintiff, find rlcfondant brings error. Moore, J. — This cnse Ava-; tried bv the Circuit judge without a jury. At the request of the defendant, he made a finding of facts, which is as follows : ...^ *' Monday morning, December 9. 1901, at about nine o'clock, there was presented at the bank of defendant at the city of Lansing for payment the following check, made upon the printed form of check supplied by defendant to its patrons, and signed by plaintiff, viz. : " ' Lan.sing, Mich., 190 No. " ' LANSING STATE SAVINGS BANK OF LANSING. " ' Pay to the order of nine hundred and seventy dollars L$970.00). " ' Jno. R. Gordon.' " The check was indorsed by Charles P. Downey, and was presented by an employee of ^Ir. Downey, and cash was paid at the time of pre- sentation. The plaintiff had been a depositor at defendant's bank at periods for three or four years, and at the openinar of the bank on the morning of December 9, 1901, his balance or credit upon the books of the bank was $3.40, but during the day $2,997. .'SO was added to plain- tiff's credit. The day defendant cashed the check plaintiff was at the bank, and was informed that the check for )^)T() had been cashed by payment to Mr. Downey, and he then notified defendant he would not accept the check as a voucher forthemonev paid. December 14, 1901, plaintiff prepared and presented to dcfemlJTnt his check, payable to him.self, for $970, being tlu; amount he claimed to then have on deposit in the bank. Payment on this check was refu.sed by defendant upon the ground that plaintiff had no funds in the bank."- — The Circuit judge rendered a judgment in favor of tlic plaintiff for $970 and interest. The case is brought here by writ of error. ~ Two questions are discussed by counsel: First, the effect of not dating the cbfck ; se cond, has the c heck a payee? We do not deem it fLtJCu nocessar}- to discuss Ihc first qiicsayee, as to ' liills I'ayalilt.' " of order, or to a niiinbur or oriler, arc held to be payable to bearer, on the ground that the use of the words 'or order' indicate an inlcniion tliat the paper shall be negotiable; antT^the nieiilion of an iin)Hisonal payee, rendering an indorsement by the payee impossible, indicates an intention that it I'shall be negotiable without Jn_dorscnient — that is, that it shall be payable to bearer. So, wHen a bill or note or check is made payable to a blank or order, and actually delivered to take elTect as com- mercial paper, the person to whom delivered may insert his name in the blank space as payee, and a hone fde holder may then recover on it. These cases diflPer essentially from the nnp f>t hnr Tn the latter case the person to whom delivered is presumed, in favor of n hnna fide holder, to have had authority to insert a name as payee. In tbe former case the instrument is, when it passes from the hands of tlie maker, cojiipjete, in just the form the parties intend. But in this case there is neither a blank space for the name of the payee, indicating authority to insert the payee's name, nor is the instrument made payable to an impersonal payee, indicating a fully completed instrument. It is claimed that the words ' on sight ' are such impersonal payee. They were inserted, however, for another purpose — to fix the time of pay- ment, and not to indicate the payee. It is clearly the case of an inad- vertent failure to complete the instrument intended by the parties. The drawer undoubtedly meant to draw a check, but, having left out the payee's name, without inserting in lieu thereof words indicating the bearer as a payee, it is as fatally defective as it would be if the drawee's name were omitted." See, also. Rush pf ah v. Haggard, fiS Tex. 074 ; Prrn'iff v. Chapman, 6 Ala. 86; Brown v. Oilman et ah, 13 Mass. IfiO; Rirh ct ah v. Sfar- hnrl-. 51 Tnd. R7 : Norton, Bills <^' ^Totes (3d ed.) p. 59, and notes; Dnnirls, N'eg. Inst. (4th ed.) § 102. The case differs from the one at bar in some respects, hut the important part of the decision is that a payee is necessary to make a complete instrument, and, even though the maker of the check may have intended to name a payee, if he has not in fact done so the check is incomplete. Tn the case at bar the failure to name a payee was not an oversight, if we may judge from what Mr. Gordon did, as will appear more in detail later. Our attention has been called to Crutclily v. Mann, 5 Taunton K. 520. In this case the ])ill of exchange was made payable to the order of The court found that under the facts shown the con- clusion was irresistible that the name was filled in with the consent of the drawer. The same case was previously reported in 2 Maule & S^'lw. no, where, ns the ease then stood, it appeared the bill of exchange had been sent out, the defendant leaving a blank for the name of the fV.] PAYABLE TO ORDER OR TO BEARER. 109 payee. One of the judges was of the opinion that the defendant, by leaving the blank, undertook to lie answerable for it, when filled up in the shape of a bill of exchange; another judge was of the opinion that it was as though the defendant had made the bill payable to bearer; while the third judge was of the opinion that the issuing of the bill in blank without the name of the payee was an authority to a bona fide holder to insert, the name. In the case of Harding v. The State, 54 Ind. 359, a promissory note^ Z) was drawn leaving a blank space for the name of the payee, and it was "^^^-^^ held : " So the name of the payee may be left blank, and this will authorize any bona fide holder to insert his own name." In the case ^ of Brummel et nl. v. Enders et al., 18 Grat. 873, promissory notes, '^^ blank as to the names of the payees, had l)een put in the hands of an agent to be sold for the benefit of the makers. The agent sold them, 'y at a greater discount than the legal rate of interest, to purchasers who ' did not know they were sold for the benefit of the makers. At the time of the sale the name of the purchasers was inserted, either by the purchasers or by the agent, in the blank left for the payee, ^^^len the ■ notes were sued, the makers pleaded usury. The court, following the '^ cases already cited, held that any hojia fide holder of a bill or note which is blank as to the name of the payee may insert his own name, and thus acquire all the rights of the payee. It will be observed that the case at bar differs from all of these cases. As before stated, not only did Mr. Gordon fail to insert the name of a payee, or to leave a blank where the name of the payee might be in- serted, but he did more. He drew a line through the blank spare, making it impossible for any one else to insert therein a name, indi- cating very clearly that he not only declined to name a payee, but intended to make it impossililo for anv one else to do so. Had Mr. Gordon issued a check otherwise perfect, but with the blank space for the amount of the chock unfilled, and delivered it to a third person, it would be presumed the third person was given authority to fill the blank space. But had he, instead of leaving the space a blank, filled it by drawing a line through it. would any one say the third person might then insert a sum of iru)ney in that space? If not, upon what principle may the name of a payee l)e inserted when the space was^ filled in the same way, or upon what theory may it bo presumed there ^ • was an impersonal payee when the maker has not made the check pay- able to cash, or some other impersonal payee. In order to con- ^ strue the check as a complete instrument, we must read info it an ^ intention not only not expressed by its language, but contrary to the \act of the maker. The check ^as it appears to-day, is without any Vayee. The record jsjsilSaDHTrtilation- to .wham, i t was deliver ed, or whether tbe^ person who presented it at the bank or the person whose ipdorsemenj^ it bears was a hnvn fidr holder. Judgment is afTirmed. S. ihdorsemeni it bear k /v\w^ AA^f^y/^-^-^ 110 FOHM REQUIRED. [aRT. II. Montgomery, J., did not sit. Hooker, C. J., concurred with Moore, J. CAinMCNTKn, J. I rojjfrot tliat 1 cannot concur in the opinion of my Brother Motu'c. 1 a^roc with liiin that the check in question is not governed hy the authorities which hohl that, where a hhink is k>ft for the insertion of the name of a payee, tlie instrument is to he treated as payahle to hearer. 1 cannot agree, however, that the case of Mcintosh V. Jjj/tlc, 26 Minn. 33{i, is controlling. That case resemhles this in many particulars. There is, however, a diU'erence, which, in my judg- ment, renders the reasoning of that case inapplicahle. Tlie fact that the plaintiff in the case at bar used the ordinary blank, and drew a line through the space intended for the name of the payee, prevents our assuming, as did the court there — and its decision was based on this assumption — that it is " the case of an inadvertent failure to com- plete the instrument intended by the parties." The instrument under consideration is obviously complete, in just the form the maker in- tended. In my judgment, the authorities w^hich hold a check payable to the order of an impersonal payee to be valid and negotiable control this case. I quote from the case of Willets v. The Phoenix Bank, 2 Ducr (N. Y.) at page 129 : " One of the checks was payable to the order of 1658. the other three to the order of bills payable; and, as the required order could not in either case possibly be given, the checks, unless transferable by delivery, were payable to no one, and were void upon their face. The law is well settled that a draft payable to the order of a fictitious person, inasmuch as a title cannot be given by an in- dorsement, is, in judgment of law, payable to bearer. Vere v. Lnvis, 3 Term R. 183 ; Minet v. Gibson, Id. 481 ; Gibson v. Minet, 1 IT. Black. 569, affirmed in the House of Lords. And it seems to us quite mani- fest that in principle these decisions embrace the present case. At any rate, the bank, by certifying the checks as good, is estopped from deny- ing tliat they were valid as drafts upon the funds of the maker, and, consequently, were payable to bearer. The giving of such a certificate, if otherwise construed, would be a positive fraud.-^ In Mechanics' Bank v. Straiton, 3 Abb. Dec. (N. Y.) 269, a check payahle to bills payable or order was lield payable to bearer, tlic court saying: "By naming the persons to whose order the instrument is payable, the maker manifests his intention to limit its negotiability by imposing the condition of indorsement upon its first transfer. But no such condition is indicated by the designation of a fictitious or im- personal pavee. for indorsement, under sueh circumstances, is mani- festly impossible; and words of negotiability, when used in connection with such designations, are capable of no reasonable interpretation, except as expressive of an intention that the bill shall be negotiable without indorsement — t". r., in the same manner as if it had been made payable to bearer." IV.] PAYABLE TO ORDER OR TO BEARER. Ill We must decide that the check in the case at bar, like those in the cases cited, is either altogeiher void, or is transferable by delivery. I submit that we should follow those cases, and decide that it is trans- ferable by delivery. To quote the language of Lord Ellenborough, in Cntchley v. Clarance, 2 Maule & Selw. 90: "As the defendant has chosen to send the bill [check] into the world in this form, the world ought not to be deceived by his acts." This view of the case compels me to notice the fact that the check under consideration is not dated. According to the weight of author- ity, this omission does not invalidate it. See Zane on Banks & Bank- ing, § 152: Daniels on Negotiable Instruments, § 1577; Norton on Bills tf- Notes, p. 405. note. I think the Judgment of the court below should be reversed, and a judgment entered in this court for the defendant. Grant, J., concurrd with Carpenter, J/ / /.. /? . I ''-if--' L^_^-^>. J^ §27 I I SHAW i;. SMITH. ^ ^^ ' 150 Massachusetts, 166. — 1889. f Contract by the administrator de honis von o! the estate of Fred- erick B. Bridgman, against the administrator of the estate of Eugene Br idgman TlTprrB-the following instrument : .$126.00 Bei.ciiertown, Juh/ 10, 1873. For valup recpiverl, 1 promiso to pay F. B. Rridfrman's pstatc. or order, one hundred and twenty-six dollars on demand, with interest annually. Eugene Bbiogman. Witness, A. Bbidcman. Writ dated March 1'?, ISSG. The answer set up, among other defenses, the statute of limitations. ^ The judge ruled that tlie instrument was not a witnessed promis- sory note, within the meaning of the statute, and was therefore barred by the statute of limitations, and found for the defendant; and the plaintiff" alleged exceptions"^ C. Allen, J. After providing that the ordinary limitation of actions of contract shall he six years, it is enacted in the Pub. Sts. (c. 107, § f)), that "none of the foregoing provisions shall apply to an action brought upon a promissory note signed in the presence of an attesting witness, if the action is brought by the original payee, or by his pxerutnr or administrator; " and by § 7, such an action may be brought within twenty years. The defendant contends that the instniment sued on is not a promissory note, for want of a sufTiciently definite payee, and he cites two decisions which sustain him in this 1 It should ho observed that the judf^mcnt below wa.s afTirmed by an evenly divided court. — C. w 1 li? KOKM KKliUlKKl). | ART. II. contention. (Lyon v. Marshall. 11 l^arb. 241; Title v. Thomas, 30 Miss. V22.) But this would l)o too strict an applii-ation of tlio doctrine that the person to wlioni a note is payable inusthcjdearly expressed. It is an equally jjeneral rule, that it is sufficTehl if there is in fact a payee, who h*--sf> designated that he can he ascertained. (Story on Notes, § ^(^.) The illustration.<; of the manner in which this rule has been applied are numerous. 1Mnis, written promises have been held to be valid notes or bills of exchane^e. thoujxh made payable to bearer, (Grant v. .t^^jVaufjIian. 3 Burr. ITilfi) ; or to persons desio^nated simply by their office, without namin^r them, e. g. the treasurer of the First Parish in H. or his successor in said office, (Buck v. Merrick, 8 Allen, 123) ; the trustees of a particular church, (Noxon v. Smith, 127 Mass. 485; Holmes v. Faques, L. R. 1 Q. B. 376) ; the manager of the Provincial Bank of England, (Robertson v. Sheivard, 1 Man. & G. 511) ; the treasurer-general of the Koyal treasury of Portugal, (Soarcs v. Glyn, 8 Q. B. 24) ; the executors of the late W. B., (Hamilton v. Aston, 1 C. & K. G79) ; the administrators of a particular estate, (Moody v. Thrclkeld, 13 Ga. 55; Adams v. King, 16 111. 169) ; the trustees act- ing under the will of the late Mr. W. B., (Mcgginson v. Harper, 2 Cr. & M. 322). Also to the heirs of a particular person, even though that person was living at the time, (Bacon v. Fitch, 1 Root, 181 ; Loci-wood V. Jesvp, 9 Conn. 272 ; Cox v. Beltzhoover, 11 Miss. 142) ; to a business name adopted by the person in interest, (Bryant v. East- men, 7 Cush. Ill ; Broivn v. Parker, 7 Allen 337) ; and to the steam- boat Juda and owners, (Moore v. Anderson, 8 Tnd. 18). So, a bill which was indorsed to a person who was already deceased was held valid in the hands of his legal representatives. (Murray v. East India Co., 5 B. Si Aid. 204.) More literally in point in the present ease, and directly opposed to the two decisions relied on by the defendant, are Peltier v. Bahillion, (45 Mich. 384), where a written promise payable to the order of J. V. Mehling estate was held to be a good note, and McKinney v. Harter, (7 Blackf. 385), which was substan- tially similar. See also Storm v. Stirling, (3 El. & Bl. 832; s. c. sub. nom. Covie v. Stirling, 6 El. & Bl. 333) ; Tales v. Nash (8 C. B. N. S. 581 ) : where a promise to the oflBcer for the time being of a society was held too indefinite, though the general rule as applied in other cases was recognized. In the case before us, the promise was to pay to F. B. Bridgman's estate, or order. He was dead, and administrators had been appointed. There could be no doubt that the promise was intended to be one of which the administrators could avail themselves. They were in exist- ence, and were ascertainable. If the administrators of his estate had been made the payees, without naming thom. there can be no shadow of question that it would nave been sufficient. It savors of too much IV.] PAYABLE TO OKDEK OK TO BEAEEE. 113 refinement to hold that tlie instrument was not a valid promissory note for want of ^-^uffieiently-tfeftTiife payee. "^ Ttdts-is-theoiilj'Tjirestron presented by the bill of exceptions. Exceptions sustained.^ (b) Payee may be (1) 07ie not maker, drawer or drawee. [This is the normal case and calls for no special illustration.] (6) Payee may be (2) the drawer or the mal-er. §27. Commonwealth v. Buttekick, 100 Mass. 12.— 1868. "Three months after date pay to the order of myself eight hundred and fifty dollars, value received, and charge the same to the account of your obedient servant, J. S^^tterick. To J. S. Butterick, Sterling, Mass." [On the face] : "Payable at the Lancaster N. Bank, J. S. Butterick." [Indorsed] : "J. S. Butterick." "J. M. Stevenson." Indictment for forging the name of J. M. S tevenson to a bill of exchan ge. Foster, J. — " Upon principle, as well as by the authorities cited by the attorney-general, we entertain no doubt that an order for the payment of money, drawn by one in his own favor on himself, and by himself accepted and indorsed, may be treated as a bill of I A promi.ssory note payable " to the order of the estate of A.," is payable to a fictitious payee where there is no such legal entity as the " Estate of A.," and if nepotiati'd by tlie maker is to Ije treated as a note payable to bearer. Lewisohn v. Kent d Stanley Co., 87 TTun (N. Y.), 257. See Kerr. Inst. L., § 28, subsec. .3. — H. [See criticism of this case by Afr. McKeelian (41 Am. Law Reg., N. S., p. 451) and bv Mr. Crawford (Neg. Inst. Law, :id ed., p. 21). — C] [In Adams v. Kin 1 i 1 1 li; jiui^-p m one of the t) ills cannot prevail/ and. in conformity v.itb onr- rioTu n lTnin p i^ -p T-ogg^f^^ the judgmeni must I cgct-a^i d ff nn *] (he c:\-r roniandod to the Circuit Court for a new trial. Tt is so accKidiiiL'-lv oi'dcrcd. ^ /" / §27 Ifec may h(y(4) two or more paye COIfDON V. ANDERSON". 83 Iowa, 224.— 1891. Uj The j)lairiti(r, as assignee for value and before maturity of two proiriissory luilcs, executed by defendants, payable " to Cliarlcs R, AVhiteseM rl nl. or order." nsks judgment thereon, and the foreclosure of a mortgage given by the defendants to secure the same. The der'Tdnnts answered that the notes and mortgage were executed for part of the purcliase yirice of certain real estate sold to them by Charles R., Emily. J. L., and IMiebe J., Whitesell. and for which C harles T?.. J. T,.. and Phehc J. executed to t he defendlints a warran ty deed warranting the title to said property. The answer allecres a breach of tli'P covenants of warranty, and" damages in the sum nf five hundred dollars, wbieh the defendants ask as an offset ajiainst the notes. The plaintiff demurred to the answer r)n the ground that the h. 'f" Ji-^' • ol<^ •^ilr 116 FOKM KEl^UlUKU. [aKT. II. damages set up were claims against the payee of the notes, and no defense against the notes, in his handsriu^~tTCMtg-H^-purehaser before maturity, and without notice; and that the answer sets up no defense to said notes, as against the phiintill", he being an innocent holder for value before maturity. The demurrer was sustained, and the defend- ants electing to stand upon their answer, and refusing to plead over, a decree was entered for the plaintilf, from which the defendants appeal. " GrvEN, J. The discussion is addressed entirely to the question whether the promissory notes sued upon are negotiable. It will be observed that they are promises " to pay to Charles K. Whitesell et al. or order." The discussion is as to the construction to be given to the words " et al," and the effect thereof. The words as here used evidently mean "and others/' Therefore, the notes are payable to Charles K. Whitesell and others or order, without designating who the others are. To learn what (pialities are essential to a negotiable promissory note, says Mr. Parsons, in his work on Notes and Bills, (page 30), "^emust bearjnjuind the p.VLr;pose of the note, and of the law in relatTonlO''1t: This is simply that the note may repre- sent ^Tno»ey7-attd-dD"aIl the work of money in business transactions. For this purpose the first requisite — that thing which includes all the rest — is certainty." Certainty, says the author, as to the person who shall receive the money, the person or persons who are to make the payment; the amount to be paid, and the time when payment is to be made. In Story on Promissory Notes (§ 35), it is said: "In instruments designed for circulation, it is of the highest importance to know to whom its obligations apply, and from whom a title can securely be derived." In Smith v. Marland, (59 Iowa, 645, 649), it is said: "Th? g^fli^tiog pggPTiti>1^^an egotiable promissory ruite are! t]ia4jtjhallj)(3SS£Ss^cert^ the^time of payme ntT and the pl ace of payment." Such is the rule uniformly laid do\vn in all the authorinesTTrm^-it does not require further citations. This case must not be confounded with notes pay- able in the alternative, as "to A. or B. ; " it is a promise to pay to Charles K. Whitesell and others jointly. Neither must it be con- founded with notes payable to bearer, without naming any payee, nor with the cases in which it has been held that whoever legally owns such a note may recover thereon. These notes being promises to pay Charles P. Whitesell and others jointly, Whitesell could not alone transfer them so as to convey the interest of the other payees any more than if they had been named in the notes. A note made to several persons not partners can only be transferred by the joint action of all of thom. {Byhincr v. Feiclcprt, 92 111. 305); "and neither payee can, of course, indorse the names of the others without special authority." {Randolph on Commercial Paper, § 155.) IV.] PAYABLE TO OEDEK OK TO BEARER. 117 The appellee contends that these notes are in accord with the pro- vision of section 2085 of the Code. Turning to section 2082, we see that notes in writing, signed by the person promising " to pay to another person or his order or bearer, or to bearer only, any sura of money, are negotiable by indorsement or delivery." It will be observed that the promise must be to another person or his order or bearer, and does not dispense with the certaint}' of which we have been speaking as to who that other person is. Section 2085 is as follows: " Instru- ments by which the maker promises to pay a sum of money in property or labor, or to pay or deliver property or labor, or acknowledges property or labor or money to be due to another, are negotiable instru- ments, with all the incidents of negotiability, whenever it is manifest from their terms that such was the intent of the maker; but the use of the technical w ords^ order ' or ' bearer ' a lone will not manifest such intent." Here, againVfhFpnmriseTnust be to another, and there *" is nothing in the section to modify the rule requiring certainty as to who that other is. It is true, as contended, that negotiable instruments L may be transferred by indorsement or delivery ; but that does not aid us in determining whetiier these particular ins trume nts are negotiable. ^"1^ It is said that Charles R. Whitesell is tlie only payee nained. That is true, but the notes show that he is not the only person to whom payment is to be made. — If it be true, as alleged in the answer, that / '^^ the other persons named, together with Charles E., are in fact payees ^^^^^ person, within the inb-nt of tbc law. It is a fiiriiiliar nilr tbal. when a person is designat*^) as payee, and a (pieslioii arises as to wlio of several persons bearing the same designation was meant, evidence is admissible to show which is th(! payee. (Parsons on Mercantile Law, 88.) Under this rule it was adinissible to show wlio was the owner of the steamboat, and hence the designation was sufficient. In Grujit v. Vanghan (3 Burrows, 15]fi), it is held that a note payable "to ship Fortune or bearer is negotiable, under the rule that, if the name of payee be not the name of a person, as if it be the name of a ship, the instrument is payable to bearer." (See, also, Parsons on Mercantile T>nw, 80.) In earb of these eases a person was designated as pavee — in the one as the owner of the steamboat Juda ; and in the other as 118 rOKM HKQUIHRD. [aKT. II. boarcr. These notes are payable to Charles II. Whitoscll and others or onler. The others are not designated by name or otherwise, and, there- fore, it is uneertaiii "as to llie persons who shall receive the money," iineertain '* to whom its ohl ligations ai)})ly, and from whom a title ean seen rely be derived." We think tlii' Distriet Court erred in sustaining the denmrrer to the answer. y . ^ Keversed. ^ *- .>- 0> — ■), i/--^ v. - .) ^ r ., •/' -« '." (6) Pa^ee may be (5) one or some of several payees. § 27 MIJSSELMAN v. OAKES. 19 Illinois, 81.— 1857. Demurrer to declaration overruled, and judgment for plaintiff. Caton, C. J. The declaration in this case was upon an instru- ment purporting to be a promissory note, payable to " Olive Fletcher or K. H. Oakes." in an action brought by Oakes. The declaration was demurred to, tlie demurrer overruled, and judgment rendered in favor of the plaintitf below. This was erroneous. The instrument sued on was payable in the alternative to one or two persons, and for that reason is not a promissory note, and could not lje_sueiL-ft«^a^' ^uch. It is indispensable to a ))romissory note that it not only must be for a sum certain, and payable at a certain time, and without condition, but it must also be jiayable to a certain person, citlier specifiod on the face of the note, or wlio may be cei-tainly identified by extrinsic proof, not inconsistent with the face of the note, as assignee or bearer. Here the promise was to pay Fletcher or Oalces, but which, is uncer- tain ; which of them had tlie riglit to receive the pay is not specified. and the legal right to the money is not vested in either. But this is a question of law too well settled by the ])ooks to require disqussion, and I will only refer to Story on Prom. Notes (p. 40). The peculiarity of the note aued on was no doubt overlooked by the Circuit Court. 1 ;^.>*>^^ ViV" ' \ Judgment reversed^ , -..^^fie judgr\ent must be reversed. - '*^'^^... — -^""^ ^ r-^'^A -— 2 " Mr. Crawford illustrates tlie meaning of this subdivision by the follow- injr fxample: 'A draft payablo to A, T?, and C, or either of tlieni or any two of them.' Crawford, p. 20. If this illustration correctly interprets the mean- ing of this subdivision — and Mr. Crawford's construction is entitled to great consideration — the existing law has been changed because the statute recog- nizes an instrument |)ayal)le to two payees in tlie alternative as negotiable whereas, under the law merchant an instrument payable to two persons in the alternative is not- negotiable. Mussclman v. Oakes, 19 111. 81; Carpenter v. Farnsuorth, IOC Mass. .'501: Wnlrud v. f'eirie, 4 Wend. 575; /ilanckcnfiatim V. Rlundell, 2 I'.. & Aid. 417. But see Watson v. Evans, 1 Hurl. & Colt. 063; Bpauldinri v. F.rans, 2 McLean, 139, Fed. Cas. 1321G; Record v. Chisum, 25 Tex. 348." Bunker's Neg. Inst. Law, p. 48. — C. iv] Payable to okder or to beareb. 119 § 27 WATSON, SOUTHERN AND MAYER v. EVANS. 1 HlKLSTONE & COLTMAN (Excu.) (J62. — 1863. Declaratiox. Tliat the defendant and William Patrick Evans and George Thomas Evans, on, etc., made their joint and several promis- sory note in the words, letters, and figures, following, and as follows, that is to say : — £100. Leamington, Dec. 2d, 1858. On demand, we jointly and severally promise to pay Messrs. Joseph Watson, Thomas Southern, and Daniel Mayer, or to their order, or the major part of them, tlie sum of one Imndred pounds, with lawful interest, for value received. George Evans. William Patrick Evans. George Thomas Evans. - That the said makers, by the said names following in the said note contained, that is to say, Joseph Watson, Thomas Southern, and Daniel Mayer, meant the plaintiffs; but the defendant and the said other makers did not, nor did either of them, pay the said note. Demurrer, and joinder therein." Hayes Serjt. (C. E. Coleridge with him), in support of the demurrer. The document is void for uncertainty. Is the money to be paid to the three payees, or any two of them? Again, do the words " or the major part of them " refer to the payment or the indorsement, or to both? (Pollock, C. B. — Is it not a proinise to pay to the three persons or their order, or the order of the major part of them?] Suppose two of them said " pay to us ; " and the other said " pay all three." If two alone sued, could the maker plead in abatement the non-joinder of the third ? Assuming that the promise is to pay all three provided they agree, if not to pay any two of them, suppose they all disagree, and each says, "Do not pay to the other." [Martin, B. — Payment to one of several joint creditors is a payment to all.] The general rule of law is qualified by the express words of the contract. In Bayley on Bills, (p. 34, 5th ed.), it is laid down that "uncertainty as to the [)prson to whom the payment shall be made will prevent the document from being a bill or note; as making it payable to A. or H." Tlie authority there cited is HUinrl-rnho), states tlie rule to be general, but, as shown by Mr. Randolph, the eases do not bear out the text. (1 Rand. Com. Paper, § KM, note 4.) And upon prineiple we do not see how the law could be held to be otherwise. For if the fictitious character of the payee is unknown to the drawer, whoever indorses the paper in that name with intent to defraud, perpetrates a forgery and the indorsement is void, a general intent to defraud being sivffi- cient to constitute the offense ^ iv- , , - ^, vyL^^L-- '^"^ rfr^-^i/lL. (The court here discusses an(| distingtiishels Lane v. Kreklei 22 /* Iowa. 399 : Phillips v. Im Thurn, 18 C. B.^N. 1^. 694:; Rogers v. Ware. 2 Neb. 29; Ort v. Fowler, 31 Kans. 478.] If the drawer of a check, acting in good faith, makes it payable to a certain person or order, supposing there is such a person, when in fact there is none, no good reason can be perceived why the banker should be excused if he pay the cliock to a fraudulent holder upon any less precautions^tliajQ_if__iL-liad been made- payable to a real personj ^ inoth er words, why he should not be required to use the^same precautions in the one case as m the other; that is, deter- mine whether the indorsement is a genuine one or not. The fact that the payee is a non-existing person does not increase the liability of the bank to be deceived by the indorsement. The fact is that an ordinarily prudent banker would be less liable to be deceived into a mistaken payment by a fictitious indorsement such as this was, than by a simple forgery.^ The determination of the character of any indorsement involves the ascertainment of two things: (1) the identity of the indorser; and (2) the genuineness of his signa- ture; and no careful hanker would pay upon the faith of the genuine- ness of any name, until he had fully satisfied himself both as to the identity of the person and the genuineness of his signature. Now, a careful banker may be deceived as to the signature of a person with whose identity he may be familiar ; but he is less liable to be deceived where both the signature and the person whose signature it purports to be, are unknown to him. In making the inquiry required in such case to warrant him in acting, he will either learn that there is no such person, or that no credible information can be obtained as to his existence, which, with an ordinarily prudent })anker, would be the same as actual knowledge that there is no such person, and he would withhold payment, as he would have the right to do in such case. But still, if he should be deceived as to the existence of the person, he would, nevertheless, require to be satisfied as to the genuineness of the signature. Of this, however, he could not be through his skill in such matters and on which bankers ordinarily rely, for he would be 5 Followpfl on this point by Jordan Marsh Co. v. National Shawmut Bank, 201 Mass. .397, 409. — C. IV.] PAYABLE TO OKDER OR TO BEArER. 125 withjoiit any standard of comparison, and he could have no knowledge of the handwriting of the supposed person, for there is no such person. So that, if he acts at ail, it must be upon the confidence lie may place in the knowledge of some other person, and if he choose to act upon this, and make, instead of withholding, payment, he acts at his peri] and must sustain whatever loss may ensue. It is a saying frequently repeated in " The Doctor and Student," that " he whb ^^ ^ lov £th peri l_shall perish^in it." In other words, where a person has a 7 safe way ancTaGancTonslt for one of uncertainty, he can blame no one -?- but himself if he meets with misfortune. Judgment-uiLilj c. Circu it Court reyersed, and that of the Common '7 Pleas affirmed.® ^^] T ^ y / ^ '^ § 28 BANK OF ENGLAND v. VAGLIANO BROTHERS. L. R. 1891, Appeal Cases (H. L.) 107. Plaintiffs carried on a large business in London as foreign bankers. V\; £[na a^hank er in Odessa, Russia, had had for twenty-nine years constanT iHisiiw^-wlatiatLs witlLJo laintiffs and his bills o n plaintiffs were each year numerous and in the aggregate for very large amounts. On several occasions Vucina had drawn them to the order of C. '-'C y Pet rjdi & C o., a firm doing business in Constantinople. _ -J^/-. j. ^"^^ Glyka was one of plaintiffs' clerks and had charge of the cor-'^^ ^"JVv respondence with persons residing in Russia. He forged the signature ^ of Xiicina_^obiIls purporting to be drawn on the plaintiffs by Vucina ^i- to the orderlrf 0.- Petridi & Co., and resembling those which Vucina was in the habit of drawing on the plaintiffs, and placed among the plaintiffs' correspondence counterfeit letters of advice with respect to these bills resembling those orriinarily received f rom A'uei n.i. By these means Glyka procured the genuine acceptances of the plaintiffs to the bills which he had forpd . He then forged on the bills indorse- ments purporting tTTTTe those of C. Petridi & Co., the payees named therein, and was paid by the defendants aeroM the counter jbc amounts for which the bills were drawn_-^ f ^^ ^f LLC, j*.U-^ Section 7, subscc. 3, of the English Bills of E.xcha'nge Afct xA&'./ M. • Accord: Flhipman v. Hank, 126 N. Y. 318. See discussion of this case in ^ PhiUipn V. Mrrrantilr \at. Rfc, 140 N. Y. 55fi, pout, p. 135. In Jordan/* f Mnrnh Co. v. \at. Shawmut file. 201 Mans. .107. it is said <)i:.('"Tlio case of X_. Shipnnin v. linnk, 120 N. Y. .318. in nimo.st identical in its leadinR features \^ with the case l)efore us. and the di-cision of it fully covers the conclusion which we liavf reached." P. 110. See also ftnlr/i v. Ilnrflinfj. 201 Mjis*). lO.'i. .nrid SrnbnnrrI Nat. TiU v. Hk. nf Awerira, 19.1 N. Y. 20, reported in 22 L. N. S. 409 with note. p:xtracts from this note will be found printed herein at p. 141. — C, 126 FORM RRQUITIKD. | AUT. 11 ** Wliore the pavoe is a fictitious or non-existing person the l)ill may be tieateil as payable to bearer."'' riaintilTs now seek to recoMM' frDin the defendants the amounts 1/ so jtaid. alK\i;ing thai they were wrmej, fully and wilhout their autliority ( debited to their account. -—- Case tried before Ch.vhlkr, J., without a jury, who foiind for the plaintiffs. 23 Q. B. D. 103. This judgment was afTirmcd by flie Court of Appeal (23 Q. B. D. 243),' and the defendants thereupon appealed to the House of Lords. Lord Hershell. My Lords, I propose to deal at the outset with \ the question of the construction of the Bills of Exchange Act, which gave rise to a dili'erence of opinion in the court below. * * * The conclusion at which the majority of the Court of Appeal arrived with reference to the construction of the sub-section of tiie Bills of Exchange Act with which your Lordships have to deal is thus stated: "The word 'fictitious' must in each case be inter- preted with due regard to the person against whom the l)ill is souglit to be enforced. If tlie drawer is the person against whom the hill is to be treated as a bill pnyablc to bearer, the term 'fictitious' may I be satisfierl if it is fuliiious ,is regards himself, or in other words, j fictilious lo liis kiiowlcilgo. If the oliligations of the acceptor are in (juisiion. and the acceptor is the person against whom the l)ill is to be so treated, 'fictitious' must mean fictitious as regards the . acceptor, and to his knowledge. Such nn interpretation is based on , K- ^o*^^ sense and sound commercial prin'iple." The conclusion thus expressed was founded upon an examination of the state of the law at the time the Bills of Exchange Act was passed. The prior authorities were subjected by the learned judges who concurred in this conclusion to nn elaborate review, with the result that it was established to their satisfaction that a bill made payable to a fictitious person or his order was, as against the acceptor, in effect a bill payable to bearer, only when the acceptor was aware of the circumstance that the payee was a fictitious person, and further, that his liability in that case depended upon an application of the law of estoppel. It appeared to those learned judges that if the exception was to be further extended, it would rest upon no ])rinciple, and that they might well pause before holding that see. 7, sub-sec. 3, of the statute was " intended not merely to codify the existing law, but to alter it and to introduce so remarkable and unintelligible a change."' My Lords, with sincere respect for the learned judges who li;ive taken this view. T cannot bring myself to think that this is the prn|)f'r way to deal with such a statute as the Bills of Exchange Act, which was intended to be a code of the law relating to negotiable instru- ments. I think the proper course is in the first instance to examine 7 Notice the diff«rent rcadincr of the Nep. Inst. Law. § 28, subd. 3. — C. -^ IV.] PAYABLE TO ORDER OR TO PEARER. 127 the language of the statute aud to ask what is its natural meaning, uninfluenced by any considerations derived from the previous state of the law, and not to start with inquiring how the law previously stood, and then, assuming that it was probably intended to leave it unaltered, to see if the words of the enactment will bear an interpre- tation in conformity with this view. If a statute, intended to embody in a code a particular branch of the law, is to be treated in this fashion, it appears to me that its utility will be almost entirely destroyed, and that the very object with which it was enacted will be frustrated. The purpose of such a statute surely was that on any point specifically dealt with by it, the law should be ascertained by interpreting the language used instead of, as before, by roaming o ver a vast number of authorities i n order to di ^cnvpr what thn Tnff^^nT^fTtTTTPtin^, il ll'/ ,1 luinrHT'- critical examination of the prior decisions, dependent upon a knowl- edge of the exact effect even of an obsolete proceeding such as a demurrer to evidence. T am, of course, far from asserting that resort^ may never be had to the previous state of the law for the purpose qf^S^ aiding in the construction of the provisions of the code. If, forT^ ^- example, a provision be of doubtful import, such resort would be^ perfectly legitimate. Or, again, if in a code of the law of negotia/^' - - ble instruments words be found wliicli liavi^ previously acquired a technical meaning, or boon used in a sense otlier tlinn their ordinary one, in relation fo such instruments, the same interprotafion might well be put upon them in the code. I give these as examples merely ; they, of course, do not exhaust the category. What, however, T am venturing to insist upon is, that the first step taken should l)e to interpret tbe language of the statute, and flint an appeal to earlier decisions can only t»(' jusfilicd on some special ground. One furtlicr remark 1 Iimvc jo tii;il<(^ before I proceed to consider the lan^Miage of fhe slatufe. Tbe P.ills of FiXchange Act was cer- tainly not intended to be merely a eoile of tlie evisfintj law. 11 is riof open to (iiu-sfion tliat it was intended to aller, and did aller it in certain respects. And f rlo nol fliink liiat il is lo lie presumed that any particidar provision was iulen^\\r, amppts ^ bill ^"^f "" Pithpr becaus e he has in his han^s^moneys of the drawer , or expects to have theiTT^efore the bill falls due, or because he is willing to give the credit of his name W lllU (Jfiltfei-, and to maKe hirn ad J,iiLaJLuaLlL)l-pdy- ment rv f_hi, c^ {[jxa£x T * i ti im irr i^ -f py r^-^' the acceptor to whom the drawer directs him to make payment ; that is a matter for the choice of the drawer alone. The acceptor i«^ nnl v ( nm rinnl lo -cc that he makes tlie |\iiy!ll<^ht as dirortpfl ^ an fls_tcL..b p uIjIl; Lu Lluugc iln- iiriiwur,i — J ^^^ In truth onJ X-Vvith the drawer that the. acceptor deals; it is at \n^ ms tance thai he accepts: it is on his behalf that he pays; and it IS to nmi that he looks either for the funds to pay with, or for reim- bursement if he holds no funds of the drawer at the time ofjiaiJBfiDt. In the ordinary case, where the payee designated in the bill is a real person intended by the drawer to receive payment, either by himself or by some transferee, the acceptor can only charge the drawer, if he pays the person so designated, or some one deriving title through him. If payment be made to any other person, the drawer's lial)i!ity on the bill is not discharged by payment ; he will or may remain liable to the real payee, or those claiming under him. nnd the acceptor having paid otherwise thnn according to the directions of the drawer cannot justify the use of his funds in making (he payment, or clniin to be reimbursed by him. Rut now supfmse the drawer inserts as payee the name of a fictitious person, requests the drawee to accept a bill 80 drawn, indorses the |)ayce'8 name, and puts the bill into circu- lation, lie ci- rlairily iiitciid iMl il to oMain ciirnTicy iiud \o )ic paid nt ma turity, ami l ie as ccriaiiilv dnl iiol iiili'inl it lo lie paid oiilv p?i vee named, r)r siiiiu' o ne dcnvin;^^ title tl iiDii'di liitii . Nor, as it sepms to me, can it reasonaltly ix; said that lie intended to direct the' drawee to pay such person and such person only. What th en is the [losilinn (.f a lawful lioldrT of a bil l so I fTo not und/'i'^t.'^TI/l il HI >»' ijiiiililcij ||i!i[ (■vt'H IIITrrT'tlic Bills J 'Jxchange Act such a noiaef l|ijiilil w ifrim iiBTtweffff ffTTieDil tbe drawer, /or he notinfMvlykne\rTTffrrTTW^^ fictitions person, but wap l)irn=elf the .nntbor of the fiction. .As ac^ainst the drawer then such a bill (■f)nld be treated as payable to bearer. NKQOT. INBTRUMENTB — 9 130 FOIJM KKQlUHi'l). [art. 11. But if it oannot bo so troatod as against tlio accoptor, tlio holder, wlio, it m:iy Ito, bought or disiouutod it on the faith of the acceptance, rely- ing on the credit of the acceptor, and unwilling to trust to that of the drawer alone, is deprived of that upon which he relied, and of the liability which he regarded as his security for payment. The holder in such a case sutlers wrong. Would any injustice result if the bill could, as against the acceptor also, he treated as payable to bearer? The drawer must be taken to liave intended the hill to be paid by the acceptor at maturity — but to whom? Not to the fictitious payee, or some one claiming througli him. Why not then to the bearer, who can bold the drawer liable upon the bill, and treat it as payable to him? And if it were the law that the acceptor was bound in such a case to pay the bearer, who would suffer? Not the drawer, for pay- ment would have been made to a person who could compel him to make payment, and he could have no ground for complaint if the acceptor used his funds in thus discharging his liability on the bill, or in case he had not provided such funds if he were held liable to reimburse the acceptor. And how would the acceptor suffer in such a case? It wasTTis nlijccl in ;i((c|>rniLr the bill to render himself liable, to mnke pa^ n rf ff t" Hie pcisoii intcudcdby the drav^^'er to re(ci\c it, , ! (if iniiiir\< [)i'(i\i(l('(l l)y him, or looking to him foi- i-ciiii- h>.; -i 11.. ill. Hi- position under such circumstances would be pre- '=-- ci ocl v w -biit ir would have been if he had made payment to a real person designated as payee, or to those claiming under him. And it might. I think, fairly be said that he was making the payment in accordance with the intention of the drawer. It may be that the right of the holder to treat such a bill, as against an acceptor ignorant of the fictitious character of the payee, as a bill payable to bearer, could not be established merely by an appeal to the law of estop])el, and that such estoppel would exist only against the drawer who knew that the payee was a fictitious person. I will assume that this was the law prior to the recent statute. But why should not the Legislature have intervened with a positive enactment imposing this liability upon the acceptor — an enactment which, it seems to me, would wrong no one, and would prevent a holder for value from suffering wrong? Estoppelisjot- ^ the only soufl d-princip^' '- 't wliif li n l.nv cnn be ba^TTT^T^'T lie law _ii£-f-«tup])ul wrttT— uat. t, '■' ;iir<'ril ^llfli( ii lit protcctioD^-io^^^ftOse dealing with the apparent owm i nf -oods. The Legislature deemed it ITecessary to intervene, and the FnT^;ors Acts were passed, each of which added something to the protection of persons so dealing. Whv, then, should it be thought improbable that the Legislature should have created in the holder of a bill drawn payable to a fictitious person a new right against the acceptor? If I am correct in thinking that this added riL^ht would obviate and not entail inju.stice, that it would make the law more reasonable and bring it IV.] PAYABLE TO ORDER OR TO BEARER. 131 more into conformity with the course of commercial transactions, I can see no reason for doubting that the Legislature so intended, if this be the plain, natural meaning of the words they have used, or for endeavoring so to construe the language as to find in it no more than a statement of the previous law. Even assuming, it is said, that where the payee is a " fictitious " person the bill may be treated as against the acceptor as a bill payable to bearer, the word " fictitious " is only applicable to a creature of the imagination, Having no real existence, whilst in the present case " C. Petridi and Company " was the name of a firm having a real exist- ence, so that the payee here cannot be termed„a..j£iitious person. [After discussing this proposition at great length tlie" court con- cludes:] It seems to me, then, that where the name inserted as that of the payee i.- - ^^ -icd by wav of prntrnre only, it may. without impro- priety, L. , .well die pu\i'c 1.^ a feigned ov iircffiidfd, or, in other' words, a fictitious person. Stress was laid upon the fact that the words of the statute are " where the payee is a fictitious person," and not " where the payee is fictitious." There is not, to my mind, any substantial difference in the meaning of the two phrases; and I cannot think that the Legislature intended the rights and liabilities arising upon mercantile instruments to depend upon nice distinctions such as this. * * * I have arrived at the conclusion that, whenever the name inserted as that of the payee is so inserted by way of pretence merely, without any intention that payment shall only be made in conformity . therewith, t he pavee is a fictitious pers on withir) fhP "^"-^ning nf thr / / statute, wli ether the name be that of an existing person, or of oneY who has no existence, and that the bil l may, in each case, be treate d / ^.,^^ by a lawful holder as payabie ^jfj pip"^^* / * r ., V *" Lxt=fu.* * * * /^'^ liords Tlaifltupy, Watson, ^ram well, Macnaghten, Morris, Field, and^'f ^ the Earl of Selbourne, also delivered opinioTis. " Judgments of the Court of Appeal and of the Queen's Bench Division reversed and judgment entered for the defendants with costs here and below ; causie remanded to the Queen's Bench Division. / § 28 MACBETH r NORTT^ AND SOUTH WALES BANK. '[190e] 2 King's Bench. 718. One White, by falsely representing to the plaintiff that be )iad agreed to [jiirfbaRf from a riian nanuji LKar r fiBrtain_sliares then held by Kerr in a company, and that he had »W€H>g«»f to resell the shares at a profit, 132 POltM HEQUIRED. [aRT. II. inducod tho plnintiff to aijroo to assi.-^t him in financing the trans- action. For this purpose the phiintiff drew a clicck on the Clydesdale Bank payable to Kerr or order for the amount of the purchase money, which was delivered to White in order that he might hand it to Kerr in jiayment for the shares. White forged Kerr's indorsement to the check, and paid it into his own account with the defendant bank, who credited him with the amount, and collected the money from the Clydesdale Bank. White had not agreed to buy any shares from Kerr and Kerr had at the time no shares in the company. The plaint ill's claim was for damages for the conversion of the check or alternately for money had and received to the plaintiff's use. Bray, J., read the following judgment: ******** The plaintiff was told thaj; Kerr was an engineer formerly living at Bootle, but then near Manchester. That was true. He was told that Kerr had agreed to sell the 5,000 shares to White. That was untrue, and he in fact held no shares. There had l>een no such transaction, but the plaintiff believed the statements made to him, and made the cheque payable to Kerr in order that he and no one else should get the money. Can Kerr, under these circumstances, be said to be a fictitious payee? I will first examine the authorities. In Vinden v. Hughes, [1905] 1 K. B. 795, the facts were, in my opinion, indis- tinguishable from the present case. Vinden had a real person in his mind when he drew the cheque, although in fact the payee was not his creditor, as he supposed, and had had no transaction with him giving rise to such a debt. He had been deceived by his clerk, but he intended the pa3'ee and no one else to receive the money. Warrington, J., held that the payee was not fictitious. He says: "It was not a mere .^pretense at the time he drew it. He had every^reason to believe, and he did believe, that the cheques were being drawn in the ordinary course of business for the, purpose of the money being paid to the persons whose names appeared on the face of those cheques." That seems to me to exactly fit the present case. Under ordinary circum- stances I should consider mvself bound by this decision, but it was pressed on me that Warrinoton, J., had misread the judgments in the Bank of England v. Vagliano. 1 think, therefore, I ought to examine these judgments. What were the facts of that case? There was no real drawer; the bills had been drawn by Vagliano's clerk Glyka to make Vagliano think that they were real bills drawn in the ordi- nary course of business by customers who were entitled to ask Vagliano to accept them. In truth, the whole bills were fictitious, though Vag- liano believed them to be real and accepted them. It was strongly urged that, inasmuch as it was the obligations of the acceptor which were in question, the payees could not be fictitious unless they were so to his knowledge, and the Court of Appeal so held; but the House IV.] PAYABLE TO ORDER OR j"0 BEARER. 133 of T-ords hc'](] tlie contrary. T think the real ground of their decision is to be found in Lord Herschell's judgment beginning near the bottom of p. 147. I have therefore to ask myself, is this the ordinary case where the payee designated in the bill "is a real person intended by the drawer to receive payment either by himself or by some trans- feree?" It seems to me that there can be but one answer to that question. Kerr was a real person intended by the plaintilf, the drawer, 'as I have found, to be the person who should receive payment. It is , a fallacy to say that Kerr was fictitious because he had got no shares"""^" andliad never agreed to sell any to White. The plaintiff believed he had, and intended him, and no one else, to receive the money. It seems to me that when there is a real drawer who has designated an existing person as the payee an.d intended that person should be the payee, it is impossible that that payee can be fictitious. I think the jtord-" fictitious "implies that the name has been inserted by the person who has put it in for some dishonest purpose, without any intention that the cheque shoutd -be paid to that person only, and there/ore it is that such a drawer is not permitted to say what he did not intend, viz., that the cheque shall be paid to that person only, and the only way of effecting this is to say that it shall be payable to bearer. It matter s not, in my opinion, how much the drawer of the ;! cheque mly^ave been deceived if ho honestly intends that the cheque / /phall be paid to the person designated by him. T think WARRTxnTON,/ 'J., has not in any way misread the judgments in Banl- nf I'Jurjfnnd v. Vaqlinno. T think his decision and mine are really founded on the principles laid down in that case, and in the result therefore I am of opinion that the throe contentions raised by Mr. Isaacs fail, and that the plaintiff is entitled to recover the whole 11,250/. This judgment was affirmed by the Court of Appeal, [1908] 1 K. B. 13, and an appeal was taken to the House of Lords. [11)08] Appeal Cases, 137. Lord Lori:burn, L. C. I adopt the language of Bray, .1. : " It seems to me that where there is a real drawer who has designated an existing person as the payee, and intends that that person should bo the payee, it is impossible that the payee can be fiolitioua." If the argument for the ajipellants wore to a\.ul, namely, that the payee was a fictitious person because White (who was himself no party to the cheque) did not intend the payee to receive the proceeds of the cheque, most serious fonsoquoncos would ensue. It would follow. !i.s it seems to me, that e\cry cheque to order might be treated as a cheque to bearer if the drawiT ' i 1 1' 'i di civcd. no matter by wli<>in into 134 Foinr ni:(irii;L:i). [aRT- H. drawinjj i<. To state such a iiroposilioii 1 - '.o rcfnlc it. Yet noUiing short of this i-oiild estalilish the appcihint"^' (oiilmlioii. As to the aiUhoril ii's, I aiirri' with tlic Coiiil of .\[)])e:il in tliiiikiiii' that neither Wu/liano v. /)'<;«/• of /uujiaitil nor (Uiitlon v. AttcnbaruiKjIi , (I l.Sl>7 I A. ('. !K)) governs tlie present ease. I will not discuss tlie former of those autliorities beyond saying that it was not a case in wliieh the drawer intended the payee to receive the proceeds of the hill. And in the latter authority the payee was a non-existent person whom no one either lould or did mean to he the reci])ient of the cheque. That heiiig so, 1 think tiiis ap})eal should he dismissed with costs. Lord Kobertson also delivered an opinion, and Lord L'ollins con- curred. Order of the Court of Appeal atiirmed, and appeal dismissed with costs.* § 28 PHILLIPS V. MEECANTILE NATIONAL BANK. 140 Nkw York, 556.— 1804. Action by John E. Phillips, as receiver of the National Bank of Sumter, S. C, against the Mercantile National Bank of the city of New York. From a judgment of the General Term affirming a judg- ment at Ciixuii dismissing the complaint, plaintiil' appeals. Gray, J. The plaintiff is the receiver of the National Bank of Sumter, in South Carolina, and through this action seeks to recover a balance alleged to be due on a deposit account with the defendant Innk. The question presented by the record is whether certain twelve '"'-ecks, drawn by the casliier of the Sumter bank, v.hieli were paid l)y +ho defendant bank, could properly be deliited in account to the Sumter V)ank. Bartlett, its cashier, had drawn them upon tlie defendant for various amounts, some to the order of A. S. Brown, and some to the order of C. E. Stuhbs. In the check book he would enter sometimes the real amount of the checks, and sometimes an amount much les<=; than the checks actually were drawn for. Tlie names of these payees were those of persons who actually resided in Sumter, and were dealers with the hank, bnt they knew nothing of these checks, and had no con- nection whatever with the transactions of the cashier in issuing these 8 See Mr. .Tohn IJ. Falconhridf/f's iirticle entitled " Fictitious or non-existing payee'' in tlie ('atimla Lau: Journal for April, 1907, p. 225, where the English and British eolf)nial rases arc admirably disciissi'd and compared. In addition to the VafiUano and Macbeth cases, reported herein, the followin. AttenhorOHi/h, f 18971 A. ('. 90; Vindrn v. Hvghes, f 19051 1 K. R. 795: London LIfr /«'.■. Co. v. MoLsons Hk., [1904] 8 O. L. R, 238; City Hk. v. I{ checks, which could be drawn out on checks signed by Arthur 13. Wallace, administrator, when countersigned by the United States Fidelity & Guaranty Com- pany. The Wallace estate had then been practically settled, and the amount on deposit was ready for distribution among the next of kin of the decedent. The four checks in question were drawn without the knowledge or authority of the administrator, his signature being forged, and in each there was inserted as payee the name of some one of the next of kin whose distributable share of the amount on deposit with the plaintiff was greater than the amount of the check or checks thus apparently payable to such person. The first check was dated September 25, 1905, and was presented on that day to the United States Fidelity & Guaranty Company by a person unnamed, without the knowledge of plaintiff or defendant. The United States Fidelity & Guaranty Company, relying upon" the apparent genuineness of the check, countersigned the same, and it was then, by some person un- known, presented to the plaintiff for acceptance and by it accepted, in writing. The name of the payee was then forged upon the back of the check as first indorser, and it was subsequently deposited with the defendant, by one M. F. Kcrby, one of its depositors, who was given credit for the same. It then bore the following additional in- dorsements : " Harvey J. Conkey. M. F. Kcrby. A. Edward Fisher." Thereafter, the defendant, through the Xew York Clearing House, presented the check to the plaintiff for payment, gunranteeing the indorsements, and it, relying upon the genuineness of the check, with the guarantee of the defendant thereon, not knowing that the indorse- ment of the pavee was forged, paid the same in good faith. Substan- tiallv the same facts are true in regard to the second check, which was dated in November, 1905. The other two checks, dated in December, 1905, and January, 1906, were not presented to plaintiff for acceptance before payment and were deposited with defendant by Harvey J. Conkey, one of its depositors, to the ciT'dit of liis account; otherwise, the same course was pursued with regard to them. They were indorsed "Harvey J. Conkey" below the forged indorsement of the payee. T'pon discovering the forgeries, the plaintiff at once notified the de- fendant, tendered back the checks, and demanded repayment. In the meantime both Kerby and Conkev had withdrawn the proceeds of the checks, and the defendant, relying on plaintiffs acceptance and pay- ment of them, had paid out the same in good faith. The defendant has refused to pay plaintiff the amount of tbo fhocT\S, or any of them, and the question presented is whether plninfiff is entitled thereto. lA^ IV.] PAYABLE TO ORDER OR TO BEARER. 139 The general rule is that payments made under a mi8tak«-«i- fact » iud^ hv re covere d: ntThoiiirli iif[rli;_M'ntly made; but it is also settled I that, if the drawee of a hill of exchange to which the drawer's name ■phas-beefi-ftrr^d accepts or j»ay> tlie same, he can neither repudiate the I acce p t ance nor r e cover the money paid, since he is bound to know the I draw er^s signat ure! Fricc v. Xral, 3 Burrows, 1354; Bank of United I i^foTeTV. Bant- of Georgia, 10 Wheat. (U. S.). 333; National Park ' Bank v. Ninth National Bank, 46 X. Y. 77; Goddard v. The Mer- chants Bank, 4 N. Y. 147. It |salso settled that, where the indorse- ment of the payee of a bill of exc Ea'IiL^L' has bceir~fgfge"d! suljsequent holdei:g__oh tain n o title to it, and payments made to one who holds under such forged indorsements may^bere^Qixred. Corn Exchange Bank v. Nassau Bank, 91 N. Y. l^;Tlolt\. Ross, 54 N. Y. ^U; Canal Bank V. Bank of Albany, 1 Hill, 287. Therefore, if all the indorsements on the checks in question had been genuine, the plaintiff could not recover; but if the maker's sig- natures had been genuine, and only the indorsements or any of them forged, it could recover. Having paid the checks, the plaintiff cannot now be heard t o^sax_that_thg_imik£iia aigna.turc& are not genuine, or recover on the ground that the same were forged, and by reason of that fact it is suggested that the rights of the parties are precisely the same as though the drawer's signatures were genuine, and since the defendant never obtained good title to them, on account of the forged indorsements of the payees, the plaintiff is entitled to recover. There are authorities to sup[)ort this contention. First Nat. Bank v. North- western Bank, 152 111. 2!)6 ; McCall v. Croning. 3 La. Ann. 409. But it does not necessarily follow, because the checks were not indorsed by the persons whose names appeared on them as payees, that the defendant, which received them in good faith and paid value therefor, can be comjicllfd to repay their amounts to the plnintifT. A leading authority on tlie subject is Bank of England v. Vngliano Bros., L. R. 1S91 App. Cas. 107, which reversed Vagliano v. Bank of England, 23 Q. R. D. 243, and 22 Q. B. D. 103. This authority has been frecpiently cited and is directly in pniifl?*"*— JtfcJ' The correctness of the decision in First NationaX Bank v. Nnrth- wrslern Bank, supra, may well be fpiestioned, since the decision of the lower court, which was reversed by the House of Lords, in the Bank of England case, was cited at lenglh and relied upon. Whetlier Ibis he HO f)r not, tlie decisions in our (twn state are entirely in harmony with the views expressed by the House of Tjords. Thus, in Cnggill V. American Exchange Bank, 1 N. Y. 1L3, 49 .Am. Dec. 310, a partner drew a bill of exchange in the name of the partnership, payable to one Truman Billings and forged Ihcreon the indorsement of tlie lat- ter. The bill siibser|nently came into the bantls of I he defendant bank, and the plaintiff, upon whom it was drawn, accepted and paid it. Tt was held that the plaintiff, on discovering the forgery, could not re- 140 FOHM KEQUIREn, [aHT. 11. cover the amount paid from the del'eiulant, since the bill was in effect pa3able to heaier, and defenilaiil had i^nnl tillr. Mr. .lusticc Bronson, who delivered (he opinion el' ihc couri, disCmi^uishcd the ease of Canal Bank v. Bank of Alhaiii/. sujnii, and said: "As the payee had un iiderest, and it was not intended that lie should ever heeonu> a party to tlie iransattion, he ni.ay he regarded, in relation to this matter, as a nonentity; and it is fully settled that when a man draws and jiuts into cirenlation a hill whieli is payable to a fictitious person, the holder may declare and recover upon it as a bill payable to bearer. * * * In legal effect, though not in form, the bill is payable to Ix'arer. * * * ry^^^ plaintiff probably accepted and paid the hill under the mistaken assumption that the indorsement was genuine : but he was not mistaken about the main fact which he was concerned to know, which was that the holder was the owner of the bill." And in Phillips v. Mercantile National Bank, 140 N. Y. 556, the cashier of the National Bank of Sumter, S. C, drew checks in the name of the bank, inserting as payees the names of customers of the bank, whose indorsements he forged. The checks thus drawn were sent to various firms in Xew York and subsequently came into the hands of the defendant, v/hich received them in good faith and charged them to the account of the Sumter Bank. The receiver of the Sumter Bank thereafter brought an action to recover the amount of these cheeks, and it was held that the same could not be maintained, since in legal effect the payees were fictitious and the checks payable to bearer, and for that reason the defendant obtained good title. * * * Under the negotiable instruments law and the cases cited, I am of the opinion the checks in question, as between plaintiff and defendant, were payable to bearer. It does not appear who forged the maker's signatures, but the subsequent history of the checks does not leave it open to doubt that the person who did so knew that the parties whoso names were used as payees Avoid d never have any interest in the in- struments. Just as in the Bank of Englanrl and the Phillips cases. in order to accomplish the fraud more easily, the names inserted as payees were those of persons to whom checks might naturally l)e made. Whether indorsing the names of the payees upon the checks was tech- nically forgery or not it is unnecessary to consider. It has been con- venient to thus describe them. Despite these forged indorsements, then, the defendant acquired good title, since in legal effect tlie cheeks were payable to hearer. Plaintiff, having pnid them to a holder in due course, cannot recover upon the ground that the payees' signatures were forged. Xor is this view at all in conflict witli SJiipin'in v. Bonk of Stale of New York, Ur^'S.Y. ?,\H. * * * The court held that the plain- tiffs could recover from the bank the amount paid, distinguishing the Bank of England case, and the distinction is obvious. In the former IV.] PAYABLE TO ORDER OR TO BEARER. 141 case, the member of the firm who signed the cheeks in the firm name believed that in every instance tlie payee was a real person to whom alone the check was paj'able, while, in the latter case, the person who wrote the maker's signature was a forger who knew that, so far as the bills of exchange were concerned, the payee was fictitious. The court expressly recognized the rule that the maker's intention was control- ling, saying: " The maker's intention is the controlling consideration which det ermmes the character o f lurh p n prr'" It is true that in many of the authorities cited the person guilty of the fraud was connected in some way with one of the parties, which may have affected the equities of the case, as M^as suggested in *S7/(/;- man v. Bank of State of Netv York, supra, concerning the decision in the Bank of England case, while here, so far as appears, the guilty party was a stranger to both plaintiff and defendant, and they are equally innocent. But that cannot change the law as to the fictitious- ness of the payees, and, if it did, I am of the opinion that any equities in the present case are with the defendant. The risk of paying out money upon a forged signature of a depositor is one which a banker must assume, and, if the plaintiff had detected the forgeries when the checks were presented for payment, it would not have suffered any loss, and it is possible that the defendant would not. T am of the opinio n flnf iln' plniniifT Ims nn lognl claim against the de fendant, and for t li.il ica-i^ii lin hilUi- is entitled to judgmentupon the merits, with costs. All concur.^ i >J^-^/ ■>f in anv of its 3 As thfi New York Court of Appeals has nor in any of its decisions passed upon the precipe questions involved in tliis case, this decision cannot, of course, be reparded as settlintr the law in New York. See a most instructive article by Professor T^. M. Tireeley in .1 Til. T.aw Rev. 331, entitled "Fictitious payees in forped cheeks or bills," criticizing this caHe and Hank v. \ ariUaiio, and ar^uinp that l''ir.9t Nat. linnk v. Nortlnocstcrn Nat. Hank, l.'i'i 111. 25)0. was correctly deciderl, and that it is not overtiirown by the s)ibsef|uent enactment of the Illinois Nejrntiahle Tnstrtiinents T.nw. Tn this eonnectJDn attention is called to the difTerent wrudinp of the iJiiiKiis .Act (it firovides that "the instrument is payable to bearer . . when it is [layahie to the order of a person known by the drawer or maker to be fictitious or nonexistent, or of a livinp person not intended to liave any interest in it ") which "seems to the writer ... to justify a construction dilTcrcut from that placed upon the Knulish and New York Acts." P. 339. The note to Srnbnard Nat. Unuk v. linnk nf Amrrirn, 103 N. Y. 26, in 22 L. N. S. 400, entitled " When is a ncpotiable instrument deemed payable to the order of a fictitious person within the rule which repards such an instru- ment as payable to bearer," diseusses nil the ca.^es printed herein on this subject, and deserves a most careful rending. Attention is partioilarly called to the followinp extracts: "The court, in Hnhn v. Wnlkinn. 20 Kan. 001, . . . makes a distinction bearing on the question now under consifloration. as to the necessity of knowl- edge by the maker or drawer of the fictitious character of the payee, Ix'twecn a case where an instrument purports to be payable to a real person, known at 148 KOHM [{Kl^lURKD. [aUT. II. § 28 McKEEIIAN, The Negotiable Instruments Law. 1 41 Am. Law Ri'X.., N. S., pp. 448-450.] The socoiul iTititisin of ij '■> | N- Y., § 2S\, par o, is lliat such an in- stnimont is, iiiulor the ail, payahle to hearer unthouf being indurscd, and that this, also, ignores the tenor of the instrument. " Nor is there any judicial precedent or mercantile custom," says Professor Ames, •' in support of the notion that a bill payable to a fictitious payee, but not indorsed in the nanie of such payee, is payable to bearer. In all the reported cases, instruments payable to a fictitious payee have been indorsed in the name of such payee before negotiation." That is sub- the time to exist, and present to the mind of the maker or drawer as the party to whose order it was to be paid, although, as a matter of fact, he had no connection with the transaction, and a case where there was no such person in existence, although the maker or drawer supposed there was; holding that the drawer's hclicf tiiat tlie person named was the real jtayee will prevent the application of the rule as to fictitious payees in the former case, but not in the latter. As subsequently shown, substantially the same distinction is made bv the English cases, when the YmjUano case is considered in connection with the subsequent cases." P. 502. "These cases \fihipman v. Bank. 126 N. Y. 318, and Armstrong v. ^'at. Bank. ante. p. 123] are . . . clearly opposed to the distinction made in the Kohn case and the later English cases." P. 503. "Ihe opinions in these cases [Vinden v. Hughes (1905), 1 K. B. 795, and Macbeth v. Bank, ante, p. 131] leave, perhaps, some doubt as to whether the doctrine of the Yagliano case is restricted to the very facts of that case; i. e., the case of acceptance of a bill where the drawer's signature as well as that ot the payee is forged, or whether the doctrine of that case would still be applicable .so as to characterize a bill as payable to a fictitious payee, as against an acceptor who had in mind an actually existing person as the payee, where the drawer knew of the fictitious character of the payee, that is, knew that the person named had no connection with the transaction. " It will be noticed that Trust Company of America v. Hamilton Bank [ante, p. 137] . . . was very similar in its essential facts to the Yagliano case, and the decision is in harmony with the doctrine of that case, even when confined to the first or narrower of the two hypotheses just stated. "Aside from the aspect of the question just suggested, the English cases, when considered together, seem to adopt practically the same position and distinction as the Kansas court. TajaUier.JwT)r^ds.JliLe English doctrine appears to be that the belief of the party 'sought to be" charged, that the payee was an actnntlr Pxtsting pii-on. U< wlinrTi, or upon whose indorsement, hejnTended the instrument to be pn]<\. will not, |)i.vent the application of the rule as to fic- titious payees if there was in fart no reaT person in existence whom he had particularly in mind as payee; but that the intention of the party sought to be charged, at least if heTfTthe drawer, that the instrument was to be paid to or upon the order of an actually existing person, known to him, and in his mind as the person to whom or upon whose order the instrument was to be paid, will defeat that rule." Pages 504. 505. See also the article entitled " Fictitious payees under Negotiable Instru- ments Act" in 13 Law Notes, 23. "In Keenan v. Blue, 240 III. 177, a promissory note payable to D. L. Buck- IV.] PAYABLE TO ORDER OR TO BEARER. 143 stantially true.* If such an instrument requires no indorsement, a departure has been made from what has been supposed to be the law — and Professor Ames and Judge Brewster agree that the new act dispenses with the necessity of an indorsement. Indeed, any other reading of it seems impossible, though whether an indorsement is necessary under the English act has never been decided, and seems fairly open.'' Judge Brewster defends the change. He says : " Surely it is more logical to hold that a note which purports to be payable to a person worth or order was indorsed by Buckworth '. . . to I. N. Porter or bearer,' signed ' D. L. Buckworth.' So indorsed the note was discounted by the plain- tiffs . . . who sued the makers. It was held, . . . Second, that the name ' I. N. Porter ' was fictitious, and hence could be disregarded, and the indorsement deemed to be to ' bearer.' The plaintiffs were therefore permitted to recover, though the note was not indorsed in the name of ' I. N. Porter.' One judge dissented on the ground that our statute requires an indorsement in the case of negotiable paper payable to a named person or l)earer. 111. R. S., ch. 98, § 4; Roosa v. Crist, 17 111. 450. He was of opinion that since the indorser did not know the name ' I. N. Porter ' was fictitious, the name could not, as to him, be deemed fictitious, and the indorsement treated as payable to bearer. . . . The name ' I. N. Porter ' was fictitious. This, however, was not known by the indorser, Buckworth. the name having been suggested by the plaintiffs, when they arranged with certain note brokers to buy the note, in order to conceal tiieir part in the transaction, the indorser simply writing the indorsement as directed by the brokers. On these facts, it would seem that the name ' I. N. Porter ' was simply another name for the plaintiffs, assumed for this transaction — not the name of a fictitious person. The decision of the court seems sound, though perhaps all of the reasons urged in support of it are not. L. M. G. " 4 111. Law Rev. .•554. — C. * In New Vork, however, it has been held for many years that a bill or note payable to the order of a fictitious payee is payable to bearer without being indorsed by the maker or payee. Plets v. Johnson, 3 Hill, 112; Central Bank of liroolclyn v. Lnn;/, 1 Bosworth, 20,3; Irmng N. B. v. Alley, 79 N. Y. 356. ■'• It might bo argued that the words " may be treated as payable to bearer " used in the I'^ngiish act mean that the bill may be so treated only when regiilar in all other resjM'cts, i. e., among other things, when projierly indorsed. Judge ( halmers, tlie draughtsman of tlic lOnglish act, says of this sub-sectioii: " VVlM-n a bill is payable to the order of a fictilious person, it is obvious that a genuine indorsement can never be obtained, and in accordance with the language of the old caseH and text books, the act puts it on the footing of a bill payable to Ijearer. But inasmuch as a bill jiayable to one person but in the bands of another is patently irregular, it is clear that the bill should be inriorsed, and perhaps a bona fulr bolder wfxild Ik" jtistified in indorsing it in the [)ay«'e's name. It might have been l)etter if the act bad provided that a bill [)ayable to the order of a fictitious p Accord: MUhUrtnn v. Criffith, 57 N. J. L. 442. — li. NBOOT. INPTRUMKNTB — 10 V 14G I'OKM UEQUIKED. [aUT. II. against him in the Davioss Ciivuil Court. A j^u'iu'ral (U'lmirrtT wa3 sustained to the petition, and, deilining to plead lurtlier, the petition was dismissed. * * * The questions involved in the case are: Was the note before its indorsement by Baxter a negotiable instrument within the meaning of the negotiable instrument act? Or, if not, did Baxter, by signing his name on the back of the note and selling and delivering it before maturity to Wettlaufer, convert it into a negotiable note and make all the parties to it subject to the negotiable instrument act the same as if it had been a negotiable note in the first instance? The contention of counsel for Baxter is that the note was not a negotiable instrument, and that Baxter by signing his name on the back of the note became merely an assignor.- * * * On the other hand, the contention for Wettlaufer is that the liability of Baxter upon this note is to be determined by the negotiable instru- ment act, * * * gj^j ^|jjj|- ^y ^]^Q provisions of this act Baxter occupies the position of an indorser and not as assignor of the note. Or, in other words, that, although the note may not have been nego- tiable when first executed and delivered, Baxter by his indorsement converted it into a negotiable note. * * * [After quoting sections 1, 8, 9, 30, 34, and 184 of the Kentucky act,^ the court continues:] For the purpose * * * Qf ascertaining what bills and notes it was intended should be negotialjle within the meaning of this act, we may with propriety inquire w-hat words were generally considered necessary to make a bill or note negotiable before this act went into effect, with a view of noting what change if any was made in tliis par- ticular. Tn an article in 7 Cyc, p. 606, by a well-known writer on commercial paper, it is said : " the usual form of negotiable paper is a provision for payment to ' order ' or ' bearer.' These or similar words are in general necessary to its negotiability, and are often required by statute, but a note which is non-negotiable for want of such words is still a valid note and may be declared on as such. Bills payable to bearer were formerly held to be non-negotiable, as being without words of transfer; but they are now recognized as negotiable and transferable by delivery. Making the instrument payable ' to the order of a person named is the same as to such person 'or order'; and in like manner to a person named ' or bearer ' is the same in effect as * to bearer.' Without words of negotiability purchasers take the hill or note subjxicl. lp^uli di^f ens^'g ^hich were available between the original parties ; and if it was orlgmaTIy~non^negotiable, as against the original ■jraTttos, it will not be rendered negotiable by subsequent trans- fer in negotiable form." The same rule is announced in 4 Am. & Rng. Ency. of Tjaw, 133; Story on Bills of Exchange, § 60; Daniel on 2 N. Y., §§ 20, 27, 28, 60, 64, and 320. — C. IV.] PAYABLE TO ORDER OR TO BEARER. 147 Negotiable Instruments, § 105; Bank v. Butler, 113 Tenn. 574, 83 S. W. 655; Westburg v. Chicago Lumher Co., 117 Wis. 589, 94 N. W. 572. It will thus be seen that it was uniformly held that, in order to make a note or a bill negotiable, the words " to order " or " to bearer," or equivalent words, must be used in the body of the note. It will be kept in mind, however, that the absence of these words do not affect \ ' * the validity of a note or render it non-tr ansferable or non-assignable. Their only effect is to make the" instmment negotiabIe7'irnT}-tlwi;eby ' cut off defenses that the maker or either of the parties to the paper might have and make against a holder in due course if the note was not negotiable. The negotiable instrument act does not apply to or affect the rights or liabilities of persons on paper that is not within its meaning negotiable. * * * This note in our opinion, which was payable to Baxter alone, and did not contain the words " to order " or " bearer," was not a negotiable instrument. These words by sections 1 and 184 ^ are indispensable to make the paper a negotiable instru- ment within the meaning of the act. • — But the argument is further made that as Baxter indorsed the note in blank — that is, signed his name on the back of it witliout any other words — he thereby converted the note into a negotiable instru- ment. It is true that section 9 of the act provides that " the instru- ment is payable to bearer * * * when the only or last indorse- ment is an indorsement in blank ; " but this does not mean that an indorsement in blank converts a note non-negotiable on its face and by its terms into a negotiable note. This construction would enable the person who last signed his name on- the back of the note to change entirely the contract as entered into between the parties, and have the effect of making the mnker, payee, and all prior indorsers liable upon a negotiable instrument when they intended to and only became liable upon a note that was not negotiable, and this, as can readily be seen, would be a most important and material change in the obligation assumed by them when they signed the paper. To give the act this construction would place it in the power of any indorser who chose to sign his name in blank to change by this act the entire character of the paper as well as the rights and lia))ililies of the parties to it. Jj^ would make the character of t he paper depend ujM^ft thr TTTTTrmrT nf the indorsement and not upon the terms ('\f)ressfd in the paper. Tlius, / if A. indorsed it [rTTiTanV Xr^ B., it would he negotiable; hut, if R./ .. indorsed it specifically to ('.. it would be non-negotiable. Manifestly; it was not intended that the iiu'ic iridorsciuciit of the note hv a remote ■ or other indfjrscr sliould have this cfrt'ct. When a paper is started on ita journey into the commercial world, it should retain to the end the character given to it in the beginning and written into its face. If it »N. Y., <|§ 20 and 320. — C. 148 FOHM HKyniUKD. [aUT. II. was intoiulod to be a negotiable iiistiuiiu'iit, and was so written, it should continue to be one. If il \Tas intended lo be a non-uegotiable instrument and was so wrillen. il sbduld so remain. Tiion every one who i^uts his name on it, as well as every one who discounts or pur- chases it, will need only to read it to know what it is and what his rigiits and liabilities are. In our opinion seeti(ui i> was merely intended to describe or desig- nate the conditions under which a note neL;()tiable on its face might become payable to bearer, and was not intended to apply to a note not on its face or by its terms negotiable. To illustrate, if this note was payable to " Newton J. Baxter or order," then the paper upon its face would be a negotiable instrument, although payable only to Baxter or order, and the only etfeet of the indorsement on the note by Baxter in blank would be to convert the note from a note jiayable to order into an instrument payable to bearer. But this iiulorsement would not in any manner change the negotiability of the note, nor change the atti- tude of any of the prior parties on the note, or increase their liability or cut off any defenses that they might have made, as it was at all times a negotiable instrument. Then, too, " when the only or last in- .dorsement is an indorsement in blank," tlip pnye e without notice of I any defecj^p t an( ? e Wou l d l lHVtj L ' uui-it i till ed a promise to pay in the ac- ceptor, and then the maker might have become liable as surety or guarantor; but as tliere is mere possession of a paper drawn in the form of an order, there being no drawee in existence, we think cannot entitle the possessor t/> an action in any form." The same doctrino may be drawn I'lotn I'rio v. Ihyuohh (!) Exch. H. 41 1) and in Dnvis v. (Unrk (\ Kng. Com. l.aw R. 177). From these authorities, and the rcM^on of l;i\v governing instruments of this ' or the like character, we are clearly of (he opininn that the petition in this ea.se did not set out a good cause of action, and that the court (!rred in overruling defendant's special demurrer to the same. We think the demurrer should have been sustained and the plaintiffs per- mitted to amend their pleadings, that, if desired, they might, by proper averments and proof, establi.sh the liability of the maker or drawer in the first instance, without an acceptance or non-acceptance. 1.''0 tOKM KK(^llIKi:U. [aUT. 11. Tho judj^inout of the Distriet Court is reversed and the cause remauded. Reversed and remandod.* ^'Um.J iAjl §20 Funk r. Babbitt. 151; 111. 408.-1895. " B. Apr. 23, 1891. Thirty days after date pay to the order of E. D. Babbitt $350, for value received. Funk tS: Lackey." Mr. Justice Baker: "Said instruments were dechu'ed on as promissory notes. It is urged that they are not notes, or even promises to pay, and, not being directed to any one, do not constitute drafts or orders, and in fact amount to no more than blank pie(■e^ of paper. They are, nndoubtedly, very irregu- lar and informal instruments, but they are not void as written evi- j^ dences of indebtedness. A person may draw a bill upon liimself, pay- \\ able to a third person, in wliich case he is both drawer and drawee. Here the iirm drew bills, but did not address them to any third person or persons, and it is therefore to be regarded that they were, in legal effect, addressed to themselves, as drawees, and the signatures of the firm to the several bills bound the firm both as drawers and acceptors. The instruments are inland bills of exchange, to wliich the firm sus- tains the triple relation of drawers, drawees, and acceptors, and as the declaration contains the consolidated common counts, tlie bills were admissible in evidence under them. Moreover, the drawers and drawees being the same, the bills are, in legal effect, promissory notes, and may be treated as such, or as bills, at the holder's option. (1 Daniel on Neg. Inst., §§ 128, 129)." § 20 Wheeler v. Webster, 1 E. D. Smith (N. Y. C. P.) 1 (1850). By the Court, Ingraham, First J. " I am of the opinion that the omission of the name of the drawee at the foot of the bill will not vitiate it. The acceptance may be considered as supplying the defect, and as being an admission by the acceptor, that he is the person in- tended. At any rate, it does not lie with him to make such defense, after having admitted, by the acceptance, that he was the person in- tended, and after having promised to pay the draft at maturity. He is estopped, by his own act, from such a defense." 5 In Peto V. Reynolds, (9 Exch. 410), cited above, the bill was not addressed to an}' drawf-e, but across the face was written: "Accepted, Samuel Reynolds, Esq., Shorn Lane, Bedminster, Bristol." One Righton (the drawer of the bill) wrote this acceptance. Defendant denied Fitrhton's a>ithority. 'I'hore was evi- dence that defendant had ornlly promised to pay the bill, but whether abso- lutely or conditionally was not clear. Plaintiff had a verdict. The court held there must be a new trial because of tlie unsatisfactory stute of the evidence. Three of the four judges expressed the opinion, however, that the instrument was not a bill of exchange for the want of a drawee, but might be treated as a promissory note if Reynolds, in fact, ratified the signature. — H. VI.] MUST BE DELIVERED. 151 VI. Delivery essential. §35 HILLSDALE COLLEGE v. THOMAS. 40 Wisconsin, 661. — 1876. l^. Action on a promissory note signed by defendant's testator and payable to plaintiff. The answer is to the effect that one Parmalee, an agent of the plaintiff, called upon the defendant's testator, and solicited him to pur- chase a scholarship in the plaintiff college, which he at first refused to do; that finally, at tlie request of Parmalee, he signed the note in suit, and left it with Parmalee, under an agreement that the latter should hold it for the testator until a certain time, to be returned to the testator i in case he should not decide to purchase such scholarship, and in the 1 y meantime the note should not be considered as delivered to the plain- ' tiff; and that at the specified time, the testator informed Parmalee that he had decided not to purchase the sch olarship, and demanded a return to him of the note, but Parmalee, professilig to have sent the npte by mistake to the plaintiff, did not comply with such demand. — «t^| ^ On the trial, by proof and the defendant's admissions, plaintiff made a prima facie case. Defendant offered testimony tending to prove the averments of the answer, but an objection to its admission was sustained : and the jury, by direction of the court, returned a verdict for the plaintiff for the amount due on the note by its terms. Prom a judgment entered on such verdict the de fendant a ppealed. '^^&, Lyox, J. The ruling of the court rejecting a 1 1 testi mon NnTHTler the / .^"^ answer is equivalent to an order sustaining a general demurrer thereto. It is an adjudication that the answer does not contain facts sufficient to constitute a defense to the ;i(tioii. If it stntes a defense, the ruling is erroneous and fatal to the judgment. We have no doubt whatever that the answer states a complete defense to the action, and that the testimony offered to prove the allegations thereof should have been, received. • ^' \ . i- c^'^j The note was not left with I'aiiiialec, jlu' agent of the plaintiff, as an escrow. On the {■f)ntrary, the defendant's testator relained the abso- lute control of the note, and the right (o recall it if he chose to do so. Such a deposit has none of the essenlial fealnres of a delivery in cserow, and hence we are not (;alled upon to delermine the legal effect -• of the delivery of a note in escrow to the agent of the payee.' • While it i« now generally conceded that a negotiable instrument may be flejivered in escrow to a tliirrl [lerson for the payee, the name as a sealed instrti- ment, it is a disputed question whetlier it nuiy be so delivered in escrow directly to the payee or his a;;ent. The following cases hohl that it may not: Sirwnrt v. Andrr.ion. ri'.) Ind. .37.') ; Jours v. Shnu\ 67 Mo. 067; Oarnrr v. Fite, 9.T Ala. 40.'); fnrlrr v. MouUon. .')1 Kans. J>. The followiiu' ca«es hoM that it may: Burk>: v. Dulaney, 153 U. S. 228; Benton v. Martin, 52 N. Y. 570; Wat- ■'A i;,i> roHM uF.guiUKD. [aut. ii. Tjier e was no delivery of the hitfiniinoiit^ and henee it uever had an iueeption or legal existence as the note or obligation of the tes- tator. It remained mere waste paper, just as it would have been had the testator kept it in his pocket instead of leaving it with Parmalee. The fact that I'armalee was the agent of the plaintitl" is of no importance. Were the plaintitf a natural person, and had the testator left the note wTtTTsuch person under the same circumstances, it would not be a delivery, and would confer no right of action. Had the paper been put in circiliTrt4tmr";iTiT''\\vie the plaintiif 'a bona fide holder thereof, for value, before duo, wc wcudd or might have to deter- mine whether or not the testator had l)een guilty of negligence in the premises. But we have no such question in this action. These views are abundantly sustained by the following cases: Walker v. Ehert, 29 Wis. 194; Kellnqq v. Steiner, Id. ()26 ; Butlei- v. Cams, .'37 Td. 61; Thomas v. Watkins, Hi Id. 549 : Chipman v. Tucker, 38 Id. 43 ; Roberts V. McGrath, Id. 53 ; Roberts v. Wood, Td. 60. Judgment reversed and a new trial awarded.^ 4 §35 ' k5nyot?V vvohlfoed. '■ ' ^^"^ ^^^-^*^_^ 17 Ml.NNESOTA, 23'J.— 1871. J^' Action on a promissory note, brought in the District Court for Steele county, resulting in a verdict for the defendant. Plaintiff moved for a new trial, which was denied, and he appeals to this court from the order denying such new trial. A single point only is dis- cussed in the appeal, which is fully stated in the opinion. By the Court — Bv.mY, J. This is an action upon a promissory rj^, note payable by its terms to C. W. Stevens, or bearer, and signed by the defendant. ~ There was plenary evidence showing thai llic plaintiff is a bona fide (J^iKLj'holder of the note, having purchased the same before maturity in good (7 faith, without notice, and for value. The only defense urged here is that there was no delivery of the kim V. Boxiem, 119 Mass. 383; Brown v. Ht. Charles, 06 JMich. 71; Sxceet v. Stevens, 7 R. I. 375. — H. [For autliorities on the admissibility of parol cvirlf-nw to show conditional delivery of bill or note see the followin<^: Beach v. Kevins, 1G2 Fed. 129, 18 L. N. S. 2S8 with note; flraham v. UcmmH, 70 .\rk. 140; m. PauVs Ep. Ch. v. FiVWs 81 Conn. 07O; Mvrrav v. IF. W. Kimhall Co., 10 Ind. App. 141, 184; Oakland Cem. .4.v.?'n v. Lakiiw,. 120 Tnwa. 121. 3 A. & E. Ann. Cas. .5.59 with notfe; McNight v. Parsons, 135 Iowa, 390, 15 A. & E. Ann. Caa. 005 with note: Hurt V. Ford, 142 Mo. 283; Jamestoicn Bus. College v. Allen, 172 N. V. 201, 92 .Am. St. Rep. 740 with note. — C] 7 See note on " Tn^trnments pnt in eirriilation in violation of instructions or conditions" in 11 Am. 81. Kep. 314-310. — C. VI.] MUST BE DELIVERED. 153 note to an};_personJyLiJi_jOB-behalf of the defendant; that for want of delivery it is not the note of defendant, and he is not liable thereon even to a bona fide holder. " A bona fide holder for value, without notice, is entitled to recover upon any negotiable instrument, which he has received before it has become due, notwithstanding any defect or infirmity in the title of the person from whom he derived it'; as, for example, even though such person may have acquired it by fraud, or even^bvt heft, or by robb ery." (Stonj on Prom. Notes, § 191 ; 2 Gr. Ev., §■ 171; S'wifi V. Tijso?i, 16 Pet. 1; Goodman v. Symonds, 20 Howard 365; Raphael v. Bank of England, 17 C. B. 162;' mieelcr v. (ruUd, 20 Pick. 545 ; Magee v. Badger, 34 N. Y. 249 ; Powers v. Ball, 27 Vt. 662 ; Cailin v. Hamon, 1 Duer, 325 ; Gould v. Seger, 5 Duer, 268; Marston v. Allen, 8 Mees. & W. 494; Sm. Lea. Cas. 597 et seq.; 1 Koss, Lead. Cases, 205 et seq.) Tlie fact that there has been no delivery of the instrument by or for the maker, or by or for an indorser through whom the holder must claim, is a defect or infirmity of title within the meaning of the rule above cited, a rule which is said to be laid up among the fundamentals of the law. (Worcester Co. Banh v. Donh. cC Melton Bk., 10 Cush. 488; Edwards on Bills and Notes, 188; Gould v. Seger, supra; Ingham V. Primrose, 7 C. B. (N". S.) S2;Shippey v. Carroll, 45 111. 285; Clark V. Johnson, 52 111.) , The order denying a new trial must be reversed." i « For an oxcolfpnt case sftting forth with great persuasiveness the contrary doctrine, see Hallry v. Terrtll, !)5 Me. 553. In this case the deteniJant waS engaged in a liiinbiring operation, and Ilurd was in h is employ. Among his dnHes was that of keeping llie time of tlie m~en in tlie~"wonds and wlicn one was discharged to riraw an order on t)ie defendant for the amount due. Blank orders were furnished Ilurd hy the defendant for this purpose. As a matter of |)ractiee, Ilurd drew an order on tlie defendant, payable to the order of Harry Carter, for iT;7."j.25, the same being in full settlement for cooking. This order was never delivered to Carter, nor inlend<-d to be delivered. Ilurd left it on his table, with other papers, for a few moments, while he was called nwny. and on his return he took all the papers and everything, and burnt them up. and supp«)sed the order was thus burned. Carter in the meantime had abstracted the order. Later Third, tliinking of the order, asked Carter, who had been near when it was written, if he had seen it, and he .said he had not. Carter negotiated the order to the plaintilf for a valuable consideration without notice of the facts. Judgment was rendered for defendant, the court saying: " In the cuse before 11", where the order had never been delivered, and therefore had no legal inception or existence as an order, the quest ir)n is whether there is any liability upon it to an innowmt indorsee for value. As is said in Hurson v. Huntuujton, 21 Mich. 415: 'The wrongful net of a thief or a trespasser may deprive the holder of his prof.erty in a note which has once become a note or property by delivery, and may transfer the title to an innocent purclia«er for value. Hut a note in the hands ni a maker before delivery is not property, nor the subject of owrur-hiy). as such. It is in law but a blank piece of paper. Can the theft or wrongful seizure of this paper create a valid contract on the 154 FOKM llEQUIRED. [aKT. II. § 35 MASSACHUSETTS NATIONAL BANK v. SNOW. 187 Massachusktts. 159. — 1905. Action by the MassaehusettB National Bank against one Snow. Vordiet for defendant, and plaintilV hrings I'xceptions. — K.NOWLTON, C J. This is an action of eon tract on three proraiB- j sory notes, signed, " 11. G. & H. W. Stevens,'' payable to the order l^f the defendant, indorsed by hiTHrin blank, and discounted by the I plaintiff.— They severally bear date December 9, 1897, and the rights of the parties are accordingly governed by St. 1898, p. 492, c. 533, sometimes called the " Negotiable Instruments Act," which is now / embodied in Kev. Laws, c. 73, §§ 18-213, inclusive. In referring to different provisions of this statute, it may be convenient to cite the sections of the Revised Laws, rather than the original act. The maker of the notes, H. W. Stevens, who did business under the name of H. G. & H. W. Stevens, has deceased; and the defendant introduced evidence tending to .show that, after the defendant had indorsed the notes, they were taken from his possession by the maker, witbout his knowledge or consent, and discounted at the plaintiff bank, and that they were altered by the insertion of the words " seven part of the maker against his will where none existed before? There is no principle of the law of contracts upon which this can be done, unless the facts of the case arc such tliat in justice and fairness, as between the maker and the innocent holder, the maker oupht to be estopped to deny the making and delivery of the note.' . . . That there must be delivery of the paper, either actually or constructively, is clear. Until then it has no existence as a con- tract. Bank v. Strang. 72 III. 550." The court further held that the case did not fall " within the principle that, when one of two innocent persons must suffer by the act of a third, he who has enabled such third person to occasion the loss must sustain it. . . . The order was drawn at tlie table of Hurd, and momentarily left there with other papers of his, to which no one had right of access, and from which it could only be abstracted by a criminal act, which he could not reasonably anticipate." See also the note in 10 L. N. S. 107, entitled " Rights of owner of negotiable paper payable to bearer, or indorsed in blank, as against bona fide purchaser from one unlawfully in possession thereof," where the authorities, pro and con. on the question whether a delivery is necessary to the existence of the instrument as an enforcible contract are exhaustively considered (see particu- larly, pages 100-111). The conflict of authority in the decisions represented by the Halley and the Kinyon cases was resolved in favor of the doctrine of the latter cases by section 35 of the Negotiable Instruments Law. " The primary purpose of the Negotiable Instruments Law was to make the law relating to commercial paper uniform tliroiighout the United States. Specifically, it was the purpose of the act to exclude non-delivery by the maker as a defense to a suit on a note complete in form and execiition by a holder in due course." 8 Mich. Law Rev. 41. "This change, like some others made by the act, is in the direction of facilitating the circulation of commercial paper." Crawford's Neg. Inst. Law, 3d ed., p. 28.— C. VI.] MUST BE DELIVERED. 155 per cent." after the words " with interest." The defense is founded on this evidence. The defendant's counsel stated that he made no contention that the bank had actual knowledge of any infirmity in the instruments, or defect in the title to them, or that it took thera JI^/o in bad faith. Nor was it conte ndpd h v thp dpfpndnn t \\\iy\ .in.,dvfir^ / count ing the notes the bank acted otherwise than in the regular and'^^- ^ usuaj^ course of bus iness. But upon the defendant's testimony it might be found that Hie notes were given to him by the maker in payment of indebtedness; that, after he had indorsed them in blank, ^,. and put them in his desk for collection or discount, he was called out of his office, leaving the maker, Stevens, there; and that Stevens then took them without right, and three days later carried them to the ~S_^ plaintiff bank, and caused them to be discounted for his own benefit.^ ^"^tL^ The plaintiff made many requests for rulings, which were refused, ^'^ subject to its exception, among which were the following ; * * * instrument is in the hands of ^ hnlrlpr-in thereof by ail parties prior to him, so as | ytST'coricIusively presumed." * ^ ^ / of a note is deemed prima facie to be a "T^ineteenth. That wben an instrument has been materially altered, and is in the hands of a holder in due course, not a party to the alter- ation, he may enforce payment thereof according to its original tenor." * * ■* — ' * The plaintiff also excepted to the following instructions given at the request of the defendant : " Fourth. That if the jury find that the notes were taken from the drfpndant wrongfully, and that the same were never dolivcrod by the defendant to Stevens, the plaintiff gained no title to the notes by the negotiation of the same by Stevens, and the plaintiff cannot recover. " Fifth. The burden is ufmn llic |il;iiiilifT lo show IIkiI Ihc noles were delivered by the dcfi'iMhint in StcM'us. or some oiIht person au tliorl/e d to negotia ft tlifni ;it the [il.-niilitr liank." "Seventh. Or, in tlic allcrnativc. if liic jury lind that the notes in question were altered by the addition of the words 'seven per cent.' thereto after the same were indorsed by tlie defendant, such an alter- ation is a material and wrongful one, destroying the validity of the notes, and upon the notes, or any one of iheni, thns altered, the plaintiff rannot roeovor." ^he notes, bein g in dorsed in blank, were pavahlc to Ip^ayer. yjthiTi , the meaning of_ tbe "statu te. T?ev. Tiaws. c. 73, ^ ?f) (5)." 'WTien the notes were taken to the pl.-iintifT for discount, Stevens was the hearer Rev. Tiaws. e. 7.^, ^ 207.' The presentation of snch notes for diseonnt • N. Y.,8 28. Bubd. 5. — C. 1 N. Y.. § 2. — C. 156 I'OKM Ki;ciUiKi;D. [art. ii. raised a presumption of fact tliat the bearer was the owner of them. Prtlrr v. rroiif. 'A (h'ny, 50?. T^pon tlio undisputed evidence, and upon tlie defendant's a(iinission that the plaintifT took them in good faith, and discounted thcin without knowlcdiio of any infirmity in tliom or defect of J,jtle in Stevens, the phiintiff became a holder in due course, within the definition of the statute. Kev. Laws, c. 73, 5j§ 6!)-7i;; - Boston SIrel cf; Iron. Coiiipnny v. IStcner, 183 Mass. 140. The defendant's contention that, after the notes had been delivered lo the defendant and indorsed by him, they were stolen by Stevens, brings us to the question whether, under the Negotiable Instruments Act. a holder in due course of a note payable to bearer, that has been stolen, can acipiire a good title from the thief. Evcn^before tiie enact- ment of the statute, while the decisions were not unifjorm^ tHe w eight I of authorit}' was in favor of an nfTirnialivc answer to the question./ Wlieeler wHiulil. ?<) I'ick. :. IT). r).M). ',:,:) \ Wonrshr. rlr.. Hank v. Dorchester, etc., Bank, 10 Cusli. 48S ; Wycr v. Same, 11 Cusli. 51, 53; Spooner v. Holmes, 102 j\Tass. 503; London Joint Stork Bank v. Sim- mons, (1893) App. Cas. 201, and cases cited; Smith v. Bank, 1 Q. B. D. 31 : Goodman v. Simonds, 20 Howard 343-365 ; Ulurray v. Lardner, 2 Wall. 110: Hotrhkiss v. National Shoe & Leather Bank, 21 Wall. 354; Kinyon v. Wohlford, 17 Minn. 239 (Gil. 215) ; Clarke v. John- son, 54 111. 296; Seybel v. National Cnrrency Bank, 54 N. Y. 288; Pvertson v. National Bank of Newport, 66 N. Y. 14 ; Kuhns v. Gettys- hnrq National Bank, 68 Pa. 445. The following specific language of the statute touching this ques- tion, as well as its provisions in other sections, was intended to estab- lish the law in favor of holders in due course: " But where the instru- ment 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 con- clusively presumed." Eev. Laws, c. 73, § 33.^ This conclusive pre- sumption exists as well when the note is taken from a thief as in any other case. Of course, this rule does not apply to an instrument which is incomplete. But in reference to a complete, negotiable promis- sory note, payable to l)earer, it is a wholesome and salutary provision. See Greeser v. Sugarman, 37 Misc. (N. Y.) 799. Upon the defend- ant's statement and the counsel's theory of the case, the rule is ap- plicable. The note was not only complete in form and in execution, but, upon his testimony, it had been delivered to him by the maker as a binding instrument, and had afterwards been indorsed by him. Therefore the first sentence of Kev. Laws. c. 73, § 33, " Every contract on a negotiable instrument is infomph'b' and revocable until delivery of the instrument for the purpose of giving effect thereto," was in- applicable. The instrument had taken effect, and was subsequently *N.Y., §§91-98. — C, » N. Y., § .35. — C. VI.] MUST BE DELIVERED. 157 negotiated by the bearer to the plaintiff as a holder in due course. That the bearer was also the maker was immaterial after the instrument h;id been so indorsed as to become payable to bearer. Upon the plain- tiff's theory of tlie facts, there was no theft, but an ordinary accom- modation indorsement by the defendant for the benefit of the maker, .and none of these qiicptinns nriso. We arc of opi nion th:it the Judge / [erred in giving tlu' fniii-tli and fifth instructions i'c(|iic>1(m1 by "the/ d efend nnt, and in refusing other instructions requested by the plainy ti-ff^Jounded upon a different view of the statute. ( There was also error in the instructions given as to the alleged alteration of the notes. By Eev. I^aws, c. 73, § 141,* it is provided that " when an instrument has been materially altered, and 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." This Lan- guage is directlv applicable to the present case. See SchoJfeld v. Earl of Londcsbo rough, (1894) 2 Q. B. 660, (1895) 1 Q. B. 536, (1896) A. C. 514; Schwartz v. Wilmer, 90 Md. 136-143. We understand that the instructions were given independently of any question of pleading, and we therefore do not deem it necessary to determine at this stage of the case whether the plaintiff should amend its declaration by inserting counts u))on the notes as they were before the alleged alteration, if it wishes to recover upon them as notes bearing interest at only 6 per cent. See Mutual Loan Ass'n v. Lesser, 76 App. Div. (N. Y.) 614. Nor do we consider other ques- tions which arc not likely to arise upon a second trial. / 1 - Exceptions sustained. § 35 ' V BUZZm.L 7'. TOBIN. ^ .^ -^^ 201 Massacht'setts, 1. — 1009 Contract, l)y one alleged to be the JKilder in due course of a check signed liy the defeiulani, to recover the amount of llu' check. / "■" At the trial there was evidcnice tending to show tliat the (Icfendant'^ r ... had agrecfl to purchase two horses of on(» Leonard, that Leonard brought the liorses to the ' (Ti'r'-lldil li t''^^ pl.ue of li ui i n >ii.>..-llie defendant previously having made ouTlind Pignrd and left on his desk a check * payable to L etitianrs ordf r for t he luirchase pri ce of the hftrses ; that the defendant uiu-xpec tedlv was called upon to leave his odlcr for a short time, and that, in his absence, at Leonard's request, tbe defend- ant's bookkeeper delivered tbe check to him: that very shortly there- after the defendant stopped payment of the check, but that, in tbe meantime. I;eonard had negotiaterl the check for value to the plain>^--^ ^ tiff, who bad no notice of the transaction between Tjconard and the^--'/^, « N. Y., § 205. — C. y , A^ 158 lORM KKQITIRED. [aRT. II. dofondant. Tlio dofondant's evidonoo tended to show that the hook- keeper had no aulhority to deliver the eheek to Leonard, and that the reason why he stopiu'd pavniciu on tht; check was that h e discovered tlwt thoTTorses were unsound. At the close of the evidence, the defeiulant requested the presiding judge to rule that the plaintitf could not recover. The request was refused and the jury returned a verdict for the plaintiff. The de- fendant alleged exceptions. *"■ Bralky, J. Tf the consideration of the check as hetween the de- fendant and the payee was tlie price of a pair of horses, which might have heen found to have hcen junsound at the time of sale, yet the plaintiff as indorsee having taken it for value, and in good faith before it was overdue, and without notice of any infirmity, or that payment had been stopped at the bank, became a holder in due course, with all the rights appertainin g to such a title. Rev. Laws, c. 73, §69;° Wheeler v. Guild, 20 Pick. 545, 552, 553, 32 Am. Dec. 231; Shawmut National Bmik v. Manson, 168 Mass. 425 ; Massachusetts National Bank v. Snow, 187 Mass. 159. The defendant, while not expressly conceding tliis, rests his defense solely on the ground that, because his clerk had no ex press aut hority to deliver the check to the payee, it was unlawfully put m circulation, and the contract being incomplete, no title passed to the plainti ff by its su ])sequent negotiation. Fearing V. Clark, 16 Gray, 74:; Hill \. kail, 101 Mass. 253, 265. But the check was in the hands of the plaintiff as a holder in due course, and as to him a valid delivery by the defendant was conclusively presumed, even if this defense would have been open as between the original parties. Rev. Laws, c. 73, § 33 ; ^ Massachnsetfs National Bank v. Snow, 187 Mass. 159, 163. We are, therefore, not called upon to decide whether there was other evidence upon which, under suitable instructions, the jury could have found either actual or constructive delivery. It accordingly follows that the ruling requested could not properly have been given, and the case was rightly submitted to the jury. '. — y / L / JU^ Exceptions overruled. VII. Non-essentials. - . .„ , § 25 ' MEHLBERG v. TISHER. 24 Wisconsin, 607. — 1869. Action on the following instrument: To Ho.xiE and Rich: Please pay to (has. Mehlberg the sum of $69.20, and charge to me. Chas. Tisher. Township of Manciiesteb, Feb'y 23, 1881. 8N. Y., §91. — r. « N. Y., § 35. -^ C, VII.] NON-ESSENTIALS. 159 Dixon, C. J. The written instrument * * * ^as a bill of exchange. It is not essential to the validity of a bill of exchange that it should be made payable to order, or bearer/ or have the words " value received," or be payable at a day certain, or at any particular §25 BROWN V. JORDHAL. 32 Minnesota, 135. — 1884, Plaintiff brought this action in the District Court for Freeborn county, as holder of the following instrument: Township of Manchester, Feb'y 23, 1881. $120. Six months after date, (or before, if made out of the sale of Drake's horse hay fork and hay carrier), I promise to pay James B. Drake, or bearer, one hundred and twenty dollars. Negotiable and payable at the Freeborn County Bank, Albert Lea, Minn., with ten per cent, interest after maturity until paid. OlE J. JOBDAHL [Seal]. Witness: J. Williamso.n. [Seal]. At the trial, before Farmer, J., the plaintilT, having introduced evidence that he bought the note from Williamson for value, before maturity, in good faith and without notice of any defense to it, admitted that the note was obtained from defendant by Williamson by fraud, and that as between those parties the note was without >^'*-k consideration and fraudulent. The court tliereupon directed a ver- -.^ diet for defendant, a new trial was denied, and the plaintilT appealed. ^^!( fiii.Fii.i.AN', C. J. The defendant executed an instrument in the '\ form of a negotiable promissory note, except that after and opposite the .signature were brackets, and between them the word "seal " thus, " [seal]." The question in the case is, is this a negotiable promissory note, so as to be entitled to the peculiar privileges and immunities accorded to commercial paper? The rule that an instrtiment under seal, though otherwise in the form of a promissory note, is not (cer- tainly when executed by a naturnl person, however it may he wlien executed by a corporation) a negotiable note, entitled to such privi- leges and immunities, is universally reeogni/.ed. and is not dispuied ' Nor to the validity of a promiBsory note that it should bo payable to order or bearer. Smith v. Kendall, G T. R. 124; Carnirrighl v. Gray, 127 N. Y. 92; Writs V. firiqhnm, Cush. (Mass.) 0. Contra: Bristol v. Warner, 19 Conn. 7. The matter as to promissory notes is one of eonstriiefion of sfattito, as such notes are the creattire of statute. See Ney. Inst. L., § 320. It must l)e remem- bered, however, that the Nrgnti.iMf Instruments Law applies only (o ru'j^'otiable paper. — H. * " The omission of the worrls ' for vnlue received ' floes not impair the note, afTect its lepjil import or weaken the presumption tliat it was given for value." MrLend v. Hunter, 29 Mi.sc. ( N. Y.) .'i.'SS. .500. — C. inO FORM REQUIRED. | ART. II. in this state. But the appellant contends that merely placing upon an iiistruiiH'iit a siToll or ili'\iri', t;iK'li as the slaliilr allows as a substitute for a foniinon-hiw seal, witliout an}' rec-oguiliou of it as a seal in the hody of the instrunn'nt, does not make it a seak'(l inslruuieut. Un- douhtedly, where then" is n scroll or device upon ;ui insi rumen t, there must he something upon tli(^ inst luinnit to show that llic scroll (V device was intended for and used as ;i seal. The scroll or rjeviee does not necessarily, as does a common-law seal, est;il)lish its own diame- ter. Such words in tlie iestimonium. clause as "■' witness my hand and seal.'' or "sealed with my seal." would establish that the scroll or device was used as a seal. No such reference in the body of the instru- ment was necessary in the case of a cf)inmon-law seal. ((loddard's Case, 2 Coke Kep. 5a; 7 Kac. Abr. | Bouvier's V §25 HOGUE V. WILLIAMSON. [Reported herein jl p. 88.] "Accord: Warren v. Lynch. .5 Johns. (N. V.) 2.'?9; Oahorn v. Kiillrr, .^r) O'l. St. nn: Oshnrne v. Tlvhbard. 20 Ore. .IIP: l\fi'»e v. Dmil-.Jrr. S."! Al.n. 3.50. i"i,p statiitp (Npp. Inst. L.. § 2.5. siibsec. 4). chini'_rc.s tin- law upon this point. \Ht. Paul's Ep. Ch. v. I''ield.a\v.— ('.] ^Xiilmnl llic aid of statutes Hie courts liarl deridetl tlmt tlie hill or nntc of a corpniatinn tlirl not lo?e its nepotiahle character hrcaii^e of tlie presoTiee of the corporate seal. Chase N. li. V. Faiirot. 149 N. Y. .5.32: Mason v. Frick, 10.5 I'a. St. 162; Mnckay v. l^nint Mary's Church, 15 R. 1. 121 : Central N. B. v. Charlotte, etc., R., 5 R. Car. 1.56. Tn order to iK'conie a common-law specialty the instrument must recite the seal or otherwise indicate the intention of the maker to create a specialty. Weeks V. Esler, 143 N. Y. 374; cases supra. [Followed in Matter of I'irie, 198 N. Y. E09. — C] Vril.] DATE. 161 (ii) Interpretation. VIII. Date. § 30 ALMICH V. DOWNEY. 45 Minnesota, 460. — 1891. Action on a promissory note for $500, brought in the District Court for I,4e_Sueur_£iUiaty. Trial before Edson, J., and verdict for defend- ants, who appeal from an order granting a new trial. c^{ ilCtn-A^ Vanderbukgh, J. Plaintiff is the indorsee of the note' in ^uix. The note was dated June 25, 1886, and was by its terms payable six mo nths after date . It is alleged in the complaint to have been executed and delivered on the day of its date. It appears from the evidence, however, that the note was actually executed and delivered on the 25th day of June, 1887, and that the date was written 1886, by mistake. There was evidence to go to the jury tending to show that it was indorsed to the plaintiff for value within six mouths from the actual date of its delivery, but not within six months or before its maturity, according to the face of {he note. The court charged "tTie~Jury, u nder plain tiff's exception, that if the note, when trans- ferred to plaintiff, was due according to the date as actually expressed therein, and was given without consideration, their verdict must be for th e defen dants. If a note is antedated or post-dated by the maker, it is a valid contract from the time of its delivery ; and, since it is competent to express the agreement of the parties in that way, the courts will construe the instrument according to its terms; and if, when delivered, it is by its date overdue, it will then be treated as a demand note. (1 Pani., Notes and B., p. 49; 3 Rand., Com. Paper, ^ 1034. ) — ftr ft where the note is intended to bea r date as of its dcliv eryTHiat is the tru f_diT?) ann u^ iLroisial ce another date is WTillfrr^n the face of the note, the mi staice may De cor rectedT* ej[cepf a>sTo~an innrtrfnt inrtrfrpee or jpiircnaser who would beprtMu- dice(I~Tiy tlie correction, and the mistake may be shown by parol. (2 - Pars., Xr)les and Ji., 514.) As it cicjirly apitciircd that tiic note was given in 1S,S7, and the wrong year inserted in the date hy mistake, the note, by intenchnent of hiw. was jJMvable in six months from June 25, 1887; and if negotiated and indorscui to the pJaintiH' before due, in goofl faith and for vahie, th(; defense of want of consideration is not available; and the mistake may in such case be shown as well by the indorsee as the payee of the; note. (Drake v. Rogers, 32 Me. 524; Germ'invi Patik v. Disflrr, 4 TTun, 633; afllrmod in 64 N. Y. 642; 1 Daniel, Xeg. Inst., ^ 83; 1 Edw., Rills and N., 5? 171.) '' ' il' The mistake should strictly have been alleged in the complaint, but as the evidence was received without oljjection. and the fact was before the court ns if proj)erly pleaded, and considered by the NEGOT. INBTKOMENTB — 11 ^> 162 INTEUI'UKTATION. [aUT. 11. court in its chargo, tho objoition to the pleading cannot be raised now. Tlie pleading might have been amended formally to conform to the proofs after the evidence was in. For the reasons stated, it is apparent that the court erred in its charge on this branch of the case, and the order granting a new trial was proper, though based on other grounds. * * * Order affirmed. / §31 COLLINS r. DRISCOLL. 69 California, 650. — 1886. Belcher, C. C. The controlling question in this case relates to the statute of limitations. The action was commenced on the twenty- fourth day of October^,. I§^2j and was based on a promissory note dated May 1, 1878, and payable one day after date, with interest. In the complaint it was alleged that the note was not in fact made or delivered to plaintiff until the fifteenth day of July, 1879 ; that during the year 1878 the plaintiff loaned to the defendant sums of money, which amounted in the aggregate to the sum named in the note as principal, and which he verbally promised to repay, but made no written promise to do so; that on the fifteenth day of July, 1879, " the defendant, at his own instance, and without any request from plaintiff, caused said note to be prepared, and he signed and delivered the same to plaintiff without being thereto requested or required by the plaintiff; that said note was antedated as aforesaid, at defend- ant's own instance, for the reason that defendant wished to pay in- terest on said principal from the first day of May, a. d. 1878, and at the rate in said note specified." The defendant demurred to the com- plaint, upon the ground that the cause of action was barred by the statute of limitations. The court at first overruled the demurrer, but afterwards reconsidered its ruling, and sustained it, and then entered judgment in favor of defendant. In our opinion, the first ruling was right and the second wrong. "' In general, it is not essential to a note that it should be dated ; and if there be no date, it will be considered as dated at the time it was made. If it be dated, the date will be prima facie evidence of the time when the noTe"\vlf?Tna;^,"bTit not cmtcluai-ve." (1 Pars.. Notes & Bills, 41.) A note may be,ailt£dai£.d or postdated, and " where the purposes of justice require it, the real date may be inquired into, and effect giveni to t Tie ins trument." (Story, Prom. Notes, § 48; Paige r.'Carter, 64 j Cal. 489.) And, whatever may be its date, a note takes effect only on I delivery. Until it is delivered it is not made, in a legal sense, and by it no obligation is imposed on the maker. If the delivery be subse- quenlTo ftie date, it becomes a valid and binding note on the day of its delivery, and not before. "If it be made payable in so many days IX.] BLANKS. 163 or weeks or months from the date, this period must begin from the date which the paper bears, without reference to the day of actual delivery; for it is perfectly competent for the parties to agree that the money should be payable when they please, and they express their agree- ment on this point by making it payable in so many days from a certain day. Thus, if a note payable in three months from date were delivered four months after date, it would be payable on demand." (1 Pars., Notes & Bills, 49.) Here, according to the averments of the complaint, which must be taken as true, the note was delivered on the fifteenth day of July, 1879. It was due at that time, and a cause of action at once accrued upon it. Until then there was no cause of action - because there was no note- But the ctcifiii^^7rr: UiiinUot;»T.c i^fgin^ fp T- ^n when the right of action accrues, and never beioic* This is a general rule, and applies to all actions, ruder our statute one has four years in which to bring suit upon a piu!iii.s.-oiy note after his right of action accrues, and his action is never barred until (hat time has elapsed. As this action was commenced within four years after the plaintiff's cause of action accrued, it is clear the court erred in sustaining the demurrer.^ IX. Blanks : Authority to fill. § 32 PAGE V. MORREL. 3 Abbott's Appeal Declsions (N. Y.) 433. — 1S66. liJA and Orlando Page sued David and DajiidJI. iJorrel, compos- ing the firm of Morrel & Son, and Benjamin N. Nellis, in the Supreme » Approved and followed in Webber v. Webber, 14fi Mich. 31, where, however, it was also held that the note heinp payable with interest, the interest ran from the date of the instrument and not from the time of its delivei v. But in I'aul v. SniHli, 32 N. J. L. 13, it was held that where at the time a promissory note was made it was antedated a number of years by the aizree- ment of the parties, the statute of limitations befjins to run against it from the time it comes due by its terms, ajul not from the time it was made. liie court said in part: " There can l>e no doubt that the true time when a note waH made may be shown if it was wronjriy dated by fraud or mistake. A note takes efTeet only from its delivery, but if delivered after its date, it is then good by relation, and takes elTeet from its date: Pnurll v. WiHern, 8 Tow. (170. A note may be antedated or postdiited, and in both cases it is valid if no statute exists to the contrary; and where the purposes of justice require it, the real date mnv be infjuired into, and effect piven to the instrument: .'story on Promissory Notes. § 43. The note in question was due immediately after itH delivery, ft wbs not antedaterl by mistake, or for any unlawful purpose, hut to carry into effect the object of the |>arties. To alter the date, or to pive it a lepal effect different frf)m that expressed on its face, is not required for tne purposes nf justice, but would be to mnke a new barpain for the parties, and thus to do injustice." Elmek, .1., at p. 14. — C. Ifi4 INTKltl'HKTATIOK. [aRT. tt. Court, on :i promissory note, of wliicli D. l\r()rn'l t?v: Son wero makers, and Nollis tlio indorsor. Tlie note was made on June 10, 1859, for llio sum of fifty dollars, payable thirty dajsjifjter date. Tt was dated .Time, hnt with a blank where the day of the month is usually stated, thus: "June , 1859." In this condiliou tlie iiole was indorsed l)y the defendant Nellis for the accommodation oi' tlic niakcis. iind on the same day, the tenth, the makers transferred it for value to one Wiles. On the fifteenth of the month. Wiles transferred the note to the plaintiffs for value, and they, without the knowledge of any of ttie other parties thereto, and of course without their express consent, filled the blank in the date with the figure " 1, " so as to make the date " June 1, 1859."' The indorser having been charged, on non-payment thirty days after June 1, this action was brought; and the only question was, whether the note was valid against the defendants, notwithstanding the insertion of the figure in the date. The judge found the foregoing facts, and held that the note was valid, and gave judgment for the plaintiffs. By ilie Court — James C. Smith, J. — The only question in this case is, whether, as between these parties, the note is rendered invalid, in consequence of its having been antedated by the plnintiffs after the transfer to them, so that it had ten days less to run than it would have had if it had been dated as of the dny when it was indorsed and negotiated to Wiles. There can be no doubt that, if the same day of the month had been inserted by the makers when they negotiated the note to Wiles, without the knowledge of the indorser, the note would not thereby have been rendered invalid, as against the indorser; and so if the day had been inserted by Whiles, with the express direction or con- sent of the maker. In such case, the note, when indorsed, being perfect in every respect but the date, and that having been left blank, the makers would have had an implied authority from the indorser, to insert any day of the month they might think proper. {Mitchell v. Culver, 7 Cow. 336; 1/. & F. Bank v. Schuyler, Id. 337, note.) Sucli_ authority results from the general rule , that an indorsement on a~ lanK note, w ithout sum, or date, or time "oT""pTiymPnt7"vvTll bind the I — n TdTnTcr,~Tor any sum, pnyanlt^ HI iliiy ti'HW, which the person, to wliom le indorser Im-N il. cLon-:!.^ lo insert. The date of a note is no g T eep tiqn 'to tliis rule, altliougli it is not essential to the validity of a note that the date be expressed ; for, where a note has no date, the time, if necessary, may be inquired into, and will be computed from the dav it was issued. But it is essential to the free and uninterrupted negotiability of a note that it should be dated, and, therefore, all the parties to a note intended for circulation, are presumed to consent that a person, to whom such a note is intrusted for the purpose of TX.] BLANKS. 165 raising money, may fill up the blank with a date. (Ih.) And a blank, left for the day of the month, may be filled with anY rt!iy"'fnj, that month, there being nu "fravfJTbr express direction to the contraryTT Upon the same-principle. Wiles, to whom the note was delivered by the makers, had an implied authority, from both makers and indorsers, to fill the blank with any day in the month. But it is claimed by the defendant's counsel, that the implied authority, above stated, is restricted to the first holder of a note, and that it was unlawfully exercised by the plaintiff, to whom the note was transferred in blank by Wiles. That position cannot be maintained. It is immaterial, to the parties to the note, whether the blank in the date was filled by the first holder or his transferee. The latter acquired all the rights of the former in regard to the paper. Until the blank was filled, each successive holder took the note with authority to fill the blank, accord- ing to the implied intent of the parties. The reasoning of Justice Bockes upon this point, in the court below, is satisfactory and con- vincing. The case of Inglish v. Bnnieman (5 Ark. 377), so far as it holds to the contrary, is not supported by authority. The judgment should be affirmed. All the judges concurred, except Morgan, .7., who dissented. Judgment affirmed, with costs.^ § 32 BANK OF HOUSTON v. DAy/ ' '^ cl^^ 122 Southwestern (Mo. — St. Louis Ct. App. ) 756. — 1909. Actiox against accommodation indorsers on a promissory note de- livered by the defendant McOa.skill to the plaintiff about December 1, 1905, and payable four months after date, but noJL-tlated. Shortly aftfr. plaintiff's fjishicr insorfr-d the date December 30, 100.'). Judg- ment for defendants nnd plaintiff appeals. NoFnoNi. X * * * It is conceded throughout the case that the date December 30th was inserted in the note by the cashier without any express authority whatever from either the makers or the in- yP>( ; dorsers thereon; and, if th(! testimony f»f .Jiick Mc(!askill is to be be- lieved, it wa.s inserted contrary to his instruct ions on delivery of the note to the bank. Mcf!a.skill testified that he instructed the cashier at the time of dcHvering the note to insert the date August 30, 1905. Be this as it may, the plaintiff bank drjcs not rely upon any express authority from any one to date the note December 30, 190.'», but, on the contrary, relies upon the fact that the note was undated, and that «Rpp notp in 2 A. & K. Ann. Tnx. .1.11, pnfitled "Implied autliority tu fill in blanks so as to complptp siicrnpH in«trumpnt." — C. A 166 INTKIU'RKTATION. [aKT. II. thore wn? a lilunk loft thrroin f(M' date at the tiino of its flolivt'ry and tlie impliod authority whicli. in tho ahsonco of express instructions, is assured by the law to tlie liolder of a note, to till in such blanks as are necessary to either make the oblirsers only defended the action, and the finding and judgment of tlie court were for them to the etfect that in the absence of directions from MeCaskill who delivered the note to the cashier of the bank, or an agreement of some kind to that effect, the cashier was without authority to postdate the note December 30, 1905 ; in other words, the instructions go to the effect that in the absence of a direction from or agreement with MeCaskill, who de- livered the note to the hank, which might be regarded as express authority therefor, there is no authority implied by law authorizing the casiiier to postdate the note December 30, 1905. The question, therefore, presented for dcrmf>n-~i« -tho-soiuidDess of the proposition of law announced in these instructions. Xow, there is no doubt where a note is issued without a date and an improper date is inserted therein by the payee and the note is there- after negotiated to an innocent party or bona fide holder without notice that such bona fido holder may enforce the same notwithstand- ing the improper date. This follows for the reason that one who signs such an instrument furnishes the means 6T fraud, a»d-is-estopped to denvTnsTiabimyTFereon. Mifrhrll v. Cvlver, 7 Cow. (N. Y.) 336; Frank V. Lilirnfeld, 33 Crat. (Va.) 377; Redlich v. Doll, 54 N. Y. 234; Joyce, Defenses to Commercial Paper, § 22; Daniels, Negotiable Instruments (5th ed.), § 143; Androscoggin Bank v. Kimball, 10 Cush. (Mass.) 373. * * * It is no doubt true that a note issued bearing the month of its issue and the year, with a blank for the day of the month, may be enforced by a subsequent holder, although the day of the month is filled in by him without express authority therefor. Such was the case of Page v. Morrell, 3 Abb. Dec. (N. Y.) '::33. In such a case it is obvious that the subsequent holder filling in the day of the month is not aware of the particular day on which the note was issued, for he knew noth- ing of its issue. The paper having come into his han3s for value in due coiirseTboaring date the month of June and the year in which it was issued, in the absence of any knowledge whatever as to the date of issue, authority was implied to him to insert any date during fhe month mentioned. However, that authority is not in point here for the reason that in that case the subsequent^^^mo^ij^^jTolder of the note had no knowledge as to what was the true -date of the instrument; •A'hereas. in the present controversy, the subsequent holder of the note (that is. the plaintiff bank), who. it may be said purchased it from Da- , the payee, in fact an accommodation party only, knew the day IX.] BLANKS. ' 1G7 and date of its issue, and, indeed, witli such knowledge occupied the same position in respect of that matter as an original payee who knows the true~(Tate of issue: that is, the plaintiff bank knew that it acquired VtiiSlSote about i.'if I'^t nf I)., iihIk r. and not December 30th, for such was the date of issue under the facts in this case. Having this knowl- | edge as between it and these accommodation indorsers, whom McCas- kill represented when he delivered the note, it became the duty of the cashier of the bank to insert the date August 30, 1905, as instructed by McCaskill, if Jiis testimony is to be believed. On the contrary, if no instructions whatever wefe^iveli, then it became the duty of the bank to insert the true date of issue identically as though it were an . original payee. ^ * * After much careful reading and reflection on the subject, we believe as a general rule between the original parties to the instrument or subsequent holder with notice the original payee or such subsequent holder with notice has implied authority by virtue of the blank con- tained in the note only to fiil in the true date or sucii a date as was dHKJ(!teiJ~("ir'c<»ntcini)Iati'd by Hk,. p-irfjog Daniels, Negotiable tnstru- , ments (5tli ^,1). ;: ]i:]u, ] M ; -J Cyc. 1G.3. 164; 2 Am. & Eng. Enc. •■' Law (2d ed.). 255; Oicrfon v. Matfhpws, 35 Ark. 146; Emmons v. ' Meelcer. 55 Ind. 329. It is obvious that what has been said is in ac- cord with the public policy of this state as declared in the new nego- tiable instrument law approved April 10, 1905^ See Laws of 1905. And the note in suit is in all ~re^pPrt!?"?lihject to that enactment. Section 6 ' of the act referred to declares that the validity of a nego- tiable instrument is not affected by the fact that it is not dated. Sec- tion 18 * declares that the instrument is not invalid for the reason only that it is antechited or postdated, " proyided_thig_ is not done for an ill egal or ^fraiixlulent purpose. The person to whom an instrumenl'so dated isTTelivered, acquires the title thereto as of the date of delivery." This section seems to contemplate instruments which are antedated or postdated by the parties in accordance with a mutual agreement to that effect, as is frequently done, and declares that they are not in- valid because of such fact, provided no illegal or fraudulent purpose is intended. Section 13- of the ad is as follows: [Quoting it.] It will be ob.served that this section authorizes the hohler of an undated instrument to insert the true date of issue therein and makes the instrument payable accordingly. It provides, too, that the inser- tion of a wrong date does not avoid the instrument in the hands of a subsequent holder in due course, and. as to him. (he date so inserted is to he regarded as the true dale. This is in affirmance of the doctrine which obtains in the law merchant, and it implir-s, at least, that the »N. Y.. § 26.— C. I N. Y., §.T1. — C. IN. Y.,§32. — C. ICS INTKKl'ltKTATION. [aRT. II. insortion of n wrnn<]: (Into in an iindatod instnimont by ono liaving kiituvlodij^o of tlu' truo (latt> of i.^suo would avoid th(^ instruniont. Such we understand to be tlie settled doctrine of the cases liereinbefore cited, expounding the principles of the hiw merchant; that is, that such amounts to an alteration. 2 Am. & Eng. Enc. Law (2d ed.) 142. Now. for one to he a hoKler of commercial paper in due course, the element of good faith with respect to the same is essential. More v. Finger, 128 Cal. 313; Reese v. Bell, 138 Cal. xix. Tberefore, the present plaintitT, having inserted an untrue date in the instrument when it was possessed of knowledge of the true date of isBueTTs^ot a subsequent liolder in due course within the meaning of the statute. Judiiment atlirmed. All concur. §33 CAULKTNS t'. WHTSLER. '^^ 29 Iowa, 495. — 1870. AcTiox upon a promissory note; defense tliat the instrument is a forgery. The cause was submitted to the court without a jury. The court found tl ie follo wiii^-f^'C'ts: Defendant entered into a contract with one Smith to sell for him, as his agent, grain seeders. At Smith's request, defendant signed his name upon a blank piece of paper, which Smith was to send to tlie manufacturers of the seeders, that they might know defendant's signature upon orders which he should make upon them for the macliincs. The signature was made for no other purpose. --^ The instrument in suit was printed over the signature of defend- ant, so obtained, without bis knowledge and consent, and the stamp in the same manner attaclied and canceled. Tlie plaintiff purchased the note before maturity, for a valid consideration, and without knowledge of any matter, connected with its execution. Upon these findings, the court held, that the note is a forgery and void, and that plaintiff is not entitled to recover thereon. Plaintiff appeal.'it^^ Beck, J. — A holder of negotiable paper, acquired before disTionor. is not protected against defenses that make void the instrument, lie can have no claim upon forged paper against the person~wIiose name is falsely aflfixed thereto as the maker, and who is without fault as to the forgery and the taking of the paper by the holder. (1 Parsons, Bills and Notes, 75, and authorities cited.) Is the note sued upon a forged instrument? "The maldng,-or {alteration of any writing with fraudulent intent, wlierchy^other ^may be prejudiced, is forgery." (State v. Wooderd, 20 Iowa, '542; Rev., § 42.53.) In order to constitute the offense of forgery it is not necessary that the signature of the instrument be false. The instrument may be altered so that it is not the instrument signed by IX.] BLANKS. 169 the maker, and, if this be fraudulently and falsely done, it is forgery. So if words be added to change its effect, with like intent, it is a forgery. In the case before us the instrument was falsely and fraudu- lently made over the genuine signature of defendant, which was not obtained for the |)iir|Hi-;c nf hiniiin- ilefendant by any contract. ^.Jt-is evidf^nt tfmt tht? iliflris, in no respect, from the cases mentioned, and that till' liutt' i< a fm-gc^y and void . (See 2 Parsons, Bills and Notes, 5^'*Tt — - -r/:I The case differs materially ip its facts from the cases cited in sup- port of plaintiff's right to recover. In those cases blanks were filled up contrary to the direction of the maker, or without his authority. But in all such cases the makers intended to execute an in strumpnt^ that should be hind ini: upon them. Blanks were filled up contrar}'? ~7v-»^ to the authority given liv the makers, or in some other wav the instru- f ' / ments were made so that they did not correspoufl with the intention ' of the makers ; but in all such cases there were mnl-rrs and indntmpnts, and through the frauds of those to whom the instruments were in- trusted they were thus made to be of different effect than was designed by ^bp qiakprs In these cases it is correctly held, that while the parties perpetrating the fraud in some cases may have been guilty of forgery, yet the makers were bound upon the instruments, as against holders in good faith and for value. The reason is obvious. The maker ought rather to suffer, on account of the fraudulent act of one to whom he entrusts his paper, or who is made his agent in respect of it, than an innocent partv. Thejaw p-stppmR h^m in faj'j t in thus J iiSllJSLil- iJl"^ tlie *"p(TWef ofanother to perpetrate the fraud, and re-, / uires him to boar tlip loss consefjuenf upon his negligence. In tlic case I f~f^tfon'TTn-frrrTlT can b(' iiii|iiitr(l to the defendant. He did j rK)t intrust his sit, pust ; Chapman v. y^osr, 5(» ^■. Y. 137, post. — H. a 170 INTKWrKKTATlON. [aRT. II. §33 MARKET AND FULTON NATIONAL BANK r. SARCENT. 80 Maim:, ;M<». — 180.'?. Whitehousk, .1. — This was an action on a promissory note for seven hundred and cijjlity-five dollars, hrought by the ))hnntiir hank as indorsee of J'^arl B. (^liace (!v Conipuny a}i;ainst the defendant as maker of the note. • TliQdefendant seasonably filed his allidavit that the ))aper declared on had been materially altered sIikh' it was exeiuted. The facts were not coiihdM'ilcd. 'i'he defendant had sifj;n('d a prior note for the accommodation of Cltacc & Company which was outstanding and overdue at the time of the signing of the note in question. At Chace's request he agreed to sign three other accom- modation' notes to take up the overdue note, each to be for one-third of the amount. But when the parties met for the purpose of exe- cuting this agreement, the amount of the overdue note was not definitelv known to either of them, hut was understood to be between six hundred dollars and six hundr ed a nd fifty dollars. Thereupon, at Chace's suggestion, the defendant signed three printed blank notes and delivered them to Chace, who agreeri to fill them out with the requisite amount specified in each, when ascertained, and use them for the purpose of takin g up th e overdue note. The note in suit is one of the three notes thus signed^ BTTl~tTT??tead of making it for one- third of the overdue note according to his agreement, Chace fraudu- lently wrote in " Seven hundred and eighty-five dollars " and indorsed the note to the plaintiff bank before maturity in the ordinary course cf business, receiving therefor the fidl amount of the note less fifteen dollars and ninety-six cents discount thereon. It is not claimed, how- ever, that Chace made any alteration in the printed terms of the blank thus delivered to him,^ Jle simply inserted in the blank spaces such words and figures as were necessary to constitute the instrument a complete promissory note. There is also positive testimony from the plaintiff's discount clerk that, at the time the note was discounted. the hank had no knowledge of any equities existing between the defendant and Chace, but took the note in the u«ual course of business. Upon this evidence the presiding justice dimct^d the jury to return a verdirt for the plaintiff for the amount of the note in suit. This instruction was correct. The court mayjmrperhy instruct the iurv- to return a verdict for either party wheii_it is apparent that a contrarv' verdict could not be sustained. (Heath v. Jaquith, 68 Maine, 433 ; Jewell v. Gagne, 82 Maine 431 ; Moore v. McKenney, 83 Maine, 80.) It is ..a^llsettlcd and familiar law that, if one affixes^his signature to a printedHlank toTa promissory nole and intruslslt to Ih'e^ustoxiy IX.] BLANKS. 171 of another for the purpose of having the blanks filled up and thus becoming a party to a negotiable instrument, he thereby confers the ~^Tight, and such instrument carries on its face an implied authority to fill up the lilanks and complete the contract at pleasure, as to names, terms r.nd amount, so far as consistent with its printed words. As to all purchasers for value without notice, the person to whom a blank note is thus intrusted must be decuied the agent of the signer, and the act of perfecTTng~tlie instrument is deemed the act of the principal. An oral agreement betAveen such principal and agent limiting the amount for which the note shall be perfected, cannot affect the rights of an indorsee who takes the note before maturity for value, in ignorance of such agreement, with a different amount written in it. (Banl- of Pitfshurfjh v. Neal, 22 Howard, 97; Aijrjlr v. Ins'. Co., 92 U. S. 330; Bank \.' StowelJ, 123 Mass. 196; Kelloqg v. Curtis, 65 Maine, 59; Abbott v. Rose, 62 Maine, 194; Breckenridge v. Lett'w, 84 Maine, 349; iyi>e/o«;'s Bills and Notes, 571.)* * * * Exceptions overruled.^ § 33 '^^ SMITH V. PROSSEE. [1907] 2 King's Bench (Court of Appeal) 735. The defendant in S QjjLtty-j Xtrjca. being about to leave for England, A/^ gave to 'I'yffei' fllVl another person a power of ntforney to act for him in his absence- He further, in anticipation of tlio possibility of funds being suddenly required during his alisonce, signed his name on two l)hmk unstamped pieces of y)aper, which were litboirraphed forms of promiHSf)rv notes, and banded them to 'i'elfer with instructions that tiiev shoidd lie retained in his custody until the defendant should, t»y telegram or letter from England, give instructions for their issue as I)romi.S8ory notes and as to the amounts for which they should be filled up. After the ilefcndant had left South Africa, Telfer, without v.jiiTrTTj^~ clearly drawn Ix'twpon issuing an instrumr-nt willi lilaiiks and insuinp one in wliich tbp blanks have boon so irr)p<'rffrtly filbd as lo loavc unorctipiod spaces. Tn t'np latter case to fill the spaces would be an alteration and would destroy the Instrument unless the maker were held to he esfoppeil by the negligent manner \n which he sinit the instrument into the world. See post, Art. IX, Div. I., 5 F?ep note on " in«truments executed in blank and wronf,'fully filled up" in 11 Am. St. Rep. :U(\. — C. 172 INTERPRETATION. [aRT. II. given), and in fraud of tlie defendant, lillcd in llio Idanks in ilic documents so as to make them a[)|)('ar to l)t' [iiiniiissoi'v iinli',-; ami sold them to the phiintilT, who took them hoiie.slly and in •;()()d faith, and without notice of the I'rauih and gave full value for them. For the purjiosi' of suing upon them in England, the notes were stamped as foreign lulls. The trial judge found tliat the notes had not heen properly nego- tiated to the plaintiff, and that he was not entitled to recover. The plaintiff appealed. f/KV^'^'f Flktciier ]\IorhTON, Tj. J* * * '(!"'. The law stands thus. If a person signs a piece 6f paper and gives it to an agent with the intention that it shall in his hands form the basis^ of a negotiable instrument, he is not permitted to plead that he limited the power of his agent in a way not obvious on the face of the instrument. Notice of such limitation may be given in various ways by the instrument itself. For instance, if in the country where the negotiable instrument is made, a negotiable instrument can only be made on paper beai'ing an impressed ad valorem stamp, the presence of a stamp on the piece of paper would be a notice of limitation of the agent's authority as to the amount of the instrument. But, in the absence of notice appearing on the face of the instru- ment, so soon as there is an intention on the part of the signer that the piece of paper shall form the basis of a negotiable instrument, no limitation of the agent's authority can be allowed to affect third parties taking it without notice. But in nij'.opinion there was no such inten- tion here, and the action fails _f or that reason. T tTrmk that tlie defendant delivered the documents to Telfer (as representing his two attorneys) for safe custody only. No doubt both parties contemplated that the defendant miglif change his mind, and might direct that the documents, M'hicb physically were in the possession of the agent might at some future time be used as_thp_basis of two prnmissoryjmtt?;: But that fact does not qualify the purpose for which The instruments were consigned to Telfer. They Avere handed to him as custodian only, and it is immaterTal whether, when tbev were so banded, the defendant said that the time mia^ht come when he might desire to change their character, or whether he made no remark on the subject. Both parties knew that they were delivered for safe custody only. The essenHaT fact which is necessary to^eTraWe-4h«--plaiB4if¥^-to-esta:trrish his case is therefore absent. The defendant never issued the documents with the intention that they should l/ecome' negotiable inatrunientr.- We were presserl wrtTi the~argument thjrt,"as~regards third parties, the question of the defendant's intention that Telfer should be the mere custodian of the documents or that he should have power to issue them as notes does not affect his liability, because in cither view the possession of the documents enabled Telfer to put them in circulation as promissory IX.] BLANKS. 173 notes. Therefore Mr. Lush, quoting LicJcbarrow v. Mason (5 T. K. (183) §ajs that tlicre is an estoppel on tlie defendant independent of 1 r^t_. any intention tliat tliey should hocome promissory notes. In my / • o|TTmtrrr tliis ;iri:niiiriit ti:ncs imuli too far. If we are to measure the/ estoppel by the physical possibility of deception, s. 20 of the Bills of Exchange Act would contain something which would be absolutely irrelevant, and which yet is a condition of the section being applicable. That section commences with the words " Where a simple signature on a blank stamped paper is delivered by the signer in order that it may be converted into a bill ; " in other w-ords, the intention that it shall be converted into a bill is made a condition of the operation of the section. In my opinion section 20 is based upon the doctrine of common law estoppel as it existed at the date of the act, and there- fore the presence of the condition as to its operation shows that the Legislature realized that llic intention that the document should be Cfi nverted jflfn a bill of exchange was essential in order to render the maker liable. In other words, both the common law and the statute featizefTlhe possibility of two rival dangers — on the one hand, a person who did nothing more than sign a blank stamped paper might find himself in the position of i^ein^ the maker of a bill or note, on the other hand, a man might issue an incompletTrbllT or note and place it in the hands of an agent with a limited authority to fill it up, and the agent might fill it np -n iflmiit duo regard to the limitations of his ^Cvvct^ authority and put il in ciiviilalion and thereby injure innocent per--" ^"^^ Bom^^^JPh^y thnrefoi-e drew the line as regards the protection of third parties in the following very reasonable and intelligible way: if the fligncr intended it to become a bill, it was for him to soe that it was issued in accordance with his intentions, and if he did not do this, third parties would not be alTected ; on the other hand, if he did not intend it to become a bill, there would be no sudi duty incumbent upon him, and he would be in the same poj^ition as if he bad merely ai t, and that the checks were given to her said husband, as her agent, to make such payments," and " offered evidence of her instructions to her husband as to the use and application of said checks, not made in the presence of the plaintiff or anvone representing him, and claimed that tbe same should be admittefl in evidence. The court declined to admit tbe same, and tbe defendant duly excepted to the exclusion." Tbe other exceptions taken at the dial bave been waived, and tbe (|ueption raised by this exception is tbe only matter now before us. * * * Tbe judge before wbom Ibe ease was tried witlioiif a jiirv found *• tbat neitber of said payments was required by tbe plaintiff to be made in advance on account of her said building numbered 811 Beacon street. anrMhat neitber of (lieni was made according to any agi»f snid 81 T Beacon street, and lliai no f1f)or in said building was completed at tbe time either of said payments was made by said Bernard Steiier on account of his building numbered SIJ) Beacon street, and were received by the plaintiff on account therefoF." ' ^- This finding makes tbe evidence" excluded inmialerial so far as tbe check for $200 is concerned. If tbis evirlence ha 1 been admitfe(l. the defendant's case on tbe $200 check would bave been Ibis: A check payable to the plaintiff is banded by tbe drawer to her busband, to be delivered by him to the plaintiff in payment of a debt to become ITB INTKUl'KlllAI'lON. {A^"^- "• duo from the drawer of the chock (o the payee, and is fraudulently liaiided hy the hushand to the jkivcc of tlic clicck in payment of a delit (hie from him to the payee, and is accepted hy the payee in good faith in i^aynient of that deht. In such a ease the payee of the cheek is a hniKi fide purchaser of the cheik for value, without notice, and the drawer could not s«^t up her hushand's fraud in defense of the check, n rights of a bona fide pur- I'hasiM' for valui' of a lU'gotialtlo insli-uiiu'iit ; and the fact that tliere was no authority for lilling up the Maiiks as they were filled up, or for otluMwiso wrongfully dealing with the paper, is no defense. Schult: V. AsUey. 2 Ring. N. C. 544; Foster v. MacKinnon, L. R. 4 c. P. ;o4, ri2. In this coninionwcalth it was lield, on the other hand, tliat a note witii a blank for the payee's name was a promissory note, and not an ineomplete paper, whieh might he made into a promissory note. Ives V. Furmcrs' Hank, '2 Allen, 1*30. And in Franlc v. Lilimfeld, 33 Grat. 377, it was held that the purchaser in good faith of a note in printed form, indorsed by ^he defendant, where the date, payee's name, and amount had been leftTT[a7TlOi~a"ion cf lui iiicomplete check tjivcs prima facie authority to fill it up, it no more imports ostensible authority tlian the possession of a va rohou?e reiiiLpU — "" The plaintilT's ri.uhts under the blank chock for $400, and to the money received for it, dei)end upon tlie authority actually given by the defendant when sin- signed it, and the evidence offered should have been admitted in respect of the credit claimed for the $400 paid under the blank check. The entry must be: Exceptions sustained. § 33 VANDER PLOEG v. VAN ZUUK. 135 Iowa, 350. — 1907. Action on a promissory note. Plaintiff appeals from judgment on a directed verdict in favor of defendants.^_ McClain. J. The facts, established practically without dispute, are that the note for $2,000, naming the plaintiff as payee, and the two (lefetidants as joint makers with one Pothoven, on which this fiction is lirought, "wn? ?iTgnod hv these two defendants ))efore it was fully completed, being at the time their signatures were affixed thereto a mere blank printed form; that these defendants so signod tlieir names at theTecpiesI of I'othoven, who was a partner of one of flieiii in a mercantile business, on the re])resentation that he might witliin a short time linil it necessary to rai.se $1.50 or $200 for tem- jtorary use in the business ; tliiit Pothoven, being indebt(Ml on his individual ;i((«©*-J;p its completion, it nmst be filled up strictly in accordance with the autliority given and within a reasonable time. But if any such instrument, after completion, is negotiated to a holder In due course it is valid and effectual for all purposes in liis hands, and ho may enforce it as if it had been filled up strictly in accordance with the authority given and within a reasonable time." It is apparent from the last sentence of this section that, if plaintiff is to be regarded as " a holder in due course," then the instrument is effectual in his hands for all purposes as though it had been filled up strictly in accordance with the authority given by defendants to Pothoven, i. e., defendants would not be allowed to contend as against a holder in due course that Pothoven did not have authority to fill the instrument out for $2,000; but, under the sentence immedintcly preceding the last, if plaintiff is not to be treated as a holder in due course, then, as defendants became parties thereto prior to its com- pletion, they are not liable to plaintiff, because it was not filled wp in accordance with the authority given. By section 191,* the term "holder" is defined as meaning "the payee or indorsee of a hill or note who is in possession of it, or the bearer thereof," and by section 52 * a " holder in due course " is defined as one who has taken the instrument complete and regular upon its face, before maturity, with- out notice of previous dishonor, in good faith and for value, and without notice that at the time it was negotiated to him there was 2 N. Y., § 33. — C. »N. Y.. §2. — C. *N. Y., §91. — C. IX.] BLANKS. 181 any infirmity or defect in the title of the person negotiating it. By section 59,^ " every holder is deemed prima facie to be a holder in due course," and by section 57 "^ "a holder in due course holds the instru- ment free from any defect of title of prior parties and free from defenses available to prior parties auiong themselves, and may enforce payment of the instrument for the full amount thereof against all parties liable thereon." — , It seems to us under these definitions and the applications thereof the plaintiff was a holder of the note, but not a holder in due course. The latter term seems unquestionably to be used to indicate a person to whom after completion and delivery the instrument has been nego- tiated In the ordinary case the payee of the instrument is the person with whom the contract is made, and his rights are not in general de- pendent on any peculiarities in the law of negotiable instruments. The peculiarities of that law distinguTsM iig ii e goti f iblc i R^ruments from other contracts relate to a holder who has taken by negotiation, and not as an original party. This is the construction put on the same phrase used in the English Negotiable Instruments Act by Lord Russell, C. J., in Lewis v. Clay, G7 L. J. Q. B. 224, in which he says: " A holder in due course is a person to whom after its completion by and as between the immediate parties the bill or note has been negotiated. In the present case, the plaintiff is named as payee, on the face of the promis.sory notes, and therefore is one of the immediate parties. The promissory notes held and sued on (by the person named. as payee therein) have in fact never been negotiated within the meaning of the act/'-Jii. TIerdwan v. Wheeler, 1 K. B. (1002) 301, this language of Lord Kussell is said to be dictum, and it evidently is so, for in the further course of the opinion he points out that, with- out regard to the dffinition of that term which he gives, the result would be the same. But the court, in TIcrdman v. Wheeler, holds that if the delivery of a note by one to whom it has been intrusted by the maker for the purpose of delivery after the filling in of the nunc of the pavce. wbicb has been left bhink at the time of the nffixing of the maker's signature, dops not constitute n negotiation, then the pnyee whose name is thus filled in cannot be :i bolder in due course. In other words, we think tliiil "bolder in due course" sbould be con- fitrued as applicable only to one wbo takes the inslruuient by negotia- tion from anrttlier who is a bolder. Certairdy, in the case before us, Pothoven was not a holder of a promissory note, for as the instrunumt was delivered to him it was not a note at all. but only m blaid< form of a not*' with the makers' names aflixed. In (liirrninl v. (Inrrnnit 7 Va. Law Keg. (539, a case at nisi priii.s, it is held that the holder filling a blank left in the instrument at the time of delivery acts at » N. Y.. § ns. — r. « N. Y., § 96. — C. ISC INTKUI'ISKTATION. [aKT. II. Ins poril as to the authority given by the maker fiigning the iaatru- ment with the name of the i)a}ee left bhink, and putting it in the liauds of another for final delivery, and says that, while this interpre- tation of the Negotiable Instruments Aet involves a change in the law as recognized in that state before the act was passed, such interpre- tation is required by the language of the act itself.^ In Boston Steel ti- Iron Co. V. Sleucr. 183 Mass. 140, a case decided under the Nego- tiable Instruments .\ct as adopted in that state, it is held that (Uie 7 The following instructive note to the Ouerrant case appears in 7 Va. Law. Reg. at p. G42: "Note. — The point dfcided in tiiis case is one of nincii importance to banlcers and other dealers in commercial paper. The construction here placed upon the Negotiable Instriinients Law materially qualifies the faTuiliar rule of the law merchant, that one who issues negotiable paper in an incomplete condition gives the person to whom he intrusts it implied authority to fill the blanks and perfect the instrument; and a transfer thereof to a bona fide holder in due course will elTectually bind tlie maker according to the terms of the completed instrument, even thoiigli, as between the original parties, there may have been a breach of trust in filling the blanks. See 1 Daniel on Neg. Inst. 142; Bank of Pittsburg v. Seal, 22 How. !)0; Frank v. lAlienfeld, 33 Gratt. 577. "The point decided is that this rule is altered to this extent, namely, that if a purchaser takes the paper brfore the blanks hare been actually filled by the quasi agent, or by a subsequent holder, he is put on notice that the instru- ment was delivered in an incomplete state, and hence that there may have been some agreement between the maker and the person to whom the instru- ment was intrusted, by wliieh the authority of the latter was limited — and therefore it is his duty to inquire wliat these instructions arc. Hence he takea the paper at his peril. "This construction seems inevitable from the language of section 14 of the Negotiable Instruments Law [N. Y., § 33], quoted in the opinion. The con- clusion is strengthened by the circumstance that that portion of section 14 here construed is a literal reproduction from section 20 of the English Bills of Exchange Act, where it merely embodies tiie rule of the law merciiant as expounded by the English courts prior to the enactment of the Bills of Exchange Act. Se<' 1 Daniel on Neg. Inst. (4th ed.), 147; Hatch v. Hearles, 2 SmaU & Gif. 147; Airde v. Dixon, G Exch. 8f)*). Norton [Bills and Notes (3d ed.), 259], after stating the general American doctrine on the subject, says: 'Such is the general rule, at least in the United Stales, although in England it is held that an unfilled blank charges the purchaser with notice, and that he must at his peril ascertain the extent of the authority conferred.' Since the enactment, by the English Act, of the rule that notice of an unfilled blank is notice of a i)o"ssible e(|uity, putting the purchaser on inquiry, was but declaratory of the already existing rule of the law merchant, as under.stood in England, it necessarily follows that in borrowing, in our Negotiable Instru- ments" Law, the language of the English Act, we adopted also the English interpretation of it. "Judge Aiken's ruling seems eminently sound, and the banking community should make a careful note of it. The decision in no wise alTects the rights of a holder in due course, who takes the paper after the blanks have been filled, without notice of the situation. How far such a holder would be affected by mere knowledge that blanks had been filled by a previous party to the instru- jpent remains to be decided." — C. IX.] BLANKS. 183 who signs a check, leaving the name of the payee blank, and instructs another to fill in the proper amount necessary to satisfy the debt of such signer to the payee named, is not bound by the check in the hands of such payee, if it is used by the person thus intrusted with it for the payment of his own debt to the creditor; the amount of such debt being correctly filled in by the creditor. In that case, the person to whomJh£_,clu'ck was Jntrustcd exceeded his auth'OTrtj in usingit ^Tor the^p fiyrvTit nf hia f^ft P debt, in stenrl of tlic debt of the signer of '"^Jift oheck^ and in this rpf}pppt_\vp think the ( use is analogous to the ^«rie__beforeus. There is language in the opinion with reference to another' cRecK which was fully completed as to name of payee and amount, but was also used by the person to whom it was intrusted in violation of his authority in the payment of his own debt, which is not in harmony with our conclusion that the payee to whom the instru- ment is first delivered cannot be a holder in due course; but in this respect we are not inclined to follow the Massachusetts case. We do not mean to say that in no case can the person named as payee in a negotiable instrument be the bolder thereof " in due course." If A., purchasing a draft to be transmitted to B. in payment of A.'s debt to B., causes the draft to be drawn payable to B., no doubt A. is the holder of such draft, and B. taking it for value becomes a holder in due course. This was true before the passage of the Negotiable Instruments Act. Arm ;iiiy one who relies in good faith (m the genuineness of such instrument, although the person intrusted with compleling and delivering the instniment has exceeded his authority, and this rule 184 INTKUrUKTATlON. [ ART. II. has beeu held appliiabU' in favor of the jiayee as well as the trans- feree of suiii an inslruMK'ul. CItarilun I'loiv Co. v. Davidson, IG Neb. 374, 20 N. W. 25G ; Androscoyyin Bank v. Kimball, 10 Cash. 373; Johnson Harvester Co. v. McLean, 57 Wis. 258; Fullerton v. Sturyes, 4 Ohio St. 530; /)i>;tZ-s v. Roberts, 13 S. C. 338; FmnA: v. Lilicn- feld, 33 CIrat. (Va.) 377; Paris v. /vcp, 26 Miss. 505, 59 Am. Dee. 267; Russell v. Lanystajje. 2 Dong. (X. B.) 514; 1 Daniel, Negotiable Inst. (5th ed.) ij^ 112-117, 769-76na; 1 Randolph, Commercial Paper (2d ed.) 5:; ISl ; 2 Randolph, Commercial Paper (2d ed.) § 9SG; 3 Randolph, Commercial Paper (2d ed.) § 1875; Norton, Rills & Notes (2d ed.) 181 ; Clark cO Skyles, Agency, § 60. Indeed, it seems to have been thouglit immaterial whether or not the person to whom the instrument is made payable and delivered had knowl- edge that it had been filled out so as to make it an effectual instru- ment, by one to whom it was intrusted by a maker who had signed it to be filled out and delivered, for it is said that the holder is entitled to assume that tlie person in whose hands it was placed for final execution had authority to do \yli*t44e^-"4iii:tk) in making it an effectual instrument, and is not cEarged with knowledge of "any limitations upon such authority. Johnson v. Blasdale, 1 Sniedes & M. (Miss.) 17, 40 Am. Dec. 85; Joseph v. First National Bank, 17 Kan. 256; Huntinyton v. Branch Bank, 3 Ala. 186; 1 Daniel, Negotiable Inst. (Sth ed.) § 843; Mechem, Agency, § 394. This principle is well illustrated by the rule, well settled in tliis state and elsewhere, that a surety who signs an instrument and intrusts it to the principal maker for delivery is bound, although the principal delivers it in violation of conditions or instructions imposed by the surety on the principal which were not known to the payee. Sawyers v. Campbell, 107 Iowa, 397, 56 : Micklevait v. Noel, 69 towa, 344 ; Davis Sewiny Machine Co. V. Buckles, 89 111. 237; Smith v. Moberly, 49 Ky. 266; Ward v. Hackett 30 Minn. 150; Craiy v. Hobbs, 44 Tnd. 363; Brandt, Surety- ship (3d ed.) § 457. But we must take the Negotiable Instruments Act as it is written, and, while the general purpose was to preserve the existing law so far as it was uniform, yet in many respects in which tiiere was a conflict or doubt under the authorities the language of the statute lays down rules which are not to be ignored simply because in some respects a change in the law is effected. With reference to the language which we have been considering in this very case, taken substantially from section 20 of the English Bills of Exchange Act, the court says, in Ilerdman v. Wheeler, supra: " W^e have been very reluctant to come to the conclusion that the judgment in favor of the defendant in this case was right, because it appears dangerous even to cast any dout)t upon a payee's right to recover when he has taken a bill or note com- plete and regular on the face of it, honestly and for value ; but, after carefully considering the matter, we have come to the conclusion that IX.] BLANKS. 185 we should be unfairly straining the words if we did not hold that 'negotiated,' in its proviso at the end of the twentieth section, meant transferred by one holder to another. It is to be observed that the Bills of Exchange Act, fn^-sPdwR-^-f section 191 of our act] defines ' is sue ' as meani ng ' the first delivery of a bill or note, complete in form,_to_a_person who takes it as holder. * * * ' There is there- fore a technical word defined and used in the act to mean that which [the person intrusted with the completion and delivery of the instru- ment] did here, and the appropriate words to have used in the proviso of section 20, if it had been intended to include this case, would have been, ' if such instrument after completion is issued or negotiated to a holder in due course.' Those are not the words, and, although we think that the present case might possibly have been decided in the plaintiff's favor before the Bills of Exchange Act was passed, we think that we cannot consistently with the meaning of ' issue ' and ' nego- tiate ' in the act hold that the present case is covered by the words used in the proviso. That being so, it falls within the first part of the secona sunsection ot section 20 [i. e., the sentence of our section pre- ceding the last]; and^as the.ax\ thority of„lb£-de£eiidant was not strictly followed, heis^flflt liable." We see no escape from the conclusion that, under the statute, plaintiff, being not a holder in due course, but the person to whom the note was made payable, and to whom its delivery as an effective instrument was first made, took it subject to the defense that Pothoven had no authority to fill in $2,000 as the amount of the note and deliver it to plaintiff. The judgment of the trial court is therefore affirmed.' V § 33 LLOYD'S BANK, LT:\ITTED, r. COOKE. [19071 1 King's Bench (CorRT of Appkai.) 7f>4. Action upon a joint and several promissory note for 1,000 pounds bv the plaintiffs as payeos against the defendants- as niakepp^ The defendant Cooke had an aerount with the plaintiffs' bank, and the note had been given to the plaintiffs by him as sectirity for an overdraft for 1.000 pounds. On applying to them for the overdraft, be had suggestcfl that he could pror-ure the firm of whieh he was a member and a relative named Sanbrook to join with him in signing •This caHp in rcportpd in 13 L. N. S. 400. with note entitled "Right of an innocent payee to recover on a note Higner] in lilank and intnistcd to a third person who exceedH his authority in flllinp np tlio Mnnks heforr delivery to the payee." See comment on this case and on lAoyd't finnk v. Cnokr, pn^t, p. 1K5, in 16 Case and Comment, 25 (July. 1908). — C. 186 INTKRI'KKI'ATION. [aKT. II. a promissory note as seourily for the advaiuo, and tho plaintHTs jif^recd to aiivaiu'o llio inoiu'v on that security. It a[)i)(';nc(l that tlio defendant Cooke had thereiijion j,'otial>l«' instruments of common law princif)lcs, is ;ippr<.v.tl in ]2 I-aw Notes. 12.T (Oetoher. lOOS), wiierc it is maintained that the '■anie doctrine should he applied witli respect to the Ameriean Xeyotialde Instruments T.aw. To the same efTect, see 1.5 Case and Comment. 25. 20 (July, 1908), where it is said: "In expressly saving the rules of the law merchant in cases not ftrovideil for in (lie act, the .American statute does not, like the English act, mention common law rules; hut tliis seems immaterial for the reason that neitlier statute was intended to rodify rules of the common law I)eyond the scope of the law merchant." See also Marlinfj v. Filzfirralrl, ]^H Wis. n.T. where the court, in answer to the contention of counsel that a certain section of the N'epotiahle Instrumr-nts Law controlled, said that " Those rules give way to the supreme rule of rntopprl in pais." P. 100. — C. 188 IXTKUl'liKTATlON. [ART. II. L. J.; but I wish to add a few observations with reference to the arguiiieiit based upon soilion 20 of i\\v l>ills of Excliange Ai't, 1S8'^, wliirh was pressed upon us !iv tlu> counsi-l for tlio defendant Sanbrook. In oases in which a blank slmupcd j)iipcr hns been signed and delivered by the signer in order that it may lie converted into a bill, subsection 2 of section 20 provides that " in order that any such instrument when completed may be enforceable against any person who became a party thereto prior to its completion, it must be filled up within a reasonable time, and strictly in accordance with tlie authority given." It was urged that this provision is an absolute limitation upon all (;lain)H based on such an instrument (whether by way. of estoppel or other- wise), and that the only way in which a person so claiming can escape from that limitation is by bringing himself within the proviso to tiie subsection, which provides that " it" any such instrument after com- pletion is negotiated to a holder in due course it shall be valid and etlectual for all purposes in his hands, and he may enforce it as if it had been filled up within a reasonable time, and strictly in accord- ance with the authority given," and it was contended that the plain- tiffs had failed to bring themselves within the words of this proviso because they were not " holders in due course." In order to agree with this view, one would have to come to the conclusion that it was intended by the Bills of Exchange Act, 1883, to make an essential change in the law with regard to negotiable instruments by shutting out the payee of such an instrument, who had given full value without notice of anything wrong, from the advantages of the position of a bona fide holder for value. — Before the Bills of Exchange Act, 1882, it would, in my opinion, have been impossible to contend that a payee of a promissory note who took it under circumstances such as existed here was not entitled to recover the full amount of the note from the maker of it. A long line of most emphatic judgments shows that, before the Act, a person who, like the defendant Sanbrook, chose to sign a bill or note in blank, and hand it to another person to be filled up, would, under circumstances such as exist in this case, be liable to the payee for the full amount for which the instrument was filled up, provided that it was not greater than the stamp would cover, so that an action such as this would then have been an undefended action. The contention of the counsel for the defendant amounts, therefore, to saying that the Act has made this important change, namely, that it has taken away the right of a payee to recover under such circumstan ces, l eaving only the rights of an indorsee in this respect unchanged. I cannot accept that view. T can see no indication in the Act of any intention to make such n radical change in the law, a change which does not commend itself to one's sense of justice, and which, if intended, would surely have been made formally and explicitly, and not left to be gathered by mere implication. And, apart from the IX.] BLANKS. 389 absence of any indication that such a serious change in the law is intended to be made, tliere are many things in the Act which lead me to the opposite conclusion. In the first place, I am satisfied that the term '^I rold e r_ iiL_d u e course,"' which is used in the Act, is intended to be the equivalent of the term "bona fide holder for value" which was used prior to the Act, and which would, inniy opinion, have included a payer who had given full value for the bill or note in good faith. This appears from the judgment of Lord Selbourne in France V. ClarJi- (26 ( li. D. 257, at p. 262), in which he uses the expression " bona fide holder for value " in a sense which must include a payee who has given value in good faith. He says: "The person who has signed a negotiable instrujnent in blank or with blank spaces is (on account of the negotiable character of that instrument) estopped by the law merchant from disputing any alteration made in the docu- ment after it has left his hands by filling up blanks (or otherwise in a way not ex facie fraudulent) as against a bona fide holder for value without notice; but it has been repeatedly explained that this estoppel is in favor only of such a bona fide holder." Now, as I have said, the courts always held a payee entitled to the benefit of this estoppel if he took the instrument bona fide and without notice, and therefore we have the authority of Lord Selborne in favor of the view that the term "bona fide holder for value" may include a payee; and, if the term "holder in due course" in the Bills of Exchange Act, 1882, is intended to be the equivalent of " kona fide holder for value," it must in clude such a pave e^_ Eut it will perhaps be said that one ought not primarily to be guided in the interpretation of such an Act by ronsiderntinns of what was the previous state of the law. The Act in its definition clause defines in a statutory manner the meaning of the terms used in it, and, although there is a strong presumption against any serious change in the general law being intended, it is, after all, a question of the interpretation of the statute, anrl these definitions must be implicitly followed. This is true, but tbe application of this principle only strengthens the view I have eniinciated. When I look at the definition of "holdor" in the Bills of Exchange Act, 1HH2, section 2, 1 find that, so far from its indicating any intention to create a difl'erence of status between a holder who is a payee and a bolder who is an indorsee, or to put a payee in any worse position in this respect than an indorsee, the contrary is the rase. Tlie Act takes special care to place them on an equality, for it defines "holder" as meaning the "payee or indorsee of a bill or note who is in possession of it, or the bearer thereof." Therefore, unless the context compels us to do other- wise, we must constnie the term " bolder " as including a payee. T next find that in section 30. Fubsection 2, of tbe Act it is provided that "every holder of n bill is prima fncir deemed to be a bolder in dne course," and that, if it is wished to dislodire him from that posi- inO INTKKI'HKTATION. \ WW. 11. tion, it must be shown that there lias been fraud or some other hke eiivuiiistaiK-e iu connectiou with the hill hrl'orr it reaehed his hands, and even tliis ouly shifts the IhikU'h of piool' and makes it ineumbent oil him to prove that he ji;ave vahie in {j;ootl I'aith. Thesi' pri)visions spei'ilu'ally give to the jjayce the priiiin facie status of a " hohler in due eourse," and, if \\v can sliow that value has in good faith boen given by him for the bill, that prima facie status can- not be displaced. ' It is suggested, however, that these conclusioTis are negatived hy the language of section '■?!), subsection 1, which states the conditions under which a person is a " holder in due course.'' T can find noth- ing in the language of that subsection which throws any doubt on the view that " holder in due course " would include a payee who has given value in good faith, unless we are to construe the word " negotiated " as being merely equivalent to " indorsed." l^nt, when the definition of "negotiation" given by section 31, subsection 1, is looked at, it appears clear that the Legislature intended to make it apf)ly also to the original operation of transferring the bill to thie payee. It lays down that " a bill is negotjated when it is transferred from one person "to anuthifrTTrTaclriuaiiner as to constitute the trans- feree the holder of the biH7' It carefully abstains-fr(Tm~prescribing that the tralisTeror must be a " holder." All that is necessary to con- stitute " negotiation " of the bill is that it should have been trans- ferred from one person to another in such a manner as to constitute the transferee the " holder of the hill," i. e. — if we replace " holder" by its definition in thu Act" — " the payee or indorsee who is in ])os- session of the bill." A cheque, therefore, payable to a particular i)cr- son, which is handed by the drawer to that person for value, would bo " negotiated " within the meaning of the Act. These considerations lead me to the conclusion tliat the Act did not intend to impair the position of a payee as contrasted with that of an indorsee, and that a payee who has given value in good faith is intended to come within its provisions as a "holder in duo course" just as much as an indorsee. Finding, therefore, I'o indicnf ion in the Act of any intention to interfere with the position of a ]tayec of a negotiable instrument in this respect, I arrive witli some confidence at tho eonclusion that, in the circumstances of a case like the present, such a payee since the Act still occupies the favorable position which he would have had before the Act by virtue of the law of estoppel as applied to a case where a promissory note has l)een signerl in blank by the maker and intrusted to another person to fill up. A p pi leaf toil aUoired.^'^ '"This case is rpportrd in 8 A. & E. Ann. Cas. 182, with note entitled, " LiaV)i1ity of makor of Mank nrirotiable instrument to hona fide holder where blanks are fraudnlentlv filled in." — C. BLANKS. 191 MADDEN V. GASTON. 137 Appellate Division (N. Y.) 294.— 1910. Action by Charlotte F. Madden against Cxeorge H. Gaston, as executor of the last will and testament of Eliza Wilson, deceased. Appeal from a judgment entered on a dismissal of the complaint at the close of the plaintiff's evidence, in a suit on two checks, alleged to have been signed by the defendant's testatrix in blank and delivered to the plaintilf and thereafter by her filled out with the amounts of $5,000 and $10,000, resp ective ly. The answer put in issue the making of the L'lKTUks, melr dehv'ery, ihe consideration, and due tilling out of the blanks. The plaintiff proved the signature of the maker of the checks and o0'ered them in evidence ; but they were excluded by the court upon the ground that there was no proof of the authority given to fill up the blanks. The plaintiff then called the defendant, who testified that, on flie day before the death of his testatrix, he had a conversation with the plaintiff, and then saw the checks in question or similar papers. - — ► MiLLEit, J. The production of the checks by the plaintiff raised a presumption of a valid and intentional delivery of them to her by the maker. Section .3.') of the Negotiable Instruments Law (chapter 38 of the Consolidated Laws). Such delivery operated as prima facie authority to fill up the blanks for any amount. Section .'?'? of the Negotiable Instruments Jjaw. The learned trial court was, therefore, vrong in holding that it was incumbent upon the plaintiff to prove her authority to fill up the blanks, as the statute imposes the burden upon the defendant to show the agreement, and that its terms have been violated, if that be claimed; and that was the rule at common law. Davidson v. fjavirr, 1 Wall. 117. Said section ',V.^ also providesr "In order, however, that any such iiist nirncnt, when completed, may be enforced against any person who hccame a party thereto prior to its completion, it must l)e filled up strictly in accordance with the authority given and within a reasonable time." It seems to me that there can be no ])r('sniiipti(iii one w;iy or the other as to the time wilhin which the hhiiiks were filled up. There- fore, the burden was u|)on Ihe plaiiitiH', who asserted it, to |)rove that the blanks wen: filled up within a " reasonahle time." It is alleged in the comj)laint that the blank cheeks were delivered ou the 22d of Octol>er, 11)07. The maker died on the Dfli of .hme, lUdS. There is evidence which, perhaps, would justify the inference that the defend- ant saw the checks on the Hth of June in their present condition. Other than that, there is nothing to shf>w when the cheeks were filled np, and certainly from Octol)er 22, 1907, to .Tune !>, |!)0S, is, unex- plained, more than a " reasonable time." Ilfiwever, the plaintiff could only prove one thing at a time. The checks were excluded upon a ground which the y)laintiff could not obviate, !inn is bciuctMi flic oriLriual parties to the instrument, and upiMi il in the form and condition in which it was executed, and, therefore, we do not think it would be profitable to consider rpiestions wliirli niiirlit arise where tlie obliga- tion is made ftayahle at a bank, the blank number of dollars after- wards filled in by the payee ami indorsed by him to an innocent holder for value before maturity. * * * We find no error in tlie reef)rd. .'udgment is nlTlrrned, wiili costs.' ' A note for thfe hiindrpd Hollars, tho fipiirPH beinp .$300. in gortd for three hundred dollars, if the ni.iker intendt-rl it to be for thn-e hundred. Burnham NEOOT. INHTKUMKNTB — 13 194 INTKHlMiKTATloM. [aRT. II. §36 Mears V. Graham, S lihukf. (Tnd.) 111. — ISlfi. Black- FOKO, .1. - Tlic {'iniinistaiuo ihat llio figuros in the margin of the noti' ari' "$;?;n.ir)" ami llic words in the body are "three hundred and thirty-thii'c dollai's and lll'tocn cents," does not affect the validity of the note. 'I'he words in the body must govern, and the note is therefore lor .$;{;{;?. ir>. 2. Interest, ITow Computed. § 36 Campbell Printing Press, etc., Co. v. Jones, 79 Alabama, 475. — 1885. Clopton, J. — The principle seems to be settled, that a promissory note payable at a future day, with interest, bears interest V. Allen, 1 Gray (Mass.), 496. A bill payable in the United States for " 3,000," "three thousand ," omitting the dollar mark and the word "dollars," is a valid bill for three thousand dollars. Williatnso7i v. Smith, 1 Cold. (Tenn.) 1. — H. [Accord: Kimball v. Costa. 76 Vt. 289. In this case the figures "$385" were in the margin, and the body of the note read: "For value received, I hereby promise to pay F. E. Kimball or order the sum of F. E. Kimball dollars, $50 payable August 9, 1902. and $50 every two months thereafter until note is paid," etc. Tyler, J., said: "The writing of the name ' F. E. Kimball' after the words 'the sum of' was clearly a clerical error, and the name in tiiat place should be read out of the note. . . . The words, three hundred and eighty-five dollars, should be read into the body of the note. The defendant had no right to understand that $50 or $100 was all there was to be paid. The figures in the margin were notice to him of the amount for which the note was given." Reported in 1 A. & E. Ann. Cas. 610, with note entitled, " Object and effect of marginal figures in bills and notes." Contra: Chestnut v. Chcatnut, 104 Va. 539. In this case the figures "$1,800" were in the margin, and the body of the note contained a promise " to pay to the order of J. A. Chestnut dollars," etc. It was held error for the trial court to permit the plaintiff to put in evidence the note in its incomplete form. Bxichanan, J., said: "The propriety of the court's ruling depends upon the que.stion, whether or not the figures and words in the margin of a note fi.\ the amount for which the note was intended to be given, where no amount has been inserted in the blank left for it in the body of the note. Upon this question the decisions of the courts are not in accord, though the weight of authority, and the better reason, seems to be in favor of the view that the sum named in the margin is generally the limit of the amount with which a bona fide holder may fill up the blank, but until so filled the instrument is incomplete, and no recovery can be had upon it [citing, among other authorities, 'Norwich Bank v. Uydc, 13 Conn. 281, a leading case on the subject]. . . . The reason for this rule of construction is that one of the essential recjuisites of a bill or note is that the amount for which it is made must be clearly expressed in the instrument, and as the marginal figures are not generally regarded as a part of it, but are intended as a convenient index, and as an aid to remove ambiguity or doubt in the instrument itself, they cannot supply the omission to insert the amount in the body of the instrument where a blank has Ijeen left for that purpo.se." P. 541. Reported with note in 2 L. N. S. 879. — C] X.] ^ ^ AMBIGUOUS LANGUAGE. • 195 from date, it being considered as a part of the debt. (Dorman v. Dibdei, R. & M. 280; Richards v. Richards, 2 B. & Ad. 447; Lerzen- berg \.\Cleveland, 19 La. An. 473.) * * * Otherwise, the words, bearing legal rate of interest, would be without meaning and opera- tion. Such is the legal effect after maturity, without express stipu- lation. In Kennedy v. Nash (1 Starkie, 452), Lord EUenborough held, " that under tlie words, bearing interest, the plaintiff was entitled to recover interest from the date of the hill, since, without any such words, he would he entitled to interest from the time when the bill became due." The ol)ligation of the note is to pay the principal, with interest. To limit the time when the interest begins to run, to maturity, is to presume that the parties contemplated the notes would not be paid when payable, and therefore provided they should bear interest thereafter. In order to give some effect to all the terms of the notes, our conclusion is, tliat the interest runs from date.* 3. Instrument Not Dated. r ^^ §36 Richardson v. Ellett, 10 Texas, 190.— 1853. Hemphill, Ch. J. — Nor is the judgment excessive, as charged by the plaintiff in error. It is true that the note, as copied in the petition, does not bear any date ; hut the petition avers it to have been executed on the 8th day of January, 1850, a fact not controverted by the defendant. By its terms the instrument hears interest from its date, and it appears to have been accurately estimated.' 4. Conflict Betwekn Wuiiten and Printed Provisions. ^36 American Express Co. v. Pinckney, 29 111. 392.— 1862. Action for negligence in collecting a draft. The question arises on the construction of a partly printed and ])artly written receipt by defendant. Hrkese, J. — The principle a))i)li(al)le in all such cases is, that a writing must be consinu'd according i(» (he clear iiifcnt of the j)nrties, if (hat can be collected from the face of the instrument. * * * I'ut there is another principle of law applicable. In a case where the agreenumt is })artly written and in y)art printed, the preference is always given to the wrilten ])!irt. What is priiited is intended to af»y)ly to large classes oJ" contracts, and not to any one exchi- sively ; the blanks are left purposely, tliat the special statements or provisions should be inserted which belong in the particular contract, 2 Intorest on notes payable on demand runs only from the time of demand. Huntrr V, TVoor/, .'54 AIn. 71 : /)of/f/p v. Perkins, !) Pick. (Mnsx.) .10!). — JI. » See Byles on Bills ( i:Uli ed.), p. 79. See, as to date, §§ 25, 30, ante. — H, 196 INTERPRETATION. [auT. II. iiiid not to others, and thus to discriminate this from otliers. So Ijovd Ellonborough hoUl, in the ciisc of Robertson and Thomasson v. French (4 Kast, ;{(U)), when he said, that words superadded in writing are entitled, if there shoukl be any reasonable doubt upon the sense and meaning of the whole, to have a greater effect attributed to tliem, than to the printed words, inasmuch as the written words are the immediate language and terms selected by the parties themselves for the expression of their meaning, and the printed words are a general formula adapted equally to their case, and that of all other contracting parties, upon similar occasions and subjects. * * * 5. Doubt Whether Bill or Note. § 36 FUNK V. BABBITT. [Reported herein at p. 150.]* §36 COMMONWEALTH v. BUTTERICK. [Reported herein at p. 113.] 6. Trreoular Signature. §36 GERMANIA NATIONAL BANK v. MARINER. [Reported herein at p. 210.] 7. Joint and Several Liability. §36 DART V. SHERWOOD. 7 Wisconsin, .523.-1858. This is an action of assumpsit brought by the appellee against the appellants, as joint makers of a promissory note, wliich read as follows : $400. RiPON, Wi.s., Nov. 4th, 1856. Thirty flay.s after flate, for value received, I promise to pay Putnam C. Dart, or order, four hundred dollars, with interest, at the rate of twelve per cent, per annum. J. C. Sherwood. Wm. C. Sherwood, Surety. ♦ See also I'eto v. Reynolds, 9 Exch. 410, note, ante, p. 150; and compare Watrous v. Holbrook, 39 Tex. 573, ante, p. 148. — H. XI.] ^^^ AMBIGUOUS SIGNATURES. 197 On tb^ trial the plaintiff offered the note in evidence, and the defendants made two objections to tlie reading of the same ; * * * 2. Tha!t the note did not show a joint liability. The court allowed the not^ to be read, and the plaintiff rested his case. The defendants moved for a nonsuit on the ground that there was a mis-joinder of parties defendant. This motion was denied. Judgment for plaintiff. Defendants appeal. By the Court — Whiton, C. J. — The judgment of the court below is correct and must be affirmed. The note declared upon is the joint and several note of the defendants ; joint because it is signed by both; and several, because each defendant promised severally. (Story on Promissory Notes, § 57; Hunt v. Adams, 5 Mass. R. ;558 ; Same v. Same, 6 do. 519.) * * * The judgment of the circuit court must, therefore, be affirmed.^ XI. Ambiguous signatures. § 37 ANDENTON v. SHOUP. 17 Ohio State, 125. — 1866. Action against George W. Shoup on the following instrument: D.WTON, August 11, I8B1. Dayton Branch, State Bank of Ohio, pay to J. B., or bearer, two hundred thirty dollars. $230. > Samuel Siioup, Agent. Allegation that Samuel Shoup was defendant's agent and acted as such in drawing the check; that plaintiff is holder in due course; that the check was duly presented and was dishonored, etc. Demurrer sustained and judgment for defendant. Plaintiff appeals. Day, C. J. — The averments in the petition will not warrant the claim in argument, that this is a case where a party himself uses a name other than his own in the transaction of his business. The most that can be claimed is, that the principal allowed the agent to sign his own name as agent in (ln' trniisactiori of some of ilie business of the principal. * * * It is undonbfcdly well settled that, where an ordinary simple con- tract is signed by an agent in his own name, wilb tlm addition of the word "agent" thereto, the principal may be niadf liMblc thereon, whether bis name apjiears on the paper or not. (Stori/ on Agency, J^ inOa, and authorities there cited.) But, for commercial reasons, a distinction is taken, in the authorities, between contracts of this class and negotiable paper. As to bills of exchange, it is said that the agent 6 Accord : Monson v. Drnhflry, 40 Conn. .5.52; Ely v. Clutr. 19 Hun (N. Y.) 35; Wallace v. Jewell, 21 Oli. .St. 163. — li. 11)8 INTKlil'liKTATlON. [aKT. ll. '' imist either sign the name of the prineipal to the bill, or it must appear on the face of the hill itself, in some way, that it was drawn for him, or the principal will not he hound." (Edw. on Bills, 80; Chitty on Bills, 27.) The question as to the liahility of the principal, on paper executed by an atjent in his own name, was well considered hy tlu; Supreme Court of Massachusetts, in the cases of the Eastern Railroad Cuinpany V. Benedict (5 Gray, 561), and the Bank of America v. Hooper (lb. 567.) In the latter case, it is said that " there will he found to be a leading distinction taken between eases of commercial paper in the form of bills of exchange and negotiable promissory notes, and other simple contracts, holding that no one but a party to such negotiable paper can be sued for the non-payment thereof." In support of this dis- tinction the following authoiities are there cited: (Byles on Bills [5th ed.], 26; Emily v. Lye, 15 East, 7; Becham v. Drake, 9 M. & W. 92; Pent V. Stanton, 10 Wend. 276; Stackpole v. Arnold, 11 Mass. 27; Bedford Com. Ins. Co. v. Covell, 8 Met. 442; Taber v. Cannon, Id. 456.) The case of De Witt v. Walton (5 Seld. 571), decided by the New York Court of Appeals, is a strong case to the same point. It was a suit brought on a negotiable promissory note, signed " David Tlubbell Hoyt, agent for * The Churchman.' " Iloyt was an agent for a paper called " The Churchman," and was authorized to contract for the proprietor in that name, and the suit was against the proprietor, Hoyt's principal. It is said in the opinion, that " the good sense of many authorities upon this subject would seem to be, that, where a party is sought to be charged upon an express contract, it must at least appear upon the face of the instrument that the agent undertook to hind him as principal. Here the promise is not by tlie defendant or ' The Churchman,' nor by Hoyt for them or either of them, or in their behalf, but for himself. The formula used by him in the signa- ture to the note in controversy has been determined, in this and other states, to create an obligation on the part of the agent personally, and not in behalf of the principal. There is no great hardship in requir- ing that if a man undertakes to oblige another, by note, bill of exchange, or other commercial instrument, be should manifest his purpose clearly and intelligiltly, or that his principal will not be bound, whatever may be the result in reference to himself." It was further held in this case, that the words added to the name of the person signing the paper was merely deacriptio personcB. The principle maintained in these cases, it is said by the author of the notes in Smith's Leading Cases (vol. 2, p. 433), "would seem to be well settled on both sides of the Atlantic." These principles applied to the case before us are decisive of it. XI.] ^^'^~ AMBIGUOUS SIGNATUHES. ^ 199 The name of the defendant is in no way indicated upon the face of the instrument upon which alone the action is based. It follows, therefore, that the ruling of the court below was cor- rect, ai^d that the judgment rendered by it must be affirmed.' § 39 WESTERN WHEELED SCRAPER CO. v. McMILLEN. 71 Nkbbaska, 686. — 1904. Action on a note reading " we promise to pay " and signed : "Directors of Thedford Irrigation and Power Co. (Limited). J. M. McMillen, G. W. Miller, G. L. Matthews." Judgment for defendants and plaintiff brings error. DUFFIE, J. — * * * The court, in its seventh instruction, told the jury : " You are further instructed that if you should believe from a preponderance of all the evidence in this case that the three notes set out in plaintiff's petition were made and executed by the Thedford Irrigation & Power Company, Limited, and if said notes were signed by said defendants with the intention and understanding to bind the Thedford Irrigation & Power Company, Limited, and not the signers of said notes as indi- viduals, and if you should find from a preponderance of all the evi- dence that it was so understood by and between the agent of plaintiff and these defendants at the time said notes were executed and de- livered, then your verdict should be for the defendant, ' No cause of action.'" The jury returned a verdict for the defendants, and the plaintiff has brought the record to this court for review. JThcfH'tition in error, among other matters, alleges "that the court errerTm permitting the defendants to introduce oral testimony tend- ing to prove a different contract than that set out in the written con- tract, namely, the notes sued upon," and in giving the instru(;tion above quoted and f)thor instructions', which it is unnecessary to dis- cuss. The general rule undoubtedly is that, on account of the qualities which the law annexes to negotiable instruments, none are bound except those who appear on the face of the inslrunicnt as bound, and accordingly that extrinsic evidence cannot be admitted to charge parties whose names do not ajipcar on the face of the instrument. * * * It is undoubtedly true that the modern cases are more liberal than was formerly the case in allowing one who signs a nego- tiable instrument, designnling himself as agent or trustee, to show by parol evidence that he was acting for another, who received all the « Rw N. Y. Life Jnn. Co. v. Marttndnlr. Tft Kan. 142. reportpii in 21 !>. N. 8. 1046. witli oxlintistivp nnfp rntitled, " Li.iMIity of principal on negotiable paper executed by an agent." — C. 200 intkiji'ui:tation. [aut. ir. beuofits of the consideration for which the note was given, h'eidan v. Wiiwgar, 95 Mich. 430, 20 L. K. A. 705, is a case in point, and other cases referred to in the notes of thi> editor will furnish examples of tlie relaxation of the rule adopted hy the courts at an earlier date upon this question. If this court li;ul not put itself on record, we should be disjiosed to follow the modern decisions, hut as early as 1886, in Webster v. Wray. 19 Neb. 558, the court, after a full review of the authorities, held tliat "no party can be charged as principal upon a negotiable note or bill of ex(thaiige unltyjs his name is thereon disclosed ; " and it was further held in that case that parol evidence was not admissible to show that one who appeared upon the face of the notes to be the maker was in fact acting as agent for another, or as the oihcer of some corporation who had received the benefit of the consideration. This case was followed by Andres v. Kridler, 47 Neb. 585, where suit was brought upon a note made and signed substan- tially in the manner of those in suit, and it was held that, " where the pleadings disclose a c'ause of action against a defendant personally, superadded words, such as ' agent,' ' executor,' or ' director,' should be rejected as descriptio personcB." We think this court is now fully committed to the doctrine tliatj^Jn order to exempt an agent from liability upon an instrument'executed by him within the scope of hiS; agency, he must not only name his principal, but he must express by; 9ome form of words that the writing is the act of the principal,} though done by the hand of the agent. If he expresses this, the prin- cipal is bound, and the agent is not. But a mere description of the general relation or office which the person signing the paper holds to another person or to a corporation, without indicating that the par- ticular signature is made in the execution of the office and agency, is not sufficient to charge the principal or to exempt the agent from per- sonal liability. There was evidence which would fully support a find- ing that in executing these notes the defendants did not intend to bind themselves personally, and that the plaintiff's agent was not only fully aware of that fact, and understood that he was taking tlie notes of tlie corporation, but assisted and advised as to the form in which the notes should be drawn in order to make thorn the ol)ligation of the corporation. This being the case, the defendants, upon a proper plea, would be entitled to have the notes reformed to express the real inten- tion of the parties. Western Wlieehd Scraper Company v. Stickleman et ah, 122 Towa. 306, and authorities there cited. We recommend, therefore, that the case he reversed, and remanded to the Distrir-t fonrt, with directions to allow the defendants to amend their answer, if they so elect : otherwise to enter judgment for the plaintiff for the amount due upon the notes. KiRKPATRiCK and Lktton, CO., concur. Per C'ttriam. For the reasons stated in the foregoing opinion, the judgment is reversed, and remanded to the District Court, with direc- XI.] AMBIGUOUS SIGNATURKS. * 201 tions to allow the defendants to amend their answer, if they so elect ; othe/wise to enter judgment for the plaintiff for the amount due upon the notes.'' §39 KEIDAN v. \YTNEGAR 95 Michigan, 430. — 1S93. McGrath. J. Plaintiff had jud<;ment upon the following promis- sory note: "$336.96-100. Grand Kapids, Mich., Dec. 22, 1887. Ninety days after date, I promise to pay to the order of Geo. Keidan three hundred thirty-six and 96-100 dollars at the Old National Bank of Grand Eapids, Mich., value received, with interest at the rate of eight per cent, per annum until paid. W. S. Winegar, Agt." Defend- ant, with Ids plea, filed an affidavit setting forth " that the note, a copy of wliieh is attached to the declaration in said cause, and served upon said deponent, with a copy of said declaration, is not the note of this deponent, defendant as aforesaid; and he denies the same and the execution thereof, and says that he, said defendant, is not indebted to Tin JiendrU v. fjarriman. l?t Afp. -107. the not? read "we promise to pay" and was signed " Otis IIabriman R. M. Tbevett L. MUDGETT W. U. OiNN President Directors of Prospect and Stockton Cheese Company." In an action by the payee against Harriman et al., as individuals, the defendants olTored evidence to show that liic note, whnii delivered to the payee, was intended, to his knowledge, to he the ol)lirr;,tinn of the Cheese Compnnv alone. Held that the evidence was inadmissihie and that the defendants were liable as individuals. Daniokth, J., said: " It is true, that in the cases cited, such evidence was admitted and was jierliaps admissible, under tlie well estab- lished rule of I.iw. that when therr- is an anilii^Miity in the contract, when the language used is equally susceptible of two different constructions, evidence of the circumstances by which the parties were surrounded and under which the contract was made may be f,'iven, not for the purpose of proving the inten- tion of the parties indej.endent f)f the writing, but that the intention may be more intelli«.'en(ly ascertained from its terms. But to make this evidence admissible some andiiguity must first appear; there must be language used such as may without doing violence to its meaning, be explained consistently with the liability of either party, some language which as in Simp.J IN i'i:i;n;i;iAii()N. |akt. ii. Biiid plaiiitilT upon saitl noli', nor for any part llieroof, nor is he in- cK'lili'il to said plaintiir in an}' sum \vliato\cr, nor in any maimer what- ever." lIj)on the trial defendant ollercd to show that in 1884, hefore plaint i IT had any dealings with defendant, plaintifi" was informed that defendant was earrying on husiness as the agent of Maggie G. Wine- gar, and was not doing husiness for himself; that husiness relations were then estahlished hetween plaintiiV and said Maggie 0. Winegar; that said husiness relations continued from the early part of 1881 to and including the year 1887, and enihraced many transaetions hetween plaintiff and Maggie 0. Winegar; tliat many instruments were made between th(> parties, which were signed exactly as the note sued upon is signed, and that this form of execution had come to be recognized and adopted between the parties as binding Maggie 0. Winegar; that during that time no business was transacted by the defendant in his individual capacity, and all the husiness done was that of his principal, and known and understood to be such by plaintiff; that the said T)ote was given and accepted as the obligation of Maggie G. Winegar; that the note was given for duebills and goods furnished by plaintiff to ^laggie G. Winegar on the books of |)laintin': that the taking of these notes did not in the least change the character of the indebtedness; and that defendant never received any benefit or consideration for said note. The court refused to admit the testimony, and directed a verdict for the plaintiff. The clear weight of authority is that the promise in the present case is prima facie the promise of William S. Winegar, and, as between one of the original parties and a third party, the addition of the word " agent " is not sufficient to put such third party upon inquiry. The question here,'"trowever, is 'whether, as between the immediate parties I to the instrument, yiarol evidence is admissible to show the real ! character of the transaction. * * * Jii Kran v. Davis. 47 Amer. Dec. 182, Chief Justice Green says: "The question is not, what is the true construction of the langua?e of the contracting party, but, who is the contracting party? Whose language is it? And the evidence is not adduced to discharge the acrcnt from a per- gonal liability which he has assumed, but to prove that in fact he never incurred that liability; not to aid in the construc- tion of the instrument, but to prove whose instrument it is. Now, it is true that the construction of a written contract is a question of law, to be settled by the court upon the terms of the instrument. But whether the contract was in point of fact executed, when it was made, and by whom it was made, are questions of fact, to be settled by a jury, and are provable in many instances by parol, oven though the proof conflicts with the language of the instrument itself." * * * To the rule that extrinsic evidence cannot be received to contradict or vary the terms of a valid instrument, there are many exceptions. As between the original parties, the consideration may be impeached; r xr.] /ambiguous signatuees. • 203 fraud or illegality^ in its inception may be shown. It may be shown that the note was delivered conditionally, or for a specified purpose, only]Hha4-it was made for accommodation, merely; if, by mistake, one party indorses before another, such mistake may be shown to lelieve him from his aj)parent liability; that a party who indorses Iiis name upon the back of a note may be maker or indorser, dependent ujwn parol proof as to when he placed his signature; that, although the legal effect of successive indorsements is to make the indorse rs liable to each othei in the order of time in which they signed tlieir names, yet such legal effect may be rebutted by parol proof that all were accommodation indorsers, and, by agreement among themselves, cosureties; that the fact of a note being joint and several did not exclude proof that one of the signers was a surety, merely, and, where the creditor knew the fact of suretyship, an extension of time, for a consideration, without the consent of such surety, released the surety. * * * As is so often said, it is the intent of the parties which is to be carried out by the courts. The rule that rejects words added to the signature is an arbitrary one. Its reason is not so much that the words are not, or nuiy not be, suggestive, but that they are but sug- gestive, and the instrument, as a whole, is not sufficiently complete to point to other parentage. The very suggestiveness of these added words has given rise to an irreconcilable confusion in the authorities as to the legal effect of such an instrument. Extrinsic evidence, there- fore, is admissilde in such case, between the immediate parties, to explain a suggestion contained on the face of the instrument, and to carry out the contract actually entered into as suggested, but not fully shown, by the note itself. The presumption that persons dealing with negotiable instruments take them on the credit of the parties whose names appear should not be absolute in favor of the immediate payee, from whom the consideration passed, who must be deemed to have known all the facts and circumsljinccs surrounding the inception of tlie note, and with sucli knowledge ncccptcd a note containinjj stich a suggestion. * * * Wo thiid< tlial in the present ease defcndniit was entitled to make the jhowing offered, frider the generni issue, defendant was entitled to give in evidenee any matter of defense going to the existence of any j)romise having legal force, as against him. I Shinti, V\. & |»r., § 710. The jurlgment is reversed. anility. T^nlcss lli(> itromisc piiiports to he hy the corporation, it is that of the persons who siihscrihe to it; and the fact of adding to their names an ahhreviation of some othcial title has no legal sig- nification as (jiialifying their obligation, and imposes no obligation upon the corporation whose officers they may be. This must be regarded as the long and well-settled rule. (Byles on Bills, §§ 36, 37, 71; I'entz v. Stanton, 10 Wend. 271; Taft v. Brewster, j/john. 334; Hills v. Bannister, 8 Cow. 31; Moss v. Livingston, 4 N. Y. 208; DeWitt V. Walton, 9 Id. 571; Bottomley v. Fisher, 1 Hurlst. & Colt. 211.) It is founded in the general prin(!iple that in a contract every • material thing must be definitely expressed, and not left to conjecture. Unless the language creates, or fairly implies, the undertaking of the : corporation, if the purpose is equivocal, the obligation is that of its apparent makers. It was said in Briggs v. Partridge (64 N. Y. 357, 363), that persons taking negotiable instruments are presumed to take them on the credit of the parties whose names appear upon them, and a person not a party cannot be charged, upon proof that the ostensible party signed, or indorsed, as his agent. It may be perfectly true, if there is proof that the holder of negotiable paper was aware, when he received it, of the facts and circumstances connected with its making, and knew that it was intended and delivered as a corporate obligation only, that the persons signing it in this manner could not be held individually liable^ Such knowledge might be imputable from the language of the paper, in connection with other circumstances, as in the case of Mott v. Hicks (1 Cow. 513), where the note read, "the president and directors promise to pay," and was subscribed by the defendant as " president." The court held that that was sufficient to distinguish the case from Taft v. Brewster, supra, and made it evident that no personal engagement was entered into or intended. Much stress was placed in that case upon the proof that the plaintiff was iatimately acquainted with the transaction out of which arose the giving of the corporate obligation. In the case of Bank of Genesee v. Patchin Bank (19 N. Y. 312), referred to by the appellant's counsel, the action was against the defendant to hold it as the indorser of a bill of exchange, drawn to the order of " S. B. Stokes, Cas.," and indorsed in the same words. The plaintiff bank wns advised, at the time of discounting the bill, by the president of the Patchin Bank, that Stokes was its cashier, and that he had been directed to send it in for discount, and Stokes for- warded it in an official way to the plaintiflF. It was held that the Patchin Bank was liable, because the agency of the cashier in the matter was communicated to the knowledge of the plaintiff as well as apparent. XI. J AMBIGrOUS SIGNATURES. • 207 Incidentally, it was said that the same strictness is not required in the execution of commercial paper as between banks, that is, in other qrespects, between individuals. In th(? absence of competent evidence showing or charging knowl- edge in the holder of negotiable paper as to the character of the obligation, the established and safe rule must be regarded to be that it is the agreement of its ostensible maker and not of some other party, neither disclosed by the language, nor in the manner of execu- tion. In this case the language is, " we promise to pay," and the -signature by the defendants, Clark and Close, are perfectly consistent with an^ assumption by them of the company's debt. "The appearancejirpon the margin of the paper of the printed name " Ridge\vog3Llcel Company " was not a fact carrying any presumption^ that the note was, or was intended to bt\ one by the company. ^ was competent for its ofTicers to obligate themselves personally, for any reason satisfactory to themselves, and, apparently to the world, they did so by the language of the note; which the mere use of a blank form of note, having upon its margin the name of their company, was insufficient to negative. [The court then decides that the fact that one Winslow was a director in the payee company, and also in the plaintitf bank, did not charge the latter with notice as to the origin of the paper.] .Tudirment afTirmed.* ENGLISH AND SComSIT AMERICAN MORTGACJE AND IN\ESTMENT COMPANY v. CLOBE LOAN AND TRUST COMPANY. 70 Nebraska, 4.35. — 1903. Al,REnT, C. This action wns brought by the English & Scottish American Mortgage S: Investment (\)riipany against the fJlobe Loan & Trust Company, Emma 0. Devries, as aflministratrix of the estate of II. 0. Devries, deceased, and W. Beach Taylor, on a promissory note, of which the following is a copv : $082.13. Omaha, Nkm., \tnrrh ]s(. ]H9R. CLOHP: LO.W ,1 TIU'ST CO.. OM.MIA, NKMR.\SK.\. On or \>('{(>r<' two joars nft«ir date, wo f)r(>niiso to pay (o the Etu^lish A Scottish .\mcrirnn Mortfrafri- fi T. Co.. or ordor. ninn liiindrcil nud i-i^'lifv two and 13/100 l)o||,nrs, for valiif ropoivr-d : nrpotiahlo and j)avnl)lc at tlio ofTirr of the r;i()l)r' Ixian A Trust ( onipaiiy, Omaha, NVtiraHka, with int«'rpst at the rate of BJx por rr-nt. ppr annum frf»R, Hrry. • 8«e extract from Mepoiran v. Prtrrson, 171) N. Y, 1, in note on p. 203. — C, 20y INTKRI'HKTATION. | ART. II. Only the last-named defondant is concvrned in the litigation at this tinio. As a dc'ftMis(> to tlic note, lie jilcadcd that it was the note of the trust ronipauy alont". and that lie signed as seeretary in order to give it etTeet ar the ohiigation of such company, and for no other purpose, (^n the trial of the issues joined between the plaintitT and Taylor, the former offered tlie note in evidence; and it was excluded on the ground that it appeared on the face of the note that it was the obli- gation of the trust company, and not the personal obligation of such defendant. Judgment was given for Taylor, and the plaintiff brings error. The sole question in this case is whether the note, on its face, shows a personal liability on the part of Taylor, If it does, the judgment of the District Court is wrong, and should be reversed>- The plaintiff contends that the mere addition of the official title of an officer of a corporation to his signature on a note does not make it the note of the corporation, and that a note thus signed is the personal obligation of the officer thus signing it. Among the authorities cited in support of this contention arc the following: Andres v. Kridler, 47 Xeb. 585; Hays v. Crutcher, 54 Ind. 261 ; ^coit v. Baker, 3 W. Ya. 2H5 ■,Rendell v. TJarriman, 75 Me. 497; Banl- v. Clarlc, 139 N. Y. 307; Tucker Mfg. Co. v. Fairbanks, 98 Mass. 101. In none of the foregoing cases, however, is the name of the corporation itself attached to the note as maker ; and those eases appear to rest on the familiar rule that, where an agent signs a negotiable instrument in his own name, with- out disclosing on the face of the instrument the name of his principal, he is personally liable thereon. But in the present case the name of the corporation is attached to the note, and is followed by that of Devries and Taylor, with the designation of their respective titles. In Aweriran Naiinnal Bank v. Omaha Cnffin Mfg. Co.. 95 N. W. 672, this court held that a note signed : " Omaha C'offin Mfg. Co. C. A. Claflin, Presdt. S. L. Andrews, Sec." — was the note of the cor- poration, and that the officers whose names were attached thereto were not liable thereon. The doctrine announced in that case is supported by the following: Liebscher v. Kraus, 74 Wis. 387; Reeve v. First Nat. Bank, 54 N. J. Law, 208; Draper v. Steam Heating Co., 5 Allen, 338; Castle v. Foundry Co., 72 Me. 167; Falk v. Moebs, 127 U. S. 597. In the cases just cited but one signature followed that of the cor- poration, and in American Naiinnal Bank v. OmaJia Coffin Mfg. Co., supra, the liability of the second officer signing the instrument was not necessarily involved; and on that ground the plaintiff undertakes to distinguish between those cases and the case at bar, and insists that while it mav be presumed tliat Devries, in signing the note, intended merely to indicate by whom the corporate signature was affixed to the instrument, no such presumption is to be indulged as to Taylor, because the signature of Devries, to which is attached his official XA.] AMblULOUS SIGNATURES. * 209 desig^iation, following the name of the corporation, is sufficient of itselfUo indicate by^honi the corporate signature was affixed. The plaintW's arguiuci>i on this point is agreeably plausible, but not cou- \iii( ing\-.\Vl^ii|ti I'.c law would have j)rcsumed a cor])orate obligation, 1 ad tl:e i:an;e of tlie (oi poiation been followed by the official signa- lui-e of t!ic pn:?ido;.t ;;!olc, Uric is no presumption that such is the iolo method of alte ti:;g (lie (()i])orato signature. Tt is not unusual fur corporations to requiic th-at instruments intended to bind them Khali be executed ly more th.nn one of their officers. And where, as in this instance, t!.c (oipornte name is followed by the signatures of "two of its officois, lo which are attached the respective titles of such officers, the presumption wliich attends the signature of the first officer should be held to attend that of the second as well. This view is in harmony with moilern methods and common usage. Instruments thus signed pass current as corporate obligations only, and outside of a courtroom no one ever acts upon them in the belief that they bind, or were ever intended to bind, the officers thus signing them, or any yieison other than the corjwration itself. We have not overlooked Ueffner v. Brownell, 70 Iowa, 591, wherein the officers were held liable on a note signed precisely as the one in suit. But that case is contrary to the doctrine announced by this court in American National Bank v. Omaha Coffin Mfg. Co., supra, and, as we think, to the weight of modern authority. It is recommended that the judgment of the District Court in favor of Taylor against the plaintiff be affirmed. Barnes and filanville, CC, concur. Vr.H CuuwM. For the reasons stated in the foregoing opinion, the jnd'TiM'iit of the District foil rt in favor of Taylor against the plainiifT is affirmed.'" >■■ i/t — 4V ■' ■ '- t — in See rrport of tliiK rnlw' '\\\ A. & E. Ann. Cas. 909, with ex^hnustivo note entitlf'd, " U.-iliility of pci'^iin -ij.'nin}.' iu'}.'otiable paper as odicer of corporation." Acfonl: Aiiiifisl v. ('Kipif. 72 Oil. St. S.'il, where tlie note read " we promise ♦ o i»ay " and was si^ii. d " Tiie Alyed in the hody of the instrument itself, imjiorts on its face an under- takint.' on the part of all whose names are si^fned thereto that they will be l)()un N. Y., 8 31). — C. « S«>p the pvtract from Mr. MrKcflian''^ artirlp on the NpRotiabIc Insfnimpnti Law, post, pages . — C. 212 IN ii:i.i'i;i:i A I iu.\. [aet. II. luakiT. Liebscher v. Kraus, T 1 Wis. ;?87. TIk' siuiu' ilaim is forcibly made as to tlie signature of the delendaut Mariuer, and it is not with- out authority to support it. Shaver v. Ocean Miiiiin/ ('(iiiijhiiii/. 21 Cal. 45. " We are uot inclined, however, to rest the ease upon any doubtful proposition. (Jrantini; that the seetion does not apply as to the signa- ture of Mr. Mariner, we think it would be conceded that upon its face it is anil)iguous so far as Mr. Mariner is concerned. The instrument says that the "Northwestern Straw Works" promises to pay. The signature of Mariner is the bare signature of an iiulividual. This is certainly not usual, and should arrest the attention of any one deal- ing with il at oiu'e. People do not ordinarily sign contracts purport- ing on their face to be contracts of others. If they do, the fact itself suggests at once a doubt as to what they mean by it. In other words, the instrument becomes, as to such signatures, and)iguous. Tlie Nego- tiable Instrument Law, before referred to, contains several provisions with reference to the construction of negotiable instruments bearing the signatures of persons who have not made their intentions clear, and these must be considered. Subdivision G, § 1675-17, ■' p. 693, provides that, " where a signature is so placed on an instrument that it is not clear in what capacity the person making the same intended to sign, he is to be deemed an indor.ser." This provision, by its very terms, applies only to a case of doubt arising out of the location of the signature upon the instrument. Names are sometimes placed at the side, on the end, or across the face of the instrument, and thus a doubt arises as to whether the signer intended to bo bound as a maker or an indorser, or perhaps as a guarantor, and to solve these doubts the section in question was evidently framed. It was to settle a doubt fairly arising from the ambiguous location of the name, and applies to no other. In the present case there is no doubt of tliis nature. The^- signature of Mr. Mariner fs placed" in the usual and proper, in fact the only proper, place for a maker. The doul)t arising is not a doubt whetber he intended to sign as maker, indorser, or guarantor, for it is clear from the location of the name that he did not intend to sign as indorser or guarantor, but simply a doubt whether he intended to sign in an individual or in a representative capacity as maker. To say that, where it conclusively appears from the instrument that the signer intended to sign as a nuUcer, the statute is intcruled to make him an indorser, would be little short of ridiculous. The statute was passed to meet a case where it is doubtful from the instrument whether a man intended to become an indorser, not to make an indorser out of a person who, without doubt, intended to sign as maker, either individually or as representative of another. We have no doubt, there- fore, that this seetion has no application to the present ease. 8 N. Y., § 36, subd. 6. — C. XI.] / AMBIGLfOUS SIGNATURES. • 213 Sections 1^7-3 and 1GT7-4, p. 712, are also referred to as having sKiHK bearing on the question. Section 1677-3^ provides that "a ix.'i'sonptaiing liis signature upon an instrument otherwise than as "alcer, diawcr or acceptor, is deemed to be an indorser, unless he iKarly indicates by approj)riate words bis intention to be bound in -oiiie otber capacity." Section lfiT7-l ■' ])rovidcs tbat, "where a per- ~o:i not otherwise a party to an instninient places thereon his signa- ture in blank l)efore delivery, he i> lial)le as an indorser in accordance with the following rules," etc. As to the last-named section, it is manifest that it has no apjdic ation, h(»cnuse Mr. Mariner did not place his signature upon the ncttc^ in hlank. 'i'he first-named section is equally inapplicable, because it is certain, from the instrument itself, that he placerl his signature thereon as maker, either individually or in a representative capacity; hence the c^ontingency named in the section has not arisen. It seems entirely clear from the language of these two sections, and from the notes thereto, that they were intended to lay down in statutory form the propositions already decided by this court in Cadi/ v. Shepard, 12 Wis. *63!), and King v. Ritchie, IH Wis. *554, and other cases following them. There are no other sections of the Negotiable Instrument Law which can be reasonably claimed to have any material bearing on the question now under consideration, and it must therefore be determined upon general principles of the common law. " It is element {irv-4-liat, in case a written con tract, is. ajn higunu!} in its ?rrps. parol prpof (if tlir' fncf.-; und circumstances under which it was !■ iijti(/']ii(cd to aid in its construction. This rule 'applies to commercial paper, even in f1ie hands of third persons, because, where the ambiguity is apparent to a reasonably prudent man on the face of the paper, he is necessarily put upon inquiry. Meachem on Agency, 5^ 443; Ifnod v. HalJcnhpck. 7 Hun, 362; 10 Cyc. p. 1051 ; 4 ThonipHon on Corporations, § 5141. The parol evidence in the present case showed without dis])ute that Mr. Mariner's signature was attacbed simply in his representative capacity and as agent of the corporation. There being a plain and)iguity in this respect appear- ing on the face of the note, the evidence was properly received, and the judgment against Mariner individually was erroneouslv rendered. Judgment reverscil, aud action reuianded, with directions to dis- isa^lie^YHiinTaint — " *'" " ■"' ' "^ «N. Y., S 11.3. — C. "N. Y., §114. — C. i 2lt iNrKUi'iiKiArioN. [aut. ii. §39 SOUTTEflAN NATIONAL UANK v. BOARDMAN. 40 Minm;s()ta, 'IWi.— 1891. A("Ti()N against defendant as indorser upon the followiii*; |)R)iiils 80 IV note : j;i_000. Minneapolis, May 12, 1884. Six nioiitlis iiftcr date we promise to pay to tlic order of A. ,1. l5oarilman, treasurer, one tliousami dollars, value received, with interest at eight per cent, after maturity. MiNNEAPOI.I.S E.N(iINE A.NU MaCHINK WoRKS. By A. L. Crocker, Sec'y. (Indorsed) A. J. Boardman, Treasurer. Defendant was treasurer of the Minneapolis Engine & Machine Works, and claims to have made tlie indorsement in that ia|»ii(.ity. Judgment for plaintiff. Mitchell, J. (after stating the facts, and deciding that the; trial court erred in not submitting to the jury a question as to the extension of the time of payment without the consent of the defendant). With a view to another trial it is necessary to" consider the questions involved in the first defense. These are (1) whether, on the face of the paper, this is the indorsement of the corporation or of defendant individually ; and (2) whether its character is conclusively determined by the terms of the instrument itself, or whether extrinsic evidence is admissible to show in what character — officially or individually — the defend- ant made the indorsement. Where both the names of a corporation and of an officer or agent of it appear upon a bill or note, it is often a perplexing question to determine whether it is in legal effect the contract of the corporation, or the individual contract of the officer or agent. It is very desirable that the rules of interpretation of coinmercial paper should be definite and certain; and if the courts of the highest authority on the subject had laid down any exact and definite rules of construction for such cases, we would, for the sake of uniformity, be glad to adopt them. But, unfortunately, not only do different courts differ with each other, but we are not aware of any court whose decisions furnish any definite rule or system of rules applicable to such cases. Each case seems to have been decided with reference to its own facts. If what the courts sometimes call " corporate marks " greatly predominate on the face of the paper, they hold it to be the contract of the corporation, and that extrinsic evidence is inadmissahle to show that it was the indi- vidual contract of the officer or agent. If these marks are less strong, they hold it prima facie tlie individual contract of the officer or agent, but that extrinsic evidence is admissible to show that he executed it in his official capacity in behalf of the corporation ; while in still other cases they hold that it is the personal contract of the party who signed it, that the terms " agent," " secretary," and the like, are AMBIGUOUS SlGNATUfiES. * 1^15 merely descriptive of the person, and that extrinsic evidence is not admissible to show the contrary. See Daniel, Neg. Inst. § 398, et seq. When others have thus failed we can hardly hope to succeed. Per- haps the difficulty is inherent in the nature of the subject. This court ha? in a lihF'of -♦Wi^ious held that where a party signs ^ a coiiliini. alTixiriLT til \\i> .-i-ii;ii uii' the tri'iii " aromise that bis jirineipal should marry the plaintiff within a given time, or do some other act which it was perfectly c(unpet,cnt for the principal to |»erform, but which the a;,'ent coubl not. What woubl bo thought of a declaration cbarf;ing the pretended agent as a principal in such a case? " » To the deciflions referred to above, and the very high authority of the German Code, there may be added the opinion of Mr. Arthur Cohen, Q. C. 218 INTERPRETATION. [arT. II. will tern] (o iiuTOMse m\U()(ialiilit v, l>y assuring tlie liolder that if tlui preteiuii'd principal lannot he rcaclicd InMauso of a lack of authority in the agent, a ivi'^vitv may ln' liail on I'lc inslrnnicnt itself against the agent. Then there is the additional aihantage — whicli on reflec- tion will ap])ear to l)e of great iinjK)rtan(e — that the linltility of the agent can he easily proved and the amount to he recovered ascertained hy a mere inspection of the instrument, whereas if the only recovery were for damages resulting from a hreach of warranty, a complicated set of disputed facts would often go to the jury, from which it would be difficult even to appro.xinuite the damage. The case which Professor Ames supposes, as proving the injustice of section 20 may serve as an illustration of this. He says, " For example, A., mistakenly believing that he is duly authorized, signs a note, 'A., agent for B.,' and de- livers it to C, the payee. At maturity B. repudiates the note. lie is, however, at tliat time a bankrupt. A. is rightfully chargeable to C. on his implied warranty of authority, but only to the amount that C. might have recovered from B., if he had authorized the note. But under section 20 A. is liable to C. for the face of the note." But, as Mr. Cohen points out, " It would be doubtful what could be recovered until the dividend was declared and the bankruptcy concluded ; and in the case of the principal not being bankrupt, but being a man in bad credit, the question would have to be left to a jury what amount could probably be recovered from the principal. It may wq]\ be held that in actions on negotiable instruments against a person who professedly acts on behalf of another person. A., it would be inconvenient to allow the former to attempt to prove that probably the whole amount could not be recovered from A." So the case stands about as follows: The rule discarded by the Commissioners works out the rights of the parties strictly on the rules of contract, and the balance of authority is in its favor. Under it, however, a plaintiff may encounter considerable difficulty and uncer- tainty in proving his case. The rule they have embodied in the act — while perhaps less clear on tlieory — is supported by the authority of several states, by the German Code, by some of the best expert opinion of England, and (besides tending to increase negotiability) enables (one of the framers of the English art, and admittedly one of tfie leading experts in England on this stibject), who regards section 20 as an improvement on the English act. He says: "This section certainly alters the law as it exists in England, but T think it very likely that the alteration is an improve- ment. The wisdom of the rule laid down in Cohen v. Wright has often been doiibted. ... I think the 20th section should be retained, and may be considered as a practical improvement of the law, unless there be reason to suppose that merchants and hankers think it unjust. T agree with Mr. Brewster that much indulgence should not be shown in business to a person who professes to have authority when he is really acting without authority." letter from Mr. Cohen to .Judge Brewster, written March 31, 1901. AMBIGUOUS RIGNATUBES. ' 21§ a plaintiff to know and prove, with ease and certainty, the amount to be recovered. Of course, under such circumstances, individual opinion will differ somewhat as to which rule should have been chosen.* HO Stagg v. Elliott, 12 Common Bench, N. S. 373. — 1862. Bill accepted " per pro. William Elliott, George Elliott." George was the son of the defendant, William, and manager of his business. Byles, J. — The words "per procuration" are an express statement that the party accepting the bill has only a special and limited au- thority, and therefore a person who takes a bill so accepted is bound at his peril to enquire into the extent and nature of the agent's authority. It is not enough to show that other bills similarly accepted or endorsed have been paid, although such evidence, if the accept- ance were general by an agent in the name of a principal, would be evidence of a general authority to accept in the name of the principal. * * * The result of the decisions seems to be this, that the way in which this bill was accepted is the legitimate way of showing the fact that the acceptor has only a special and limited authority. Fur- ther, it is to be observed, that this rule depends upon the law merchant, which extends over Europe and America; and this is the way in which it is understood all over the world. § 40 The Floyd Acceptances, 7 Wallace (U. S.), 666. — 1868. Mr. Justice Mii^i.kk. — An inHivirlual may, instead of signing, with his own hand, the notes and bills which he issues or accepts, appoint an agent to do these things for him. And this appointment may be a general power to draw or accept in all cases as fully as the principal could; or it may be a limited authority to draw or accept under given circumstances, defined in the instrument which confers tlie power. But, in each case, the person dealing with the agent, knowing that he acts only by virtue of a delegated power, must, at his peril, see that the papor on which he relies comes within the power under which the agent acts. And this applies to every person who takes the paper aftfrwards; for it is to be kept in minfl that the protection which cnnuTUTcial usage throws around negotiable paper, cannot he used to establish the authority by which it was originally issued. These principles are well estaljlifthed in regard to the transaction of indi- vidnals. They are equally aytplicnhlc to those of the government. Whenever negotiable p;ij)er is foutul in the market purport int: to hind • FW-e alnn articlp in 10 I>aw Notes. 104. entitlpd " Liability of an apent under the Ncpotiablp TriHtriimpntH T-aw," and criticism of thi" article in 20 Tlarv. Law Rov. 169. — C. 220 INTERPRETATION. [aRT. II. the government, it must necessarily be by the signature of an officer of the government, and \]\c |niic1i;is('r of such paper, whether the first liohh^r or another, must, at his peril, see that the officer had authority to hind tlie government. § 40 Nixon v. rAi.MKif, S New York, 398. — 1853. Bill accepted "Jeremiah G. Palincr, l)v .lames L. Palmer." Defense, want of authority. ^Iason, .1. — " The bill being on its face accepted by James L. Palmer for the defendant, was notice that he professed to act under an authority, and imjiosed upon the plaintiffs the duty of ascertaining that he acted within it." Xn. Indorsement by infant or corporation. § 41 FEAZIER .V. MASSEY. ,, ^"' 14 India^, .382.-1860. WoRDEN, J. — Action by Massey against the appellants upon a promissory note made by the latter to William T. Hess, and by Hess indorsed to the plaintiff. Answer that said William T. Hess, the payee of the note, was, at the time he indorsed it to the plaintiff, a minor under the age of twenty-one years ; wherefore, etc. To this answer a demurrer was sustained, and the plaintiff had judgment. The ruling on the demurrer raises the only question involved in the case. We think it clear that the demurrer was correctly sustained to the answer. The disability of an infant to make a valid, binding con- tract, is a personal privilege intended for the benefit of the iiil"ai)l himself, and none but he, or his representatives, can take advantauv of such disability. (1 Pars. Cont. 275.) Besides this, the defendant , by making the note to Hess, asserted to the Avorld his competency to negotiate and assign the paper, and they cannot be permitted to gair. say the assertion so made.* (Edw. on Bills, p. 250; Story on Prom. Notes, § 80, 5th ed.) Per Curiam. — The judgment is affirmed with 6 per cent, damages and costs. 4 .S*>r Nop. Inst. L., § 110. A porond indor.sor cannot deny the competency of th« first indorser. Prescott Bank v. Caverly, 7 Gray (Masa.) 271. — H. ini.] /^^ ^~"~-\^ FORGED SIGNATURES. p 221 WILLARD V. CROOK. 21 Appeal Cases (Dist. of Col.) 237. — 1903. Appeal by plaintiff from an order of the Supreme Court overruling his motion for judgment against the defendants for want of sufficient affidavits of defense, in an action on a promissory note against the maker and several indorsers. The affidavit of defense of the last indorser was that the preceding indorser, a corporation, had indorsed the note solely for accommoda- tion. Mr. Justice Shepard delivered the opinion of the court : *********** The defense of Walter P. Wilkins, the last indorser of the note, is equally without merit. Wliethor the preceding indorser, Wilkins & Company, incorporated, had the power to make an accommodation indorsement merely is a question of no importance so far as his lia- bility under the subsequent indorsement is concerned. If it were conceded that the corporation's indorsement of the paper was beyond its powers, and it incurred no liability thereby, its effect was, never- theless, to pass the property therein. Code, D. C, § LS'^e."* And the subsequent indorsement by WilkinsJo-Wi+lard was a warranty of the genuirmhess oTfTle paper, of FnsoM^n title thereto, and of the capacity of all the preceding parties to contract. Idem, §§ VM\^, 1370.* * * * For the reasons given, the order will be reversed with costs, and the cause remanded for further proceedings in conformity with this opin- ion. It is 60 ordered."' Xni. Forged signatures. §42 LANCASTER v. BALTZELL. 7 OiLL & .Johnson (Md.) 408. — 18.30. Action by indorsee acrainst niaker. Jud-jiiKMif for plaintiff. Defendant appeals. The fnds nppcMr in (lie opiTiion. RN. Y.,§ 41. — ('. « N. Y., §§ 11.5. 110. — f. 7 In «ro»/>n v. Donnrll, 40 Mr. 421. th." roiirt lul.l that in an aHion l.y indorHfo of a notf against the mak.T, the plaintifT i,^ only rr.|uirr(l to prove nn inHorHfm«-nt sumricnt to paH« tin- properly in the note.'"'ri,r aiifl.ority to be proved in not one to hiriri the eoriH)ration by n eontraet of in • Nor like the ca.se of a drawee who accepts or pays a bill upon which the drawer's name is forped. See National Park Bk. v. Ninth Nat. Bk.. 46 N. Y. 77. — H. fSee First Nat. Bank v. Bank of Wytidmere, 15 N. D. 299, post, and State Bank of Chicago v. First Nat. Bank of Omaha, 127 N. W. (Neb.) 244, post. — C] » Money paid to a holder deriving title throufjh a forped indorsement may be recovered back. Chnmhrrs v. Union Bank, 78 Pa. St. 205; /■Avpi/ v. Cincinnati Bank, 18 Wall. ( U. S. ) 604; Holt v. Ross, 54 N. Y. 472; Green v. Purcell N. B. (Ind. Ter. ). 37 S. \V. Kep. 50. Contra: London, etc.. Bank v. Bank of Liver- pool (1896), 1 Q. «. D. 7. — H. [In First Nat. Bk. v. Shaw, 149 Mich. 362. it was held that makers who actually sipned a joint and several note purportinp at the time of its delivery to have been sipped by twenty persons and bearinp nnthinp on its face to cast doubt upon any of Mie sipnatures, cannot e3eni)e liability to a bona f\dc holder upon the pround that the names of some of the purported makers were forped before the note was executed and delivered. See this case reported witii notes in 13 L. \. S. 426, anne may by his admissions or conduct estop himself fr')m denyinp the penuineness of his sipnature as apainst one who bas rhanped his lepal position relyinp on such admissions, representations, or conduct. HufTcut on Apency, § -f 3 ; pases supra; Lancaster v. Hallzrll, anff!, p. 221, — H. 224 INTERPRETATION. [aUT. 11. §42 WAKREN v. SMITH. 100 Pacific llEroRTEB (Utah) 1069. — 1909. The Southern Pacific Company in March, liH)!, delivered to plaint- itr, for services rendered, its pay check payable to his order, and drawn on the treasurer of the Southern Pacific ('oiu])any. This action is to recover I'roui delVntlant the money which lie I'olleited on said clieck. Judgment for defendant and plaintill: appeals. Stkaup, C. J. * * * The court found the facts as follows: That the check was delivered to the plaintill' on March 23d [1004] at Montello; that it was stolen from him on March 3r)th ; that the plaintiff had not indorsed the check, nor had he anthorizcd anybody to do so; that the plaintiff had received no part of the money evidenced by it; that the defendant "became indorsee and indorser of said check on or about the 1st day of April, 1904, at Odgen City, Utah ; that said check, indorsed with the name of the payee, was transferred and delivered rg* on thf hcli^-f that tlip pprKon who indorsod it wan tlic person whom (lip drawfr infi-ndfd tf) dfHi^nato as payee. This hflief is hir<,'(dy — an«l whon the perxon who prps^nts tlip cdiprk is not idpntified — is solely indnred hy tlie fact that the rheek is, or was at the time of indorsf-nient, in tlie inif)oster's pnsses- »ion. Tlip drawer — hy deliverinj^ the eheek to the iniposler in the h(dief that he is thp person named as payee — creates the appearance on wliich the bank arts. 23*2 INTERPRETATION. [AHT. II. atTords a surer means of itleiitifioation. C. was deceived as to the man he was dealing with, but he dealt with and intended to deal with the visible man who stood before hiin, identified by sij^ht and hearing. Thinking that this man's name was B., he drew the check to B.'s order intending thereby to designate the person standing before him; so the bank has simply paid the money to the person for whom it was intended. Such was undoubtedly the law prior to the act. By section 23 [N. Y., § 42], when a signature is forged or made without the author- ity of the person whose signature it purports to be, it is wholly inop- erative except as against the person who " is precluded from setting up the forgery or want of authority." In the light of the cases above referred to, the meaning of this section, as applied to the point under discussion, seems reasonably clear. The drawer (C.) " is pre- cluded from setting up the forgery or want of authority " and so the signature is not inoperative as to him and the law remains unchanged. Tn 1899, Rliode Island adopted the l^egotiable Instruments Law and in 1901 the case of Tolman v. American National Bank arose in that state. In that case, one Louis Potter, representing himself to be Earnest A. Haskell, went to the jilaintiff, (Toljnan) for a loan of money, giving the occupation and residence of Haskell as his own. The plaintiff made inquiry, and finding that Haskell was employed and was living as represented, gave Potter his check on the defendant bank payable to the order of Haskell. Potter indorsed Haskell's name and delivered the check to one A. R. Hines, who had it cashed at the bank. In an action by Tolman to compel the bank to credit him with the amount of the check, the court held that the bank must bear the loss. As Professor Ames remarks, " the decision is a surprising one, both from the standpoint of common law principles, and of Section 23 of the act. All the reported cases on the point of fraudulent impersona- tion are against the decision. As a statutory question, but for this decision, the liability of the drawer would seem clear under the last clause of the section." [After analyzing the opinion of the court in the Tolman case, and reviewing Dean Ames' and Judge Brewster's discussion of it, Mr. McKeehan continues :] It is perfectly e\ndent, then — and indeed this is Professor Ames* position — that the trouble is not with Section 23, but with the case of Tolman v. The Banlc. Undoubtedly it \n unfortunate that the only judicial interpretation that this section has received should serve only to throw doubt on what was previously well settled.'' But the blame 7 Tt is not dpnipd that mrich mipht be said in favor of the result reached in Tolman v. The Bank, did the question arise de novo. The point is that when XIII.] FORGED SIGNATURES. 233 does not belong to the Negotiable Instruments Law. Section 33 — copied from the English act — was, at the time of its adoption, an accurate statement of existing law, and in view of the unanimity that exists among the cases on which it is based, the doubts raised by Tol- / man v. The Bank will probably soon be dispelled and this section will be interpreted as having merely affirmed a well settled rule. once 90 difficult and doiilitful a point is clearly settled, mischief and not pood resuTts^from reopening the matter and involving it in doubt. As matters stand -day, no lawyer could advise a client, with any certainty, on this point. ARTICLE III. Consideration t)F Negotiable Instruments, I. Presumption of consideration. §50 BRISTOL V. WARNER. 19 CONNECTfCUT, 7. — 1848. Assumpsit on the following instrument: '* On demand, after my decease, I promise to pay Josiah W. Bristol, or order, eight hundred and fifty dollars, without interest." The making of the instrument being admitted, the plaintiff intro- duced the instrument in ovidenco and rested his case. The court charged that the note impoi'ted on its face a valuable consideration ; that it was a promissory note and not a testamentary paper. (Conflict- ing evidence was given as to the consideration. Verdict for plaintiff". Church, Ch. J. — 1. The question first presented by tliis motion, is whether the note in controversy imports on its face a valuable con- sideration ? We tliijak-it...d.pes ; and that the charge to the jury on this point was correct. It has now becoine the settled law of this state, after a time of some doubt, that a promissory note not negotiable, and not purporting on its face to be for value received, does not imply a consideration; and that a plaintiff, prosecuting sucji a note, is left to prove one, or fail to recover.' {Edgriinn v. Edtjerton, 8 Conn. R. 6.) But this note is, in form, negotiable, though not yet negotiated ; and no consideration is expressed in it. And, therefore, it was claimed at the trial, that it should be treated as if it were not negotiable paper; — that it, being a simple contract, and as yet confined in its operation to the original parties to it, required proof of consideration. But we believe that the negotiability of the note gave it a character and a credit at its inception, then importing a consideration, as well between paver and pavee, as between the maker and indorsers or subsequent holders. We suppose this court so regarded it in the case of (Jamp v. Tompl-iva (9 Conn. R. 44.t), in which it is said, that such instruments, as well as bills of exchange, from their very nature, import a considera- tion. Our statute making a certain description of notes negotiable. \ Centra: Camioright v. Gray, 127 N. Y. 92. But see Neg. Inst. L., § 320. — H. [234] 1.] PBESUMPTION OF CONSIDERATION. 235 intended to give to them the same effect here, as such paper was known to have in England, and in the commercial community generally. The most respectable elementary writers upon this branch of the law, treat this as a well established princ?^le. Mr. Chitty says : " In the case of bills of exchange and promissory notes, they are presumed to have been on good consideration ; and it is not necessary for the plaintiff to state any in his declaration, or prove it, in the first instance, on the trial," etc. Evans, in his learned commentary on Pothier, remarks, that "the case of bills of exchange and promissory notes affords, in some degree, airpTreption to the general rule, which has been under discussion, when they are indorsed over for a valuable consideration; the want of con- sideration, between the original parties is immaterial ; as between them a consideration is presumed ; but if the contrary is shown it is a suffi- cient defense." Chancellor Kent, in his commentaries, speaks thus: \ "It is usual to insert value received in a bill or note ; but this is un- \ necessary and value is implied in every bill, note, or indorsement." ' (Chitty on Bills, 67; 2 Pothier on Obligations, 22; 3 Kent's Com. 50 ; 1 Stephen's X. P. 766 ; Goshen & Minisink Turn. Co. v. Hurtin, 9 Johns. R. 217; MandeviUe v. Welch, 5 Wheat. 277; 2 McLean, 212.) And yet, there is an essential difference between promissory notes before they are indorsed, and afterwards, in respect to their original consideration. In the former case, a consideration is implied, but may be denied in defense; while in the latter, only in special cases; it can- not be disputed if the holder be a meritorious one, receiving the paper before due. * * * Xew trial not to be granted.^ 2 The doctrine tliat a hill or note roqnirea any con'^iderntion is of compara- tivoly recent oripin. Tt was unknown in tlie time of Blaokstone (2 Tomm. 41RK and early American cases are to he found in wliich it appears to he denied or doubted. {Hourrs v. Hurd, 10 Mass. 427; lArinqKion v. Hastic, 2 Cai. [N. jY.] 240.) But the modern cases now uniformly liold that a bill or note /executed ajid^deTiy^re^Pjie^a^ift is unenforceabTe for want of consideration. f Hill V. nurk-Tniti.itrr, .5 Pick. (Mass.) 301; Parish v. Ktnnr, 14 Pick. (Mass.) ' 198; Schnonnwkrr v. Jfonsn. 17 Johns. (N. Y.) .301; Hnrrin v. Clark, 3 N. Y. 93. Nor will a meritorious consideration sustain a promi.ssory note even in pquily. W'hitakrr v. \Vhi1nk. Pec 337. The cases are uniff)rni tliat a hill anri a ncfrotiahle note have presumptive consideration. 1 Daniel on \ep. Insf., ^(5 101-1(53. Whi-ther nonnepotiable notes import a consideration is a matter of the construction of the statute pov ♦rninp promi'-sory notes, fhiil. § 103; .Art. W'll. Div, T. 3, pnst. As to burden of proof, see Kep. Tnst. !>., § Oft. The court.'* do not inquire into the adequacy of the consideration; but inade- quacy of consideration may l)e evidence of had faitli or fraud, fonrs v. fjor- don, L. R. 2 App. fas. Olfl; Huffcut's AuKon (8th EnR. ed.), pp. 90-92. — H. 236 CONSIDKRATION. [ART. III. § 50 TTirKOK V. RFNTTNC. 92 ^Uteluvte Division (N. V.) 107.— 1904. O'Brien, J. This case has already hfon before this court. FTickok V. Bunting, 67 App. Div. 360. The action is upon an instrument in the nature of a promissory note, a copy of which is as follows: New York. December , 1893. Having bet'ti cause of a nioiu-y loss to my frioiul, Geraldine H. Hickok, I have given her tliree tliousand dollars. I hold this amount in trust for her and one year after date or thereafter, on (h'inand, I {)ronuse to pay to the order of Geraldine II. Hickok, her heira or assigns, Three thousand dollars with interest. Ella F. Bunting. 216 East 12th St., N. Y. 1, 16, '94. Upon the former trial, after the plaintiff had proved the signature, and introduced the note in evidence, and given some testimony in sup- port of its validity, tlic defendants on their part od'ered evidence which it was thought by this court threw doubt upon the delivery of the note and raised the question as to whether or not there was con- sideration therefor. For these reasons a judgment directed for tlie plaintiff, from which the defendants appealed, was reversed, this court holding that there were presented questions of fact which should have been submitted to the jury. Upon the new trial the plaintiff con- tented herself with proving the signature and the amount of interest due, and, relying upon the presumption of delivery from the posses- sion of the note, offered it in evidence, and rested. The defendants moved to dismiss the complaint, and to the denial of their motion ex- cepted, and then in turn rested ; and, the plaintiff having moved for a direction in her favor, that motion was granted, and to this ruling the defendants excepted, so that it is these exceptions to the refusal to dismiss the complaint and to the direction of a verdict for the plain- tiff which are now urged upon our attention. Had this been a negotiable promissory note in the usual form, we do not think it would be seriously contended that upon such a record as is here presented a direction of a verdict would not have been proper. The defendants contend, however, that, though this in- strument be regarded as a promissory note, it is of an unusual kind, and that all the parts of the instrument must be read together, and that, inasmuch as on its face it purports to state a consideration which is neither a legal nor a valid consideration, the one expressed takes the place of the valid consideration whieh, if such a statement had not appeared upon the face of the note, would be presumed. For this proposition the appellant claims support by taking certain language in our former opinion away from its context, and considerinc it apart from thp pubjpft in the di=ruspion of which it was used. The portion from which the appellants get most comfort is the following: I,] PRESUMPTION OF CONSIDERATION. 237 "The recital is that the deceased had been the cause of a money loss. This standing alone, would be insufficient to show tlie existence of a present legal consideration, or that an enforceable obligation had ever existed. * * * Jf we eliminate the declaration of the plaintiff that the deceased owed her n debt, then we have nothing in the oral /testimony or in the recital of the instrument to establish that there at , any time existed a legal enforceable obligation against the deceased in j favor of the plaintiff, or that the facts were of such a character as/ would estop the deceased from denying her legal obligation for the' payment of the money." ^^— This language was not intended to be, nor was it, confined to stat- ing that the recital which preceded the promissory portion of the in- strument was conclusive either upon the plaintiff or the defendant. What the court was discussing was whether, upon all the evidence — that presented on the face of the instrument, together with such cor- roborating evidence as the plaintiff adduced upon that subject, as offset by the testimony offered by the defendants — the situation was one which, upon the question of consideration, required that their case should be submitted to the jury (which was tlie conclusion we reached), or whether the trial judge was right on the first trial in directing a verdict. As we have pointed out, upon the present trial there was practically no evidence given except such as was needed to entitle the paper to be admitted in evidence. Tliat the paper was a promissory note was expressly held upon the former appeal, and in the following language : " Following the declaration of trust the instrument contains a promise to pay, one year after date, or on demand, to the order of the plaintiff, her heirs or assigns, $.'5,000, with interest. There are no words of limitation of this promise in the language preceding it. The promise to pay is express, and is to the order of the payee, and con- tains every essential element to constitute a promissory note as defined bv the Xegotinblc Tnslrnnicnts Law Cchapter 612, p. 755, § 320, Laws 1897) and by authority. Carmrrirjhl v. Craij, 127 N. Y. 92." The contention of the appellants may be well founded that if, on the face of the instrument, it conclusively appeared that tiiere was / no consideration, or that there was an invalid consideration, then the/ Jinstninient could not be enforced. • For the reason, however, that/ fneither of these appf-arcd npon the face of the instrument, we think that, taking the legal prcsuniption whifh arises in favor of there hav- ing been a valid consideration for the note, and in the absence of any evidence to rebut it, a prima fnrie case was made out. Tn Tfprjrwnn V. Moov. 131 \. Y. 102, the deceased made an instru- ment as follows: "One year after my doath T herrby direct my executors to pay to .Tospph TTetroman, his heirs, executors or assigns, the sum of $1,076 00, being the balance due him for cash advanced at various times by 238 CONSIDERATION. [aRT. III. him to Adrian liegeman, my son, and others, as per statement rendered hy him tliis day witliout interest." Tn that case, as in this, the inference was sought to he drawn from the language employed in tlie note tliat there was no legal considera- tion ; hut the court said : " The addition of the words that tlie money is due the payee ' for cash advanced at various times hy liini to Adrian TTegeman, my son, and others, as per statement rendered hy him this day,' does not alter the implication that the money is due the payee from the maker. It simply states the origin of the indehtedness of the maker. It was not for money advanced directly to her, hut to her son and others. There is nothing inconsistent with her indehtedness to the payee in the fact of this acknowledged advance of the money to the maker's son. An original indebtedness may have arisen against the maker hy the payee advancing'at the maker's request moneys to her son. And when she says that a certain amount is due the payee, and signs the statement, with the addition of the origin of the indebtedness, the implication is neither forced nor unnatural tliat she means that the amount is due from her, or else she would not have signed the paper." We think the respondent is right in asserting that the principle of the TTegeman case and the one at bar are precisely the same, and that, as in the former, the court was bound to presume in support of the obligation that the money advanced to a third person hy the payee was advanced at the maker's request, and thus constituted a legal ohlisration on the part of the maker, so, in the present case, the court is bound to assume that the money lass which the plaintiff, tln^ payee, had suffered at the hands of the maker, was legally chargeablf! to the maker, and constituted a legal liability on her part. Our conclusion therefore is that the disposition made by the learned trial judge was right, and that the judgment appealed from should he affirmed, with costs. All concur.^ 3 Aflirmpd 182 N. Y. 530. no opinion. In fluntinf/ton v. Shvie, 180 Mass. 371, payw stipd makors on a promissory note cnntaininfj tlip words " valiip received." Defense was want of considera- tion. The trial judge instructed the jury that the words " value received " were equivalent to a declaration and admission on the part of the defendants that they had received full value, and that where as here the makers had admitted consideration in the note itself, the burden of proof was upon the defendants to show that there was no consideration. Held error. " The rule is well settled in this Commonwealth that, in an action on a promissory note, the burden of proof is upon the plaintiff to establish the fact that it is given for a valuable consideration. While the production of the note, with the admission or proof of the signature, makes n prima facie case, yet if the defendant puts in evidence of a want of consideration, the burden of proof does not shift, but remains upon the plaintiff, who must satisfy the jury, by a fair preponderance of the evidence, that the note was for a valid considera- tion. . . . We can see no reason for changing the rule so well established merely because the note contains the words ' value received.' " Lathbop, J., on p. 372. — C. 11.] PRE-EXISTING DEBT. 239 n. What constitutes consideration. § 51 . RAILROAD COMP;^NY v. NATIONAL BANK. 102 United States, 14. — 1880. Action by the bank against the railroad company on a promissory note. Defense, that the note was diverted by the defendant's agent, and that the bank is not a liolder for value and therefore subject to the defence. note was made by the company payable to AYilliam Y. Le Count, its treasurer, and indorsed by him in blank and by Palmer & Co., owners of the larger portion of the stock. The note thus indorsed was placed by the company in the hands of Hutchinson & Ingersoll, note-brokers, for negotiation and sale in order to raise money for the company. Hutchinson & Ingersoll pledged the note as collateral for a loan, and subsequently agreed that it should stand as collateral for a loan previously made. No agreement was made to extend the pre-existing debt, or to refrain from calling it in. Mr. Justice Harlan, after stating tlie facts, delivered the opinion of the court. * * * The bank, we have seen, received the note, before its maturity, indorsed in blank, without any express agreement to give time, but without notice that it was other than ordinary business paper, or that tliere was any defense thereto, and in ignorance of the purposes for wliicli it had been executed and delivered to ITiitchinson & Inger- soll. Did the bank, under these circumstances, become a holder for value, and as such entitled, according to the recognized principles of commercial law, to be protected against the equities or defenses which the railroad company may have against the other f)arties to the note? This question was carefully considered, though, perhaps, it was not absolutf'lv necessary to he (Iclcnniiicd, in Swift v. Tyson ( K! Pet. 1.) * * * The o[»inion in that case has been the subject of criticisni in some courts, because it seemed to go beyorul the [)recise point necessary to be decided, when declaring that the Jxnia fide holder of a neirotiable note, taken as collateral security for an anteceilent dehl. was pro- tected against efjuilies existing helween the original or antecedent parties. The brief dissent of Mr. .luslice Catron was solelv upon that ground, which renders it quite certain that the whole court was aware of the extent to which the opinion carried the doctrines of the com- mercial law upon the subject of negotiable instruments transferred or delivered as security for antecedent indebtedness. In the judgment of this court, as then constituted (Mr. Justice Catron aloiu' excepted), the holder of a negotiable instrument, received before maturity, and without notice of any defense thereto, is unafTeeted by the eqtiities or defengee of antecedent parties, equally whether the note is taken as 210 CONSIDERATION. [aRT. III. collateral security for or in payment of previous indebtedness. And we understand the case of ^fcCar^l/ v. Ronts (31 How. 432), to affirni i>irif( V. Ti/son. upon the ])oint now under consideration. It \ya8 there said: " Nor does the fact that the bills were assigned to the plaintiff as collateral security for a pre-existing debt impair the plaintiff's right to recover." (p. 438.) "The delivery of the bills to the plaintiff as collateral security for a pre-existing debt, under the decision of Swift V. 2>o/(. was" legal." (p. 439.) It may be remarked in this connection that the courts holding a different rule have uniformly referred to an opinion of Chancellor Kent in Bay v. Coddingion (5 Johns. Ch. [N. Y.] 54), reaffirmed in Coddingion v. Baij (20 Johns. [N. Y. ] 637.) There is, however, some reason to believe that the views of that eminent jurist were sub- sequently modified. In the later editions of his Commentaries (vol. Ill, p. 81, note b.), prepared by himself, reference is made to Stalker V. McDonald (6 Hill [N. Y.] 93), in which the principles asserted in Bay v. Coddingion were re-examined and maintained in an elaborate opinion by Chancellor Walworth, who took occasion to say that the opinion in Swift v. Tyson was not correct in declaring that a pre-exist- ing debt was, of itself, and without other circumstances, a sufficient consideration to entitle the bona fide holder, without notice, to recover on the note, when it might not, as between the original parties, be valid. But Chancellor Kent adds: "Mr. Justice Story, on Promis- sory Notes (p. 215, note 1), repeats and sustains the decision in Swift v. Tyson, and I am inclined to concur in that decision as the plainer and better doctrine." Of course it did not escape his atten- tion that the court in Swift v. Tyson declared the equities of prior parties to be shut out as well when the note was merely pledged as collateral security for a pre-existing debt, as when transferred in payment or extinguishment of such debt. According to the very general concurrence of judicial authority in this country as well as elsewhere, it may be regarded as settled in commercial jurisprudence — there being no statutory regulations to the contrary — that where negotiable paper is received in payment of an antecedent debt ; * or where it is transferred, by indorsement, as collateral security for a debt created, or a purchase made, at the time of transfer ; '' or the transfer is to secure a debt, not due, under an agreement, express or to be clearly implied from the circumstances, that the collection of the principal debt is to bo postponed or delayed until the rollateral matured ; or where lime '5 agreed to bo given and is ^ctuai'fy given upon a debt overdue, in consideration of the transfer of negotiable paper as collateral security therefor;' or where 4 Accord: Mayer v. Heidelhach. 12.3 N. Y. 332. —- H. s Bank v. Vanderhorst, 32 N. Y. .553. — IT. • The aprppment for pxtension must be definite and binding. Atlantic N. B, T. Franklin, 55 N. Y. 235. — H. n.] PRE-EXISTIi^G DEBT. 241 the transferred note takes the place of other paper previously pledged as collateral security for a debt, either at the time such debt was contracted or before it became due — in each of these cases the holder who takes the transferred paper, before its maturity, and without notice, actual or otlierwise, of any defense thereto, is held to have received it in due course of business, and, in the sense of tlie commercial law, becomes a holder for value, entitled to enforce payment, without regard to any equity or defense which exists between prior parties to such paper. Upon these propositions there seems at this day to be no substantial conflict of authority. But there is such conflict where the note is transferred as collateral security merely, without other circumstances, for a debt previously created. One of the grounds upon which some courts of high authority refuse, in such cases, to apply the rule announced in Swift v. Tyson (16 Pet. 1), is, that transactions of that kind are not in the usual and ordinary course of commercial dealings. But this objection is not sustained by the recognized usages of the commercial world, nor, as we think, by sound reason. The transfer of negotiable paper as security for antecedent debts constitutes a material and an increasing portion of the commerce of the country. Such transactions have become very common in financial circles. They have grown out of the necessities of business, and, in these days of great commercial activity they contribute largely to the benefit and convenience both of debtors and creditors. * * * Anotlier ground upon which some courts have declined to sanction the rule announced in Svift v. Tyson is, that upon the transfer of negotiable paper merely ns collateral security for an antecedent debt notliing is surrendered by the indorsee — that to permit the equities between prior parties to prevail deprives him of no right or advantage enjovod at the the time of transfer, imposes upon him no additional burdens, and sub- jects him to no additional inconveniences. This may be true in some, but it is not true in most cases, nor, in our opinion, is it ever true when the note, upon its delivery to the transfcrt'c, is in such form as to make him a party to the instru- ment, and impose upon him the duties which, according to the com- mercial law, must be dischargcil hy I he holder of negotiable paper in order (o fl\ liaf)ility uf)on Ihe indorser. The bank did not take the note in suit as a mere agent to receive the amount due when it suited the convenience of the debtor to make payment. It received the note under nn o])]i£Tation imposed by tlie~rommercial law, to present it for payment, and give notice of non-payment, in the mode prescribed by the settled rules of that law. We are of opinion that the undertakinj,'-of the linnk to flv tlie lialtility of prior parties, by due presentation for payment and due notice in case of non-payment — nn undertaking necessarily implied by becom- KBOOT. IN8TRUMKNTB — 16 242 CONSIDERATION. [AUT. III. ing a party to the instiuinoiit - was a sufTieicnt consideration to protect it against t'quitios existing Ix'twoon the other i)arties, of wliich it had no notice. It assumed the (hities and res])onsihilities of a holder for value, and sliould have tlie rights and |)rivileges pe^aining to that position. * * * \__ Our eomdusion, therefore, is tliat tlie transfer, before maturity, oi negotiable pa])er, as security for an antecedent debt merely, witliout other eireumstanees, if the paper be so indorsed that the holder be- comes a party to the instrument, although the transfer is without express agreement by the creditor for indulgence, is not an improper use of such i)aper, and is as much in the usual course of conimercial business as its transfer in paynuMit of such debt. In either case, the hotia fide holder is unatYected by equities or defenses between prior parties, of which he had no notice. * * * |:Mr. Justice Cliffokd concurred in an opinion of great learning, but of too great length to be reprinted here. ] Mr. Justice Bradley. I concur in the judgment rendered in this case, and in most of the reasons given in the opinion. But, in refer- ence to the consideration of the transfer of the note as collateral security, I do not regard the obligation assumed by the indorsee (the bank)," to present the note for payment and give notice of non-pay- ment, as the only, or the principal, consideration of such transfer. The true consideration was the debt due from the indorsers to the indorsee, and the obligation to pay or secure said debt. Had any other collateral security been given, as a mortgage, or a pledge of property, it would have been equally sustained by the consideration referred to; namely, the debt and the obligation to pay it or to secure its payment. If the indorsers had assigned a mortgage for that purpose, the title of the bank to hold the mortgage would have been indubitable. In that case prior equities of the mortgagor might have prevailed against the title of the bank; because a mortgage is not a commercial security, and its transfer for any consideration whatever does not cut off prior equities. But the bona fide transfer of commercial paper before maturity does cut off such equities; and every collateral is held by the creditor by such title and in such manner as appertain to its nature and qualities. Security for the payment of a debt actually owing is a good consideration, and suf- ficient to support a transfer of property. Wlien such transfer is made for such purpose, it has due effect as a complete transfer, according to the nature and incidents of the property transferred. When it is a promissory note or bill of exchange, it has the effect of giving absolute title and of cutting off prior equities, provided the ordinary conditions exist to give it that effect. If not transferred before ma- turity or in due course of business, then, of course, it cannot have Buch effect. But I think it is well shown in the principal opinion II.] PRE-EXISTING DEBT. 243 that a transfer /or the purpose oi' securing a debt is a transfer in due course. And ihat really ends the argument on the subject. Mr. Justice Millek and Mr. Justice Field dissented. Judgment affirmed.'' § 51 GROCERS' BANK r. PENFIELD. C9 New York, 502. — 1877. Appeal from judii^mont of the General Term of the Supreme Court in the first judicial de])artment reversing a judgment in favor of defendants, entered upon the report of a referee. (Reported below, 7 Ilun, 279.) This action was upon two promissory notes, on whieli defendants Pen field and Stone were makers, which were made payable to defend- ant Truax, and by him indorsed and transferred to plaintiff. Tiie referee found, in substance, that the notes were e.xecuted by tiie makers without any consideration; were accommodation notes, and were received by plaintilf solely as collateral security for a pre- cedent debt, without any agreement to extend the time of payment of the debt, and thereupon held that plaintiff was not a bona fide holder for value, and directed judgment dismissing the complaint as to said makers. Rapallo, J. We think that the order in this case must be affirmed on the ground stated by Brady, J., in his opinion delivered at General Term. Wliatever confusion may have existed upon the point, we think that wo may now safely say, in the language of Professor Par- sons (1 Parsons on Notes and Bills, 2!)f)), that it is universally con- ceded tliat tbo hf)Idor of an accommodation note, witliout restriction as to the mode of using it, may transfer it either in payment or as collateral security for an antecedent debt, and the maker will have no defense. (See, also. Story on Bills, § 192, note vi , and Story on Notes, § 19.'), and authorilies cited.) The existing debt is a sulTicient consideration for the transfer, and no new consideration' need be pbowri. Tt is only where the note has been diverted from the purpose for which it was entrusted to the payee, or some other equity exists in '"We arp of tlic opinion that ft creditor to whom a npRotiahle security is priven on nrcntinf cf n [)rf f'\i'»tinjr doltt IioMh it by nn indeffasildo title, wiiother it he one [i.nynldo ni .t future time or on demand." Cttrrir v. ^^i.ta, L. R. 10 Kx. 15.3, Lord Cnlcridfre. ('. .T., (li^^<•ntin^. It wa.t proliahly tlie intent of the franiers of § Til of the Nep. In«t. Ti. to aV>olish the rnle rst.nhli'-lir'd in fmhlirtfitrm v. liny, 20 .Johns. 0.37, and ever sirire in force in New ^'nrk ; whetlier the Innfjiiape nsed is apt for that purpose will he a question of indicial f'etermination. — TT. fOn thifl point, see the New York cases referred tu in lliikcl v. Elicard, 08 Kan. 295, poat. — C] 244 CONSIDERATION. [aRT. III. favor oi the maker, that it is uecossary that the lioMer should liave parted with value ou the faith of tlie note, in order to eut oil such equity of the maker. {Cole v. 6aulpaiiyh, IH Barb. 104'; Bank of Rutland V. Buck, 5 Wend. GG ; Lathroy v. Morris, 3 Sandf. 7.) It has been held by high authority that an antecedent debt is sufficient even in the case of a note fraudulently diverted to constitute the holder a bona fide holder for value without any extension of time or surrender of securities or other new considerations. {Sivift v. Tyson, 16 Peters, 1.) But in this State that doctrine does not prevail. {Stalker v. McDonald, 6 Hill, 93.) The leading authorities upon the subject are reviewed in the case of Maitland v. Citizens' Bank (40 Maryland, 5-10). Whatever diiVerence of opinion may have existed, as to the case of a note diverted or fraudulently put in circulation, it must be regarded as settled that an indorsee of a negotiable note made for the accom- modation of the indorser, but without restriction as to its use, taking the note in good faith as collaterial security for an antecedent debt, and without other consideration, is entitled to the position of a holder for value, and not affected by the defense of want of consideration to the maker. We should not have deemed it necessary to discuss the point so much at length, but for the reason that it does not appear ever to have been previously expressly adjudicated in this court. The order should be affirmed and judgment absolute, etc. All concur. Order affirmed and judgment accordingly.* §51 BIRKET V. ELWARD. 68 Kansas, 295. — 1904. Plaintiff sues as indorsee upon a promissory note which he acquired from the payee as collateral security for an existing debt of the payee to him, without any agreement for an extension of time or other new consideration. Judgment for defendants and plaintiff brings error. Mason, j. * * * It is obvious that plaintiff could only recover on the theory that he was an innocent purchaser, and the sole question here involved, there- fore, is whether one who takes commercial paper as collateral security for an existing debt, without an agreement for an extension of time or other new consideration, is ever entitled to protection as a hona fide holder. If so, the judgment must be reversed ; otherwise it must be affirmed. The rule in the federal courts, as well as in those of England and Canada, is that the holder of a negotiable note taken as collateral security for a pre-existing debt is a holder for value in due course « Se« also Continental N. B. v. Townsend, 87 N. Y. 8. — H. U.] PRE-BXISTINU DEBT. 345 of business, and as such is protected against all latent equities of third parties. The state courts* that have passed upon the question are in irreconcilable conflict. The cases are collected in 4 A. & E. Encycl. of L. (2d. Ed.), 290-293, and in 7 Cyc. 932-935. The lists there indicate with substantial but not absolute correctness the line of cleav- age^ It is to be noted that in each of them Kansas is wrongly placed among the states that are committed to the rule stated, upon the strength, respectively, of the cases of Banlc v. Dakin, 54 Kan. 656, and Best v. Crall, 23 Kan. 482. While these cases have a tendency in that direction, they do not go the full length indicated. In Bank V. Dakin the note involved was transferred as collateral security for a debt created at the time of, and in reliance upon, such transfer, which was therefore supported by a new consideration, sufficient upoTi any theory of the law. In the opinion a number of cases are cited as support- ing the proposition that even a pre-existing debt would afford a suf- ficient consideration for the purpose, and among them was included Best V. CraJl. In that case the collateral note was in fact transferred as security for a debt that already existed, but this was done pursuant to a promise made when such original debt was created, so that the effect was tiie same as though the transfer had actually been made at that time. A careful examination of the cases cited in the lists referred to discloses that in the following states the rule of the federal court has been adopted : California, Colorado, Connecticut, Georgia, Illinois, Indiana, Louisiana, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, TJhoflo Island, South Carolina, Texas, Vermont, and West Virginia. In California and Nevada the matter is affected by statu- tory provisions that the acceptance of the security forfeits a right to attach. Nebraska is also now committed to this doctrine. Lashmott V. Frail . 96 N. W. 152. Such citations fnrther show that in tlie following states the rule has been denied: AIa})iiina, Arkansas, Iowa, Kentucky. Maine, Michigan, Mississippi, Missouri, New Hampshire, New York, .N'ortli Dakota, Ohio, Pennsylvania, Tennessee, Virginia, Wisconsin. North Carolina should also be placed on this list, but •there, as well as in Tennessee and Virginia, the legislature has lately changed the rule by statu fe." Sec rinxiks v. Sullivan. 129 N. C. 1!>0; Bank of Charleston v. Johnson, 105 Tenn. 521 ; I'ayne v. ZeU, 98 Va. 294.'" In New York, in 1897, in a revision of the law of nego- • Namely, tli»> X*>p'>tialtlp Insfmnipnts T.aw. — V. 'oRpf. also, to i\\c snmf pfTcrt. flrahnm v. Stniih, 155 Mioh. fiS. At p. flR. Bi.ArR. J., says: " Tf. ns rnnfpTififd J.y dcffTirlnnt's ooiinvcl, fho plaintiff r«>c«ive(i tho nntp nn collatrral Mfpurity for an i-xiHtinp ili-ht. and the Nrpofiable Instrnmrnts Act, J'lil.. Af«s 1005. p. 3K}), No. 205. has intnuhiwd no chnufir in thf law aq to «npli in' Pet. 1, 10 L. PJd. 865, the opinion being written by Justice Story. It was there declared that one who took negotiable i)aper in payment of or as security for a pre-existing debt was a holder for value and in due course of business, and the argument was made in support of that express ])roposition. But the reference to paper taken as security was not required by the facts of the case, and Justice Catron dissented on this ground. In Railroad Co. v. National Banl-, 102 U. S. 14, the same reasoning was adopted and applied in a case where the transfer was made merely to secure an antecedent debt. The note there involved had several indorsers, and the obligation assumed by the last holder to give them notice of non- payment was treated as a part of the consideration of the transfer, })ut the decision did not turn upon this trentment. And in American File Co. v. Garrett, 110 U. S. 288, the principle was applied where there were no prior indorsers. Tn the opinion in Railroad Co. v. National Bank it was noted (citing 3 Kent's Commentaries, p. 81, note " b ") that Chancellor Kent, after the decision in Swift v. Tyson, indicated tliat l)e was inclined to concur in it, as the plainer and better doctrine. tract. An antecedent or pre-existing debt constitutes value, and is deemed Burh whf'tlier the instnimont is payat)le on demand or at a future time' Sec- tion 29 provides: 'Where the holder has a lien on the instrument, arising; either from contract or by implication of law, he is deemed a holder for value to the extent of his lien.' We are of the opinion that it was the intention of the Legislature to change the rule theretofore prevailing in this state 'so that any person to whom a negotiable security has been pledged as collateral ■would be a holder for value to the extent of the amount due him.' I'aynr. v. Zell, 98 Va. 294; Mersick v. Alderman, 77 Conn. 0.34; Brooks v. Hullivan, 129 N. C. 190. See, also. Petrie v. Miller, .'37 Ajip. Div. 17, afTirmed without opinion. 173 N. Y. 59G." — C. 11 § 52. — C. 12 A passing reference to this case in Bank of America v. Waydell. 187 N. Y. 115, serves, to some extent, to continue the doubt as to what po.sition the New York Tourt of Apjieals will take on this (pipstion. Sea editorial in the New York Law Jrntrnal for Jan. 18, 1907, at p. 1302. — C. 11.] PBE-EXISTINQ DEBT. 247 The Bay-Cuddington case and the Swift-Tyson case are cited in almost every opinion in which \he merits of the question under con- sideration are discussed, and the state courts have ordinarily taken sides upon the matter as the arguments of the one decision or the other have appealed to them with the greater force. In the former case it is said : " It is the credit given to the paper, and the con- sideration bo?ia fide paid on receiving it, that entitles the holder, on grounds of commercial policy, to such extraordinary protection, even in cases of tlie most palpable fraud. It is an exception to the general rule of law, and ought not to he carried beyond the necessity that created it." In the latter case it is said: " Receiving it [a negotiable instrument] in payment of or as security for a pre-existing debt is according to the known usual course of trade and business. And why, upon principle, should not a pre-existing debt be deemed such a valuaf)le consideration? Jt is for tlie benefit and convenience of the commercial world to give as wide an extent as practicable to the credit and circulation of negotiable paper, that it may pass not only as security for new purchases and advances, made upon the transfer thereof, but also in payment of, and as security for, pre-existing debts. The creditor is thereby enabled to realize or to secure his debt, and thus may safely give a prolonged credit, or forbear from taking any legal steps to enforce his rights. The debtor also has the advantage of making his negotiable securities of equivalent value to cash. But establish the opposite conclusion, that negotiable paper cannot be ap- plied in payment of or as security for pre-existing debts, without letting in all the equities between the original and antecedent parties, and the value and circulation of such securities must be es.sentially diminished, and the debtor driven to the embarrassment of making a sale thereof, often at a ruinous discount, to some third person, and then by circuity to apply the proceeds to the payment of his debts." Among other arguments advanced in behalf of the majority view are that the question is really oike of the law merchant — the custom of /nercliants — and that a "transfer by a debtor to his ereditor of a negotiable instrument, to pay or only to secure a prior debt, makes the creditor a holder for value, by the custom " (Rigclow on Bills, Notes & Cheques, 247) ; that the creditor, in accepting a negotiable note, whether or not there are parties to be charged by notice, does under- take to exercise some degree of diligence (2 Randolph on Commercial f'aper, § 804), thereby affording a new consideration, or at all events that he "is naturally lulled into security and inactivity by crediting the face of the note, and be should not Ik' inaile to sufTer by the maker for confidence which his own promise crentcd " (1 Ojiniel on Neg. Fnst., § H.'Jla) ; that the true consideration for the transfer is thp del)t due from the indorser to the indorsee, and the oliligation to pay or secure said debt; that such transfer is a sufTicicnt consideration, because "security for the payment of a debt actually owing is a good 248 OONSlUKKATlON. [aKT. III. t'ousideratiou, and sullK'ient to support a transfer of property '' (sep- arate opinion of Justice Bradley in Railroad Co. v. Nat. Bank, supra). That tlie policy of the law is to facilitate the transfer of negotiable paper free of equities is illustrated by the fact that it is almost uni- versally held that one who acquires it in payhient df an antecedent debt is a bona fide holder {Draper v. Cowles, ^ K^n. 484; 4 A. & E. Encycl. of Law [2d ed.] 385), whereas the ordinary rule in reference to protection under recording acts is that one who accepts property in satisfaction of an existing debt is not an innocent purchaser (4 A. & E. Encycl. of L. [2d ed. ] 490; Dolan v. Van Demark, 35 Kan. 304; Henderson v. Gihbs, 39 Kans. 680.) Even where the New York doctrine is accepted, an exception is made against the plea of lack of considera- tion when made by an accommodation party to the pa])cr transferred as security. Grocers' Bank v. Penfield, 69 N. Y. 502 ; Maitland v. Citi- zens' Bank, 40 Md. 540; Smith v. Wachob, 179 Pa. 260. If the question were a new one, to be determined upon consideration of equitable principles, there would be strong reasons for holding that he who takes a note merely as security for an existing debt acquires no greater right than his debtor had. The reasons given in Mann v. National Bank, 30 Kan. 412, for applying this rule to a bank that receives a note from a depositor, and adds the amount to his account, which is not overdrawn, would seem to apply to the case of one who receives the paper as collateral for an indebtedness already existing. He parts with nothing, and is in no worse situation than he was before. It requires no variation of usual procedure to save him from loss. But on the other liand, the same arguments would reach the case of him who takes commercial paper in payment of an existing un- secured debt. He likewise is in no way placed in any worse situation than he was before, since, while the original debt may be regarded as technically canceled, he at all events has his remedy upon the collateral against the person from whom he received it, whatever defense might be available to the maker. He still' has a valid claim against his original debtor, and that is all he had in the first place. See Ran- dolph on Commercial Paper, §§ 461-465. Yet, as has just been said, one acquiring commercial paper under such circumstances is held to be protected as an innocent purchaser. But the question before us is peculiarly one in which great weight should be given to the authorities, and especially to the decisions of the courts of the national government, which do not recognize any local law in such matters. Oates v. National Bank, 100 U. S. 239, 25 L. Ed. 580. The question is one likely to arise frequently in transactions between inhabitants of difTorent states. It is important that the law should be uniform in the different jurisdictions. It was doubtless in recognition of this consideration that the legislatures of North Carolina, Tennessee, Virginia, and possibly New York, as already noted, have lately by statute brought their local laws on the Ill,] HOLDER FOR VALUE. 249 subject into harmony with the general law as administered by the federal and by the greater nuiyber of the state courts. We prefer to hold, in accordance with tlie weiglit of autliority, that an indorsee of negotiable paper taken as security for a pre-existing debt is a holder for value and in due course of business, and therefore, in the absence of any circumstances charging him with notice, is protected against a claim of payment made to the original payee. * * * The judgment is reversed, and the cause remanded for a new trial. All the justices concurring.'^ m. Holder for value. § 52 HUNTER v. WILSON. 4 Exchequer Reports. 489. — 1849. This was an action by the plaintiff, as indorsee of a bill of exchange, against the defendant, as acceptor. The defendant pleaded (in sub- stance), that the bill of exchange was drawn by one McLean, at the request and for the accommodation of the defendant, and without any consideration or value whatever, and that the bill was indorsed by the said McLean without any consifleratTon or value given by the plaintiff for such indorsement, to the defendant, or to the said McLean, or to any other person whomsoever. The plaintiff had signed inter- locutory judgment upon this plea, the defendant being under terms of pleading issuably. A rule nm was subsequently obtained, on the part of the defendant, to set this judgment aside, but without any aflfidavit of merits. Willes now showed cause. — The plaintiff was clearly entitled to sign judgment, for the plea is not issuable. It is quite consistent with the plea that there was a good consideration given for the bill. It nuiy have y)aKsc(l through many hands, each party having given con- sideration. I KoLFK, R. — It may have been indorsed to A. B., who made a present of it to the plaintiff.] Or the defendant may have owed a debt to some third party. The allegation that the hill was drawn for the accommodation of the defendant is absurd. [T?olfk, R. — The plaintiff may be the executor of a person who gave full value for it.] ITe was then stopped by the court, who called upon Barnard, in support of the rule, who contended that the plea was good upon general demurrer. Pahkk, R. The plea is elearly n^A issuable, nrid the plaintiff was entitled to sign judgment. There in not even nn alletration in the plea, that none of the previous nrties to the bill had given value »• Rec this cane reportrd with evhauaL^ve note in 1 A. & E. Ann. Csb. 272. — C. 250 CONSlDKlUTrON. [art. III. for the indorsement. The rule, therefore, ought to be discharged, and with costs, as tlie dofcndaiit is not prepared with an aflidavit of merits. Pollock, C. B., Alderson, 13., and Komk, B., concurred. Rule discharged, with costs,^ § 52 ARPIN V. OWENS. ^ 140 Massachusetts, 144. — 1885. Judgment for defendant and plaintiff alleged exceptions. W. Allen, J. This was an action by the payee of a foreign bill of exchange against the acceptor. The bill was dated February 23rd, pay- able in thirty days after date, and was accepted March 1st. There was evidence that the plaintiff took the bill from the drawer on the day of date, for value, in the regular course of business. The court ruled that the burden was on the plaintiff to prove that the defendant had received a consideration for the draft, and that, if the jury should find that he received no consideration, they should find for the defendant. There was evidence of want of consideration between the drawer and the defendant, and evidence bearing upon other grounds of defense, which is not material, as the ruling presented but one question for the jury. For the purposes of the ruling the plaintiff must be taken to be a bona fide purchaser of the bill for value, and without notice of want of consideration ; and the question presented is whether, in an action by the payee of a bill, who took it before acceptance, against the acceptor, want of consideration between the drawer and acceptor is a defense; in other words, whether in such an action the rule to be applied as to w^ant of consideration as a defense is that which obtains hctween the maker and payee of a note or that between the maker and indorsee. The rule is stated thus in Byles on Bills (6th Amer. Ed.) 206: " Between immediate parties — that is, between the drawer and acceptor, between the payee and drawer, between the payee and maker of a note, between the indorsee and indorser — the only consideration is that which moved from the plaintiff to the defendant, and the absence or failure of this is a good defense to an action. But between the remote parties — for example, between the payee and the acceptor, between the indorsee and acceptor, between indorsee and remote in- dorser — two distinct considerations, at least, must come in question : First, that which the defendant received for his liability; and, secondly, that which the plaintiff gave for his title. An action between remote 1 Accord: Hoffman v. Dank, 12 Wall. (U. S.) 181. — C. III.] HOLDER FOR VALUE. 261 parties will not fail unless there be absence or failui-e of both these considerations.'' The payee of an accepted bill holds the same relation to the acceptor that an indorsee of a note holds to the maker. There is a very close resemblance between an accepted bill and an indorsed note. The indorsed note is evidence of a debt originally due from the maker to the payee, and assigned and made due to the endorsee. The bill is evidence of a debt originally due from the drawee to the drawer, assigned and made due to payee ; and the rule that the title of the assignee cannot be impeached by showing want of consideration for the original debt is applicable equally to the indorsee of a note, and to the payee and to the indorsee of an accepted bill. The reason, applicable alike to payee and indorsee, is tersely stated by Vaughan, J., in Low v. Chifney, 1 Bing. (X. C.) 267: "How was he to know what had passed between the drawer and acceptor." See Davis v. Randall, 115 Mass. 547. It is contended by the defendant that the rule does not apply to the case at bar, because the acceptance was after the bill was purchased by the payee, and that, therefore, it was not taken by him on the faith of the acceptance. There is no ground for this distinction. It is im- material when an acceptance is made; it may be made at any time, and the rights of the payee and of indorsees are the same after it is made whether they were acrinired in anticipation of it or su})Scquont to it. It is held in this state lliat, upon the qnostion whether a promise to accept made by the drnwee to the drawer is an acceptance as to other parties, the knowledge of the promise, and presumed reliance upon it in becoming parties, is material. Exrhangp Bnnl- of Sf. Lovis v. Rice, 98 Mass. 2HH. But where, as in the case at bar, there is an acceptance upon the bill, il makes no difTerence in the rights of pavees or in- dorsees whether they be.come such before or after the acceptance. See Grant v. Hunt. 1 C. R. '1 1 ; Wj/vne v. Rnikes, 5 East, 514; Poirell v. Mnnnier, 1 Atk. fill. The instrument is negotiable before aceeptance, and the acc(>ptance is an acknowledgriieni of (lie debt it represents, and an alisoliite promise to pay it to the [» rsori who is or shall become ilie lioliler of the bill; and to allow a want of consideration for the acceptance to d«'feat the right of a bona fide holder, whether he became such before or after the acceptance, woiild be contrary to the na(iir(> and purpose of bills of exchange, and to the nniforni usage in regard to them. Exceptions sustained/' «ln Hfuertcmatte v. Morris, 101 N. Y. 6.3. 7n. tho court Rnys: " Tf a pnrty brconips a bona fide holdor for vahip of n t)ill In-forn ita nrrcptancp. it. is not efisenfial to his riRtit to enforrr it against a HiiltwrnirTit arccptor, ttiat an add! tional considprntion should prorofd from him to the drawee. The liill itself implies a repre«ver the full amount thereof. fJen. St. 1902, § 4227 [N. V.. § 96). Hut it has long been an accepted principle limiting the operation of the general rule, but not repugnant to it, that one who takes siich paper as collateral security for a debt will l>e limited in hi« recovery to the amount of that «Iebt. Cromuell v. County of Sac, 96 U. S. 60; Dunrau v. Cilbrrl. 29 N. .1. Law. .'521 : Fishrr v. Fisher, 9S Mass. .303; Younrfs V. Lee, 12 N. Y. ^Ty\. The reeoverv, however, is none the less upon the paper. The plaintiff was justified in confining his allegations to such as disclosed hi« right prima favir to recover the amount of the note, and in leaving to the defendants to set up in their answer, as they did, the facts which served to limit that right. Vanlieir v. Hank, 21 Til. -Xpp. 126; Curtis v. Mohr. 18 Wis. 61.5; Duncan v. Oilhrrt, 29 N. .1. Law, .'521. The exceptions to the finding need not be considered." — C. 254 CONSIDERATION. [abT. 111. of a sale of the articles enumerated in the bill of parcels. Agree- ments of this character arc valid, and are often specifically enforced in equity by injumtion, and at law by actions for daniagcs. Evidence that the plainliir has inlorl'crcd with the route in tlic manner stated, uould tend to show; tliat he has deprived the defendant of a part of the consideration for which the note is given. It was formerly held that such damages must be recovered by a cross-action, and could not be proved and allowed in defense of an action on the note, by way of recoupment. But the doctrine of recoupwcnl of damages was fully established in this court, in llarrinfjfdn v. Sirntton, (22 Pick. 510.) (See Burnett v. Smith, 4 Gray, 50.) Tt has since been apphed in numerous ca.se?, and was already well established in New York. It is an equitable set-off of damages which ought to be deducted from the plaintiff's demand, and for the recovery of which the defendant ought not to be turned round to a cross-action. The court are of opinion that it should be applied to a case like the yjresent. where the plaintiff has deprived the defendant of a valuable part of the consideration of the note in suit, if the facts which were alleged shall be proved. The first exception must be overruled ; and the second sustained.'' V. Liability of accommodation party. § 55 GREENWAY v. WILLIAM I). ORTHWETN GRAIN CO. 85 Federal Reporter (Cir. Ct. App.. 8th Cir.) 5.36. — 1808. Sanborn, Circuit Judge. On June 27, 1894, for the purpose of enabling Ed. Ilogaboom to borrow money upon it, and without con- sideration, the plaintiff in error, G C Greenway, signed, as one of the makers, a promissory note made by Ed. Hogaboom for $5,000 and interest at 10 per cent, per annum after maturity, payable to the order of Hogaboom.* On July 2.3, 1S04, Hogaboom made his promis?ory note for $5,000 with interest at 10 per cent, per annum from its date, payable seven months thereafter to the order of the defendant in error, William D. Orthwein Grain Company, a corporation. On that dnv, Hoeaboom indorsed and pledged the four-months note to secure t!ie pavinent of the seven-months note, delivered them both to the defend- * .Accord: Torinus v. Buchham, 29 Minn. 128 -, 1 Daniel on Xcg. Inst., §§ 201- 204. Ono who is " not a hnklcr in duo course " stands in tlic same relation as an immediate party. Thus a transferee of overdue paper is subject to tlie defense of failure of consideration. Bryan v. Primm. 1 111. .33: Diamond v. Barri.f, 33 Tex. 634; Sauyer v. Boovry, 5 La. Ann. 153. — H. fRee also Tinthnrn v. Whrrhrriqht. 90 Me. 351, reported in 2 A. & E. Ann. Cas. 428, witli note entitled " Partial failure of consideration as defense to action on bill or note." — CI » This note was payable four months after date. — C. v.] ACCOMMODATION PARTY. 255 ant in error, and borrowed $5,000 of that corporation upon them. Only $666.66 has ever been paid upon eitlier note. The grain company Bueu Greenway on the note which he signed, and his defenses were: (1) That he signed the note without consideration, for the accommodation of Hogaboom, and that the defendant in error was cognizant of this fact when it made the loan to him • * * * tjie court peremptorily instructed the jury to return a verdict for the defendant in error for the face of the note and interest, less the $666.66 which had been paid. This instruction is assigned as error. Accommodation paper consti- tutes a loan of credit, without consideration, by one party to another, who undertakes to pay the paper and indemnify the lender against loss on its account. It is paper which is made, indorsed, or accepted by one party, without consideration, for the accommodation of another, for the purpose and with the intention that the latter shall obtain money or credit upon it of some third party. The accommodated party can maintain no action upon it against the accommodation maker, because the latter has received no consideration for it from him. But, if the party accommodated uses the paper in the ordinary course of business to obtain money, credit, or any other thing of value from a third party, the law imputes the consideration which he receives to the acominodation maker, indorser, or acceptor, because the latter, by plac- ing his name upon the paper, has, in effect, requested him who advances the consideration upon it to pay that consideration to the party accom- modated. It was for that very purpose and with that intention tliat he placed his name upon the paper; and when a stranger has given a valuable consideration for it to the accommodated party in reliance upon this purpose and intent, the acommodation maker cannot be per- mitted to say that he has not himself received that consideration. Tt is therefore no defense agaihsf ome who has acquired accommodation paper, with knowledge of its character, but in good faith, in tlie ordi- nary course of business, and for value, tliat the accommodation maker actually received no consideration for it. Hnnl- v. Weifiiger, 2 Pet. 347, 348; Iron Co. v. Broun. 63 ]\[e. 13f); Tourfrlnf v. RrrrJ. 6? Minn. 3fi4; Ren v. McDonald. 68 Minn. 187; MUhr v. Lnrved. \{r.\ III. .562, 571 ; L'^rnpl v. .'\yrr, 2 S. (\ 31 1, 318; Spvrqin v. Mrl'hrrhrs. 12 [nd. 527. C)ne who takes commercial 'paper by way of a pledge to secure the repayment of a simultaneous loan made in consideration fif the pledge acquires it for value. Siriff v. Ti/snn. 16 TVt. 1; Odlrs v. Hntilr, 100 V. 8.239; RniJmnd Co. v. Bnnlc. 10? V. S. 1 I. '?S. The first defense of the plainfifT in error w;is lliereforc witlioiil foimdation. The charge of the court below was right, and the judgment must be afTirmed. It is so ordered.' « Sf-e Stnrlinp v. .fnnrs, 138 Wis. S2, pn.it. — C. i'5() CONSIDERATION. [aRT. III. § 56 OPPENTTETM v. STMON KETGEL CTGAR CO. 90 New York Supplement (Sup. Ct., App. T.) 335. — 1904. Actions on promissory notes. Judgments for plaintiff and defend- ant appeals. BistMioFF, J. The notes in suit were discounted by plaintiff's as- signor for tlie maker, being in the latter's possession with the indorse- ment of the payee, the appellant corporation. The circumstances im- ported the fact that the indorsement was for accommodation (Stall v. Banh-, 18 Wend. 466; Fielden v. Lahens, 2 Abb. Dec. Ill, 116), and hence not within the powers of a manufacturing corporation, such as this. Nat. Park Bank V. G. A. Co.,n6'M.Y.2S^. The Negotiable Instruments Law (Laws 1897, p. 719, c. 612) does not affect this ques- tion of power. Section 41 provides for the passing of title by indorse- ment, not tlie incurring of liability, and section 55 does not refer to corporations; therefore it is not to be implied that the Legislature in- tended to extend the powers of every corporation to the making of accommodation indorsements. Crawford, Neg. Instruments (2d Ed.) pp. 36, 37. Upon the facts presented, the judgment charging the appellant with liability is without support, but it may be that upon a new trial the plaintiff might produce sufficient proof to bind the cor- poration upon principles of estoppel. Therefore an absolute dismissal will not be ordered. Judgments reversed, and new trial ordered, with costs to appellant to abide the event. All concur.'^ 7 In Nat. Bank of Newport v. H. P. Siiyder Mfg. Co., 117 App. Div. ( N. Y.) 370. 373, the court said: "It is to be borne in mind that the defendant in thi's case is a manufacturing? corporation. When an individual signs a note, either as maker or indorser, for the benefit of another, and allows it to be put in circulation, he is liable to a holder for value, althourjh such hoFder knew him to be an accommodation party. Negotiable Instruments Law, § 55; \afional Bank of the City of \. Y. v. Toplitz, SI App. Div. 593, affirmed 178 N. Y. 404. Rut a manufacturing corporation has no power to bind itself as an accommodation party. Central Bank v. Empire Stone Drefisinfj Co.. 26 Barb, 23; Bank of Genesee v. Patchin Bank.'\3 N. Y. 309; National Park Bank v. German Am. N. W. d S. Co.. 116 N. Y. 281. So that the rule adverted to [that the burden was upon the defendant to prove that the plaintiff knew or had reason to suspect that 8 C0NSI1>KHATI0N. [aRT. III. would cease to be such when the subsecjuent payment was made him. Nor can the promise to pny the commission out of the proceeds of the note as distinct from I he actual payment constitute value for the en- dorsement, for that promise was merely one to perform an existing le«ral obligation, and was therefore without consideration. Tf the jury found that Austin was an accommodation party, they would necessarily find that the plaintifi' was the party accommodated, for no one else was concerned. 'J'he maker had nothing to do with the arrangement. If Austin loaned his name to the plaintiff corporation, it acquired no rigiit of action against him. Mess7)iore v. Meyer, 56 N. J. Law, 31. * * * A jury question was presented, and it was error to direct a verdict for the plaintiff. The judgment must therefore be reversed, and the record remitted for a new trial. * " * ARTICLE IV. Negotiation. I. What constitutes negotiation or transfer. §60 Crouch v. Credit Foncier, L. R. 8 Q. B. 374. (1873.) Blackburn, J. — In the present case the plaintiff has taken upon himself the burden of establishing both that the property in the debenture passed to him by delivery, and that the right to sue in his own name was transferred to him. The two propositions are very much connected, but not identical. The holder of an overdue bill or note may confer the right on the transferee to sue in his own name, but he conveys no better title than he had himself. * * * But the two questions go very much together ; and, indeed, in the notes to Miller v. Race (1 Smith, L. C. 9th ed., p. 491), where all the authorities are collected, the very learned author says : "It may there- fore be laid down as a safe rule that where an instrument is by the custom of trade transferable, like cash, by delivery, and is also capable of being sued upon by the person holding it pro tempore, tiien it is entitled to the name of a negotiable instrument, and the property in it passes to a bona fide transferee for value, though the transfer may not have taken place Jn jiiarket overt. But that if either of the above requisites be wanting, t. e., if it be either not accustomably transfera- ble, or, though it be accustomably transferable, yet, if its nature be such as to render it incapable of being put in suit by the party holding it pro tempore, it is not a negotiable instrument, nor will delivery of it pass the property of it to a vendee, however bona fide, if tlio trans- feror himself have not a good title to it, and the transfer be made out of market overt." Bills of exchange and promissory notes, whether payable to order or to bearer, are by the law merchant negotiable in both senses of the word. The p<>rson who, by a genuine indorsement, or, where it is payable to bearer, by a delivery, becomes holder, may sue in his own name on the contract, and if he is a bona fide holder for value, he has a good title notwithstanding any defect of title in the party (whether indorser or deliverer ) fntrn whom he took it.' « For a luminous discunaion of " nef^otiability," see Willis on Negotiable Securities (1896), Lectures I and II. - H. [25g] 'JGO NEGOTIATION. [AHT. IV. 1. Transfek uy Deliver^, §60 BlTZER (;. WAGER. 83 MlcHtQAN. 223.-1890. .\('ttOV on the following promissory note: $100AH). Hart, Micit., March 20, 1880. Kijllit months after duto 1 promise to pay to the order of Marget A. Bitzer (or bearer), one hundred dollars, at the Oceana County Savings Bank, value received, with interest at the rate of 6 per cent. Bebt Spellman. G. L. VVagar. Judgment for plaintiff. Defendant brings error on the ground that the court erred in admitting in evidenio the note in question for the reason (a) that the note is payable to Margaret A. Bitzer, and has never been indorsed or transferred by her to plaintiff; (b) that said note is not competent evidence, for the reason that plaintiff has not shown that he owns or has property in said note. Long, J., [after disposing of another matter]. — The note is plainly payable to bearer, and suit could be maintained thereon in the name of any holder. Judgment affirmed.'' § 60 COCK V. FELLOWS. 1 Johnson (N. Y.) 143. — 1806. From the return to the certiorari in this cause, it appeared that an action had been brought by the defendant in error against the present plaintiff, before a justice of the peace, in which he declared on a writing or note, in the following words: Due the bearer hereof, 31, 18s, lOd. whicii T promise to pay to Abrah.am Thompson, or order, on demand, as witness my hand, this 22d, 11th month, 1803. [Siffned] Jordan Cock. The note was not endorsed by Thompson, and the declaration stated the note was made payable to the bearer. The justice gave judgment for the plaintiff below, for the amount of the note. Per Curiam. The word hearer has reference to Thompson as the 2 Accord: Grant v. Vaughan, 3 Burr. 1516; Pierce v. Crafts, 12 Johns ( N. Y.) 90; Ellis v. W/ieeicr," 3 Pick. (Mass.) 18; Matthews v. Hall, 1 Vt. 316. In Illinois promissory notes payable "to A. or bearer" recpaire indorsement, though not if payable "to bearer." Roosa v. Crist. 17 III. 4,50; Garfield v. Berry, 5 III. App. 3.'5.5 : cf. Avery v. Latimer, 14 Oh. .542. For meaning of " instruments payable to bearer," see § 28, ante. As to effect of special indorsement see Johnson v. Mitchell, 50 Tex. 212, post. — H. 1. 2.] TRANSFER BY INDORSEMENT. 861 payee, and as the promise is expressly to pay him or order, anotlier per- son could not maintain an action on the note without his endorsement. The judgment below must be reversed. Judgment reversed. T . i P 2. Transfer by Indorsement and Delivery. (a) Transfer by indorsing assignment. § 60 MARKET r. COREY. 108 Michigan, 184.— 1895.3 Action against Corey as indorser. The indorsement read : "I here- by assign the within note to Matthew M. Markey and Catherine Sun- dars." The note also referred to a certain contract which provided that in case of default in any one of five notes (of which the note in suit was one), all of the notes, at the option of the payee, might be declared due and payable.* Judgment for plaintiff. Long, J., [after stating the facts]. — The usual mode of transfer of a promissory note is by simply writing the indorser's name upon the back, or by writing also over it the direction to pay the indorsee named, or order, or to him or bearer. Ah indorsement, however, may be made in more enlarged terms, and tlie indorser be hold liable as such. In Sands v. Wood (1 Iowa, 203), the indorsement was, "I assign the within note to Mrs. Sarah Coffin." In Sears v. Lantz (47 Iowa, 658), the indorsement on the note was, "I hereby assign all my right and title to Louis Meckley." And in each rase the party so assigning was held as indorser, the court in the latter case saviufj of Sands v. Wood: "He used no words that, in and of themselves, indi- cated that he had bound or made himself liable in case the maker, after demand, failed to pay the note. But it was held the law, as a legal conclusion, attached to the words used the liability that follows the in- dorsement of a promissory note." (See, also, Duffy's Adtn'r v. O'Con- nor 7 Baxt. 498; Selhy'v. Judd. 24 Kan. lOfJ; Brotherton v. Street find. Sup.], 24 N. E. 10(58.) The rule of the American cases is well stated in Daniel on Neg. Inst., (§ GSSc), as follows: "The question arising in such ca.ses, is a nice one, and depends upon rules of leiral interpretation. The mere signature of the payee, indorsed on the paper, imports an executed contract of assignment, with its implica- tions, and also an executory contract of conditional liability, with its • Reported in 3fi L. R. A. 117. with note entitled "Assignor of proiniHsory notf n«< an inilorxor." — f. « Neg. Inst. L., § 21, subsec. 3. — H. 262 NEGOTIATION. [aRT. IV. implications.' The assignuu'iit would be as complete by the mere sig- nature as with the words of" assignment written over it. The condi- tional liability which is executory is implied by the executed contract of assignment, and the signature under it, which carried the legal title; and the question is, does the writing over a signature an express assign- ment, which the law imports from the signature per se, exclude and negative the idea of conditional liability, which the law also imports if such assignment were not expressed in full ? We think not. When the thing done creates an implication of another to be done, we cannot think that the mere expression of the former in full can be regarded as excluding its consequence, when that consequence would follow if the expression were omitted." The language used in the assignment to the note in suit does not negative the implication of the legal liability of the assignor as indorser, and as the words are to be construed, as strongly as their sense will allow, against the assignor, he must be held as indorser. This rule is fully supported in Hatch v. Barrett (34 Kan. 230; 8 Pac. 129). (See, also, Adams v. Blethen, 66 Me. 19.) In the case of Aniba v. Yeomans (39 Mich. 171), the assignment read as follows: *'T hereby transfer my right, title, and interest of the wdthin note to S. A. Yeomans." Mr. Justice Marston said in that case: "The right or interest passing, therefore, under the usual and customary indorse- ment, is much greater than the mere right, title, and interest of the payee ; and when the transfer, as made, only attempts to pass the title and interest of the payee of the note, no greater right or interest than he then held can pass." Tn other words, the learned justice seemed to think that the words used limited the transfer to the right and title he then held. While this holding appears to be at variance with the cases elsewhere, we think it readily distinguishable from the present, as here the words are, "I hereby assign the within note to Matthew M. Markey and Catherine Sundars" and do not purport to limit the liability of Corey as an indorser. In Stevens v. JIannan (86 Mich. 307), the note sued upon was negotiable in form, and made |)ayable to Batchelder, and he assigned it before maturity, as follows: "For value received, 1 hereby assign all interest in and to this note to Ralph E. Watson." Defendant insisted in that case that the plaintiff could not sue in his own name, but should have sued in the name of the payee. It was said by Mr. Justice McGrath : "I do not think the point well taken. If Batchelder's indorsement did not affect its negotiability, then Watson's indorsement entitled the plaintiff, as holder of the note, to sue in his own name." It must be held, therefore, that the memorandum on the note did not relieve Corey from his liability as indorser. The court was not in error in admitting the contract in evidence, 6 See Neg. Inst. L., § IIR, post. — H. 1. 2.] TRANSFER BY INDORSEMENT. 263 as its purpose was to show that the note was not in fact limited by its provisions, and those provisions of the contract cited did not destroy the negotiability of the note. (Daniel, Neg. Inst., § 48.) The judgment must be affirmed. The other justices concurred." § 60 Hall v. Toby, 110 Pennsylvania State, 3l8. — 1885. Action by D. B. Toby as indorsee under the following instrument and assignment : 1551.50. Wabbex, Aug. 18, 1879. For value received I promise to pay Wm. Toby, or order, five hundred and fifty-one 50/100 dollars with interest. Orbis Hall. [On the back of this paper was the following transfer or assignment): For value received 1 hereby assign, transfer and set over to D. B. Toby all my right, title, interest and claim in the within note. Wm. Toby, D. B. Toby. TiONESTA, Nov. 21, 1881. Per Curiam. — This note was negotiable. It contained an absolute and unconditional promise to pay to Wm. Toby or order the sum specified. As no time of payment was therein expressed, the law ad- (^m^ judges the money to be payable immediately. A right of action ^^x^ accrued at once and would be barred by the Statute of Limitations at v^ the expiration of six years thereafter. The note had all the essential / ^"^"^ language to constitute a promissory note. The legal right of action thereon would have passed by indorsement "', and delivery. For purpose of transfer the assignment on the back of this note passed the legal title.^ (h) Transfer by indorsing guaranty. § 60 TRUST COMPANY v. NATIONAL BANK. 101 United States, 68. — 1879. Bill to compel surrender of note. The note with security was given by the Wyandotte Bank io the Cook County National Bank to obtain credit, and not to be negotiated. The latter did negotiate it to the Trust Company. At its maturity there was (l\ie on it to the • Accord: Maine Trust, etc., Co. v. BuHrr, 45 Minn. 50fi ; Dnvidaon v. Powell, 114 N. r. 575; Mfrnll v. Hurlry. 6 So. Dnk. 592. Contra: Lyons v. fUvflhis. 22 I'a. St. 185; Spencer v. Halprrn. 62 Ark. 696; Cf. Aniha v. Yrnmans. 39 Mich 171. M. 1 Cf. .imhn V. Yromnns. 39 Midi. 171. While the indorspment passes title it does not make thp " nssignor " liable a-* an indorser. Lyons v. nivrlhis. 22 Pa. St. 186. Contra: Henderson v. .ickelmirc, 59 Ind 540; Adams v. Blethen 68 Me. 19. — H. 264 NEGOTIATION. [auT. IV. Cook County Xational Rank '$\;V2, wliiih tlie Wyandotte Bank offers to pay. Mi{. Justice Sthono [after stating tlie faetsj. — The note was not indorsed to the Trust Company, and it was not, therefore, taken in the the usual course of business by that mode of transfer in wliieh negoti- able paper is usually transferred. TTad it been indorsed by the Cook County Bank, it may be that the Trust Company would hold it un- atfected by any equities between the maker and payee. But instead of an indorsement, the president of the Cook (bounty Bank merely guar- anteed its payment, and handed it over with this guaranty to the Trust Company. The note was not even assigned. There was written upon it only the following: — For value received, we hereby guarantee the payment of the within note at maturity, or at any time thereafter, with interest at ten per cent, \n-i- annum until paid, and agree to pay all costs and expenses paid or incurred in collect- ing the same. B. F. Allen, Prcs't. In no commercial sense is this an indorsement, and probal)ly it was not intended as such. Allen had agreed that the note should not be negotiated, and for this reason perhaps it was not indorsed. That a guaranty is not a negotiation of a_ bill or note as understood by tTieTaw" merchanf, is cerfaTri. (Snevily v. Elrl, 1 Watts & S. [Pa.], 203; La- mourieux'v. Hewitt, 5 Wend. [N. Y], 307; AlilJer v. Gaston, 2 Hill [N. Y.], 188). In this case, the guaranty written on the note was filled up. It expressed fully the contract between the Cook County Bank and the Trust Company. Being express, it can raise no applica- tion of any other contract. Expressnm facit cessare taciturn. The contract cannot, therefore, be converted into an indorsement or an assignment. And if it could be treated as an assignment of the note, it would not cut off the defenses of the maker. Such an effect results only from a transfer according to the law merchant; tliat is, from an indorsement. An assignee stands in the place of his assignor, and takes simply an assignor's rights; but an indorsement creates a new and collateral contract. (2 Parsons, Notes and Bills, 46 et seq., notes.) At best, therefore, the defendants below can claim no more or greater rights than those of the Cook County Bank, and the complain- ants are entitled to a return of the note and of the collaterals on pay- ment of the sum of $132. Decree affirmed.* » Accord: Tuttlp v. Tinrtholomew, 12 Met. (MasR.) 452; Belcher v. Smith, 7 Cush. (Mass.) 482; Canfield v. Vaughan, 8 Mart. (La.) 68.3. Contra: Myrick v. Hasey. 27 Me. 9; Heard v. Dubuque Bank, 8 Neb. 10; Helmer v. Hank, 28 Neb. 474; Kellocjfi v. Doufflns Co. Bank, 58 Kan. 43: Dunham v. Peterson. 5 N. Dak. 414, where the question is fully discussed and authorities collected; Elgin City Banking Co. v. Zelch, 57 Minn. 487, infra. — H. J. 2.] TRANSFER BY INDORSEMENT. § 60 ELGIN CITY BANKING CO. v. ZELCH. 67 Minnesota, 487. — 1894. Action by indorsee against maker. The question was whether plaintiff was an indorsee, or an assignee and so subject to the defense of fraud or failure of consideration. 'J'he court directed a verdict for plaintiff. The facts appeaTTiTthe opinion. Mitchell, J. — The defendant executed his negotiable promissory note, payable to the order of one Daniel Dunham, who transferred it to the plaintiff, with the following indorsements: "Pay the Elgin City Banking Co. D. Dunham." " Payment Guaranteed. D. Dun- ham." Whether these indorsements be construed as constituting a single contract, or two distinct and separate contracts, we are clear that they constitute an "indorsement," in the commercial sense, and that the transferee is an "indorsee," and entitled to protection as such, under the law merchant. The fact that Dunham enlarged his responsibility beyond that of " indorser," by guarantying payment, did not change or affect the character of his indorsement. 1'--^^. ^^^ Order affirmed.' / 9 See note 1, above. "A piiaranty of the pnytnont of a note does not neces- f sarily include a contract of indor.sement. but wlien such guaranty is written , » y!Pj upon the back of the note in general terms and signed by the payee named nA^ — ^ therein, the universal custom is to treat such contract of guaranty as a trans- I J ifr of the title of the payee to the person to whom the guaranty is made." National Bank of Commerce v. Galland. 14 Wash. 502. 505. Such a guaranty constitutes " an indorsement of the note with an enlarged liability." Donner- hTf) V. Opprnheimrr, 15 Wash. 200. " I guarantee attorney's fees up to 10 -ry^ r"- cent, if this nofp has to he collected by law, and its prompt payment." — ^"Tu._>^ held nn indorsement by the payee with an enlarged liability. Pattillo v. Alexander, 9Ct Ga. 60. For a distinction between the case where the guaranty i.s (.\!euted by tlie payee and where it i.s executed by a third person, see lort- .-"•'/ V. Arnold, .31 Oa. 210; Cciirr Mfrj. Co. v. Jonrs, 90 Ga. 307. See title " Guarantor's Liability." posf. Art. VT. Div. VTT. Dkmvery. — '• It has often be« n ilecided. that the assignment ftransfer] of a note is not comph-te without a delivery, and that where a promissory note is found in the hands of one who has nuule an indorsement thereon, which, if accompanied by delivery, would have amounted to an assignment ftransferl, the presumption will be that the a.ssignment was never completed, and that he may, even after suit brought, strike out such indorsement." Wul.schner v. Hells, 87 Infl. 71. 74. .\ccorTiAn[.E iNSTRfMKNT. - The indorsement and delivery of a non m»gotiabIe nofp does not ( indejwndenf of sfntufe) authorize the holder to bring an action in his own name, and the holder is subject to all defenses that might have been set up against his transferor. Robinson v. Hroirn, 4 Rlackf. (Ind.) \2S, Maule v. Crntrford, 14 ITun (N. Y.) 19.3; post, Art XVII, Div. I, 3. — H. ^hJU 266 NEGOTIATION. [ART. IV. §60 \ JOHNSON V. MITCHELL. [Jitporttd hrnin at p. 289.] § 60 BROWN V. CUKTISS. [Reportid herein at p. 4(57.1 II. Indorsement: form required. 1. Must be Written on Instrument or Allonge, § 61 HERRING v. WOODHULL. 29 Illinois, 92.— 1862. Breese. J. — The first point made in this case is, that the note was not properly indorsed, the transfer being on the face of the note. Literally, indorsement means a writing, in dorse, upon the back of tlie bill or note. But it is well established, that though such is its import, it may be on the face of the bill,' and numerous indorsements may be made on a separate paper, called an allonge. (Chit, on Bills, 227; Yarhorough v. Bank of England, 16 East, 12; Rex v. Bigg, 1 Strange, 18; Story on Prom. Notes, § 121 ; Cnhson v. Powell, 6 Howard [Miss.] 60.) And any form is sufficient which manifests an intention to trans- fer the note. {Morris v. Bird, 11 Mass. 436.)- § 61 FOLGER V. CHASE. IS Pickering (Ma.ss.) 63. — 1836. Action on three promissory notes. Wilde, J., delivered the opinion of the Court. * * * The last objection is, that the indorsement on one of the notes was not made on the back of the original note, and therefore amounted only to an equitable transfer. The indorsement was made on a paper attached to the back of the note by a wafer, and it had been before thus attached for the purpose of entering thereon iiidorsenienis of pnyments, the back of the original note having been before covered witli indorse- ments : and several payments had been indorsed on the attached paper, 1 Accord: Younrt v. Clnrrr. 3 -Tur. N. S. 637; TJaines v. Dubois, 30 N. J. L. 25P; f^hnirr v. f^ullii-^in. lOfi Pal. 20«. Sep Ncfi. Tnst. L., § 36. subsec. 6. — H. i See Germanta Nat. Bank v. Mariner, 129 Wis. 544. ante, p. , — C, II.] INDOESEMENTS FORM. 267 before the note was transferred by indorsement to the plaintiff. This paper thus attached had become a part of the note, and no good reason can be given why an indorsement made thereon should not be held a valid and legal transfer. Thp^j^jll*^^^^" '"j ^^^^^ Sllfh an indorsemen t is notsaflcti^ pcd by e ua^om; but we think it is sup^ rted by th e rea- sons on which the customw^[^~^«gifratty tounHed. Bills of excliange and promissory notes were indorsed on the back of the bills and notes, because it was a convenient mode of making the transfer, and in order that the evidence thereof might accompany the note. Such an indorse- ment as this will rarely happen, and no authority to support it could reasonably be expected ; but there is no authority against it. If a person write his name on a blank paper, to be used as an indorse- ment of a note to be written on the other side, and it be filled up as intended, the party would be held liable as indorser of the note, although such indorsements are infrequent, and are not according to the customary form of making a transfer; but they have been held to be within the reason of the custom, and are supported by principle. (Bayley on Bills, 92 ; Violett v. Patton, 5 Cranch. 142.)=' So in the present case, as there is no authority against the validity of the indorsement, we think we shall violate no principle in iiolding it to be a legal transfer of the note. Judgment for the plaintiffs. 2. Must be of Entire Instrument, ^62 ITUOnES r. KTDDELL. 2 Bay (So. Cab.). 324.— 1801. Tins was an action against defendant as indorser on a note of hand, in which there was a verdict for defendant. The note of hand in question was given by David Bush, of Camden, to the defendant Kiddell, for 473?. sterling. Kiddell afterwards made the following indorsement, viz: — " I assign over to Hudson Hughes, the sum of l,f>30 dollars and 50 cents, 88 part of this note of hand. (Signed.) Benjamin Kiddell." Afterwards ho marlo another indorsement, and assigned over the reflidue of said note [to Hugfies. | (Signed) Benjamin Kidrlell. The court, after hearing the arguments,* refused to grant a new trial, on the grounfi tlint jin indorsetuent for part of a note or hill is » Rpe Nrg. InBt. L.. S 33. ante. — H. * foiinspl for (IrfoTi'Iant argnofi thnt " \i it wrro allowatilr for a man to indoroo for part, ho migtit inflorsc oni' liiinrlroH to A. anntluT tmndrpfl to B, and BO on; and by that nu-ans. dfffndant might bocomr liable to twfntv dif- 268 NEGOTIATION. [ART. IV. SO, then two vitioi Rule discharged. bad. (Ijex Mercatoria, 4-15 ('arth. KUJ.) And if so, then two vitious indorsements lun never loiistituk' a ^ood one. in. Indorsement: kinds of. I, Special Indorsement. §64 REAMER v. BELL. 79 Pennsylvania State, 292. — 1875. Action by holder against makers of a note payable " to the order of William Dilworth, Jr.," and indorsed: " Wni. Dilworth, Jr.— Pay R. MeCurdy, Cash." Defense, want of title in holder (Bell). Judg- ment for plaintiff. ^Ik. Justice Paxson delivered the opinion of the Court. We think the affidavit of defense filed in this case, while not as specific as it might b.ave been, was ncvertlieless sulTicicnt to prevent judgment. Tbe copy of tlie note filed by tlie plaintiff below goes to sustain tbe denial of his title contained in tbe affidavit referred to. It is indorsed " Wm. Dilwortb, Jr.; pay R. McCurdy, Cash." This is a special indorsement, and upon its face conveys no title to the plaintiff below. The further allegation that the note in controversy was procured by false and fraudulent representations, and that the consideration thereof has failed, coupled witli tbe denial of said plaintiff's title, was sufficient to put the latter npon proof that be is a hnna pdp bolder.* Judgment reversed and a procedendo awarded." 2. Blank Tnooksfment. § 64 CURTIS V. SPRAGUE. [Reported herein at p. Hflf.V §65 Evans v. Gee, 11 Peters (U. S.) 80.— 1837. Bill payable "to the order of Thomas Evans " was indorsed in blank by payee (defend- ferent actions on the same bill. For these reasons, and to guard against this monstrous inconvenience, the law of merchants has established it as a rule, that a bill cnnnot be endorsed for part. Cunn. on Bills. .57." To the snmo effect, see T.inrfitay V. Price, 23 Tex. 280, bottom of p. 282. — C. » See Nep. Inst. L., § 98. post. — H. • See also Lavrence v. Fiissrll, 77 Pa. St. 400. — IT. 7"T see no difTerence between a'note indorsed in blnnk and one payable to bearer. They both po by delivery, and possession proves property in both cases." Lord Mansfield in Peacock v. Rhodes, 2 Doug. 633. — H. III. 2.] BLANK INDOKSEMENT. 269 ant). Plaintiff became a holder in due course and wrote over the in- dorsement, "Pay to Sterling IT. Gee." Mr. Justice Wayne: — As regards the right of a bona fide holder of a bill to write over a blank indorsement to whom the bill shall be paid, at any time before or after the institution of a suit against the indorser, it has long been the settled doctrine in the English and American courts ; and the holder by writing such direction over a blank indorsement, ordering the money to be paid to particular persons, does not become an in- dorser. {Eden v. East India Co., 2 Burr. 1216; Com. 311 ; Str. 557; Vincent v. Halock, 1 Camp. 6; Smith v. Clarke, Peake, 225.)' §65 BELDEN v. HANN. 61 Iowa. 42. — 1883. Question certified by Circuit Court : Whether a holder of a note under a blank indorsement may write above the indorsement " guar- antee payment at maturity to bearer," and proceed against the in- dorser upon the guaranty without presentment, demand and notice. RoTHRocK, J. * * * It is well understood that the blank indorsement of a promissory note by the payee creates the liability of an indorser as understood in the law merchant. Such indorsement creates the same liabihty from the indorser to the indorsee, as if it were in full. (Bean v. Briggf! cf- Felthouser, 1 Iowa, 488.)^ But the contract of indorsement is very diflferent from a contract of guaranty, and the holder of a note with a blank indorsement by the payee has no legal right to change the obligation of the indorser,^;^" by writing a contract of guaranty over the naiiio of (lie payee, " with^A^'^^^-.t^^ out thf knowledge or ronsent of the payee." . . What the rights of the parties may be to show by pnrol ilio renl ^^*"'^.] RESTBICTIVE INDORSEMENT. 273 in eti'eet a new draft payable to Thacher only, and not negotiable, so tliat no action could be maintained upon it in the name of the plain- tiff. In this they were sustained by the court, and the plaintiff was iionsuited. The other ol)je( tious taken by the defendants on their motion for !i nonsuit were not considered by the court below, and under the circumstances of the case cannot be noticed on this appeal : so that the only thJDi: for us to consider is, whether the indorsement of a note made after due. differs from one made before maturity in respect to its neifotiability? ^ It was conceded on the arirument that no express authority could be found sustaining the distinction upon which the decision of the superior court was based ; but it was urged that the defense could be sustained upon the principle that a dishonored note loses its mer- cantile character, and its indorsement becomes an original contract which must be made expressly negotiable in terms, or it could not be held to possess the character of negotiability. There is unques- tionably a difference between the indorsement of a note after due iiiid one while it is running to maturity, but this relates only to a single })oint arising fruiii the necessity of the case, to wit, the time of payment, which, in the latter indorsement, is fixed at a future day by the express agreement of the parties, while in the former, it is declared by law to be within a reasonal)le time, upon demand. I>ut in all other respects the contract is the same as an indorsement in the usual course of trade; and it is difficult to perceive how the Fingle difference referred to can at all affect the negotiability of the indorsement. A bill or note does not lose its negotiable character by being dishonored. T-iL Liii;Mnnll y npfr otiable, it may still pass from hand to ha nd ad i ii^lniLuiu until paid !)y the drawer. Moreover, the u dorser after mnt i|rity ^rite^ in thp camp fnr^|^ nnd is bound only u] the same conrlition '' ' ;ind npnn the drawer nnd notice o f no-^ ]iMynient as aTiyTrtf ; -i i-. Thus the |i;i|ht [neserves its mr'r- V cantile exU'li'iu'C and lelnifis the main attributes of a proper bill or iiotf, and (in iilates as such in the commercial communitv. Kxci'pt ions to a general imiIc affecting so important and numerous a ( la.'-s of transactions as the one under consideration must be pro- ductive of great iiu onvenieiu'C, and will not be indulged except for urge?it reasons; and nothing has been made to ap[>eiir in the milmi- ment or seems to exist in the case, which warrants tlic comi in treating the ordinary indorsement of a dishonored bill or note as without the law merchant and not negotiable. While it was ques- tioned whether such a note was negotiable, and whether the indorser was chargeable except upon the usual condition of demiind and " Spp Ncg. Tiist. L., § 26, ante, and cases. — H. NBOOT. INBTntlMKNTS — 18 274 NEGOTIATION. [aRT. IV. notice, there was perhaps reason enough to sustain tlie decision of tlie court below. But :^inc•e both the note and its indorsement, by a long course of decisions, have been treated as within the law mer- chant in respect to their main alliihutes, the indorsement ought to be regarded as negotiable to the same e.\tent as an indorsement before maturity. The latter follows the nature of tlic original l)ill and is equally negotiable. {Edie v. East India Co., 2 Burr. 1216; Milford v. Walco'tt. 1 Ld. Raym. 574; AUwood v. HazeUon, 2 Bailey's S. C. R. 457; Bishop v. Dexter, 2 Conn. R 419; Berry v. Robinson, 9 John. 151.) The note in the present case M-as upon its face transferable, and its character in respect to negotiability could only have been changed by an indorsement containing express words of restriction. The defendant's indorsement was a full one, containing the name of the person in whose favor it was made, but omitting the words " or order," the legal effect of which was, nevertheless, to make the note payable to him or his order, and his indorsement therefore was effect- ual to transfer the note to the plaintiff. (Chitty on Bills, 136 ; Story on Prom. Notes, § 139.) I am of opinion that the judgment of the superior court should be reversed, and a new tri al aw arded. Judgment reversed. §66 CENTRAL RAILROAD 7'. FTRST NATIONAL BANK OF LYNCHBURC. 73 Georgia. 383. — 1884. Blandford, Justice. — The defendant in error brought its action for money had and received, against the plaintiff in error, alleging that plaintiff in error had received from one Mayer and Glauber a sum of money due on a draft of which the following is a copy: $276.85. Lynchburg. Va.. Feb. 17, 1881. Sixty days aftrr rl.ntp. pay to thp orflf-r of Allen W. Tally, Cnsliier, two hun- dred and sevpnty-six dollars and piwhty-fivp cents, with current rnte of exchantre on New York, value received, and charge the same to account of Hunter & Marshall. To S. Mayer & Ci.AunER, Albany. Georoia. fOn the h.nck of the draft were the following; indorsements: First]: Pay W. H. Patterson, cashier, or order, for collection for account of First National Bank, Lynchburg, Va. (Signed) Allen W. Tally, Cashier. [Second 1 : " Pay to .John A. Davis, agent,^ or order, for account of Citizens' P>ank of Georgia, Atlanta, Ga. (Signed) W. H. Patterson, Cashier." T Davis was the agent of the railroad company, the plaintiff in error. — C. III. 3.] RESTRICTIVE INDORSEMENT. 275 The evidence showed that the plaintiff in error had collected this draft; upon demand being made on plaintiff in error for the pay- ment of the money thus collected by the attorney for defendant in error, payment was refused; the railroad claimed that the Citizens' Bank was indebted to it, and that they had given that bank credit for the amount thus collected. It was further shown that the Citi- zens' Bank had failed before the money had been collected by the Central Kailroad and Banking Company. The court below held that the Central Railroad and Banking Company was liable to the, defendant in error, and this ruling is assigned as error. 1. The qualified indorsements on the back of this draft by the cashier of The First National Bank of Lynchburg, whereby he directs payment to be made to W. H. Patterson, cashier of the Citizens' Bank, or order, for collection for account of First National Bank, Lynch- burg, Va., was nothing more nor less than a warrant of attorney authorizing the indorsee to collect the amount due on the draft for the indorser. It conveyed no title to the paper, but was notice to all persons subsequently dealing with this paper, that defendant in error had not parted with the title or intended to transfer the ownership of the proceeds to another. The legal import and effect of the in- dorsement was to notify the plaintiff in frror that the defendant in error was the owf>^r- nf flif drnft, jind tliat iln- Cifizons' Bank was inerelyTfs~agi'nf tV,i- ( ulKi tmn : that a (nialifinl lith- (nv thi< jmrpose only, and no i^*' • '. •,;i, n, tlu' Citizens' Pjank. (.Moi'^^e on Banks, .t2 ; Swift V. Tysnn. If, !'>(> I-. 1 ;'l Howard, 2.34; 3 Penn. Stat. 318; 22 Md. 148; i Wall. iGfl; 102 U. S. 658; 1 Bond, 38D ; 11 R. I. 110; 51 Iowa, 15.)® 2. But it is insisted that there was no privity between these parties respecting the transaction, so as to authorize this action. WJjen the plaintiff in error received from Mayer & Clauber the money due~7)Tl the draft, titfiy jieceived^som cthmg which belonged to the ilcfpridrrnt^ in error; it was their money, and this act put them in privity for the purpose of this action. Where one person is in possession of money whicli of right and in equity belongs to another, this action inay be maintained for its recovery. The law implies a promise on the part of any person who has received the money of another to pay that person on demand. Tlie reception of money by one and the demand by the other makes all the [)rivity that is necessary to maintain this action. And we arc clear that plaintiff in error had no right to retain the • Arrorfl : f'ommrrrinl Rank v. ArmHlrnnq. 14fi W S. .TO; Rutrhers'. rtr.. Rank V. fJuhholl, 117 N. Y. 384; Freeman's Bank v. National Tube Works, 151 Mass. 413. — H. 2iB NiaiOTlAl'lON. (a1{T. iV. proii'ods ol' llurf ilral't as pavnu'iit of or sci'urity i'or any balance which the Citizens' Bunk might be diir it. Judgment affirmed.' § 66 BROOK, OLIPriANT & CO. r. VANNEST. 58 Nkw JiiiKsKY Law, 102. — 18t)5. Van Syckel, J. — 'IMiis is an notion to rccovor th(? amount due upon the following promissory note: $4,986.25. Trenton. N. J.. Jani/. .SO. 1891. Four iiioiitlis after date, we jironiise to pay to tlie order of ourselves, forty- nine hundred and eiglity-six •2.'j/100 dollars at tlie oflice of VVni. 15. Brook & Co., at 40 .lolin St., New York City, value reeeived. [ Indorsed! 15rook, Oliphant & Co. BkOOK. Ol.lPHANT & Co. For discount and credit of the Central Rubber Selling Co. John H. Britton, Treas. Tills note was executed by ilrook, one of the firm of Brook, Oli- phant & Company, in favor of said firm, and passed to the Central Rubber Company, without consideration. It was discounted in New York for the Central Rubber Company, and was taken up by that company before it was due and put in its safe at Trenton, in this State. The manager of the Contra! Rubber Company, after that and before the maturity of the note, passed it to Vannest, wlio is the plaintiff below. The makers of the note set up in defense in the trial court — first, that the plaintiff below acquired no legal title to the note under the special indorsement of the treasurer of the Central Rubber Company; secondhj, that the plaintiff below was not a hnna fide holder for value. ^ It is undoubtedly true that if the note had fallen into the hands of anyone before it had reached the bank which discounted it, he could not have acquired or passed to another any valid title to it. The special indorsement would have been notice of an infirmity in the holder's title. 9 If a bill or note be indorsed without restriction by the payee and deposited in bank for collection and the banker pledf^e or sell it, tlie pledgee or buyer gets poor! title. Crtflins v. Martin. 1 Rn^anquet & Puller. fi48 ; Ayer v. Tvlden, 15 Gray (Mass.) 178: Hank v. Vanrlnhorst. 32 N. Y. 553. But if the bill or note be restrictively indorsed " for collection " or "on account of A." (indorser), or B. (a third person), the pledgee or buyer gets no title other than that lield by the bank as agent or trustee. Trr.vttel v. Rarandon, 8 Taunton, 100; Lloyd v. Siqourney, 5 Bingham. 525: Fimt N. B. of Clarion v. Grccpfi, 70 Pa. St. 384 (semblt;). — H. » The portion of the opinion relating to this second point is omitted. — C. III. 3.] RESTRiCTiVE INDOESEMENT. 2'^'t But after that indorsement had served its purpose, and the note came back to the Central Rubber Company, that company, by pass- ing it to Vannest, gave him as good a title as if the indorsement had not been special but general. * * * Tliere is no error in the proceedings below, and, therefore, the judgment should be affirmed.^ § 66 HOOK V. PRATT. 78 New York. 371.— 1879. This action was brought by plaintiff, as trustee of Charles H. Hook, against defendants, as executors of the will of James P. Haskin, deceased, upon a draft signed and indorsed by said testator, of which the following is a copy : $5.0n0. Syracuse, N. Y., September 13, 1872. Orrin WELCir. Treasurer Morris Run Coal Co. Pay to the order of myself, one year after date, five thousand dollars, for value received. (Signed) J. P. Haskin. [Indor.sed] Pay to the order of Mrs. Mary Hook, 35 King, for the benefit of her son Charlie. (Signed) J. P. Haskin. Defendants waived demand upon the drawee and notice of protest. Upon the trial defendants' counsel moved for a nonsuit, in sub- stance, upon the ground that the indorsement was restrictive and did not import a consideration, hut imported a gift. The motion was denied and said counsel excepted. R.\p.\T,LO. J. — Tlie point mainly relied upon by the appellant is tliat the draft and indorsement upon wliich this action is brought do not on their face import a consideration.' The draft was drawn by the defendants' testator upon llie treasurer of an incorporated com- pany, payabh; to tlie drawer's own order and puipoited to l)e for 2 In Moore v. First Nat. Bank, 38 Colo. 336 (quoting the headnote), "a note, after liaving been indorsed to a bani<, was indorsed by tlie bank to its president for cf-lleetion, wlio later re indorsed it to the bank witlioiit reeourse; nnd ttie bitter, without striking out its indorsement to the |)resirh'nt, or adding further indorsement, transferred the nf>te by delivery to pl.iintiir. 'Ilie indorse- ment was not bft by mistake, acciih-nt, or oversight. Held, that the bank is estopped to deny its liability, regardless of whi'tlu-r the re issue was before or after maturity; and tliat such indorsement passed the legal title, fixed the indorser's liability, and nutlK)ri7e!ow it was said that " Tlu- only question in this case is whether the paper sued on inifiorts a consideratirm. in view of the restrictive character of the indorsement, or if it does not, whetlier a consideration waa proved." 14 Hun, 3ii6, 397. — C. o;g NEGOTIATION. [aKT. IV. value received. It was iiulorseil by the tlniwer by a special indorse- ment " Pay to the order of Mrs. Mary Hook, for the benefit of her son rharlie." The appellant claims that this is one of those restrictive indorsements wliich do not purport to be made for a consideration, and do not entitle tiio indorsee to maintain an action on tlie hill, without proving a considi'iation. As a o-enerai rule an indorsement of a negotiable bill which pur- ports to jiass the title {o the l)ill to the indorsee, imports a considera- tion, and the burden of proving want of consideration rests upon the party allciiinir it. The restrictive indorsements which are held to negative the presumption of a consideration are such as indicate that they are not intended to pass the title, but merely to enable the indorsee to collect for the benefit of the indorser, such as indorse- ments " for collection '* or others showing that the indorser is entitled to the proceeds. These create merely an agency, and negative the presumption of the transfer of the bill to the indorsee for a valuable consideration. But where the indorsement purports to pass the title to the bill therein from the indorser, and divest him of all beneficial interest, a consideration for such transfer is presumed. All the cases cited by the counsel for the appellant rest upon these principles. The cita- tion from 3 Kent Com. 92, states the principle to be that when the indorsement is a mere authority to receive the money for the use or according to the directions of the indorser, it is evidence that the indorsee did not give a valuable consideration for it and is not the absolute owner. This accords with the statement of the principle by Wilmot, J., in Edie v. E. India Co. (2 Burr. 1227). So an indorse- ment "Pay to S. W., or order, for our use." (Sigovrney v. Lloyd, 8 B. & C. 622; s. c. 3 Y. & J. 220), was held to create a mere agency, and the addition even of the words " value received " to such an indorsement has been held not to vary its effect. (Wilson v. Holmes, 5 Mass. .543.) Tn Edie v. East India Co. (2 Burr. 1221), the examples of restrictive indorsements put by way of illustration are, " Pay to my steward and no other person," or "pay to my servant for my use." These show that there was no intention to pass the title to the bill ; and the same effect has been given to an indorsement, " Pay to P. only." It was held that these words indicated that the indorsee was agent only, and paid no consideration for the bill, as a purchaser w^ould not have accepted such an indorsement. (Power w. Finnic, 4 Call [Va.], 411). But an indorsement to one person for the use or benefit of another, affords no such indication. The indorser parts with his whole title to the bill, and the presumption is that he does so for a considera- tion. The only effect of such an indorsement, by way of restriction, ia to give notice of the rights of the beneficiary named in the indorse- III. 3.] BESTBICTIVE INDORSEMENT. 279 nient, and protect him against a misappropriation.* Wl^eu a bill is indorsed "' Pay to A. or order i'or the use of B.," A. cannot pass the bill off for his own debt, but he can by indorsing it transfer the title, and will hold tlie proceeds for the benefit of B., and be accountable to him for them. {Evans v. Cramlingioii, Carth. 5, affirmed in the Exchequer Chamber, 2 Vent. 309.) lu Treuttel v. Barandoti (8 Taunt. 100), cited by the appellants, drafts payable to the drawer's own order were indorsed by him to De Eoure & Co., or order, " for the account of Treuttel & Wurz." It appeared that De Roure & Co. were the agents of Treuttel & Wurz, and the latter were held entitled to maintain trover for the drafts against a party to whom De Roure & Co. had plf'dired them for their own debt. There is nothing in this case to sustain the proposition that a draft thus drawn and indorsed does not import a consideration, or that the indorsee could not main- tain an action upon it against the drawer and indorser without proving a consideration. The effect of the special indorsement was simply to give notice of the interest of Treuttel & Wurz, and prevent De Roure & Co. from appropriating the drafts to their own use. Blaine v. Houine (11 Rh. I. 119), is to the same point. In the present case the indorsement did not purport to restrain the indorsee from negotiating the draft, for it was " Pay to the order of Mrs. Mary Hook " for the benefit of her son Charlie. She was con- stituted trustee of her son and held the legal title. (3 Kent's Com. SO.) The indorsement gave notice of the trust, so that if she had passed it off for hor own debt, or in any other manner indicating that the tran.sfer was in violation of the trust, her transferee would take it sultject to the trust, but there was nothing reserved to the drawer and indorser. He retained no interest in it. The presumption is that the draft was drawn and indorsed l)y him for a consideration receivpd either from thn indorseo or the beneficiary. If the youth of the beneficiary should be d(vmed to afford a presumption that no consideration was paid by him. Ilm presumption would be that it emanated from his mother. The facts ay her. There is nothing illegal in an undertaking by a putative father to support his illegiti- mate cliild, or to pay a sum of money in consideration of such sup- port being fiirniKlicd by another, though it be the mother of the child, if BUfh was the consideration of this obligation, and it was furnished by Mrs. Hook, she was at liberty to take it. payable to herself in her own right, or for the benefit of her child. (Iliclcs v. Gregory, 8 C. B. 378 ; Smith v. liorhe, 6 C. B. [N. S.] 233 ; Nichole v. Allen, 3 C. & P. * Neg. Inst. L., § fll. post. — H. 280 NKuuriATioN. [akt. IV. 3t!; Ji'iniintja v. Ihuivn, H Mirs. &, \\. 49G ; Knowlman v. Blueit, 9 L. K. LExch.Jl, 307; Liaiiu v. Winihrup, I J. V\\. 3;57, :{3S.) Tlio jud^inout slioulii be allirnied.'^ §67 SMITH V. BAYER. 46 Oregon, 143. — 1905. This is an action on a promissory note for $290, executed and delivered by the defendants to the Concordia Loan & Trust Company of Kansas City, Mo., on January 30, 1896, due on or before August 1st following. The complaint alleges the execution of the note, its indorsement to the plaiutiir before maturity, tiie making of certain payments thereon by defendants, and prays judgment against them for the balance. The answer admits the genuineness of the note, denies that it was indorsed to the plaintiff before maturity at all, and aflirmativoly alleges that it remained the property of the payee named tlierein until after maturity, when it was transferred to the Fidelity Trust Company, and that thereafter the defendants paid the note to the trust company and satisfied it in full. The reply denies the allega- tions of the answer, and affirmatively pleads that at all the times men- tioned the plaintiff was and now is the owner in his own right of two-sevenths of the note, and since the 21st day of .July, 189(i, has been and now is the owner of the remaining five-sevenths for collection. Upon the trial plaintiff produced the note, with an indorsement thereon as follows: " Pay to tlie order of Milton \V. Smith for collec- tion and return to Concordia Loan & Trust Company, A. T). Kider, treasurer, 0. K. F. Amelung." He testified that he received the note in due course of mail from the loan and trust company, inclosed in a letter which the witness produced, and whicli stated, in substance, that the note was remitted for collection. ="= * * The note was then admitted in evidence over defendants' objection on the ground that the indorsement did not transfer such title to the plaintiff as would sup- port an action thereon in his own name, and because the genuineness of the indorsement had not been sufficiently proved.* The witness was also permitted to testify, over defendants' objection and exception, that he was in fact the owner in his own right of two-sevenths of the note, and the court instructed the jury that any settlement made by the defendants with the payee or owaov of the note after the indorse- ment thereof to the plaintiff would not be a defense against the 5 WTipther the indorsement " pay to A. B. trustee," is restrictive, see dis- cussion of instruments payable "to A. B. trustee," post, p. 304. — H. • That part of the case relating to the genuineness of the indorsement is omitted. — C. III. 3.] RESTRICTIVE INDORSEMENT. 281 plaintiffs two-sevenths interest therein, although it would be such defense against the otlicr fivc-scvontlis. The verdict and judgment were in favor of the ])laintifT, and the defendants appeal. Be.an, J. * * * The only ]:oints of real importance on this appeal are: (1) Whether the indorsement, being on its face "for col- lection and return " to the payee, vested plaintiff with such a title as will enable him to maintain an aclion thcroon in his own name; and, if so, (2) whetiior the court erred in admitting parol testimony tend- ing to show that plaintiff was in fact the owner of two-sevenths of the note, and in instructing the jury that, if such was the case, any settlement with the payee or assignee subsequent to the date of the indorsement to plaintiff would be no defense as against plaintiff's two-sevenths. The indorsement of a promissory note by the payee with the words " for collection," or the like, is not strictly a contract of indorsement, but rather the creation of a power, the indorsee being the mere agent of the indorser to receive and enforce payment for his use. The title to the note and the proceeds thereof remain in the payee, and he may maintain suitable actions and proceedings to enforce his right. White V. Xniionnl Bnnl-. 102 U. S. 658; Commercial BnnJr of Pennsylvania V. Armstrong, 148 U. S. 50; Sweneij v. Easter, 1 Wall. lOfi; ]yiJJiams, Deacon tf- Co. v. Jones, 77 Ala. 2fl4 ; People's Banh of Lewishurg v. Jefferson County Savings Bank, 106 Ala. 524 ; Central Railroad v. First National Bank of Lynrlihurg, Virginia, 73 Ga. 383. There is, in the absence of a statute, some conflict in the decisions as to whether such an indorsee can sue in his own name. The weight of authority seems to be in favor of his right to do so. 4 Am. & Rng. Kncy. Law (2d ed.), 274; Freeman v. Exchange Bank, 87 Ga. 45; Jioherts v. Parrish , 17 Or. 583; Falconio v. Larsen. 31 Or. 137; Selover, Bank Collections, § 28. And it is now so provided hy statute in this state. H. &. ('. (!omp. § 4439;" Selover, Negotiable Instniments Law, § 155; Crawford, Neg. Inst. Law, § 67. We are therefore of the opinion that the present action was rightfully brought in the name of the plaintiir. It was open, however, as against him, to all defenses which could have been made if the notes had n'maincd in the hands of the indorser^ and the action bad been brought by it. Wilson v. Tolson, 79 Oa. 137, 3 S. E. 900; Lrary v. Blancharrl, AH Me. 269. The indorsement did not pass the title, nor did it deprive the defendants of any defense they may otlierwise have against the note. Tt merely created the plain- tiff the agent of the f)ayee for collection with the right to sue in his own name. The plain meaning of such an indorsement, as said by Mr. Justice MlT.LEn (White v. National Bank, 102 TT. S. 658, 26 L. Ed. 250), is that the maker of the note " is to pay it to the indorsee • N. Y., i «7. — C. 28V* NEGOTIATION. [aBT. IV. for tho use of tho iiuiorsor. 'riu> iiidoisee is to receive it on account of tlio imiorsor. It ilofs not iiiir|iort to transfer the title of the paper or the ownership of llie inoiu'v when reeeived. lioth these remain, by the reasonable and almost necessary meaning of the language, in the indorser." Such being the ellVct of tho restrictive indorsement and the char- acter of the title a(i|iiiie(l hy the plaintiff by reason thereof, it neces- sarily follows that the court was in error in admitting evidence to contradit't the contract of indorsement by showing that the note was not transferred to the plaintitf for collection as shown on its face, but that he actually owned two-sevenths thereof in his own right, and in instructing the jury that a settlement made with the payee after the indorsement to plaintitf would Ije no defense against plaintiff's two- sevenths. The contract of indorsement is in writing. The terms thereof are plain and unambiguous, and parol evidence is not admis- sible to vary or contradict it. White v. National Bank, 102 U. S. 658, 26 L. Ed. 250; Lcary v. Blanchard, 48 Me. 269; Howe v. Taylor, 9 Or. 288. The plaintiff's action is based on the indorsement, and not on any interest he may have in the note. He is made by the indorsement the mere agent of tlie payee for its collection. The defendants' obligation, notwithstanding the indorsement, is to the payee or subsequent owner of the note, and not to the plaintiff. If they settled and paid the note to the payee or assignee, such settlement is a complete defense to an action thereon by plaintiff as a mere agent for collection. It mav be suggested that, because the jury found a verdict in favor of plaintiff for the entire amount sued for, they must have found that the settlement alleged as a defense was never made, and therefore the error of the court in charging the jury in relation thereto was harmless. The ruling of the court upon this point and its instructions to the jury injected into the case an issue not proper to be tried, the result of which was to confuse and mislead the jury, and we do not think it can be said that the error was harmless. From these views it follows that the judgment of the court below must be reversed, and a new trial ordered. Many of the other ques- tions argued in the briefs will probably not arise on a retrial, and need not, therefore, be noticed at this time. § 67 Bleckley, C. J., in FREEMAN v. EXCHANGE BANK. 87 Georgia, 45. — 1891. 1. An indorsement for collection, or the like, is not a contract of indorsement, but the creation of a power, the indorsee being a mere agent to receive or enforce payment for the indorser's use. {Central III. 3.] RESTRICTIVE INDORSEMENT. 283 Railroad v. First National Bank, 73 Ga. 383; Tiedeman, Com. Pap., § 268; 1 Danifl, Xeg. Inst., § G98-698(d) ; 2 Randolph, Com. Pap., § 724-5-6-7, 1000; 1 Morse Banks, § 217; 2 Id. §§ 5; and, accompanied as it was in the present case with proof tiiat the plaintilf had become the owner of the note by purchase before it became due, established a conclusive I'ight to recover against the defendant. ensign in any regiment of the line, between the 1st and tiio ()4th, if within two montlis from this date." In this form the hill was accepted liy defendants, who subsequently paid the bill to E., a remote indorsee of ,\. The payee's name did not appear in the ' Gazette,' and he brought an action against the ac- ceptor. Held: plaintiff could recover. It is the rule of this case tha'. h changed by § 69 of the Neg. Inst. Law. A conditional in7//. 1.5 Wend. ( N. Y.) 362. The indorsee is a trustee for the conditional indorser if the condition is not fulfilled. — H. [" The payee indorses to A., specifying in the indorsement tliat it is upon the express condition precedent that the indorsee shall within two days deliver to indorser a certain horse. The condition is not fulfilled. .At maturity tiie maker pays the indorsee. At common law the maker's payment would not he availing, and the indorser could collect from him. Robertson v. lOnsiru/ton, 4. Taunt. 31. The section changes this and protects the maker. The indorser must look to the indorsee for redress." Professor L. M. Greeley in 2 111. Law Rev., at p. 151. — C] IV.] indorsement: METHODS AND EFFECT. 289 The indorsement of a third person, directing the payment of the note to be made to the order of anotlier, did not change the contract of the promisor, or enable him to set up in defense that the plaintiff's title was imperfect, merely because he had not obtained the signature of the person to whom some intermediate holder had ordered the note-' to be paid. {Wilbour v. Turner, 5 Pick. 52G; Waynam v. Bend, 1 Camp. 175; Story on Notes, § 132.) Exceptions overruled. §70 JOHNSON i;. MITCHELL. 50 Texas, 212. — 1878. The facts are stated in the opinion. Gould, Associ.ate Justice. — This suit was brought by B. F. Mitchell against appellants. W. L. Johnson and C. R. Bedford, the makers of a promissory note, payable January 1, 1873, to J. W. Crabtree. or bearer, and against Crabtree, who had indorsed the note as follows: "I hereby assign the within note to' S. L. Gilbert for, value received, and guarantee the solvency of the makers of said note, 11th of September, 1873. J. W. Crabtree." The averments of Mitchell's petition as to his right or title to.. the instrument sued on were, that he was the legal holder and owner ^if^ the note; that Crabtree sold and transferred it to Gilbert, setting' out the assignment as indorsed, and that, after said transfer, he,' (plaintiff) purchased the note from Gilbert, who transferred it to him by delivery. The only evidence of ownership introduced by Mitchell was the note and indorsement. The defendants had all filed a general denial, but produced no evidence. A jury being waived, the court gave judgment against Johnson and Bedford as principals and Crabtree as guarantee. Johnson and Bedford asked for a new trial, claiming that the evidence was insufTicient to support the judg- ment ; and their motion being overruled, they alone have appealed. It is insisted, on their part, that the production of tlie note, trans- ferred as it was to Gilbert, did not establish that Miichell was the legal holder or owner. As Crabtree does not eonifilain. the sole question is ns to the legal effect of possession of a note payable to bearer and in ; Story on I^IIIh, § (U); )i I'ars. on Notes and Bills, p. 1!), note w; P'dws. on Bills and Notes, 131, 269; 1 Dan'l. on Nes^; Inst. § 693; Grccneaux v. Wheeler, 6 Tex, 522; Wethcred v. Smith, 9 Tex. 625; Whithed v. McAdams, 18 Tex. 553; A^oss V. .s'//m7/i. 19 Tox, 173.) Lord Manstield said, in Peacock v. Rhodes: " I see no difference between a note indorsed in blank and one payable to bearer ;" and Chancellor Kent said, in Convoy v. Warren: "A note indorsed in blank and one payable to bearer are of the same nature. They both go by delivery, and possession passes property in both cases." (2 Doug. 636; 3 Johns. Cases, 263.) So " a note payable to the maker's order becomes, in legal effect, when indorsed in blank, a note payable to bearer." (Byles on Bills, ch. 7, p. 68; Brown v. De Winton, 6 M. G. & S. [60 Eng. Com. Law], 336.) From these authorities, we conclude that Mitchell's possession was at least as satisfactory evidence of his ownership as it would have been had the note been payable to Crabtree or order, indorsed in blank by Crabtree, and then indorsed in full by Gilbert and someone other than Mitchell. The negotiability of a note payable to bearer is certainly not further restrained by an indorsement in full than would be, by the same indorsement, the negotiability of a note payable to order and indorsed in blank by the payee. But the rule is well settled, that " if a bill be once indorsed in blank, though afterwards indorsed in full, it will still, as against the drawer, the payee, the acceptor, the blank indorser, and all indorsers before him, be payable to bearer, though as against the special indorser himself title must be made through his indorsee." (Byles on Bills [.5th ed.], 109; cited by Pollock in 2 Exch., infra; Chitty on Bills, 228, 230a ; 3 Kent, side p. 90; Story on Prom. Notes, § 139; 2 Pars, on Notes and Bills, 19, 26; Walher ei al. v. McDonald, 2 Exch. [Welsbv, H. & G.], 531 ; citing Smith v. Clark, 1 Peak. N. P. C. 295, and 1 Esp. \80; Mitchell v. Fuller, 15 Penn. 270; Tluie v. Bailey, 16 La. 213; Little v. O'Brien, 9 Mass. 423; Dugan v. The United States, 3 Wheat. 172; Edw.'s on Bills and Notes, 275; citing Dolfus v. Frosch, 1 Denio, 367; Savanah National Bank v. Ilaskins.) We conclude, then, that however it might have been as against Crabtree, on which point we express no opinion, as against the makers of the note, its production })y Mitchell was sufficient evidence of title. It may be objected that the safe transmission, by mail or other- wise, of notes and bills payable to bearer requires a different rule. The answer is. first, that such a consideration will not justify a departure bv the courts from established principles and precedents, second, that what is known as a " restrictive " indorsement stops the currency of negotiable paper. (Chitty on Bills, 232; Story on Prom. IV.] INDORSEMENT : METHODS AND EFFECT. 291 Notes, § 142, et seq.j 2 Pars, on Notes and Bills, 21 ; 1 Dan'l. on Neg. Inst., § 698.) Whilst we have disposed of the ease on the assumption that Crab- tree's transfer was equivalent to an indorsement in full to Gilbert or order, it is not intended to pass upon that question. Looking to the original nature of the note, which was that it should pass by delivery, and following what was long since said to be the settled rule, " that the assignment follows the nature of the thing assigned," it may be questioned whether that indorsement does not receive full effect by treating it as intended to secure Crabtree's liability as guarantor to Gilbert or bearer. (See Edie v. East India Co., 2 Burr. 1216; Lane v. Krekel, 22 Iowa, 400.) The judgment is affirmed. Affirmed. § 70 McKEEHAN, The Negotiable Instruments Law. [41 Am. Law Reg., N. S., pages 454-462.] Section 9 [N. Y., § 28], par. 1-5: "The instrument is payable to bearer (1) when it is expressed to be so payable; or (5) wlien the only or last indorsement is an indorse- ment in blank." Section 40 [N. Y., § 70], which is involved in the discussion of Section 9, par. 1-5, reads : " When an instrument, payable to bearer, is indorsed specially, it may nevertheless be further negotiated by delivery; but the person indorsing specially is liable as indorser to only such holders as make title through his indorsement." One or two preliminary observations may aid to a j)roper under- standing of the criticisms made of these sections. Blank indorsements were unknown to the early law of Bills and Notes, wliicb re(jiiired that the name of the indorsee should be con- tained in the indorsement. A practice later arose by which tlie payee often wrote only his own name on the back of ii bill, leaving a blank above his signature for the name <>f Hit- indorsee. Hence the term "blank indorsement." The bill being transferred in this condi- tion, the transferee or any subscfjnent holder has an implied authority " to write above the signature an order of payment to himself, or to bearer, or to anyone; to whom he may wish in turn to transfer the bill ; and the blank indorsement, when so filled up, takes effect by relation from the time of tlie original delivery by the indorser."* The trann- feree or any subsequent holder is the indorser's agent for tliis purpose. * Amea' Cases on " Bills and NoU-h," Vol. 2, p. 837. 292 MEGOTIATIOJ^: [Am\ IV. For a long tinio it was necessary to exercise this authority and fill out all the blank indorsements on a bill at or before trial. Gradually this last requirement was dispensed witli, and thus a bill payable to the order of A. — -with A.'s name written on the back (no indorsee being named) could be reeov«'red on by the holder/' Such instruments are eaid to be payable to bearer, find indeed they are so while the indorse- ment remains blank, but altbough the necessity of filling up a blank indorsement has been dispensed with, the right to do so has never been abridged, and tlie holder of a bill or note has to-day, as he always had, the right to till up any or all blank indorsements on the instrument and thus make it payable only to order. It is to be observed — and this is important — that these rules in no way violate the original tenor of the instrument. The maker has promised to pay "A or order " and A., by signing his name with a blank above it and handing it to B., authorizes B. or any subse(iuent holder to designate the person entitled to receive payment. Until', they do so designate him, the holder is the man entitled. Now, sup- pose B. indorses specially to C. or order, and then C. transfers the paper to D. by mere delivery. Should D. be allowed to sue the maker as on a note payable to bearer? No, for since the maker haff promised only to pay to A.'s order — and since A. has given B. or any holder authority to designate the one to whom the sum shall be paid — and since B. has designated that it shall l)e paid "to C. or order" — plainly no one who cannot trace title tlirough C. comes within the terms of the maker's promise. Tliat is the logical view,, amidl it is the view that the merchants and hankers adopted, i. e., a blank indorse- ment of a note payable to order is controlled by the subsequent special indorsement. But the courts held otlierwise. In the case of >Sniith v. CJnrl-e,^ decided in 1794, a bill originally payable to order, was indorsed in blank by the payee and was subsequently indorsed specially. Lord Kenyon held that the bill was payable to bearer as long as the first indorsement remained blank, and that the holder niisfht therefore strike out the special indorsement and recover as on a bill payable to bearer. Smith v. Claris has been generally followed both in Eng- land and America.'' This decision was op])osed to the view held by '■' This adflpfl a new tfrm to tlip inflorsfr's order, i. e., that until the blank was fillrd lip the instrumpnt should bn payable to bearer. 6 Peake, 22.5. Althouph in a case which arose some years earlier. Ancher V. fUink of Enfjla7}(l. 2 Douglas, p. 637 (1781). Lord Mansfield evidently afjreed with the understand inji of mercliants that a blank indorsement was controlled by a subsequent special indorsement. However, the exact point decided in Smith V. Clarke was nf)t involved in that case. T Walker v. Macdonald, 2 Wels. Hurl. & Gordon. 526 (1848); Hoiiie v. Bailetj. 16 La. 21.3 (1840); Xniional Bank v. Haskins, 101 Mass. 370 (1869); Eoury v. Eppinger, 34 Mich. 31 (1876); Watervliet Dank v. White, 1 Denio, IV.] iNDORSEMUNf : METliODS AND EFFECT. 29^ the business comtntinity, and so, in 1882, framers of the English act, in order " to bring the hnv into accordanee with the mercantile under- standing, by making a special indorsement control a previous indorse- ment in blank," ' provided in section 8, par. 3 : " A bill is payable to bearer which is expressed to be so payable, or on which the only or last indorsement is an indorsement in blank." The provisions of section 9 [N. Y., § 28], par. 1-5 of the Ameri- can act are the same as those of the English act and were inserted for the same reason. It is further to be observed that Smith v. Clarke and all of the cases which follow it are cases of instruments originally payable to order. None of these cases contains a syllable about instruments originally made payable to bearer. There is an important distinction between the two kinds of instruments. For reasons which I have referred to above, the custom of merchants, which has now been adopted by both the English and American acts, says that in the case of an instru- ment originally payable to order, a blank indorsement is controlled by a subsequent special indorsement, because in such a case the maker's promise embraces only those who make title through the special indorsement. But a note nriginnlhj payable to bearer is another mat- ter. Tt is a violation of the plain tenor of such a note to treat it as other than payable to bearer. That is the maker's absolute promise : — to pay the bearer. His promise cannot be qualified or changed in any way by a sultseqiient holder. The only efFoct of a special indorsement on snrh a note is that the intlorscr can be held only by those who make title through his indorsement.' This distinction between instruments originally payable to bearer and instruments originally payable to order and then indorsed in blank is preserved both in the Enc^lish and American acts. Tinder tioth acts, a note orifjinally payable to bearer and specially indorsed Miitinues payable to bearer, while an instrument oriirinally payable I order is payable to bearer only when the last indorsement is in i Section 48 fN. Y., § 78] : " The holder may at any time strike out any indorsement which is not necessary to his title. The indorser whose indorse- ment is struck out, and all indorsers, subsequent to him are thereby relieved from liability on the instrument." , » Story, Promissory Notes, § 208. • Smith V. Clarke, supra. IV.] INDORSEMENT : METHODS AND EFFECT. 295 Judge Brewster answers this criticism, however, in another way. lie first agrees with Professor Ames that E. (in the case supposed) ouglit to be allowed to strike out C.'s special indorsement, and then he tries to give him tliis right.* He first points to section 48, wdiich gives the right to strike out indorsements not necessary to title. Hut Professor Ames reminds him that section 48 confers this right only on holders and that E. is not a holder, for "holder" is defined in section 191 [N. Y., § 2] to mean " The payee or indorsee of a bill or note who is in possession of it, or the bearer thereof," and " bearer " is defined by the same section to mean " The person in possession of a bill or note which is payable to bearer." Both ignore the fact that in the case supposed C.'s indorsement is necessary to E.'s title. In order to give E. the right to sue the maker, Judge Brewster next refers to section 40, which provides inter alia that " When an instrument payable to bearer is indorsed specially, it may nevertheless be further negotiated by delivery." " This section," says Judge Brewster, " which authorizes a transfer by delivery seems to give the transferee the right to sue in his own name, otherwise the note would not be negotiated within the meaning of the act." But if section 40 applies to a note originally payable to order — then indorsed in blank and made payable to bearer — and then indorsed specially — if such an instrument may still be negoti- ated by delivery, then the rule of Smith v. Clarke is still in full force, and section 9, par. .'5, which was inserted to overthrow Switli v. Clarke is a nullity. That carries us to the next criticism. Professor Ames insists that section 40 completely nullifies section 9, par. 5, and that for this reason only may E. sue the maker in the case supposed. TTis position is that section 9, par. 5, was inserted to change the old rule that an instrument " payable to bearer (or in- florwd in blank)""' although afterwards specially indorsed, was still negotiable by delivery — that "then, in apparent forgetfulness of the effect of section 9, par. T)," section 40 was inserted providing that an instrument payable to bearer and indorsed speeiall} is still nego- tiable by dcdivery, the special indorsee being liable only to such as * Mr. Farroll answers Professor Anics lis follows: "In answer to this, it in necessary only to say tliat in most jiirisdij-tion^ he ninv lniiii.' suit in liis own name, beinjr the real party in interest." (The Negotiable Instrnniejits f.aw, by Jno. I.awrenee Karrell. Hrief of Phi Delta Phi, Vol. Ill, No. 2, First Quarter, H)01.) Hut the statutes whieh iiermit an ussignee to sue in his own name have elTeeted merely a i)rore(lural ehange. He is still an assignee merely and can !)« met by any defense arising out of the instrument whieh could be plendfd against the assignor. The (piestion is not in whose name shall K. bring suit (a minor point), but it is what right can E. as.s«>rt. '•'Ihese are Professor .Nnies' words; but if by " Payable to In-arer " he mean« orxf/innlly payable to tiearer, it is submitted that neither Smith v. ('larkr nor any of the cases whieh follow it ^av any thing altout such instruments. They are all cases of instruments oiiginully payable tu order. 29(5 NKGOTIATION. [aKT. IV. make title througli his indorsement, and tliat this section (-10) tlms clianjies the hiw back to its former state. Judge Brewster's answer is : " Section U) is chiimed to be repugnant to section 9, par. 5, but this is not so. Section 9, par. 5, declares a note to be payable to bearer when its last indorsement is in blank; 40 relates to a note when the last indorsetiieiil is special, and provides that it may then be transferred by delivery,'^ in order to cover cases of good faith where title is frequently passed in that way, by persons ignorant of mer- cantile usage.'' It is submitted that that is no answer, and for this reason. If a bill may be transferred by delivery, it is payable to bearer. Section 40, on Judge Brewster's reading, permits a bill whose last indorsement is special to be payable to bearer, yet section 9, par. 1-5 was inserted to permit only bills originally payable to bearer or whose last indorse- ment is in blank to be payable to bearer.'' I submit that in one way and one way only can these two sections be harmonized. If section 40 be interpreted as applying only to instruments originally payable to bearer, there can be no difficulty as to either section.* True, it reads merely " When an instrument payable to bearer is indorsed specially," etc., and there is no denying 6 The italics are the reviewer's. 7 Judge Brewster cites the following passage from the new Norton Horn Book by IVfr. TifTan_y, p. 110, to provp that section 40 and section 9, par. 5, are in harmony: "An instrument which is originally payable to bearer, or which has been indorsed in blank, though afterwards specially indorsed, is still pay- able to bearer; except as to the special indorser, wlio, on such an indorsement, after such an indorsement, is only liable on his indorsement to such parties as make title through it." It is submitted that the above tends to prove just the reverse, because if by section 40 an instrument originally payable to order, then indorsed in blank, and then specially inrotnissorv note: Detroit. Jaiuiari/ 1. IS.*??. Two years aftor date, T promise to pay to the order of Walter Chester, and Pease, Chester and Co.. one thousand and five hundred dollars, fur value received, at the Farmers and Mechanics' Bank of Michigan, with interest. (Signed) John Chester. [Indorsed:! Pf.a.se, Che.ster & Co. [and also] D. E. Jones (in blank). The declaration contained three counts, to the first of which there was a demurrer. This count states that one John Chester, on the 1st of January, 1S37. made his note payable to order of Walter Chester, and Pease, Chester & (,'o., and that Pease, Chester & Co., under tlieir partnership name, indorsed and delivered the said note to the plaintiff. John Chester, the maker, was a member of the firm of Pease, Cliester & Co. Demand of the note when due, and notice to the defendants, w-as proved. Walter Chester, one of the j)roniisees in the note, seems not to have indorsed it, and this is fatal to the right of the plaintiff. The interest of the promisees is joint in the note, and not being in partnership, they mu.st each transfer the note. (Cliitty on P)ills, 123; Tayl. 55; Car- vick V. Vickcry, Doug. G53 ; Jones v. Radford, 1 Camp. 83; 21 Eng. C. L. Rep. 41.) Only one-half of the note was transferred by the indorsement of Pease, Chester & Co., and this does not give a right to their or any subsequent assignee to sue on the note. Pecourse against the maker cannot thus be divided and suits multiplied. The plaintiff seeks by this action to recover Iho full amount of the note against the defend- ants, as indorsers. But as he holds but one-half of the note under the assignment, the indorsement, at most, can only be evidence of that amount. The declaration is defective in not averring that Walter Chester, one of the payees, did indorse the note. Demurrer sustained. The plaintiff dismissed his action.' 1 In Allen v. Corn Exchange Bank, 87 App. Div. ( N. Y.) 335, 337, it was said that " where commercial pajier is payable to two or more persons, who are not co-partners, it must be indorsed by all to pive pood title to a trans- feree. ... In ^Voofl V. M'oofl. Ifi N. .T. L. 428, it was held that one joint payee of a promissory note cannot indorse it either in his own name alone QT it.] indorsement : methods and effect. 299 3. Indorsement Where Payable to Cashier, Etc. § 72 JOHNSON V. BUFFALO CENTER STATE BANK. 134 Iowa, 731. — 1907. Action on certificate of deposit issued by the Clay County Bank of Felton, Minn., to " E. E. Secor, Cashier," and by indorsement of " E. E. Secor, Cashier," transferred to the State Bank of Dows, and by that bank to phiintiff. It is alleged that Secor, to whom as cashier the certificate of deposit was issued, and by whom it was indorsed, was the cashier of the defendant bank, and, acting in that capacity, trans- ferred the instrument to the State Bank of Dows. In the answer of defendant it is admitted that Secor was its cashier at the time of the transaction in question; but it is alleged that the Clay County Bank was a copartnership of which Secor was a partner, and that the cer- tificate was made use of by him for his own personal benefit, and not for the use or benefit of the defendant bank, which received no con- sideration therefor, and that Secor acted without the knowledge or consent of any officer or agent of the defendant bank and without its authority. The court directed a verdict for the plaintiff, and from the jiuigment on that verdict defendant appeals. Mc'Clafn, J. The first contention for the appellant is that the question whether plaintiff was a holder of the certificate of deposit in due course — that is, a purchaser for value before maturity without notice of any defenses — sliould have been submitted to the jury. ♦ • * We think that, had the question been submitted to a jury, there could have been no other finding than that plaintiff was a bona fide holder without notice before maturity on good consideration, and therefore in this respect there was no error in directing a verdict. The next contention is in snbstance and effect that Secor was, in fact, negotiating the certificate of deposit in his own interest, and not in his own name and thnt of his co-pnypp. Thoy aro not pnn«siflprof1 pnrtnprs either in the commprcial or legal sensp of Uip trrni." Spp this rasp for other authoritipR. In linyilon v. Mcolrtli, ]H N'cv. 200. 302. tlip roiirt said: " Wp hav.- poii- Biflpfpfl the qiif^tions lipfofp fli^russpd, upon tiip tlipory tliat a notp like the one in suit, indnrspd by one only of two joint paypps, !■< suhjppt to any pqiiitips existinp in favor of thp makpr. thp sanip as thoii;;h it had not hepn indorsed by eit'fipr; and such, wp think, is thp law. Snrh a notp is payable to both, or to their joint ordpr. I'.y the law niprrhant it rannot be transfprrpd pxpept by thp joint indorspnipnt of .ill thp paypps. Ityhinrr v. Fnrkrrt, 92 Til. 311. and authorities there riterl. If a note unindorsed is not transferred in pood faith, then onp indorspd by a part only is in tlip sanip .'nw ' as followH: ffinntcH N. Y.. S 12]. Tlie rlnnsf ju.«t er, creates an ambiguity as to the real party intended, to ex|ilain which parol cvi04 NEOOIIATION. [AKT. IV. iiuMoial papor that the iiiU'ivsts of coiiuiieni' require that a promissory note, fair on its faee, should he as ne^^otiable as a government bond. Every ivstrieiiou upon the eircuhitioii of negotiable j)aper is an injury to the state, for it tends to derange trade ami hinder the transaetion of business. Commercial neeossity requires that only slight evidenee should be insisted upon to establish an rsfnppri in pais as to the valid- ity of eoiunuM-cial ]ia|>er. The only practicable rule is to make the face of the ])a]H'r itself, when free from susjiicion, sulfieient evi(ience, in the absence of notice, against all who aided to put it into circula- tion in that condition, unless the note is void by the positive command of a statute, such as the act against usuiy. No other rule would work well, for it would be intolerable if every bank had to learn the true history of each piece of paper presented for discount before it could act in safety. It is better that there should be an occasional instance of hardship than to have doubt and distrust hamper a common method of making commercial exchanges. While it is unnecessary that the defendant should describe herself as a guarantor by adding the word " surety " to lier signature, for possession by her husband, who was prior in order of liability to her- self, was notice that she did not indorse in the ordinary course of business, still if she regarded her indorsement as a New Jersey con- tract she should have given notice of that fact in some way so that a purchaser in good faith might know that it was not what it appeared to be, a New York contract. (Smith v. Wrsto^i, 159 N. Y. 101 ; Banh of Monovgahela Valley v. HV.s'/o/(. 159 N. Y. 201.) Even in the state of New .Jersey, where the common-law disabilities of married women have not been wholly removed, her indorsement would be enforced as a New York contract. {Thompson v. Taijlor, 66 N. J. L. 253.) Independently of the statute which will be cited presently, the argu- ment in favor of an equitable estoppel rests mainly on the presumption that a note dated and payabfe in New York was made and indorsed in that state. While this question has seldom been liefore the courts, Mr. Daniel in his useful work on Negotiable Instruments says it is the law and thj authorities support the assertion. (Daniel on Neg. Inst. [5th ed.] § 728; Maxwell v. Vansant, -16 111. 58; Toivne v. Rice, 122 Mass. 67; Bedford v. Bangs, 15 App. Ct. TJep. 76; Lennig v. Ralston, 23 Penn. St. 137; S7iaifh v. Mingaij, 1 M. & S. 87; Edwards on Bills, etc., § 378; Tiedeman on Bills & Notes, § 91.) Even if the question were entirely new, sound reasoning would lead to that conclusion. While the contract made by an indorser is independent of that made bv the maker in the sense that it is of a different nature, and can be separately r-nforced, still it is dependent on the promise of the maker, because it is an agreement to, perform his promise, upon certain con- ditions, if he does not. Therefore, the placp where the maker prom- ised, as stated in the note itself, must with all the other provisions, thereof be read into the promise of the indorser, and it thus becomes IV.J INDORSEMENT : METHODS AND EFFECT. 305 by fair presumption, in the absence of notice to the contrary, the place where the indorser promised also. The purchaser has no other guide as to a fact which may involve the validity of the contract, and hence it is a commercial necessity that both contracts, so closely connected that the second cannot exist without the first, should be presumed to have been made at the same place, unless the one with power so to do rebuts the presumption by timely notice. The learned counsel for tiie defendant seems to recognize the existence of tliis presumption, as he says in his points that, " If we examine the note alono, then the negative inference might possibly arise that the defendant intended the note should be governed by the laws of another state." Tie insists, however, that as the phiintilf stipu- lated the facts at the trial, it knew the defendant did not so intend. The rights of the parties do not depend on what the phaintiff knew at the time of the trial, but on what it knew when it discounted the note, and at that time, owing to the absence of notice, which was the defendant's fault, it had no information but what the note gave. The defendant knew that her husband could use the note in any state, and the place of date and payment indicated the state where he expected to use it. Unless she intended that it should be used in a state where her indorsement woukl bind her, she must have intended to defraud and hence is estopped. But, to clinch the argument, we have only to refer to the Negotiable Instruments Law, which provides that : " Except where the contrary appears, every indorsement is presumed pri)iin facie to hnve lieon made at the place where the instrument is dated." (L. 1897, ch. C»12, § 76.) This statute was prepared for uniform ndion in all the states, and it has already been adopfod in Tnany. It is regarded as simply declaratory of the common law upon the subject under consideration. (Eaton & r.ilbcrt on Commercial Paper, § HO.) Therefore, when the note was j)resented for di.scount in New York, the plaintilT bad the right under the statute to presume that it was indorsed in the state where it was dated, because nothing aj)])eared to the conirnrv. The defendant, by her indorsement, aided in the negotiation of a iidb' car- rying with it that prfsumj)tion, both at common law and according to (he statute, ami after the jtlaititifT bad acted on the )»resuni])tinn she cannot be heard when she attempts to say that slic itiddised in a state where her indorsenumt is not binding, and that she did not intend to be bound by her promise when she nuide it. The judgment should be affu-nied, with costs. Ci'LLiA', Ch. .1., Chay, Hartlktt, IlAKiiiT and \Vi;i;.\i;ii, .1,1., con- cur; O'P.HFKN, J., absent. Judgment afTirmed.* « Thi'< rnof i'* rppnrtorl with w)U'k in 2 T,. \. S. 200, ;iii also Curtis v. Nprngnr, 51 Cnl. 2.30. ante, p. 144, and Bronkx, Oliphani d Co. V. Vanncst, 58 N. J. L. 162, ante, p. 276. — C.J ARTICLE V. IviGUTs OK Holder. I. To sue and to receive payment. § 90 HAYS V. HATHORN. 74 New York, 486. — 1878. Action on a promissory note alleged to have been made by defend- ants (Hathorn & Southgate), payable to the order of one of them (Frank H. Hathorn), and by him indorsed in blank and transferred to plaintiff. Judgment for plaintiff. Hand, J. — In their answer, the defendants denied that the note on which the action was brought was ever transferred to the plaintiff or that he was the legal owner or holder thereof. They further denied that the plaintiff was the real party in interest ; alleged that the Sara- toga County Bank was the real party in interest and the owner and holder and should be the plaintiff, and that the note was duly trans- ferred to it instead of to the plaintiff.' Upon the trial, the plaintiff having produced the note which was payable to the order of F. H. Hathorn and indorsed in blank by him, rested. The defendants then offered to prove that the note " was not the property of the plaintiff, that the same was never transferred to him, that he was not the real party in interest, that the note was the property of the Savings Bank who is the real party in interest." The evidence was objected to by the plaintiff as immaterial and was ex- eluded. This ruling I think was erroneous and renders necessary a reversal of the judgment. Under the answer and this offer, the defendants unquestionably proposed to show substantially tliat the plaintiff had no title legal or equitable to the note, and no right as owner to its possession. This miglit have been done by proving that he was the mere finder or the anlawful possessor, or that the right to its possession and ownership was in the bank to whom they were liable thereon, or in some other way. This they had a right to show. it may be that, had their offer been admitted, they would have pro- 1 " Everv action must he prosrouted in the name of the real party in inter- est." N. Y. Code Civ. Proc, § 440. — H. [See Am. 8oda Fountain Co. v. Hoque, 17 N. Dak. 375, reported in 17 L. N. S. 1113, with note entitled " Holder of unindorsed note as real party in interest within meaning of statutes defining the parties by whom the action must be brought," confinuing note on the same subject in 64 L. R. A. 581. — C] [3141 I.] TO SUE AND RECEIVE PAYMENT. 315 duced in fact no evidence to sustain it or prevent a recovery, but in considering the validity of their exception to the exclusion, we must assume that the evidence would have fully covered the propositions contained in the offer. And, as remarked in the dissenting opinion in the court below, "unless the defendants are to be precluded alto- gethei from giving any evidence of a matter confessedly issuable, I do not see how this offer could be rejected." The cases relied upon as justifying the exclusion of the evidence do not go that length. In Ciimmings v. Morris (25 N. Y. 625), it was held that the maker of a note could not defeat the plaintiff, not a payee, by proof that the consideration of the transfer to him was contingent upon his collecting the note. Such plaintiff was declared to be the real party in interest on the express ground that the transfer was complete and irrevocably vested in him tlie title to the note. In City Bank v. Perkins (29 N. Y. 554), there was no question of exclusion of evidence, but all the circumstances being proved, it was held that where the cashier of a bank holding commercial paper, pledged it " duly indorsed " to the plaintiff as security for a loan by the plaintiff to liis bank, and it had been actually transmitted under his direction to tlio plaintiff so indorsed, it was no defense to one admitting his liability upon such paper to show lack of authority in the cashier alone to contract a loan for the bank; or the fraudulent diversion by him of the funds received from the plaintiff on such loan. Some remarks in tlie opinion in that case, not necessary to the decision, are perhaps too broad to bo entirely approved, but it is fully conceded in it that proof that the plaintiff had no right what- ever to the possession but was a mere finder or had obtained it by pome " positive breach of law " would be a defense. Brown V. Ppnfidd (3fi N. Y. 473), holds merely that proof, by the party liable on a bill, of gross inadequacy of the consideration for the transfer of such bill to the plaintiff does not impeach the validity of such transfer as to the party so liabU\ In AUon v. Brown (44 N. Y. 22S), it was decided that, as against the plaintiff holding legal title to the claim by written assignment valid upon its face, the debtor cannot raise the question as to the consideration for such assignment or the equities between the assignor and assignoo. In Enlon v. Algrr (17 \. Y. 31.")). tlm note Ix'ing payalile to bearer and produced bv the plaintiff upon the trial, it was proved thai the payee had delivered it to the plaintifT upon his undertaking to collect it at his own expense and pay to such payee upon its collection a crrtain sum of money. This was hrld to show pufrieipntlv that the plaintiff, and not the payee, was the real party in interest under the Code. Sheridan v. Thr Mayor (HR X. Y. 30), reiterates the dortrine that, as against the debtor, the plaintiff holding a written assignment of 316 I! 1(11 ITS oi' iioi.nKR. [art. v. tlio claim to hinisolf valid on its i'aci', obtained the legal title and was tlio irnl i>artT in intorost iidl withstanding tli(> fact tliat the assign- ment was without considciation and merely colorable as between him and ilic original claimant. Such assignment is exjiressly declared to jirotect the debtor jiaying tiic assignee against a subsequent suit by the assignor. In Gajjr v. Kendall (15 Wend. 640), the fact that the prosecution of the note was by its owner and holder in the name of the plaintiff, a stranger to it, without his consent or knowledge, was sought to be set up as a defense, but it was ruled out on the ground that the nominal plaintiff need have no title to or interest in the paper sued upon. We apprehend the Code has changed this and that such facts would now be fatal to an action. Such a plaintiff could not in any view be the real party in interest. Indeed, he would not even have manual possession of the paper. From this glance at the cases, it appears that it is ordinarily no defense to the party sued upon commercial paper, to show that the transfer under which the plaintiff holds it is without consideration or subject to equities between him and his assignor, or colorable and merely for the purpose of collection, or to secure a debt contracted by an agent without sufficient authority. It is sufficient to make the plaintiff the real party in interest, if he have the legal title either by written transfer or delivery, whatever may be the equities between him and his assignor.- But to be entitled to sue, he must now have the right of possession and ordinarily he the legal owner. Such ownership may be as equitable trustee, it may have been acquired without adequate consideration, but must be sufficient to protect the defendant upon a recovery against him from a subsequent action by the assicrnor. As we understand the scope of the offer in the present case, it went to entirely disprove any ownership or interest whatever or even right to possession as owner in the plaintiff. It should theiefore have been admitted. It may be true that the plaintiff, if tliis note had been delivered to him with the intent to transfer title, might have lawfully overwritten the l)lank indorsement with a transfer to himself; it is also true that the production of the paper by him was prima facie evidence that if had been delivered to him by the payee and that he had title to it, but the defendants' offer was precisely to 2 A transfer merely to enable the transferee to sue upon the instrument is valid. Laic v. Parnell. 7 V. B. N. S. 282; Wheeler v. Johnson, 07 Mass. 39; lioifd V. Corhitt. .37 Mich. 52: Brattie v. Tjett, 2R Mo. 500; Bank v. f^enior, 11 R. T. .376; Wnlkrr v. Wait. 50 Vt. fiOR. If aotinj? by authority of the bene- ficiary, such transferee is the real party in interest. The authority may be revoi formal i)lainlilT. Colllr v. CnJl, 20 Iowa, >181 ; Salnn v. School Pislriif. (C. C.) 1'.'5 F(h1. 2.'15 ; Vifhfjo of Knit v. Dana, 100 Fed. 56; Pi'rJ.-inson v. PiilJ. 72 111. App. 75. One instan<-e of a transfei- in bad faith is presented in ShrhJnn v. PriiPsst'T. 52 Kan. 579, where its purpose was to defeat the taxation of the note involved. Another is suggested in Shrrif/nn v. Mayor. 68 N. Y. .'30, where it is said: " It is not a case of mala fide possession a This rnsp is rppnrtcfl in 1 A. * V. Ann. C'hs. 8.12. with note rntitlrrl " Pirrht of Hftion thcifOM ef nominal holder of prnmiHsory note." See also tl xhaiiMfivf noto (o Slrunrl v. Prirr. fi.l Kan. ini (ovornilcl Ity Mnnlrji v. I'nik. supra), in 04 T,. H. A. ."iSl. entmrd "Who i« thf roa! party in infcTPst within tlip niraninp of HtntutoH dofininjj the parties hy whom an action mnnt he hrought." — C. 318 RIGHTS OF HOI, DKfi. |.\l;r. V whioli the defendant can avail itsolf of, as if a thief should bring an action upon a proniiss(»n- iu)tc wliicli he had stolen." In Daniel on Negotiable Instruments (vol. 2, § 1191), it is said: '' If it were shown that the plaintifT, upon suing upon a note payal)le to bearer or indorsed in blank, has no interest in it, and, in addition, that be is suing against the will of the party benetlrially interested, he t-ould not recover, as his conduct would be in bad faith." In support of this statement the author cites Tnwne v. ]Vason, 128 Mass. 517, the syllabus to which reads: " It is a goorl defense to a promissory note that the plaintiff, although in the poss(>ssion of the note, has no interest in it, and is prosecuting the action, not for the benefit of the person beneficially interested, bnt against his objection." But in that case the defense made was that the plaintiff had wrong- fully, and without the consent of the owner, obtained possession of the note sued on, which was indorsed in blank: tiiat he had no title to it, and never had had any ; and that he was not authorized to sue in behalf of tiie owner — in effect, that he had stolen the note. And the ground of the decision was that under tlie facts stated the plainiill" had no authority to receive payment of the note, and a payment to him would not have released the maker. And this suggests what we con- ceive to be the true rule, of general if not of universal application — that, so far as affects the question of tlie right of the plaintiff to maintain the action, the only inquiry open to the defendant is whether the plaintiff had such title to the note that a payment made to him would be a complete protection to defendant from any further lia- bility. Sturr/is V. P,al-cr, 43 Or. 23G ; Brown x. Powers, 53 App. Div. (K'Y.) 251; Hays v. Hathorn, 74 N". Y, 48(5. Any investigation which goes further than this merely involves questions between the plaintiff and other claimants of the note or its proceeds, and with these the defendant has no concern. Tt was said in Citi/ Bank of New Haven v. Prrh'ns, 29 N. Y. 554: "The defendant claims no title to the paper, and does not pretend to have any interest in it. except as a promisor, liable to pav to any proper bolder. There is no party before the court who has any legitimate interest in questioning the plaintiffs' title, or who has, as it seems to me, under the circumstances of this case, any right to be heard on that question. The defendant stands here, therefore, as a mere volunteer, in behalf of others not before the court, and who make no claim on their own account. * * * jj. will be time enough to determine whether any other y^erson has a bet- ter title, when such person shall come before the court to claim tlie bills in question, or their proceeds, from the plaintiffs."* * " Tt i?; tbp spftlcfl Inw nf this mmmonwoalth that a hohlpr nf a negotiable promissorv note pavahle to hearer or payable to orrler an'l infiorsed in blank can sue on it in his own name, t.itfir v. O'Rrien. 9 Mass. 423; lirekman v. Wilson, 9 Mete. 434; I'eaalee v. McLoon, 16 Gray, 488; Whitton v. Hayden, 9 II. 1. a.] INSTRUMENT COMPLETE AND REGULAR. 319 n. Holder in due course. 1. Requisites to Constitute Holder in Due Course. (a) Instrument must be complete and regular. § 91 Davis Sewing Machine Co. v. Best, 105 N. Y. 59. — 1887. Action to recover the value of certain notes diverted by plaintiff's president. At the time defendant purchased the notes they were com- plete and regular and signed by the plaintiff's treasurer, except that they were not signed by the president although a blank space with a diagonally ruled line, with the title of his office printed thereunder, was left at the foot of each instrument. Ruger, Ch. J. — It is not seriously questioned, but that the notes were unlawfully converted by W., and that the plaintiff was en- titled to recover their possession, unless fhe defendant became the honn fide holder thereof, by virtue of their purchase from the Security Bank. * * * The authorities seem to l)e consistent and uniform to the effect that the defendant cannot be considered such a holder. The suggestion that a party issuing negotiable paper with blank spaces therein, apparently intended to be filled up to make a com- plete contract, impliedly authorizes its holder to insert appropriate words in such blanks, may be dismissed as inapplicable to such a case as this. It has sometimes been held that a party signing such paper and delivering it to a third party unfilled by implication confers such authority, but it can hardly be claimed that one drawing the form of a promissory note which is unsigned, and falls into the hands of another, thereby authorizes the holder to attach the maker's signa- ture or to add anything which is incomplete in its cxecnlion. The rule that a party buving commercial paper whi<'h remains in some es.sential particular incomplete and imperfect, does not acquire the character of n honn fide holder, rests upon sound reasons and is well established in commercial law. Xo stronger eviden^-e could ho afforded that such paper had been prematurelv put in circidation mntrary to the will and intention of its maker, than the fact thai it had not been fully and completely prepared, to [xTform the ollice for which it was desifmed. It is apparent tliat sikIi paper must have been taken fmm the possession of its maker before an intention to part with it had been fully formed, and that he still designed to .Allrn. 40S; National f'rmhrrton Itank v. Porter, \2f> Mnss. .3.1.3, 28 Am. Rop. 2^f>: Nprifford v. Vor/wi, 120 >fn'i«. .S.T^. It i« not nnrcs:ilo). that "a lU'ij^oliabk' iiiistniinciit must In- a (.(imiilctc and jxTl't'cl instrnnu'iil wlu'ii it is issm'tl, <'r there must he au(h(iril\ repost-d in stMuo ono, afterwards to supply anylhin;;- needed to make il perfeet." 'Die rule is also laid down in Daniel on Ne,i;otiahle Inslrumenls We cannot, therel'oi-e. Iiohl that the Tiaist Company |del\'ndant| heeame the bona fide holder ol' the se\en notes. * ■" * ^ {()) I itslnniiciil Jtrusi not he overdue, etc.'* § 91 LE DUE V. FIUST .NATIONAL BANlv OF KASSON. 31 MlN.MvSOTA, ^.-J. — 18S3. ^IjTCiiELL, J. At Ivasson, Minnesota, on tlie liftecntli of Oetohor, ISSl, the plaintiff drew its draft or hill of e.xohange for $500 on the Ninth National Bank of Now York, payable on demand, to the order of plaintiff, and, for value, delivered the same to the payee, who, on the same day, indorsed it to one Edison, who held it until the ciiz'ldh of ilarch, 1883, without presentation for payment, and, on the dav last named, indorsed it to one Jordan, who, on the eleventh of the same month, indorsed it to the Exehanpe IJank of Louisiana, Ati^souri, whieli caused it to be presented for payment on the fifteenth of the month, when payment was refused and the draft protested. On th(> fourth of April, the Exchange Bank transferred it to plaintill". .No explanation is given why Edison held the di-aft so long without pre- senting it for payment, nor does it appear that either Jordan or any of the subsequent indorsers asked for any explanation of this fact when they purchased it. In October. 18>Sl, immediately after the draft in question had been transferi'cd to him, Edison absconded from the state, leaving debts unpaid, among which was a promissory note for $500 and interest, dated September 20, 1881, payable in thirty days to the order of defendant bank, and wliicli it then held and still holds, and v.hich has never been paid. About the first of November, 1881, the defendant, having ascertained that Edison was the owner '• Folio wpfl in Flinrler v. Bacon, 127 App. Div. (N. Y.) .')72. the court saying that the Ne2otial)le Tiistnimcnts Law " is but a codifiration of thp nilo of the law nierchant, wliicli was that a party l)uying commercial paper wiiich remains in some e.ssential jjarticnlar incomplete and imperfect does not acquire the character of a bona pile, holder." — ('. 8 See y. M. f'. A. (himnnfiiiini Co. v. Hnrkfnrtl Nnl. Hank. 170 Til. .'iflfl. reported in 4r> L. R. A. 753. with exhaustive note entitled " Rights of iioider of negotiable paper transferred after maturity," — C. II. 1. h.] iNSTfiUMENT Noi oViiiiiru l^. .'V31 of the draft in question, notified tlie drawee not to pay it. Tliis last fact is, pcriiaps, not material. Upon being sned upon the draft, the defendant now seeks to set off against it the promissory note against Edison already referred to, and the only (juestion in the ease is whether, under the faets stated, this can be done. It niny be here remarked that La Due, the payee, was elearly discharged from liability as indorser. Ijy the delay of five months in ])resenting the draft for payment; hence, he can chiim no rights as an indorser wlio has Ikh'U (compelled to pay. Pfis purchase of tlie draft from the lv\-ehange ]^>ank was a purely voluntary ad, ;iiilace an overdue bill or note iif)on tlie same fooling as a)iy other chose in act ion. and if it be as- signed after (\\U'. a set-off to the amount of tlic nole or draft may be made of any demand existing against any jK-rson who has assigned or transferred such note or bill afler it beiame <1ue, if the demand is such as might have been set off against llie assignor while the note or bill bchtnged lo biin. .\ -^el olf arising out of an independent transaction against an interinediale bolder is thus ])laced upon the same footing as an equity attaching to ihe bill or note itself iigainst the original payee. This same rule is laid down in somewhat did'e'- eril langnag" in the provision regarding set-off in justice's court. Section 10, r. n."., rien. SI. 1H7H. To illustrate, su|»pose 1'^dison bad l)ecn the payee, and had obtained the draft by fraud and williout consideration, or bad received payment (ui if while be owned it. but fiv oversiL'bt or mistake it reiiuiined in bi>< hands. These would have been defenses attaclied lo the draft itself, n< between the rtriginal parties, and if tlie draft w:is nverilne when I'Mi'^fUi indor-ed it to Jordan, defendant could have pet them up even under the former rule airainst the draft \u the bands «>f .Jordan, or those to whom iie sub- sequently transferred it. NKOfyr. INSTUUMENTS — 21 322 iu)i.i)i:u IN DUK t'ouKsi:: kki^uisitios. [aut. v. But now, umler tlie slatulc, tloffmlaut could set off this note, although it arises out of an indi'iHMKli'ut matter, against an interme- diate iiolder, beeanse it is a (lemand which might have been set of! against Edison while the draft belonged to him, had he sued on it. Linn v. h'ii;j;j, V.) iMinn. isi (CAl 145) ; Martin v. Pillsbury, 23 Minn. 175; Harris \. Ihinrrll. ('.•'> X. (\ 584. Such a rule may render pre- carious the busin(>ss of dealing in overdue ])aper, especially when it has passed after matmily thrt)ugh the hands of several holders. The policy of sucli a law is exclusively for the Legislature, but we may suggest that we see no reason why overdue commercial paper should not be placed on the same footing as any other chose in action. Notes and hills of exchange are only treated as business paper when negotiated before maturity. When overdue they are dishonored. In the principal commercial states of the Union, such as New York,^ this same rule has long been established by statute. Hence our state cannot be charged with having adopted a rule in opposition to the judgment or usages of the business world. ^ The only question left, then, is whether this draft was " overdue " when Edison indorsed it to Jordan on the eighth of March, 1882, four months and twenty-three days after its date. In the case of a bill, note, or check, payable on demand, no exact day of payment is fixed in the instrument. The general rule is that it must be pre- 1 See N. Y. Code of Civil Procedure, § 502. — C. 8 On this point Mr. Crawford says: " Tt was not deemed expedient to make provision in the Nefjotiable Instruments Law as to what equities the trans- feree will be subject to; for the matter may be affected by the statutes of the various states relating to set-off and counterclaim. In an act designed to be uniform in the various states, no more can be done than fix the rights of holders in due course. On the question whether only such equities may be asserted as attach to the paper, or whether equities arising out of collateral matters may also be asserted, the decisions are conflicting. In England it was decided in Burroughs v. Moss, 10 Barn. & Cress. 558, that the indorsee of an overdue bill is liable to such equities only as attach to the bill or note itself, and not to claims arising out of collateral matters, such as a general set-off is. This is a leading case, and has since been uniformly followed in that country." Crawford's Neg. Inst. Law, 3d ed., p. 7G. In Edney v. Willis, 23 Neb. 56, at p. 01, Maxwell, J., says: "Section 31 of the code provides that ' In the case of an assignment of a thing in action, the action by the assignee shall be without prejudice to any setoff or other defense now allowed; but this section shall not apply to negotiable bonds, promissory notes, or bills of exchange, transferred in good faith and upon pood consideration, before due.' This clearly implies that set-off may be allowed against a note transferred after due. . . . The English rule seems to be based upon the doctrine of recoupment, and is not apf)licable in any state having a .-tatute similar to our own, where independent and collateral claims may be set off against an overdue note in the hands of a payee." For a very instructive and learned discussion of this matter, see Cumber- ]and Bank v. Uann, 18 N. J. L. 222. See also Davis v. Miller, 14 Gratt. (Va.) 1. — C. n. 1. b.] INSTRUMENT NOT OVERDUE. 323 sented for payment within a reasonable time, having in view ordi- nary business usages, and the purposes which paper of that class is intended to subserve. The term *' overdue," as applied to a demand bill of exchange, is used in different connections, in each of which it has a different mean- ing; and the failure to keep these distinctions in mind, has perhaps led to some misapprehension regarding the present case. Sometimes it is used in reference to a riglit of action against drawer or indorser. In that connection a bill is not overdue until presented to the drawee for payment, and payment refused. Sometimes the term is used in considering whether an indorser has been released by a failure of the holder to present tlie bill for payment, and to give the indorser notice of its dishonor witiiin a reasonable time. Again, the term is applied to a bill which has come into the hands of an indorser so long after its issue as to charge him with notice of its dishonor, and thus subject it in his hands to the defenses which the drawer had against it in the hands of the assignor. It is in this last connection that the term " overdue " is considered in the present case. That in this case a bill may be said to be overdue, although it has never been in fact presented to the drawee for paynit^nt, is recog- nized everywhere throughout the books, and will be apparent, we think, on a moment's reflection. Suppose a draft has been held by the payee five years, without ever having been presented to the drawee for payment, and is then indorsed to another party. It would not be due 60 as to give a right of action against the drawer, because his contract is only to pay in case it is not paid by the drawee on presentation. But there would be no doubt that it would be overdue or dishonored, so as to charge it in the hands of the indorsee with any defenses whidi the drawer had against it in the hands of the payee, although, when he took it, it had never been presented for payment. The retention of a demand draft so long a time without presentment, when no de- fense exists against it, is so unusual and contrary to business usages that this circumstance would be held to charge the indorsee with notice when he purchased the draft that it was dishonored. '^riic lapse of time would in such case be so great as to put a purchaser upon irifpiiry as to thy reason why it was still outstanding and uni)ai(l. The cases are almost innurrierable in which it has been held that paper payable on demand had been outstanding so long, when trans- ferred, as to he deemed overdue and dishonored, so as to subject it, in the hands of the pnrehaser, to any defenses which the maker or drawer had against it in the hands of the payee: and in none of these cases is the question whether or not the paper liad been, before the transfer, presentefl for yiayment to the maker or drawee, referred to as at all material. Dotni v. ffallivff. 1 Barn. X' C. 330; First Nat. Bank of Newton V. Needham, l'f> Iowa, 'JII»; Corriuq v. Altinan, 71 N\ V. I.'55; i^ylvesier v. Crapo, 15 Pick. ^2; Ranger v. Carey, 1 Mete. 369; Her- 324 IIOI.DKU IN DUE COUlfSK: liKQUlSlTES. [aUT. V. nek- V. Woohrrtoit, 11 N. Y. 581 ; Story, rroin. Notes, § 207 and note; Tlionii>st>n v. llale, (> I'ick. 2r),S ; Aiiicricaii lUvik v. Jenucss, 2 Mote. 288; Car//o» v. />'aj7n/, 27 N. 11. 2:30; Fa;7.T/- v. TuWc, 4\ Me. IT)!); .Vprwj.t V. Toirnsnid. 6 Conn. 5; Camp v. >\-o/7, 11 Vt. 387; Morei/ v. ^VakcfielJ, II \'t. 2 1. Tlmt in determining wlietlier an indorsee took r. demand note or bill as dishonored and overdue ])aper, siihjeet to all equities or defenses, the test is the length of time it has been outstand- ing, and not whether it hn< iu fact been presentcil I'ov ])ayiiH'iit, may he illustrated in another way. Suppose a dralt had in fait lieen presented tor pa\inciit, and itaymciit refused <»n the \ovy (hiy it was issued, it would then lie ovri-dne as to thi' drnwiM-, so that an aetion would then lie against him. IWil suppose immediately after sueh presentation, and on the same day, the liolder should indorse the draft to another, who took it in good faith for value, without notiee of this actual dishonor, clearly such indorsee would not take it as overdue paper, subject to the equities or defenses against it in tlie hands of tlie former holder, because, a reasonable time for it-; prc-cntMtion not having expired, there was nothing to put liim upon iii<(niry. oi- to charge biin with notiee of such equities. // itii ii/rlnian v. f/olaUiig, 40 Cal. 111. In fact, in determining whetlici' an indorsee takes such paper as overdue paper, subject to such defenses or equities, the ques- tion of actual demand and dishonor does not enter into the discussion. The point of inquiry is, had the paper been outstanding so long after its date as to put the purchaser upon inquiry, and charge him with no- tice that there is some defen.sc to it? In view of the well-known fact that bills of exchange are not always transmitted iinmediately for pa}Tnent, but first pass through the hands of several intermediate holders in the ordinary course of business, and in other cases ai'c pur- chased by travelers to be carried with them instead of currency or coin, to be negotiated as occasion may require, we are not disposed to lay down any narrow rule on this subject. Rut in this case we tliink that the fact that this draft was, without any ex])hanation of the reason, found outstanding nearly five months after its date, fully justified the trial court in holding it overdue and dishonored when Jordan took it, so as to charge it in his hands, or the hands of those who liold under iiini, with any defense or set-off which tlie drawer had against it in the hands of Edison. Order denying new trial atlirmed. § 91 GARDNET^ r. ?,E.\rON TI?TJST COMPANY. 190 Mass.\cut:sett.s, 27.-1000. Morton, J. — This is a bill in equity brought by the plaintiif. a minor, by her next friend and guardian, to compel the defendant the Beacon Trust Company to assign and deliver to her a mortgage and II. 1. b.] insti:t;mi:nt vot ovKiutuE. o25 the nofe thereby secured, alleged to have been fraudulently obtained from the plaintiif's guardian by one Edwin M. 'I'hayer, since deceased, and fraudulently assigned by him to the trust company. As to cer- tain of the defendants the bill was dismissed, and a decree was entered in favor of the plaintitf against th^ trust company and other defend- ants. The case is here on appeal by the trust company. All of the evidence is reported. Briefly stated the facts are as follows: In January, 1;K);>, the plaintiff was tiie owner of a mortgage and the note thereby secured for $1,500, on land in Quincy, given by the defendant Biown to one Hattie E. Carr and translVirctl by successive assignments to the plain- tiff. Her mothei-, Mary E. Gardner, now Mary E. Wales, was her guardian. Tlie note and mortgage had been long overdue. By means of fraudulent misrepresentations that the owner of the equity wished to pay off the mortgage, Thayer obtained from the ])laintiff'"s guardian an assignment of the note and mortgage to himself, and subsequently assigned them to the trust company as security for a note of $2,000 for money borrowed by him of the company. The trust company took the assignment in good faith, for value, and witli- out any notice of Thayer's fraud, or of any defect in his title, unless the fact that it took them when overdue constituted such notice. We assume, in favor of the plaintiff, that the fact that the note was secured by mortgage does not alTeet its character as an overdue nego- tiable instrument when taken liv the trust company, although it is -aid in Mvrphj/ v. Bnrvnrd, MVl Mass. 7'?, 7.'), that there is a distinc- tion between tlie purchase of ordinary commercial paper and that of notes known to bo secured by a mortgage of real estate, thougli Ijouuht as negotiable pa)>er. See Fish v. Frrnrli. 15 Gray, 5<;0 ; Vinton v. Kinq, 4 Allen, 5(;"i ; Willro.r v. Fuller, \'.Vi Mass. '.Vi()\ Haron v. Abbott, ]'■')'] Mass. of(7. But the note did not cease to he proiierty or to be negotiable because overdue. Barter v. Lililc. (> Melc. (Mass.) 7; Fisher v. Lrhind. I Cush. 15G, 458; LeavHl v. rnlnani. :] X. Y. 494. And the question is whether, assuming for the moment the validity of the transfer by the plaintiff's guardian (o Tliayer, wliicb will be considered later, the fad that i!ie note and nioilgage were ovenlue when the trust company took them so affe(fed their title as to postpone their right to that of the defrauded owner. The general rnlo is thus stated by Tiord Flerscbel in f^omlon .Jninf Slnrl- Jlnnl- v. Simmons (ISDS) A.' C. ?01. '?15: " ^IMie general rule of law is, that where a person has obtained the property of a'lotber from one who is dealing witli it without the authority of the true owner, no title is acquired as against that owner, even tbomrb full value he -riven, ami the property be taken in the belief that an unqiiest ionahle title is being obtained, urdess the person takinir it can show that the true owner has so acted a** to tnislcnd him ir)t<> the belief that the i)erson dealing with flie property iiad authojity to do so. If this can be 326 1101. UKU IN DUK couhsk: hkquisites. [art. v. shown, a good title is iUHjuiriul by peisonal t'sto})i)t'l against the tru& owner." lie then goes on to say that there is an exception in the ease of negotiable instruments, manifestly meaning those not yet due, and that as to them any person in possession of them can convey a good title, even if acting in fraud of the true owner. This is the only exception mentioned hy liini to the general rule which he lays down, ai.J which would seem, therefore, to liave been regarded by him as applying to overdue negotiable notes as well as to other property when circumstances brought them within it. Ap])lying the rule thus laid down, or the rule that, where one of two innocent persons must suffer in consecpience of the fraud of another, the loss must fall upon the one wlio, by his trust and confidence, has enabled the perpetrator of the fraud to commit it (Easter et al. v. Allen, 8 Allen, 7 ; McNeil v. I'enth Nat. Bank, 46 N. Y. 325), it would seem plain that the loss in this case should fall upon the plaintiff, unless the fact that the note and mortgage were overdue makes a difference. She had assigned the note and mortgage to Thayer by an instrument valid upon its face, and had delivered possession of them to him. As a consequence of her conduct, he had possession of them as apparent owner, with full dominion over the property which they represented. This ap- parent ownership was obtained from the guardian by Thayer's fraud, it is true ; but, although that would liave enabled her to avoid the transaction as between her and him so long as the note and mort- gage remained in his hands, his apparent ownership was not affected thereby. Does, then, the fact that the note and mortgage were overdue when the trust company took them, make a difference? The pur- chaser of an overdue negotiable note takes it subject to all the equi- ties, if any, that are attached to it at the time of the transfer in favor of the maker, the owner, or of third parties. Vinton v. King, 4 Allen, 562; VermiJye & Co. v. Adams Express Co., 21 Wall. 138; In re European Bank, Ex parte Oriental Comniercial Bank (1870) 5 Ch. App. 358 ; In re Overend, Gurney & Co., Ex parte Siuan (1868) 6 Eq. 31 I. Tf there are no equities attached to the note the purchaser gets as good a title after as before maturity. In re Overend, Gurney & Co., Ex parte Swan, supra. And it makes no difference that the note is dishonored. If there are equities attached to it, he takes it subject to them. This is what is meant when it is said that the purchaser has no better title, legal or equitable, than his transferror had, and that the note is subject in his hands to the same infirmities of title as against the true owner, and to the same defenses as against the maker, that it was subject to in the liands of his transferror. 1 Daniel on Negotiable Instruments (3d ed.) §§ 72-74, et seq. If, for instance, an overdue note is stolen from the owner, a subsequent pur- chaser acquires no title as against the true owner (Vermilye endent transaction. But the same learned writer, above referred to, states llial (he mere fact that an accommodation note has been indorsed after it became due, does not of itself, witliout some other equity in the maker, defeat a recovery by the indorsee. (Story, § 101.) And ^Ir. Chitty states "that it has bctn so decided. The cases of riuirln^ v. M(tr><'li'ii (1 Taunt. 224) ; Shirfmn,! v. Fonl ( I ^l;in. i^: Gy. 101) ; 1 ScoK. (i0,9, ami f'(irnlhrv>i v. U'r-sV (11 Q. 1*,. IK'), ure in support of the propo- sition. These nre tlie cMses upon the auj'ioritv of which Ibe ]iresent case was decided below. I am constrained to sav thai I am tiol satisfied lliat sueli an e\ce[)- tion to the rule is either just or <'alb'd for Itv niiv )U'inci|ib'. nor .nn I at all convirice decision in didrlrs V. Mnrnden, upon wliidi the nthei- two cases ;ii)ove i-eferre(| to were decided. The cases, largelv collected in the notes lo ('bitty in the recent edition, warrnnt. I think, the dissatisfnctifm I liiive expressed. No case in this state hns called for n decision of the question ; iind yet in Brown v. Mott (7 .1. H. HCl). :\\v\ in (inml v. ElJiroli (7 Wend. 227), the case of Chnrirs v. Mnrsdcn is referred to without disiipprct- bation, and the proposition to be derivetl therefrom is stilted; but in neither cise was the point now raised before the court, for in neither did it appear, tbnt tlie plaintiff took the note ;ifter it became due. And that in other state? in tlds country. «ueli an exception to the general rule first above stated is repudiated, see Brown v. Ilnshngs 3;)'^> iioi.KKU IN \>VK t'Oiutsi;: Kiu^uisri'Ks. [akt. v. {,){'> IViui. ^JSa) ; liiilhiii v. ISisliop (II \l. lo) ; Odiornc v. Iloivnrd (lv» A. IL. o-lti; ; ( ((iiiiniuys v. j./i^/t^ {i'o MaiiK', L6'o) ; 1 i/t/u/t v. Kiiiy (Mi Muss. 1 Allen, JGo) ; KcUuyij \. ikuiun (!)1 Mass. 12 Alk-n, 52; j. And llie goucral jjropositiou, tluil \\v \\\\o takes a note wiion overcluo, laL^s it subjtrl lo all delVnsos iiilieiviit in llic iiute, or ai'isin;,^ oul of any agreoiia-nt with Uie holder, expressed or implied, ami relating thereto, or in anolhcr roi-iii. lliat siicli an iinlorsee ohlaiiis no irreater or other riulits than his indorser had in it at the lime of the indoist'Hient, has Ix>en stated as hiw in eases almost wilhoiil num- ber. It will, jierhaps, suHice to refei- lo I wo From the Su])r(>nie Court of the I'nited States. Andrcivs v. I'ot^tl (i:! Pet. 79), says of tile indorsee of a dishonored hill: " if he chooses to receive it, he takes it with all the infinnities l)elongin,<>; to it ; and is in no better condition than the person from Avhom he receiv(Ml it." {/''mrlcr v. Broiiflii/. 14 Pet. '.]'il.) "A note overdue oi' hill dishonored is a circumstance of suspicion to |mt those dealin;;' lor it al'terward on their guard, and in wliosi; hands it is open to the same defenses it was in the hands of tiie holder when it fell due. After maturity, such paper cannot be negotial)le ' in the due course of trade," altiiough still assignable." See also Fuley v. iSiuith (G Wallace, 4U2.) In my ov.n opinion, the just rule, and tlie rule lesliiig on the soundest principle, requires us to reverse. The supposed exception to t!ie general rul'j rests on neither reason, nor as 1 think on authority, certainly not in this country. It was suggested by the counsel for the respondent, that as madci- of fact, the defendart's indorsement was not without coiisidcialion, and for t-:e accommodation of Myers, who hehl the note at malui'ity. The findip.g of the referee on that subject is conclusive in this court; and that finding is, that the indorsenuMit was made without consideration at Myers' re'piest, and to enable Myers to use tlie notes. This is but a statement that the defendant indorsed the notes for the accommodation of Myers. It was so treated in th(^ court below, and it is an unwarranted assumption to say, that possibl\- llu' dcd'endaiit had some other inducement to indorse the notes, in order that the plaintiff might accept the notes, and give credit to liie maker tlKMeol', who was his delitor. MUKHAV, J., also read an o|iinion for reversal. Gi{Ovl:u, Lott, Jamks and Danikls, JJ., concurred for reversal. JIason, J., thought the law settled in this State in favor of the plaintiff, by the cases (< Johns. .jtJl ; 7 Wend. 227; ajul 1 Hill, 513), and was for affirmance. Hunt, ('h. J., was also for aflirmance. lie did not approve of construing the defendants' contract as conditioned u|)on tiansfei h^'ffir-c due .Tnd'jnient reversed. II. 1. &.] INSTRUMENT NOT OVERDUE. 333 MAELING V. JONES. 138 Wisconsin, 82. — 1909. Timlin, j. * * * The accommodation note in question was transferred by the party accommodated, namely, the payee therein, after it became due. Does this circumstance permit the accommodation maker to avoid the note on the ground that he received no consideration? If tlie effect of a transfer, after due, is merely to leave the transferee subject to notice or knowledge of the true circumstances attending the execution of the note in question, and for this reason subject him to defenses, then, as actual knowledge that the note was accommodation paper would be no defense by the accommodation maker as against the transferee for value from the party accommodated, it would seem that it could make no difference in the liability of the accommodation maker upon this ground whether the note was transferred before or after due. Aside from this imputed notice or knowledge, or actual notice or knowledge, it is not true that the taker for value from the party accommodated stands in the shoes of the latter. The difference between them is that one has parted with value for the note and the other has not. Tn neither case has the maker received a consideration moving to liiin. So that between the party accommodated and the accommodation maker there is no consideration parted witli or received by either, wliile between the transferee for value and the accommodation maker there is a consideration moving from the former at the instance of the latter sufficient to support the contract. '^Fhere is considerable conflict among the decisions on this ])oint, and those text-writers who profess to have made a thorough examination of the cases seem to incline to the belief that the weight of authority upholds the view that the transferee of accommodation paper after due may enforce the same against the accommodation maker. Joyce on Defenses to Commercial Paper, § 282; 1 Dan. Neg. Instruments (5th ed.) § 72fi ; 2 Randolph, Comm. Paper (2d ed.) § i\77 ; Story, Prom. Notes (7lh ed.) § 194; 2 Par- sons, Notes & Bills, p. 29 ; Mersick v. Alderman,^'' 77 Conn. 634 ; Black V. Tarhell, H9 Wis. 390; 1 Am. Sc. Eng. Ency. Law, 3fi|. The uniform Xegdtiable Ttistrumcnts Tjaw (Sanborn's St. Stipp. 1900, §§ ir.75-lfi84-7) enacted by the Legislatnn" of this state, and in like manner adopted by thirty-four stales of the TTnion, and by Congress for the District of Columbia, in the effort to bring about more uniformity of decision regarding these instruments of commerce, appears to distinguish Itelween a holder for value and a holder in fine course. T'rannan f»n the Negotiable Instruments Daw (A. D. 190S) ; i^Ttiis rnsp is rfpnrtod in 2 A. & K. Ann. Cns. 2.'>4. with noto pntitlod " Ripht of transfpfpc of aroommodatrrl party after matvirity nn apainst accommodation party." — r. 334 HOLDER IN DUE COURSE: REQUISITES. [ART. V. Bunker on the Negotiable Instruments Law (A. D. 1905). Section 11)75-55," Sanborn's St. Supp. l!)0(j to St. ISDH, defines who is an accommodation party, and provides that such party is liable on an instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew him to be only an accommodation party. Section 1675," Sanborn's St. Supp. 190(), defines "holder" to mean the payee or indorsee of a bill or note who is in possession of it, or the bearer thereof, and defines " value " to mean a valuable con- sideration. On the other hand, a holder in due course is defined in section 1676-22; Sanborn's St. Supp. 1906 ^ [giving substance of this section.] In the hands of a holder otherwise than in due course such note is subject to the same defenses as if the notes were not negotiable. Sec- tion 1676-28,^ Sanborn's St. Supp. 1906. A negotiable instrument is disciiarged by the payment in due course by the party accommodated. It is not discharged by payment by a party secondarily liable thereon, but remits such party to his rights against him primarily liable (sec- tion 1679-2,^ Sanborn's St. Supp. 1906), except where it is made for accommodation and paid by the party accommodated (Id.). On the other hand, there are the cases of Chester v. Dorr, 41 N. Y. 279; Peale v. AddicU, 174 Pa. 543 ; Bacon v. Harris, 15 K. I. 599 ; Battle v. Weems, 44 Ala. 105, and Simons v. Morris, 53 Mich. 155. See, how- ever, in Alabama, the later case of Connerly v. Planters' & Mer. Ins. Co., 66 Ala. 432 ; in Michigan the later case of Warder et al. v. Gibbs, 92 Mich. 29. No doubt there exists a class of defenses in favor of the accommo- dation maker of negotiable paper which may not be urged in cases where the note is fair on its face and negotiated in due course before due to a purchaser for value, without notice or knowledge of any in- firmity, but which might be urged in favor of the accommodation maker if the note were overdue when negotiated, but the fact that the accommodation maker received no consideration is not one of these defenses, so long as the note was negotiated by his express or implied authority. The fact is here established that this note was in its incep- tion accommodation paper. Jones made to Herman no express restric- tion upon its use for that purpose. We do not overlook the testimony of Brand with reference to conversations between him and Herman not in belialf of Jones, which the court below from its findings must have rejected as incredible. We approve this rejection. The testi- mony is overborne by the circumstantial evidence. It is a question 11 N. y., § 55. — C. 1 N. Y., § 2. — C. 2N. Y..S91. — C. 3 N. v., § 97. — C. 4N. ¥., §202. — C. II. 1. b.] INSTRUMENT NOT OVERDUE. 335 upon which the precedents are at some variance whether or not the agency of the party accommodated to use the accommodation paper to raise money thereon (no express agreement appearing) expires with the maturity of the paper. The greater number of courts seem to favor the view that the agency to negotiate an accommodation paper and raise money thereon is not so limited. See citations supra. The courts of this state are not yet committed upon the question presented, and it seems more in harmony with the uniform Negotiable Instruments Law, and with the weight of judicial authority, to hold, as we do, that the mere fact that the accommodation note was trans- ferred by the party accommodated after due to a holder for value does not permit the accommodation maker to defeat recovery at the suit of the holder for value merely upon the ground that the note was an accommodation note, and without consideration moving to the accom- modation maker. This necessitates a modification of the judgment of the court below so as to permit the appellant to take judgment against the accommodation maker, Jones." § 91 FIRST NATIONAL BANTv OF WAVERLY, IOWA, v. FORSYTH. 67 Minnesota, 257. — 1897. Judgment for defendants. From an order refusing a new trial, plaintiff appeals. JIiTciiKLL, J. The only question presented by this record is whether the promissory note in suit was dishonored paper at the time it was indorsed to the plaintiff, and therefore subject, in its hands, to defenses existing between the original parties. The note was exe- cuted April 4, ism, and was payable July 1, ISO I, with interest pay- able annually. The court finds that it was indorsed to the plaintiff on the 22d of May, 1894; that on that day the plaintiff ])aid for it $343 ; that at that time there was interest overdue and unpaid on the note; and that that fact was known to the ph intiff at the time of the purchfiso. The evidence amply sustains these findings. No interest had ever been paid, and hcucc. there were, at the time of the purchase, two yearly instai'ments of interest overdue and unpaid. The sum which was paid for the paper fully justified the court in finding that the plainfiff knew of this default. Therefore the case is not distin- guishable from nntil- v. SrofI Co., M Minn. 77 (Gil. nO). We are asked, however, (o overrule that case, for the rea.son that it stands R Spt aNo \nrf v. Pnltrr. 22fl Til. fi2R, ropnrtod in 11 T,. N. R. 1034, with nntp entitlpH " Kffpct of trnriHfrr, nftrr mntiirity, of arrommoHntion pnpor whirli has been diverti'd from the iibo for which it was intrnHeH by the accommoflatinj» party." — C. 336 HOLDER IN HUE COURSE: REQUISITES. [ART. V. alone, ami is loiitrary to tlio uniform current of authorities in other iurisdietions. If this was tiiic, it would prohably be sulTicient reason for overruling the case, because uniformity is eminently desirable in rules governing negotiable paper. All the authorities agree that, when the principal of a note is pay- able by installments, and one installment is overdue and unpaid at the time the paper is indorsed and transferred, the whole j)aper is dishonored, and subject to all equities between the original parties. Whether or not the same rule applies when there is an installment of interest overdue is a contro- verted question — at least, the authorities are not all agreed on it. The cases holding, either directly or impliedly, that the indorsee for value of negotiable paper is within the protection of the law merchant, although interest is overdue and unpaid at the time of purchase, are the following: Bank v. Kirhy, 108 Mass. 497; Cromwell v. County of Sac, 96 U. S. 51; Kellcy v. Whitney, 45 Wis. 110; State v. Cobb, 64 Ala. 127; Brooks v. Mitchell, 9 Mees. & W. 15. The first three are the only cases in which the question is discussed, and of these the last two adopt substantially the line of reasoning used in Bank v. Kirby. Among the text writers Daniels, Bigelow, and Ticdeman favor this rule. The Supreme Court of Wisconsin had held the same way in Bofta V. Hewitt, 15 Wis. 260, but held differently, or at least expressed different views, in Hart v. Stickney, 41 Wis. 6.30, but finally overruled this dictum in Kelley v. Whitney, supra. The authorities on the other side of the question are Newell v. Gregg, 51 Barb. 263 ; Bank v. Scott Co., supra, and Chouteau v. Allen, 70 Mo. 290-339. While Newell v. Gregg is not the decision of a court of last resort, we do not find that it has ever been overruled in the state of New York, or that the Court of Appeals of that state has ever passed upon the question.* These are all the cases we have been able to find on either side. The line of rea- soning in Newell v. Gregg is that, as to notice of dishonor, there is no difference between an overdue and unpaid installment of principal and an overdue and unpaid installment of interest; that payment of •In Citizens' Hav. Bank v. Couse, 124 N. Y. Supp. (Sup. Ct., Trial T., Wayne Co., .Juno 2.3, 1910) 79, it was hold that where a note provided that interest was payable annually, a default of interest appearing thereon when it was transferred to plaintiff was sufficient to put plaintiff on inquiry as to any defects f nd to require submission of plaintiff's bona fides to the jury. .After discussinp Newell v. Grer/rj, 51 Barb. 263, the court said: " I am unable to distinguish that case from this. . . . The authority of the case of Neicell V. Gregfj has not been overthrown by subsequent decisions in this state, so far as I am aware, and I feel bound to follow it, notwithstanding the fact that a different rule prevails in other jurisdictions." Referring to a dictum to the contrary in Town of Ontario v. Hill, 33 Ilun. 2.50, affirmed 99 N. Y. 324. the court said: "Newell v. Gregrj was not cited by the court or in the briefs of counsel, and apparently was not brought to the attention of the court. Certainly there was no intention shown to overrule that case." — C. n. .1. c] GOOD FAITH AND VALUE. 337 one is as muc.i a part of the agreement as payment of the other; and tliat, in eitliur case alike, the indorsee takes the note with warning tiiat there has heen a default, and that the maker may have a defense ; and hence, if t!:e one renders the paper dishonored, there is no reason for holding tl:at th.e other does not. The reasoning in Bank- v. Kirhy is th.at, in their effect upon the credit of a note, there is a manifest difference between a failure to pay interest and a failure to pay prin- cipal ; that interest is an incident of the debt, and differs from it in that it is rot suFjcct to protest and notice to indorsers or to days of grace ; that the statute of limitations does not run against it until the principal is due, etc. If the question were a new one in this state, we might, possibly, be inclined to adopt the Massachusetts doctrine, as founded on the better reasoning. But Bank v. Scott Co. has stood unchallenged in this state for twenty-i^even years, and the decisions are not so numerous or so uniformly in favor of the opposite doctrine as to clearly prcAe that it is the es-tablished rule of the commercial world generally. If the rule ought to he changed, it is a very easy matter for the Legislature to do it. The practical difference between the two doctrines is not as great as miglit at first seem, for, even under the Massachusetts rule, the non- payment of interest is a fact proper to he considered, in connection witb other circumstances, upon the question whether the holder is en- titled to the position of one who has purchased the paper in good faith and without notice of existing defenses. And we do not think any court has ever gone so far as to hold that the defaults in payment of interest may not he so numerous and of such loiig standing as to be sufficient, of themselves, to justify a court or jury in finding that the holder was not a purchaser without notice. For these reasons we think that Baiik v. Scoil Co. should be followed, upon the ground, if no other, (jf slure decisis. Order affirmed.' (r) Musi hr lakrn in qond failh and fur value. §91 DkWITT v. I'KWKINS. 22 Wisconsin, 473. — 18f.8. Action on defendant's promissory note. The jury, by direction of the court, found for the plaintiff; and the defendant ap[)ealed from the judgment. The (jueslions in dispute will sufficiently appear from the opinion. •Contra: f^nion Jnrrntmrni Co. v. WpHs, .39 Can. Rnp. Ct. 02.';. 11 Am. k Ene. Ann. fas. 3."?. whi-rr* (he whnlf qiipsfinn is HiscnHsofl nt prrnt lonpth, ami where tliere is also a lonj^ (liHscMting upiniun. — C. NKOOT. 1N8TRDMKNTH — 22 33b HOLDEK IN DUK COUUSE : UKQUISITB8. [aKT. t. DixON, C. J. — TliL' plaiutiir, knowing the del'eudanl, and that lie was iu fair credit aud able to respond, purchased, shortly before its niaturitv. a promissory note apiinsl him for three hundred dollars and interest for six months, paying therefor only the sum of live dollars. As between the defendant and the payee, the note was invalid for want of consideration. Is the plaintiff a bona fide holder for value, so as to })rotect him against the defense of a want of con- sideration? We answer, no. The consideration paid by him was merely nominal. It is as if the note had been given to him, and he should claim the protection afforded a bona fide holder for value. It appears on the face of the transaction that it was not a negotiation of the note in the usual course of business, but that the sum exacted on the one side and paid on the other was to give that the semblance of a sale, wliich otherwise was intended as a mere gift, or, what is worse, a shift to get the note out of the hands of the payee so as to cut off the defense of the maker, for the payee's benefit. Either view is equally fatal to the action of the plaintiff, provided the defense of a want of consideration is established. Again, the buying of a note against a solvent maker, the purchaser knowing him to be such, for a mere nominal consideration, is very strong, if not conclusive, evidence of mala fides. It is constructive notice of the invalidity of the note in the hands of the seller — such as to put the purchaser upon inquiry, which if he fails to make, he acts at his peril. (Brown v. Tabor, 5 Wend. 56G; Mathews v. Poy- thress, 4 Ga. 287, 299 et seq., and cases cited; Anderson v. Nicholas, 28 N. Y. 600; Whithrrad v. Jordan, 1 Younge & Collyer [Exch.], 303, 328; Jones v. Smith, 1 Hare, 68; 1 Parsons on Notes and Bills, 254, 259-60.) The proof offered to show a failure of consideration should have been received, and the case submitted to the jury on this ground. [Omitting a question of evidence.] By the Court, — Judgment reversed, and a new trial awarded.'' § 91 Lord Blackburn in JONES v. GORDON. L. R. 2 Appeal Cases, 616. — 1877. Farttier, my Lords, I think it is right to say that T consider it to be fully and thoroughly established that if value be given for a bill ^ Accord: Smith v. Jansen, 12 Neb. 125 ($100 for $30) ; Hunt v. Sandford, 6 Yerp. (Tenn.) 387 ($333.33 for $125); Gould v. Stevens, 43 Vt. 125 ($300 for $50). — H. [See Bailey v. Smith, 14 Oh. St. 396, and exhaustive note to tliis case on " what amount paid constitutfs purchaser for valne " in 84 Am. Dec. 401- 404. — C.l 11. 1. c] GOOD FAITH AND VALUE. 339 of exchange, it is not enough to show that there was carelessness, negligence, or foolishness in not suspecting that the bill was wrong, when there were circumstances which might have led a man to suspect that. All these are matters which tend to show that there was dis- honesty in not doing it, but they do not in themselves make a defense to an action upon a bill of exchange. I take it that in order to make such a defense, whether in the case of a party who is solvent and sui juris, or when it is sought to be proved against the estate of a bankrupt, it is necessary to show that the person who gave value for the bill, whether the value given be great or small, was affected with notice that there was something wrong about it when he took it. I do not think it is necessary that lie sliould have notice of what the particular wrong was. If a man, knowing that a bill was in tlie hands of a person who had no right to it, should happen to think that per- haps the man had stolen it, when if he had known the real truth he would have found, not that the man had stolen it, but that he had obtained it by false pretenses, T think that would not make any ditterence if he knew there was sometliing wrong about it and took it. If he takes it in that way he takes it at his peril. But then I think that such evidence of carelessness or blindness as I have referred to may with other evidence be good evidence upon the question which, I take it, is the real one, whether he did know that there was something wrong in it. If he was (if I may use the phrase) honestly blundering and careless, and so took a bill of ex- change or a bank-note when he ought not to have taken it, still he would be entitled to recover. But if the facts and circumstances are such that the jury, or whoever has to try the question, came to the conclusion that he was not honestly l)lundering and careless, but that he must have had a suspicion that there was something wrong, and that he refrained from asking questions, not because he was an honest blunderer or a stupid man, but because he thought in his own secret mind — I suspect there is something wrong, and if I ask ques- tions and make further inquiry, it will no longer be my suspecting it, but my knowing it, and then I shall not be able to recover — I think tliat is dishonesty. I think, my Lords, that that is cslablished, not only by gf)od sense and reason, but by the authority of the cases themselves." * * * •"It may be true in this case that the plaintiff bouglit lufon- nialurity for value, and without notion of any (h'fense ; and yet lu- may not In- a purcJiascr in pood faitli. He may, wh«'n he l)Oiif;lit, have liad knowledfifc of facts whicli excited in liis mind huc)i suspirion'* as to the pa|)or that lie feared to make an investigation |pHt it would di.srloHe a defense, and tlnTcfore lie carefully shut his eyes and bought in the dark. Tn Hurh a case lie would not be a piircliaser in good faith." foKrisH. .T.. in Knoultryn v. Srhultz, N. D. 417, 422, quoted in Waltrrtion had heen fraudulent. The verdict was in favor of the defense, and the i)!:nntifr now in- sists that the judicial instruction should have heor, t'mt sii'^picious circumstance? attendinir the acquisition of his title wore rot ?utfiiient to defeat his claim, unless of a character to raise a conviction of actual fraud on his part. Counsel who so ably argued this case in behalf of defendant, did not deny that the modern English authorities were hostile to their position, but they went upon the ground that the rule thus sanctioned was an innovation, and consequently would not be followed by this court. The ancient rule, it was maintained, is that declared in GUI v. Cubitt (3 Barn. & Cress. 466). This decision was made in the year 1824, and, beyond all question, it sustains the principle now claimed by the defense, for in the reported case referred to the jury were ex- plicitly told that " there were two questions for their consideration : first, whether the plaintiff had given value for the bill, of which there could be no doubt; and, secondly, whether he took it under circum- stances which ought to have e.xcited the suspicions of a prudent and careful man." The authority is directly in point, and the only ques- tion which can arise is, whether it correctly states the ancient rule of the common law upon the subject. My first remark in this connection is, that from the opinion of the judges in the case of Gill v. Cubitt, it appears that the doctrine adopted was intended to be an innovation upon the antecedent prac- tice, and that it was avowedly opposed to a decision of the greatest weight. Twenty-three years before, in the year IfiOl, Lord Kenyon, in Lawson v. Weston (i Esp. 50), had expressly repudiated the idea that suspicious circumstances, in the absence of actual fraud, would avoid a note in the hands of a holder for value. But this doctrine did not harmonize with the views of the judges in the case of Gill v. Cubitt, and it was accordingly overruled. Tims, Chief Justice Abbott says, in his opinion: " I think the sooner it is known that the case of Law.^nn v. Wonlon is doubted, at least by this court, the better. I wish doubts had Ijeen cast on that case at an earlier time." And he concludes: " For these reasons, notwithstanding all the unfeigned reverence T feel for everything that fell from Tiord Kenyon, by whom Lavsan v. Wck- ton was decided, T cannot think that the view taken by that learned lord was a correct one." Nor is this rejection of this antecedent deci- sion attempted, in the slightest degree, to be put upon the foundation of pre-existing authority. Not a rase is referred to for its justifiration, and althontrh in Lnvsnn v. Wrutnn. the authoritv of Tjord Marisfielil, in Miller v. Race, was mooted, no remark is made on that circum- 342 ilOLDKK IN UUL COUKSK: KliQUiSlTES. L'^'^'^'- ^• stauL-e. I tliink a poiusal of llu' o[.iiiiuMs in ^'(7/ v. Cubitt will satisfy auyoue that it was a well-understood intention to deviate from the le^'al rule upon this suhjeet which had previously existed; or, if any douht should renuiin, such doubt will certainly he dispelled by a refer- ence to the case of Slater v. West (;i Carr. & Payne, 325), decided in the year 1828, in which Chief Justice Abbott (then Lord Tenterden), in laying down the doctrine that a person is not entitled to recover who takes a bill of exchange " under circumstances which ought to excite suspicions in the mind of a reasonable man," says: "This doctrine is of modern origin. I believe I was the first judge who decided this point at nisi prius. The court to which I belong con- firmed my decision, and the other courts have, I believe, acted on the same principle." And Chief Justice Bayley, in his opinion in Gill v. Cubitt. is equally explicit. " But, it is said " — such is his language — "th^t the question usually submitted for the consideration of the jury in cases of this description, up to the period of time at which my Lord Chief Justice's direction was given, has been whether the bill was taken bona fide, and whether a valuable consideration was given for it. I admit that has been generally the case." From these citations, I think it is manifest that the judges who participated in the decision of the case of Gill v. Cubiit were aware that by the views expressed by them, they introduced a novelty, and departed from the older practice of the courts. That the principle adopted in that case was an innovation, seems to me unquestionable. I have shown that it is irreconcilable with Lawson v. Weston. So it plainly occupies the same relation to the case of Peacock v. Rhodes (Doug. 632), decided by Lord Mansfield in 1781. The rule which it endeavors to overthrow will be found sustained in Miller v. Race, (1 Burr. 452) ; Price v. Neal (3 Burr. 1355) ; Grant v. Vaughn (3 Burr. 1516) ; Anonymous (1 Lord Raymond, 738) ; Morris v. Lee (2 Lord Raymond, 1396.) There was not a case cited upon the argument, nor have my researches led me to one anterior to the decision of Gill v. Cubitt, which sustains the doctrine there propounded. T confidently conclude, therefore, that the case above criticised cannot stand on the ground of ancient authority. In my apprehension, the original rule as it existed in the time of Lords Kenyon and Mansfield was, that nothing short of mala fides would vitiate the title of the holder of negotiable paper taking it for value, before maturity. It is entirely out of the question, therefore, for this court to regard Gill v. Cubitt as imperative authority. It is true that that case was followed for a time to a considerable extent by the English courts. But, as I have already said, in England the original rule has been reinstated. In Backhouse v. Harrison (5 B. & Ad. 1098), Mr. Justice Patterson says : " I have no hesitation in saying that the doctrine first laid down in Gill v. Cubitt, and acted upon in other cases, has gone too far and ought to be restricted." And in Goodman v. Harvey (4 Ad. & El. ii. 1. d.] notice: what constitutes. 343 870), Lord Denman thus forcibly expresses the rule at present pre- vailing in tlie courts at Westminster : " The question I offered to sub- mit to the jury was, whether the plaintiff had been guilty of gross negligence or not. I believe we are all of opinion that gross negli- gence only would not be a suflBcient answer where the party has given consideration for the bill. Gross negligence may be evidence of mala fides, but it is not the same thing. We have shaken off the last rem- nant of tlie contrary doctrine. Where the bill has passed to the plain- tiff without any proof of bad faith in him, there is no objection to his title." The following cases recognize and enforce the same rule: (Uther v. Rich, 10 Ad. & El. 7S4; Artbouin v. Anderson, 1 Ad. & El. (N. S.) 498; Stephens v. Foster, 1 Oromp., Mees. & Eos. 894; Palmer V. Richards, 1 Eng. L. & Eq. 529; Marston v. Allen, 8 Mees. & Wels. 494; Raphael v. Bank of England, 17 C. B. 161.) An examination of the American reports wull disclose a similar mutation of judicial opinion upon this subject. For a time, in sev- eral of the states, the rule broaclied in the case of Gill v. Cubitt has been acted upon ; but now, in most of them, and in those of the most commercial importance, that rule has been entirely discarded.* (34 New York, 247, Magee v. Badger; 7 Bosworth, 543, Bel. Bank of Ohio v. Hodge et al.; 10 Cush. 488, Worcester, etc.. Bank v. Dorches- ter, etc.. Bank; 4 Geo. 287, Mathews v. Poythress; 6 Md. 509, Ellicott V. Martin; 36 New Hamp. 273, Crosby v. Grant.) The subject has also recently been settled, after an elaborate dis- cussion and full consideration in the Supreme Gourt of the United States, in the case of Goodman v. Simonds (20 ITow. 343), the result being an explicit repudiation of the doctrine tliat suspicious circum- stances will, per se, vitiate the title to commercial paper. From this brief review of the cases, I think it may be safely said that the doftrine introduced by Lord Tonderden stands at the present moment marked with the disapproval of the higliost judicial authority. Nor does such disapproval rest upon merely speculative grounds. That doctrine was put in practice for a course of years, and it was thus, from experience, found to be inconsistent with true commercial policy. Its defect — a great defect, as I think — was, that it provided nothing like a criterion on which a verdict was to be based. 'I'he rule was, that to defeat the note, circumstances must be shown of so suspicious » The earlier MaKsachusettn casoH which were in accord with the rule of Qill V. Cubitt wore overruled by later cases. See f'^illebroHyti v. Haywood, 190 MasM. 472, 47f>. In Tennessee this rule wns in force until chnnped hy the ennetment of the Nepof iiililc Instriitnents I, aw. See Unaka Nat. Hank v. Butlrr. 11.3 Tenn. .574. ITie rule of dill v. Cubitt is still followed, however, in Vermont where the Nepotiahle Instrununts I,:iw has not yet heen enacted. See l.imrrirk Sat. Bank v. .\tlnmx. 70 Vt. 1.T2: followfrl in f'apilnl Snr. Hank v. Montprlicr Hav. Bank, 77 Vt. 189, and I'ieraon v. Uuntington, 82 Vt. 482. — C. 344 HOLDER IN UUK coursk: Hi'tiUiaiTES. [art. V> a cluiracter that they wouKl i)iit a mau ol' ordinary prudence ou in- quiry — and by force of such a rule it is obvious every case possessed of unusual incidents would, of necessity, pass under the uncontrolled discretion of a jury. An incident of the transaction from which any suspicion could arise was sutlicient to take the case out of the control of the court. There was no judicial standard by which suspicious circumstances could be measured before connnitting them to the jury. And it is precisely this want which the modern rule supplies. When mala fides is the point of inquiry, suspicious circumstances must be of a substantial character, and if such circumstances do not appear, the court can arrest the inquiry. Under the former practice, circum- stances of slight suspicion would take the case to the jury; under the present rule, the circumstances must be strong, so that bad faith can be reasonably inferred. Thus the subject has passed from the indefi- nite to comparatively delinite; from the intangible to the compara- tively tangible. From a mere matter of fact, the question, to some extent, has become one of law. I cannot doubt, when we recollect that inquiries of this nature always attend that class of cases where judgments are sought against innocent and unfortunate parties, that the change is most beneficial. All experience has shown how hard it is to prevent juries from seizing on the slightest circumstance, to avoid giving a verdict against the maker of a note which had been obtained by fraud or theft. To pre- serve the negotiability of commercial paper and guard the interests of trade, it is absolutely necessary that large power should be placed in the judicial hand w^hen the question arises as to w^hat facts are sufficient to defeat the claim of the holder of a note or bill which has been taken before maturity, and for which value has been paid. It is only in this mode that the requisite stability in transactions of this kind can be retained. But I do not think the difference between the two rules above dis- cussed is as great as some persons have supposed. In my apprehen- sion, the entire variance consists in the degree of proof which the court will require in order to submit the inquiry to the jury. Mere care- lessness in taking the paper will not, of itself, impair the title so ac(juired; but carelessness may be so gross that bad faith may be inferred from it. Nor is it necessary, in order to defeat the title of the holder, that he have actual knowledge of the facts and circum- stances constituting the particular fraud ; it is sufficient if he have knowledge that the paper is tainted. with any fraud, although he may be ignorant of the nature of it. In the case of May v. Chapman (16 Mees & W. 355), Baron Parke says: "I agree that 'notice and knowledge ' means not merely express notice, but knowledge, or the means of knowledge, to which the party wilfully shuts his eyes." Reviewed in tl>i« sense. 0=; I have already rrn^arked, the nri^iciple seems to me a highly salutary one, and, in the language of Professor II. 1. corporation flofH not put a ptirchaHcr of the note upon inrpiiry as to whether its insuance was iinthorizefl. LACr«iHi.lN, .1., said in part: "The rule applicable to notes made by oflicerH of n corporation to their own order, and used to pay tlieir indiviliinl otdifr.itions. has no application to notes madn by the duly authorized oflicers, and payable to a director. It ia not uncommon 352 HOLDER IN DUE COURSE: REQUISITES. [aRT. V. §95 BOROUGH OF MONTVALE v. PEOPLE'S RANK. 74 Nkw Jersey Law (Ct. Err. and App. ) 464. — 1907. GuMMERE, l^. ,1. This is an iiciioii of i('|)lr\iii liiuu^Mit by the bor- ough of Montvale to recover from the possession of the People's Bank for iHroctors to have business dealinpa with the corporation, and it is porfectly lefjitiniate if tlicy refrain from votinji;. and do not use tlieir personal inlluence witli their fellow directors for their own advantajie at the expense of (he corporation. But the officers of a corporation individually make the contracts in behalf of the corporation and issue its oblifjations. 'J'hey may not lawfully contract with themselves, or use the credit of the corporation for their own benefit individually. There is reason, therefore, for the rule that one taking the ne,coti;)ble i>;\per of a corporation in payment of an individual obli<;ation of an officer is chargeable with notice and is put upon inquiry as to whether the is>uanee of the paper was authorized ( Wilnon v. Met. El. It. It. Co., 120 N. Y. 150; Hanover Nat. Bank v. Am. Dock i£ Trust Co., 148 N. Y. 012; Chcerrr v. /^i/. Co., 1.50 N. Y. 59; Rochester rf C. T. R. Co. v. PavJoiir, 104 N. Y. 281 ) : but the reason does not exist in the case of a director, and therefore the rule is not applicable. The plaintirt's. therefore, were entitled to have the jury instructed, as matter of law, that the fact that the payee was a director of a corporation was not notice to the plaintifTs of any infirmity in the note, and did not put them upon any inquiry concerning the circumstances under which it was issued or came into the hands of the payee. Any other rule would seriously impair the negotiability of the corporate securities." In Havana Cent. R. Co. v. Knickerbocker Trust Co., 198 N. Y. 422, it was held (quoting the headnote) tliat "Where the treasurer of a corporation, authorized to sign checks for it as treasurer, drew cheeks to his own order and deposited them in a bank to his own account, the bank on which the checks were drawn paid them, and the bank in which they were deposited, and which collected them, credited the proceeds thereof to the individual account of the treasurer, who thereafter drew out such proceeds, the latter bank is not liable to the corporation. The deposit bank of the corporation upon which the checks were drawn was its agent to determine whether the checks were prop- erly payable or not. When it decided that they were and paid tliem to another bank, in which they had been deposited l»y the treasuj-er for his indi- vidual account, which latter bank received the proceeds in good faith, this was an acknowledgment that its treasurer in fact possessed authority to draw such checks, and the corjjoration has no right to recover the proceeds from tlie baid< in which they were deposited." Wii.i.ard Barii.ktt, J., on p. 429, said: "The distinguishing feature between this case and the cases relied vipon to support the judgment which has been rendered herein is that in tlie cases cited the form of the transaction was notice to the party receiving the check or other instrument that it was sought to be used to pay an individual debt out of trust funds. Here the checks were not designed to discharge any obliga- tion owing to the defendant. The defendant merely colbeted the amount? thereof and placed the same to the credit of the payee. ... It seems to me that when a corporation opens an account with a banking institution it con- fers upon that institution the power to determine whetlier any check drawn upon the account conforms to the contract between the depositor and the depositorv. When it makes a mistake in the determination of such a question the depository may be liable to the depositor; but the depositor cannot recover back the money i)aid on such check to a third person who has received it in pood faitli reiving on the representation of the deposit bank that the check was all right and has sub.sequently parted with the money." — C. JT 1. d.'\ NOTICE: WHAT CONSTITUTES. 353 certain coupon bonds, dated July 1, 1903, payable to bearer on the first day of July, 1913, and made and executed by the borough, but which it avers were never issued or delivered by it. The case was tried in the court below upon an agreed state of facts, from which it ap- peared that the bonds in suit were two of an issue of thirty $500 bonds, each of which was signed by the mayor of the borough, one Alfred M. C'rotty, sealed with the corporate seal of the municipality and duly attested by the borough clerk; that some of the bonds were sold by the borough, and tlie remainder were left by it in the custody of the mayor until some further disposition of them should be made by the borough; that the bonds in suit are two of those which were left in the custody of the mayor; that while in his custody the latter hypothecated them with the defendant bank to secure the payment of a loan made by it to him; that the bank had no knowledge, until long after the making of the loan and the pledging of the bonds, that Crotty was not in lawful possession of them and authorized to sell and dispose of them ; and, finally, that the loan made by the bank to Crotty still remains unpaid. Upon these facts, the court held as matter of law that there was never any delivery of the bonds in suit such as to impress upon them the quality of negotiable instruments, and that they had no legal force or existence in the hands of the de- fendant, and directed judgment to be entered in favor of the borough. It will be observed that the bonds in suit were made and executed about a year after the act of the Legislature, entitled " A general act relating to negotiable instruments (being an act to establish a law uniform with the laws of other states on that subject)," approved April 4, 1902, went into etlect. P. L. p. 583. * '* * It is suggested that, although the bank had no knowledge of any lack of authority on the part of Crotty to dispose of the bonds, the fact that he signed them as mayor charged it with notice of the defect in his title within the meaning of the fifty-second section '• of the statute. But it is provided by the fifty-sixth section® of the act that " to constitute notice of an infirmity in the instrument or defect in the title of the person negotiating the same, the person to whom it is negotiable must have had aclual knowledge of Ihc infirniity or defect, or knowledge of such fads, that his action in taking the in- strument amounted to bad faith." Knowledge on the part of the bank that the person to whom they made the loan was the mayor of the borough, if it had such knowledge, affords no ground for holding that its action in taking the luinds amounted to bad faith. Not- withstanding that Crotty executed them in his ofTicial eaj)acity, he had as complete a right as any other citizen of the borough or any member of the p\jblic at large to become a purchaser of its securities, and the 6N. Y.. §01. — r. e N. Y., § 05. — r-. NKOOT. IN8TttDMKNT8 — 23 364 IIOLDEH IN Dl'K COlmsK: ItKQUISlTES. [ARt. V. fact that lie assumed to deal with them as his own in his transaction with the bank, instead of being notice to it that he was betraying the trust reposed in him by the municijiality and was fraudulently })utting upon the market securities which had not been issued by it, justified the bank in believing that he was in fact just what he represented himself to be by his conduct, namely, the owner of the securities. The bank is therefore the holder in due course of the bonds in suit, as such holder is defined by the statute. The rights of the holder in due course, and the liability of the maker of a negotiable instrtinient which has been put into circulation by a person other than the maker and without the authority of the latter, are prescribed by the fifteenth section ^ of the act, which ia as follows: [Quoting it.] Applying to the borough the conclusive presumption which this last-cited section of the statute prescribed for the protection of a holder in due course, it must be held to have made a Valid delivery of these bonds, so far as the defendant bank is con- cerned, and the latter is therefore entitled to retain possession of them as outstanding obligations of the municipality. * * * The judgment under review will be reversed.^ §95 FOX V. CITIZENS' BANK AND TRUST COMPANY. 37 SOITHWESTERN REPORTER (TeNN.) 1102. — 1896. Bill to enjoin defendants from further prosecuting suits on notes executed by complainants to J. C. Anderson, trustee, and indorsed by him to defendants. Decree for defendants. Complainants appeal. It is conceded that there is a total failure of consideration, and that there would be a perfect defense against Anderson. 7 N. Y.. § .3.5. — C. 8 This casp is commented upon as follows in 24 Bankin The addition of the term " trustee," " agent," etc., to the name of the payee is restrictive in «fT«tt. It merely K'v«h notice of the riglits of the cestui or the [irincipnl ; it cannot if)<.'icaliy 1)0 liehi to j;ive notice of n defense in favor of the mnker. See as to restrictive indorsements, Nerj. Inst. L., ^ On. See also 8 27. siihsoc. fi; Dnm« v. (larr, N. Y. 124. antr. p. 121. A qualified indorsement is not notice of any infirmity in the instrument. Ijomax V. Pivot, 2 Hand. (Va. ) 247. The death of the maker, known to the hiiyer. does not deprive the buyer of the position of n hold.r in due course. <}lnrk V. Ihnyrr, in.") Mass. 2Ifl. The df)ctrine of notice hy lis prrnlenn has no application to negotiable paper. County of Warrrn v. Marry, 97 l'. S. 10(5. Nf.r should the maker, before maturity, be liable to garnishment at the suit of a creditor of tlie payee, for a purchaser from the payee in due course should be protected. 1 Daniel on Neg, Inst.. § 800o. — H. ;55S llOLDKU IN DUE COUUSK : REQUISITES. [aRT. V. Under the ruling of tho romt lit> recovered $500. Sis contesta- tion is, that lie is entitled to recover the face of the note, with interest. Alter the evidence was concluded, tlie plaintitl' asked the court to charge the jury, that if they believed, from the evidence, that the plaintiff purchased the notes in controversy of WiHiam Irwin for a valuable consideration, on the 1st of November, \H72, and paid -$500, part of the consideration, on 21st day of January, 1873, before any notice of any fraud in the contract, he was entitled to recover the whole amount of the notes; and the court refused this instruction. But the court charged the jury, — " That, in the first place, the jury must find that there was fraud in the inception of the notes as alleged; and that if the defendants failed to satisfy the jury of that fact, the whole defense fails. " That if the fact of fraud be established, and the jury find from the evidence that the plaintiff paid $500 upon the notes witliout notice of the fraud, and that after receiving notice of the fraud tiie plaintiff paid the balance due upon the notes, he is protected only pro tanto; that is, to the amount paid before he received notice." It does not appear that, upon the purchase of the notes in suit, the plaintiff gave his note or other obligation which might by its transfer subject him to liability. His agreement seems to have been an oral one merely, — to pay the amount agreed upon, as sliould be required; and he had paid $500, and no more, when notice of the fraud was brought home to him. The argument of the plaintiff in error is that negotiable paper may be sold for such sum as the parties may agree upon, and that, whether such sum is large or small, the title to the entire paper passes to the purchaser. This is true; and if the plaintiff had bought the notes in suit for $500, before maturity and without notice pf any defense, and paid that sum, or given his negotiable note therefor, the authori- ties cited show that the whole interest in the notes would have passed to him, and lie could have recovered the full amount due upon them. {Fowler v. StricMand, 107 Mass. 552; Park Banl v. ^Vatson, 42 N. Y. 490; Bayilc of Michigan v. Green, 33 Iowa, 140.) The present case differs from the cases referred to in this respect. Tlie notes in ques- tion were purchased upon an unexecuted contract, upon which $500 only had been paid when notice of the fraud and a prohibition to pay was received by the purchaser. The residue of the contract on the part of the purchaser is unperformed, and honesty and fair dealing require that he should not perform it; certainly, that he should not be permitted, by performing it, to obtain from the defendants money which they ought not to pay. As to what he pays after notice, he is not a purchaser in good faith. He then pays with knowledge of the fraud, to which he becomes a consenting party. One who pays with knowledge of a fraud is in no better position than if he had not paid at all. He has no greater equity, and receives no greater pro- TI. 1. e] NOTICE BEFORE FULL AMOUNT PAID. 359 tection. Such is the rule as to contracts generally. In the case of the sale of real estate for a sum payable in instalments, and circum- stances occur showing the existence of fraud, or that it would be inequitable to take the title, the purchaser can recover back the sura paid before notice of the fraud, but not that paid afterwards. (Bar- nanl v. Camphell, 53 N. Y. 73; Lewis v. Bradford, 10 Watts, 82; Juvenal v. Jackson, 2 Harris, 529; Id. 430; Youst v. Martin, 3 S. & H. 423, 430.) In Weaver v. Barden (49 N. Y. 291), the court use this language: " To entitle a purchaser to the protection of a court of equity, as against a legal title or a prior equity, he must not only be a pur- chaser without notice, but he must be a purchaser for a valuable consideration : that is. for value paid. Where a man purchases an estate, pays part and gives bonds for the residue, notice of an equita- ble incumbrance before payment of the money, though after giving the bond, is sufficient. {Touville v. Naish, 3 P. Wms. 306; Story v. Lord Windsor, 2 Atk. 630.) Mere security to pay the purchase price is not a purchase for a valuable consideration. {Hardingham v. Nicholls, 3 Atk. 301; MaundreU v. Manndrell, 10 Ves. 246, 271; Jackson v. Cadwell, 1 Cowen, 622; Jewell v. Palmer. 7 J. C. 65.) The decisions are placed upon the ground, according to Lord Ilard- wicke, that if the money is not actually paid the purchaser is not hurt. He can be released from his bond in equity." The plaintiff here occupies the same position as the bona fide pur- chaser of the first of a series of notes, of which, after notice of a fraud, he purchases the rest of the series. He is protected so far as his good faith covers the purchase, and no further. Upon receiving notice of the fraud, his duty was to refuse further payment; and the facts before us required such refusal hy him. (Authorities supra). Crandell v. Vickery (45 Barb. 15G), is in point. * * ** To the same purport in principle, although upon facts somewhat different, are the cases of darland v. The Salrm limik (!> l^Iass. lOS) ; The Fulton Bank v. The Phoenix Bank (1 Hall, :a',2) ; and U7a7c v. Springfield Bank (3 Sandf. S. C. 227). The cases are nujnerous that where a hnna fide holder takes a note misa[)f)ropriated, fraudulcnlly obtained, or without consideration, as collateral security, he holds f(tr the amount advanced upon it, and for that amount" only. Williams v. Smith. 2 Hill. i'.'H ; Alhilrr v. Unrlshnrn. 1 Zabr. 663.) * * * The case V)efore us is governed by the rule Itial the portioii of an unperformed contraet which is completed after notice of a fraud is not within the principle which protects a bona fide purchaser. No respectable authority has been cited to us sustaining a contrary position, nor have we been able to find any. The judgment below is base*) upon authority, and upon the soundest principles of honesty and fair dealing. It has our concurrence, and is affirmed. 360 HOLDER IN DUE COUKSIi. [aHT. V. 2. Holder Deriving Title from Holder in Due Course. §97 SIMON V. MEimiTT. 3a Iowa, 537. — 1871. Action by the holder of a promissory note against the maker. There was a verdict and judgment for defendant. Plaintiffs appeals. Beck, Ch. j. * * * Among other instructions the court gave the jury the following: " H" you liiid from the evidence that the note in question was obtained of the makers by fraud and deception, and if you further find that the plaintiff, Simon, knew of such fraud and deception, or if he had reason to know or believe that said note was fraudulently obtained of the maker, and that it is void, and if, be- cause of such knowledge or belief, he refused to receive or purchase it of Leggett until an indemnifying bond was executed to him by Leggett, then the law of the case is with the defendant, and if you so find then your verdict should be for defendant." And the instruc- tion directed the jury that if plaintiff, " in good faith, for a valuable consideration, obtained the note in the ordinary course of business, before maturity, without notice of fraud, or without having reason to know or believe that the note was obtained by fraud of the maker," they should find for plaintiff. These instructions are erroneous. They leave out of view the well- settled doctrine that if Leggett, the transferer of plaintiff, was such an innocent and bona fide holder of the paper, that in his hands it could have been enforced against defendant, plaintiff, although he may have taken the note charged with notice of its infirmities, may re- cover in this action.^ If Leggett so held the note, his title and rights thereto were such that they could not have been defeated by defendant. In the transfer, the title and rights held by him passed to plaintiff. The notice which plaintiff may have had of the fraud in the original transaction does not defeat the rights he acquired by the transfer. 2 This doctrine applies to a purchase after maturity as well as to a purchase before maturity. Barker v. Lichtenhrrper, 41 Neb. 7.'51. Rut it does not apply to a purchase from a subsequent holder in due course by a prior party who when he held the instrument was chargeable with notice of its infirmities. Thus, in Kost v. Bender, 25 Mich. 515, 510, Cooley, J., said: " It is perfectly true as a general rule, that the hrma fide holder of nego- tiable paper has a right to sell the same, with all the rights and equities attaching to it in his own hands, to whoever may see fit to buy of him, whether such purchaser was aware of tiie original infirmity or not. Without this right he would not have the full protection which the law merchant designs to afford him. and negotiable paper would cease to be a safe and reliable medium for the exchange of commerce. For, if one can stop the negotiability of paper against which there is no defense, by giving notice that a defense once existed while it was held by another, it is obvious that an important element in its value is at once taken away. But I am not aware that this rule has ever been applied to a purchase by the original payee, nor can I II. 3.] AMOUNT OF RECOVERY. 361 One reason of the rule is obvious. The maker of the note would be liable to the transferer; his condition is made no harder by the note coming into the hands of one having notice of its infirmities. We do not understand that there is any conflict in the authorities upon this point. (TloskelJ tf- Gerveij v. ^Vhitmore, 10 Me. 103; Smith v. Hiscock, 11 Id. 449; Prentice & Messenger v. Zane, 2 Graft. 262; Boyd v. McCann, 10 Md. 118; Howell v. Crane, 12 La. An. 126; see authorities cited in Story on Prom. Notes, § 191.) The instructions above set out, being in conflict with this doctrine, ought not to have been given. For this reason the judgment of the District Court is reversed. 3. Rights of Holder in Due Course to Recover Full Amount. § 96 BTSSELL r. DTCKERSON. 64 Connecticut, 61. — 1894. Baldwin. J. (.After disposing of another matter.) — The plaintiff's appeal is based on the instruction given to the Jury, tliat in the action against the maker of a negotiable accommodation note by an indorsee, who took it in good faith for value before maturity, and witliout notice of any infirmity, if the defendant proves that it was obtained from him by the payee and indorser by fraud, the rule of damages is the amoiint paid by the plaintiff. A note given for the accommoda- tion of the payee, which he has thus negotiated to a bona fide pur- chaser, stands, as between the holder and maker, on the same footing as if it were business paper.^ The jury should therefore have been perceive that it is essontial fo the protortion of the innoppnt indorsee, that it should he. It cannot \ic very important to him, that there is one person incapahle of siicreedinp to his equities, and who eonseqiiently would not he likely to hecome a purehaser. If he may sell to all the rest of the eonimunity, the market value of his security is not likely to he afTectrd hy the circumstance, that a Hinj^le individual cannot compete for its purchase, especially when we eonsider that the nature of negotialile securities is .such that their market value is very little influenced hy competition. Nor do 1 perceive that any rule or principle of law wouM Im- violated hy permitting the maker to set up thia defense a^ain'-t the payee, when he hecomes indorsee, with the same effect as he miphl ha\e done hefiire it had her^n '-old at all. or that there is any valid reason afrainnt it." KoHt V. livnilrr, nuprn, is approvcfl in Arnfinn Coffee Co. v. Itoprrs, lOf) Va. .51, reported in R A. Si K. Ann. (as. 62.T. with note entitled "Title accjuircd by payee of instrument fratidulently f)rocured from maker, or subject to other defenses, by repurchase after transfer tf> innocent third person."- — ('. 3 ^?usine^s paper (as rlist in^uished from acconunodat ion paper), may l)C purchased lor any price without involving any <|uestion of iisiiry, for (lie trans- • action is a sale and purcha-e and not a loan. Cram v. UrntlrirhR. 7 Wend. ( N. Y.) 569; Corning v. Pond, 20 Hun (N. Y.), 120. I5ut a transfer of accom- 'M2 ii()|,iii:h in dvk conRsic. [art. v. instriK'toil tliat the rule of daiiia^'os imdor the circumstances stated in the charge, was the face ol" the note, wilh iulcrcsl lioiii its maturity. (Belden v. Lamb, 17 C'oiui. Ill, I5;5; Firal Eciiesiaslical Society v. Looiitis, !'•? Conn. 510, ol I ; Hun laud v. Fowler, 17 Conn. 347; Crutn- well V. Cot: Illy of Sac, DG U. S. 51, (iO.) There is error, and a new trial is ordered upon the plaintiff's appeal, in ease one slioiild not he granted hy the City Court, on the ground that the verdict was against the evidence. §96 Ji-:FFEKSON BANK 7;. CHAPMAN-WHITE-LYONS CO. 123 SoiTTHWKSTKBX (Tenn.) 641. — 1909. Action on note. Jndijment for plaintiff and defendant appeals. McAltster, j. * * * It is said, however, by counsel for appellant, that in no event is the complainant entitled to recover exceeding the ainonnt it paid for said note, with interest. It appears that the decree below was for the full amount of the note, with interest and attorney's fees amount- ing to $251.75. Counsel, in support of his position, invokes the prin- ciple announced in Oppenheirner v. Bank, 1)7 Tenn. 19, wherein it was said : " We hold, however, that, these notes being fraudulent in their inception and without consideration between the original i)arties, the bank will only be entitled to recover to the extent of the sum actually paid by it, to wit, the sum of $1,200 and interest. In otiier words, we hold there was a negotiation of the notes in due course of trade only to the extent of the amount actually paid." Again, in Campbell v. Brown, 100 Tenn. 215, it is said: "The purchaser of a note at a rate of discount equivalent to 40 per cent, per annum cannot, though innocent of any wrong, recover more than the amount actually paid against t1>e u'akc^r in fraud of whose rights the note was transferred." * * * But we are of opinion that this question is now settled by section 57 * of the nego- moflation papT by the accommoriatpd party to one knowing the fatts, is a loan and not a purchase and sale, and if it be at a rate of discount f^reater than that allowed by the usury laws, is usurious. Ibid; 1 Duiiel on Nej^. Inst., §§ 7.50-7.5.3. 'Jfany cases hold the same as to aecommodation paper even thoujih the buyer does not know it to be accommodation paper: but this view has been criticised. Ibid. There has been great conflict among the authorities as to tlie amount a holdei in due course may recover from an accommodation party oi- n party whose assent to the paper has been procured by fraud. 1 Daniel on Nej;'. Tnst.. ?5 7.54-75R. The Neg. Inst. Law. ^ Ofi. settles the law in conformity to the rule of the Supreme Court of the United States. Cromwell v. County of Sac, 96 I'. S. 60: /?. Co. v. fichuttc, 103 U. S. 118. — H. *N. Y., § 96. — C. II. 3.] AMOUNT OF RECOVERY. 363 tiable instruments law, which provides that the innocent holder " may enforce payment of the instrument for the full amount thereof against all parties liable thereon."' Judgment affirmed.* §96 NATIOXAL BANK OF MICHIGAN v. GREEN. 33 Iowa. 140.— 1871. Action by holder against indorser. The answer set up a sale for less than the face value. Demurrer to this defense overruled. Judg- ment for defendant. Day, Ch. J. — In objection to the second count "^ it is claimed tliat the holder of negotiable paper is entitled to recover of the indorser the whole amount thereof without reference to the amount paid therefor. Upon this question the decisions are not in harmony. * * * Without attempting a review of the authorities bearing upon this branch of tlie demurrer, we deem it sufficient to state as our opinion that the indorsee in good faith of a promissory note, is entitled to recover of the indorser the amount of the note. This view has the unqualified indorsement of Mr. Parsons. (See 2 Parsons, Notes and Bills, 428. Also, Durant v. Bavin, 3 Dutch. 623, 63.^).) It follows that the demurrer to the second count should have been sustained. Reversed.^ § 96 MERRIT r v. BENTON. 10 Wendelf., lift. — 1833. Action against indorser. Judgment for amount of note and notarv's fees. Defendant moves for new trial. » " It is innisted by defendant'.s counspl that as plaintifT paid only $1,000 for the note and mnrt^afic. tlic excrntion of whicli \va« induced by fraud, the sum -n paid and interest thereon is the limit of his reeovery. and not the sum Rpeeified in the note. A diversity of jndieial nfteranee exists on this important question, as will be seen by examininp the antliorities collated in (he notes appended to the cases of rinilry v. .S'»/m//i. 14 Oh. St. 3J)r», 84 Am. Dec. 38.5. anri Rrfirll v. rirrrinfi. 77 f'al. .")72. 11 Am. St. Pep. .307. Whatever the rule may lx» in otlier iuri«dirt if>n". it is settled in thix state by statute ffhe Nepo- tiable Instruments I.nw]. enacted prior to the pivinp of the note and mortpape, that the hr)lder of a nepot i.-iblc instrument in iliie course may enforce payment for the full amount thereof apainst all [lartifs liable tIicreo?i; P., i^- C. Comp., t, 4450 fN. Y.. ? Pfil." MnoRF, .T.. in f.nssns v. MrCnrty. 47 Or. 474. at p. 484. — r. •Only so much of the opinion is pivt-n as relates to this. — FI. T The amfiunt of recovery a-.'ainst the indorser lias been a matter of preat contention. 1 Drininl on X'lv Inst.. §§ 7»iven. — H. 9 For recovery of " re-exchange " see Bills of Kxchanpe Act, § .57. subsec. 2; 2 Daniel on Neg. Inst., §§ 1444-1447; Bank nf U. i>n(t fidr bohler before it is due. and for a valuable consideration, iii such case the holder acquires riglits which did not belong to the pavee. He stands in a different relation to the promisor. These rllitioivil ri'jhts and privi'cgis have been conferred upon s\icli holder by law, for good and sufficient reasons, too well known and understood 372 uicJUTs OF noLUEB. [aht. v. to need to he stated, but which are incident to, and dependent upon, the attribute of ncj^otiability, wliich these inslruiuents possess. Ami it may be hiiil ilown as tlio j;oiieral rule, as the general prin- ciple api)lying to this class of cases, that such a note, thus ne<^otiated and in the hands of such a holder, is not liable to any defense which the maker had as against the original payee. To this general rule there are some exceptions/ among which are — 1. When a statute not only prohibits the making of a contract, but provides that the same shall be void to all intents and purposes; or whore the law provides that any contract made or securities given upon any illegal consideration shall be absolutely void, then the note which embodies such contract, or is based upon such considera- tion, is held void everywhere and in the hantls of every holder. In England, and in most of the United States, there are or have been laws against usury, which not only, by a general prohibition of usury, made that an illegal consideration for a note, but also provided that all bills or notes founded upon such a consideration should be abso- lutely void. Such, however, is not the law in this state on that sub- ject, and it is believed that we have no statutes with similar provisions. Hence, here usury may be a good defense to a note as against the original party, but not as against an innocent indorsee, for value, etc. 2. When the note is a forgery, it is void everywhere. 3. When tlie maker belongs to a class of persons who are ordinarily, and as a general rule, on grounds of ])ublic policy, held incompetent to contract at all, such as infants, married women, alien enemies, and insane persons,® including spendtlirifts and otiiers under guardianship, who have been by some statute declared incompetent to contract. 4. Notes signed by agents without authority. In none of these cases (except the first, which, as we have seen, does not apply in this State), is a note valid in the hands of anyone; and the party who discounts such paj)er is bound to inquire, at his peril, whether the note offered to him is signed by a party capable and competent in law to bind himself, or by an agent duly authorized to bind his principal. Besides this, he is bound to inquire whether the party from whom he receives it is competent to make such transfer in his own right, or is authorized to do it for his principal, for whom he assumes to act. If there is a failure in either of these points of capacity or authority, it will not avail tlie party that he is a bona fide bolder, for value, without notice. Tie must look to his indorser if he has one, and if he has not he must suffer loss. 'These exceptions constitute what are known as real or absolute defenses. See Ripelow. Bills, Notes and Checks (Students' ed.), pp. 174-205. — H. 9 See Walker v. Winn, 142 Ala. 560. reported in 4 A. & E. Ann. fas. 537, with note entitled " Validity and effect of negotiable paper signed or indorsed by lunatic," — C. in.] DEFENCES. 373 5. Another case might be mentioned, which has been made an ex- ception to the general rule above stated by express provisions of the statute, — as where a note is attached by the trustee process. Tliere, by operation of the statute, the maker of a note may have a perfect defense against an indorsee, for value, without notice, and before due. So notes discharged by operation of insolvent laws might afterwards be transferred, by possibility, so as to form another exception, where the indorsee, holding the note bona fide, etc., might be met with a perfect defense on the part of the maker. But these last cases throw- no light upon the question we are considering. These are the principal, perhaps all the exceptions to the general rule stated above, that no defense is available against an innocent indorsee, for value paid before due.^ But where the contract was illegal, being prohibited by law, or the consideration was illegal, as usury, wagers, compounding a felony, restraint of trade or of mar- riage, etc., or where there was a want or failure of consideration, and even where the note has been paid, — all these defenses,- and many more, cannot be made against the note in the hands of such a holder. And the question here raised is, whether, in case of duress, or fraud, wheie there is mala fides, but it is all on one side, and the other party to the note has been induced to sign it by force or by fraud, and is in every respect an innocent party, such defense shall ' avail him as against such a holder, for value, etc., who seeks to col- lect it. And we think ^uch a defense caiinot avail the maker against such nn indorsee of the note. The authorities favor this view. * * ♦ Suppose an individual, then, were about to purchase a note pay- able to bearer, before it was due, and pay a fair equivalent for it, with a view of collecting it of the innker, and where he is to have no indorser to rely upon, — wliat would be bis duty in order to proceed safely? First, he must assure himself of the genuineness of the signature, or, if it purported to be signed by an agent, he must > To thpsp should l.P a(| tl.f oxtinpuishment of the instrnment by cancel- lation or altf ration. Sec Noj;. Inst. L.. §§ 204-2nfi. post. Tho rnsp'of want of delivery, or want of de read in view of its purpose, and not ai intending to repeal other Htat\ites passed in the exercise of the police power of the state to suppress crime and fraud." See also the extract from the opinion of f'l-i.f.KN, C. J., in Schleningcr r. Gilhooly, 189 N. Y. I, given in note on p. 379, — C. 3T8 RIC.IITS OF IIOI.OKR. [ABT. V. sui'h :i caso, tho note will be declared void in the hands of an innocent holder." In the case of Bolion'!< Assignees v. liroini. etc, 101 Ky. 355, the court said: " Tn the case of Cochran v. (leniKui Insurance Pank. 9 Ky. Law Kep. liX?. the Superior Court held that 'a hill or note based upon a jxanibling consideration is absolutely void, and the drawer or maker is not bound to even an innocent bolder.' And in the case of Farmers' <.{'• Drovers' Bank of Louisville v. IJnser, 13 Ky. Law Tfep. HfiG, the court says: 'The whole current of authority is that the obligor nuiy insist upon the illegality of the contract or con- sideration, notwithstanding the note is in the hands of an innocent liolder for value, in all tb.ose cases in which he can point to an express declaration of the Legislature that such an illegality makes the con- tract void.' " For these reasons, the judgment of the lower court is affirmed.^ §96 SCHLESINGER v. LEHMAIER. 191 New York, 69. — 1908. Haight, J. This action was brought by the receiver of the Federal Bank, a domestic corporation engaged in the banking business in the city of New York, to recover the amount of two promissory notes made by the defendant for $500 and $454.50, respectively, each made payable to the order of the maker and indorsed by him. The com- plaint alleges that before maturity the notes were discounted by the Federal Bank, and that the plaintiff as receiver now holds them. The answer, in substance, alleges that the notes described in the complaint were made by the defendant and delivered to the Globe Security Com- pany in payment for another note of the defendant held by that com- pany and for the sum of $135.50 interest, which sum was far in excess of interest at the legal rate and was. therefore, usurious, and that the Federal Bank subsequently discounted the notes and received them, with full knowledge of the payment of such usurious rate of interest. Upon the trial the City Court awarded judgment for the plaintiff, holding that the facts alleged and set forth in the answer did not in law constitute a defense to the action. We are again called upon to construe the provisions of the National Banking Act, so called, and our own Banking Law, based thereon, which is as follows : " Every bank and private and individual banker doing business in this state 'may take, receive, reserve and charge on every loan and discount made, or upon any note, hill of exchange or other evidence of debt, interest at the rate of six per centum per annum ; and such interest may be taken in advance, reckoning the days s See exhaustive note in 119 Am. St. Rep. 172, entitled "Defenses to notes and other obligations given for gambling debts." — C. III.] DEFENCES. 379 for which the note, bill or evidence of debt has to run. The knowingly taking, receiving, reserving or charging a greater rate of intere.^t shall be held and adjudged a forfeiture of the entire interest which the note, bill or e\idenco of debt carries with it, or which has been agreed to be paid thereon. If a greater rate of interest has been paid, the person paying the same or his legal representatives may recover back twice the amount of the interest thus paid, from the bank and private or individual banker taking or receiving the same, if such action is brought within two years from the time the excess of interest is taken. * * * The true intent and meaning of this section is to place and continue banks, and private and individual hankers on an equality in the particulars herein referred- to with the national banks organized under the act of Congress entitled 'An act to provide a national cur- rency secured by pledges of United States bonds, and to provide for the circulation and redemption, thereof,' approved June the third, eighteen hundred and sixty-four." (L. 1870, ch. 163; L. 1893, ch, 689, § 55, as amended by L. 1900, ch. 310, § 1.) The general statutes of our state forbid the taking of interest upon the loan of money in excess of the rate prescribed by law, and also render void all bonds, notes and other contracts given to secure a loan made in violation thereof. (2 E. 8. 772, §§ 2, 5; L. 1S37, oh. 430, § 1.) These statutes still remain in full force as to individuals" and corporations except in so far as they have been modified or superseded by the Banking Law enacted for the benefit of banking corporations and private and individual bankers, hut the precise extent of such modification is a question involving some difhcultv in its solution and has already been the subject of discussion in this court. In the case of Sclilesinper v. Gxlhooly (189 N. Y. 1) the construction of the National Banking Act and of our state Banking Law was discussed in two opinions, one written by Cullen, Ch. J., and the other by Vann, J., in which the chief judge reached the conclusion that the statutes referred to only applied to cases where the banks had been paid an unlawful rate of interest and that they had no application to negotiable paper purchased by the banks which had previously been tainted with usury; while Vann, J., reached the conclusion that these statutes extended to and covered negotial)lc paper purchased hv the bank before maturity in good faith with^)ut knowledge of its previous taint. Two of my associates concurred with the chief judije and two concurred witli Judge Vann. Willard Bartlett, J., concurred with Judge Vann in the result, upon the ground that, under the \egotiid)le Instruments Law, a hnnn fidn purchaser takes a note free from the defense of usury.'' The judgment was. therefore, afbrnu'd, tlius hold- • But RPe pxtract from hlnr v. /<>i.iliu/,\ fi5 Misc. ( N. V.) inj). in note 7 on p. .180. — f. Tin Srhtr.tinqrr v. fhJhnrJy, I Pf) N. Y. 1. .T.T, f I I r.KN. (". .?., snid: "I nhall not diBcusB at any length the effect of the Negotiable Instrumentft Law. . . 3S0 RIGHTS OF HOLDER. [ART. V. in*!; that, whore a bank has in good faith discounted negotiable paper for vnhio h(>foro maturity witlioiit notice that it was already void for usurv, the defense of usury is not available, and that must now be regarded as the law of this state. The question we now have presented was not disposed of in the former case, and is quite ditferent. It is now contended that the bank may purchase void paper of the holder, with full knowledge that the maker has been compelled to pay a usurious rate of interest, and that by such purchase the paper becomes validated, and in the hands of the bank may be collected of the maker, if such an interpretation is adopted, then it practically nullities our usury laws, for any person who has exacted usury for the loan of money may take his paper into a bank and arrange for its prosecution and thus evade the defense of usury. The decision of our court in the case of Schlcsinger v. Gil- hooly (supra) has already eliminated from our usury statutes their most drastic features, so far as banks are concerned, and no longer can a person put in circulation negotiable paper void for usury, which may be transferred to innocent banks who purchase in good faith with- out knowledge of its taint, and thus be deprived of the right to collect it from the maker. I think that under well settled principles of statutory construction we cannot construe its general language as repealing the provisions of the usury, gaming and lottery laws, which render obligations given on such considerations abso- lutely void. The Negotiable Instruments Law applies only to commercial paper, and the effect of the usury and gaming statutes, like that relating to patent rights, is to withdraw notes given on such considerations from the domain of negotiable instruments. {Eastman v. l^hain, 65 N. Y. 522.)" But see the following extract from the case of Klar v. Kn/ttiuk, 65 Misc. (N. Y. Sup. Ct., App. T.) 199, decided in November, 1909, where the court took the contrary view of the effect of the Negotiable Instruments Law: " GiLDERSLEEVE, J. . . . Until the enactment of section 90 of the Nego- tiable Instruments Law, in respect to notes having a usurious inception, and the decisions in Hchlesinger v. Gilhooly, 189 N. Y. 1 ; Hchlesinge.r v. Lehmaier, 191 id. 09, and Hchlesinger v. Kelly, 114 App. Div. 546, there was no uncer- tainty about the law in this state in respect to notes usuriously given. It was plainly declared in Claflin v. Bnorum, 122 N. Y. ,385. The court said: ' A note void in its inception for usury continues void forever, whatever its subsequent history may be.' Section 96 of the Negotiable Instruments Law provides as follows: 'A holder in due course holds the instrument free from any defect of title of prior parties and free from defenses available to prior parties among themselves and may enforce payment of the instrument for the full amount thereof against all parties liable thereon.' "We think it was the purpose of the legislature in enacting this provision to mako a radical change in the law of this state affecting negotiable paper, and that the law now is that k bona fide holder in due course holds the note free from any taint of usury. The f^chle.singer cases, .swpm, unmistakably and specifically declare the law to be that a bank acquiring in good faith, for value, commercial paper, void between the parties for usury, may recover thereon. We see no reason why the provision under consideration does not apply to, and may not be invoked by, individuals as well as banks. In Wirt v. Stubhlefield, III.] DEFENCES. 381 Until a recent amendment of section 378 of the Penal Code the acceptance of an unlawful rate of interest for the use or loan of money was a misdemeanor and punishable criminally. The taking of usury is still a wrong and against the public policy of the state. If the statutes are to receive the construction contended for, then the officers of a bank may become parties to a wrong and, against the policy of the state, aid the wrongdoers in their receipt of usury by the taking of such paper and practically collecting it for them. Assuming, for the purposes of the argument, that national and state banks are govern- mental agencies, and that among the powers given to banks, either state or federal, is that of purchasing negotiable paper, and tbat in the discbarge of such powers they are entitled to protection, evidently such protection was only intended to apply in so far as tbe officers of such banks acted in good faith in accordance with the law, and not where they departed therefrom and knowingly and intentionally joined with wrongdoers in an attempt to evade the laws. The learned Appellate Division appears to have entertained the view that the purchase of commercial paper with knowledge that it was void for usury did not place the bank in a worse position than it would have been in had it taken usurious interest itself. The answer to this is that the statute makes it different. The usury laws, as 17 App. D. C. 2S3, the court, in constniinp the same provision enacted by ConRn-ss for the District of rolnmbia as the Negotiable Instruments Law. took the view that we have adopted and made no distinction between indi- viduals and banks. " We think Mr. .Justice Lauohlin. in f^chlesinger v. Kelly, supra, correctly stated the law of this state, when he said: 'The usury laws remain in full force, but to facilitate the free circulation of nepotiable paper by protecting holders thereof in due course for value in their ripht to enforce the same, the UHury laws are to that extent superseded by the provisions of section 06 of the Negotiable Instruments Law.' . . " SKAnrRV. .7. f conmrrinp) . I concur in the opinion of Mr. .Tustice OiLnFR- fiXS.^•^^r. in so far as that opinion holds that the enactment of section 90 of the Negotiable Instruments Law changed the existing law, and that under the provisions of the Negotiable In^-truments Law the defense of usury cannot be Bet up against a bona fitlr holder. I lliink that the cr)rrect interpretation of that law was first given by Mr. .Tustice Laughlin in Srhlr.titifirr v. Krlh/. 114 App. Div. 54f5. It seems to me that f^chh-sinprr v. Oilhnnly, IHf) N. Y. 1, left this fpieMtion imdetermined, and that we are now at liberty to adopt the views expressed by Mr. Justice Laughlin in the Kelly case and by .Judge Willard Bartlett in Nehlesirtfier v. (lilhooly. fiiiprn." Lkiiman. .J., wrote a flissenting oftinion. It must be ohnf-rved. however, that the decision in Klnr v. Kofitiuk, supra, is that of an inferior appellate court, and in the f.ice of the contrary doctrine maintninecl hy the N. Y. Court of Appeals prior to the enactment of the Negotiabln Instruments I>aw. and the dicta in the opinions of that court in the Rrhlr sinner cases in 180 N. Y. L and 1!)! N. Y. flO (reported herein at p. .37S ) , Hubsefjuent to the enactment of that statute, it is doulitfiil whether that decision will be followed by the latter court when the question coipeB ■quarejy before it, — V, 382 lUoiiTs or iioldkr. |art. v. between individuals, have not been changed, and as between the maker and the holder, ii' usury is exacted, the paper is still void and no reeovery can ho had thereon.* Not so, however, with banks which have received unlawful interest; the paper is not all'ected or rendered void, hut the l)aiik is subjected to a forfeiture of all interest and to penalties for that which it has received. In Cnpuiiif/ri v. Allirri (KiT) N. Y. 255) we held that the penalties could be collected in an action bronj^lit for that purpose, but how could such an action be maintained against the Federal Bank upon the paper in q\iestiou ? It has received no unlawful rate of interest. It has not violated any statute in this regard. The unlawful interest was collected by the Globe Company before the bank had become the purchaser of the paper. That com- pany was not a banking corporation, and consequently is not liable for the penalties provided by the Banking Law. True, it forfeits its right to collect the balance remaining due upon the paper, and it may be liable for the interest received in excess of the legal rate; but, under the view of the Appellate Division, the maker would he deprived of his defense of usury, and also of his right to maintain an action for the penalties provided by the Banking Law. To my mind, the legis- lature never intended such an interpretation of the act. It pertains to negotiable instruments, and should be construed in connection with the other legislation upon the same subject. In the Negotiable Instruments Law it is expressly provided that a holder, who becomes such before maturity in good faith and for value without notice of any infirmity, holds the same " free from any defect of title of prior parties and free from defenses available to prior parties among them- selves, and may enforce the payment of the instrument for the full amount thereof against all parties liable thereon." TTere we have the legislative intent expressed in clear and unmistakable language. It establishes a just and proper rule which protects the hank in making purchases of commercial paper in good faith before maturity, for value and without notice of infirmity. But where it purchases with actual knowledge of the infirmity or defect, or knowledge of such facts that its action in taking the instrument amounted to bad faith, it is not protected. I am, therefore, of the opinion that the matter set forth in the answer is sufficient in law to constitute a defense and that, conse- quently, the judgment of the Appellate Division should be reversed and the order of the Appellate Term affirmed, with costs to a))pellant in the Appellate Division and this court. CuLLEN, Cb. J. T concur in the opinion of my brother Hatgiit for reversal, but deem it proper to add a word explanatory of my position. In the case of Schlesinfjer v. GUhooly (189 N. Y. 1) I dis- « P.iit spo pxtrart from Klnr v. Kostkik, 6.5 Misc. (N. Y.) 100, in note 7 on p. .380. — C. III.] DEFENCES. 383 sented from the decision in an opinion. While I retain the views then expressed, I recognize fully the effect of the decision there made and accept it as a binding authority declaring the law to be that a bank acquiring, in good faith for value, commercial paper void between the parties for usury, may recover thereon. In that case, however, the recovery was sought to be upheld on two separate grounds, the Banking Laws, state and national, and the Negotiable Instruments Law. Had a majority of the court placed their decision on either ground I should have felt the decision binding not only as to the point actually decided, but as to the propositions on which the decision was founded. I under- stand, however, that while my opinion in its entirety commanded the assent of two only of my associates, the member of the majority who based his decision on the effect of the Negotiable Instruments Law expressed his approval in that part which dealt with tlie effect of the Banking Laws, though it nuiy be that approval was obiter, his action proceeding on a different question. Therefore, for the reasons stated in my former opinion as well as for those stated in the opinion of my brother Haight, now rendered, I concur in the reversal of the judg- ment appealed from. WiLLARD Bartlett, J. I concur in the opinion of Haight, J., for reversal — having concurred with the opinion of the chief judge in Schlrsitiffrr v. GUhooJij (189 N. Y. 1), except as to the effect of the Negotiable Instruments Law, although the statement of such con- currence was inadvertently omitted from the report of that case. Werner and Hiscock, J J., concur with Haight, J., and Cullen, Ch. J., and Willard Bartlett, J., also concur in memoranda with Haight, J.; Gray and Chase, JJ., dissent. Judgment accordingly.' §96 ARND V. SJOBLOM. 131 Wisconsin, 642. — 1907. •Suit on promissory note. I'lniiitiff gave ovidcTico thai bo wns an innocent purchaser for value before flue witli no notice of any defense or invaliflity. It was stipuhifed that the note was in fael given in payment for lighfning rods erected .ipon defendant's tmihlings in accorflance with a jtrior written ef)iitraet made by the defendant, where- upon, on motion of defeiidnnl, judgment of nonsuit was entered dis- missing the action, from \vlii( li the plaintiff appeals. DoDfiE, J. The eonstitntif)nality of eli. 1.'{H, Laws of l!»0;{, as ap- plierl to iifites given for lightning rods, is settled by Quiggh v. ffrr- • ThiH cBBe is roport««cl with a note in 16 L. N. R. 626, and thp (lilhooly ca»e, 189 N. Y. 1. is roportffl witli n nofo in 12 A. * E. Ann. f'n«. 1138. For a di»- ciUHion of thrse two ch.hph, won lii CaHH and Comment, 130. — C 384 HKiins OK iioi,i)i;i{. [art. v. mnn. l.'?l Wis. .S7!), inarkin Chapter 4.38. Laws of 1003, is now to be found in the following sections of the Wisconsin NogotiaMe Instruments Law: " Section 1675 la. All promissory notes and other evidences of indebtedness, taken or ^ven for any liphtninj: rod, patent, patent riyht, stallion or interest therein, as the case may be, shall have written or printed thereon in red ink the words: 'The consideration of this note is the sale of a lightning rod, patf'nt. patent right, stallion, or interest therein, as the case may be.' "Section 16i.5-Ib. Any person who shall sell a lightning rod, patent, patent right or stallion, or any interest in a lightning rod. patent, patent right, or stallion, who shall take a promissory note or other evidence of indebtedness for the whf)le or any part of the consideration thereof, and who shall fail to state the consideration for said note as provided by section 1 of this act, or in words of similar import, shall be liable to a penalty equal to the face of the note so taken. " Section ir»7.5 Ic. All notes or other evidences of indebtedness taken as the whole or a part of the consideration for any lightning rod, patent, patent right, stallion, or interest therein, which shall express upon their face the III.] DEFENCES. 385 invoked. Other decisions affirming the validity of commercial paper in hands of innocent holder, notwithstanding illegality and consequent original invalidity, are Union T. Co. v. Preston Nat. Bank, 136 Mich. 460; ^ Traders' Bank v. Alsop, 64 Iowa, 97; Johnson v. Meeker, 1 Wis. 436, 441 ; Mack v. Prang, 104 AVis. 1 ; Keller v. Schmidt, 104 Wis. 596, 602. We feel no doubt that the principle of Knox v. Clifford is sound and supports the right of this appellant to recover upon the facts as they appeared at the time of the nonsuit. consideration for which they are taken, as required by section 1 of this act, shall he non-nefrotiable, and be subject to all the defenses in the hands of an innocent holder that the same would have if not transferred." The above statute was held unconstitutional so far as it relates to patents and patent rights in ■/. //. Clarke Co. v. Hire, 127 Wis. 4ol ; but c'on^titiitio)i;il as to the provision relating to stallions in Quiggle v. Herman, 131 Wis. 379, and as to the provision relating to lightning rods in the case to which this is a note. Several states have provisions of a similar nature relative to negotiable instruments given for patent rights either incorporated in their Negotiable Instruments Acts (as, for example, N. Y., § 330) or found in independent statutes. The Arkansas statute (Kirby's Die., §§ 513-510) was held consti- tutional in Woods v. Carl, 203 U. S. 358. affirming 75 Ark. 328. and in Ozan Lumber Co. v. Unicn Co. Rank, 207 U. S. 251, reversing 145 Fed. 344. The New York Act (now Neg. Tnst. Law, § 330) was held constitutional in IJerdic v. Roessler, 109 N. Y. 127. For decisions on the constitutionality of similar acts in other states, see the cases in the note to Troo(/,s v. Carl, 75 Ark. 328, in 5 A. A E. Ann. Cas. 420. — C. 2 In Union Trunt Co. v. Preston \a(. Tianh, 130 Mich. 400, it was held that certain sections of the Michigan Banking Law forbidding and making it a crime for a bank officer or employee to certify a check when the amount thereof dfies not stand to the credit of the drawer on the books of the bank, do not make a check so certified invalid in the hanils of a hona fide holder for value. rARPKNTKR. .!., said: "It by no means folhtws, however, because a contract made in violation of law, common or statutory, is void between the original parties, that, if given the form of negotiable paper, it is void in the hands of a hona fide holder. In44 and 1!I45 of these statutes, relating to insur- ance premiums, and also in cases where the title of the person negotiat- ing such instrument is void under the provisions of section 167G-25 of this act." Section UiTG-'>.'r) * a})plies only to the case where the signer did not know the nature of the instrument and could not have obtained such knowledge by the use of ordinary care. Sections 1944, 1945, refer to a note given for an insurance premium, which by said sections is required to bear upon its face a declaration of its consideration, and omission thereof is penalized. But for these express exceptions the provision is general that the innocent holder may enforce payment for the full amount free from defenses available between the original parties. Such specific exceptions strongly indicate that no others were intended. We cannot escape the conclusion that this statute supports plaintiff's right of recovery.^ note in due course; since it is not tlie policy of the law to render negotiable paper void in the hands of innocent holders where the statute has not so expressly declared." Similarly, it was held in Citizens' St. Bank v. Nore, 67 Neb. 69. that (quot- ing the iieadnote): "In this state a statute will not be construed so as to make a negotiable instrument void in the hands of a bona fide purchaser unless the act specifically so declares. A note given for medical services by an unlicensed practitioner may be recovered on by a bona fide purchaser, not- withstanding the provisions of chapter 55 of the Compiled Statutes, prohibit- ing the practice of medicine without a license." — C. 3 This section is the same as section 96 of the N. Y. Neg. Inst. Law through the words "against all parties liable thereon," the balance of the section ia found only in the Wisconsin statute. — C. * This section is in substance the same as section 94 of the N. Y. Neg. Inst. Law except for the addition of the following words found only in the Wis- consin statute: " and the title of such person is absolutely void when such instrument or signature was so procured from a person who did not know the nature of the instrument and could not have obtained such knowledge by the u.se of ordinary care." Referring to the.se additional words, the court, in Aukland v. Arnold, 131 Wis. 64, at p. 67, said: "In terms it expresses the rule of law recognized in the decisions of this court when it was enacted, which was to the effect that, when a signature to a negotiable instrument is ob- tained by falsely and fraudulently misrepresenting its character, and the per- son signing it could not have obtained knowledge of the falsity and fraud by the use of ordinary care, this makes the title to the instrument absolutely void as to such signer. Butler v. Corns, 37 Wis. 61; Walker v. Ebert, 29 Wia. 194 freported herein at p. 3871; Keller v. Ifuppold. 11.5 Wis. 53(1; Franklin T. Killilea, 126 Wis. 88." — C". ■'» A' an authf)rity in othf-r -tates upon tlie pro[)er construction and effect of the Negotiable Instruments Law, this decision loses much of its value III.] DEFENCES. 387 By the Court. — Judgment reversed, and cause remanded for new trial. " § 94 WALKER v. EBERT. 29 Wisconsin, 194. — 1871. Action against maker of a promissory note, by a holder who claims to have^^irchased it for full value, before maturity. Defense: that defendant is a German unable to read and write the English language; that tlie payees fraudulently induced him to sign an instrument repre- sented to him to be a contract of agency, but which in fact was the promissory note in question. Evidence to establish this defense ruled out, and judgment given for plaintiff. Defendant appeals. DixoN', ('. J. — The defendant, having properly alleged the same facts in his answer, offered evidence and proposed to prove by him- self as a witness on the stand, that at the time he signed the supposed note in suit, he was unable to read or write the English language; that when he signed the same, it was represented to him as, and he believed it was, a certain contract of an entirely different character, which contract he also offered to produce in evidence ; that the con- tract offered to be produced was a contract appointing him, defendant, agent to sell a certain patent right, and no other or different contract, and not the note in (juestion; and that the supposed note was never delivered by the defendant to any one. It was at the same time stated that the defendant did not claim to prove that the plaintiff did not purchase the su])posed note before maturity and for value. To this evidence the plaintiff objected, and the objection was sustained by the court, and the evidence excluded, to wliich the defendant excepted; and this presents the only question. We think it was error to reject the testimony. The two cases cited by coTinselToFfhe defendant {Foster v. McKinnon, L. R. 4 0. P. 704, and Whitney v. Siiydrr, 2 Lansing, 477) are very clear and explicit upon the f>oint, and demonstrate, as it seen)S to us, beyond any rational doubt, the invalidity of sueli paper, even in the hands of a holder for value, before maturity, without notice. The party whose signature to such paper is obtained by fraud as to the character of the paper itself, who is ignorant of such character, and has no intention of sign- ing it, and who is <,niilty of no negligence in allixing his signature, or in not ascertaining the character of the instrument, is no more bound by it than if it were a total forgery, the signature included. becaune it is basrd, at leant in part, upon the proviaions in the Wisconsin statute TcftTTfi] to in notes 3 nnrl 4, supra, not found in tin- statutes of the other statPH. — *'. • This case in rc-fiorted with notes in 10 L. N. S. 842, and in 11 A. A E. Ann. Caa. 1179, continuing note in 4 \. & K. .Ann. ("as. 353. — C. 388 UUUITS OK llOl.DKK. [arT. V. The reasoning of the ahove i-uscs is en li rely satisfactory and con- elusive upon this point. 'I'lie incjuiry in siuli eases goes back of all questions of negotiability, or of tlie transfer of the supposed paper to a pureliaser for vahie, before maturity and without notice. It chal- lenges the origin or existence of the paper itself ; and the proposition is, to show that it is not in law or in fact wliat it purports to be, namely, the promissory note of the sujiposed maker. For the pur- pose of setting on foot or pursuing this inquiry, it is immaterial that the supposed instrument is negotiable in form, or that it may have passed to the hands of a bona fide liolder for value. Negotiability in "such eases presupposes the existence of the instrument as having been made by the party whose name is subscribed; for, until it has been so made and has such actual legal existence, it is absurd to talk about a negotiation, or transfer, or bona fide holder of it, within the meaning of the law merchant. That which, in contemplation of law, never existed as a negotiable instrument, cannot be held to be Buch; and to say that it is, and has the qualities of negotit^bility, because it assumes the form of that kind of paper, and thus to shut out all inquiry into its existence, or whether it is really and truly what it i»urports to be, is petitio principii — begging the question altogether. It is, to use a homely phrase, putting the cart before the horse, and reversing the true order of reasoning, or rather pre- venting all correct reasoning and investigation, by assuming the truth of the conclusion, and so precluding any inquiry into the ante- cedent fact or premise, which is the first point to be inquired of and ascertained. For the purposes of this first inquiry, which must be always o|X'n when tlie objection is raised, it is immaterial what may be the nature of the supposed instrument, whether negotiable or not, or whether transferred or negotiated, or to whom or in what man- ner, or for what consideration or value paid by tlie holder. It must always l>e competent for the party proposed to be charged upon any written instrument, to show that it is not his instrument or obliga- tion. The principle is the same as where instruments are made by persons having no capacity to make binding contracts; as, by infants, married women, or insane persons; or where they are void for other cause, as, for usury; or where they are executed as by an agent, but without authority to bind the supposed principal. In these and all like cases, no additional validity is given to the instruments by putting them in the form of negotiable paper. (See Veeder v. Town of Lima, 10 Wis. 2ft7 to 2f)9, and authorities there cited. See also Thomas v. Watkiris, K, Wis. 549.) And identical in principle, also, are those cases under the registry laws, where the bona fide purchaser for value of land has been held not to be protected when the recorded deed under which he purchased and claims, turns out to have been procured by fraud as to the signa- ture, or purloined or stolen, or was a forgery, and the like. (See III.] DEFENCES. 389 Everts v. Agnes, 4 Wis. 343, and the remarks of this court, pp. 351- 353, inclusive.) In the case first above cited (Foster v. McKinnon), the defendant was induced to put his name on the back of a bill of exchange by the fraudulent representation of the acceptor, that he was signing a guaranty. In an action against him as indorser, at the suit of a bona fide holder for value, the Lord Chief Justice, Boville, directed the jury that, " If the defendant's signature to the document was obtained upon a fraudulent representation that it was a guaranty, and the defendant signed it without knowing that it was a bill, and under the belief that it was a guaranty, and if he was not guilty of any negligence in so signing the paper, he was entitled to the ver- dict;" and this direction was held proper. In delivering the judg- ment of the court upon a rule nisi for a new trial, Byles, J., said : '' The case presented by the defendant is, that he never made the contract declared on ; that he never saw the face of the bill ; that the purport of the contract was fraudulently misdescribed to him; that when he signed one thing, he was told and believed he was signing another and an entirely different thing; and that his mind never went with his act. It seems plain on principle and on authority, that if a blind man, or a man who cannot read, or for some reason (not implying negligence), forbears to read, has a written contract falsely read over to him, the reader misreading to such a degree that the written contract is of a nature altogether different from the contract pretended to be read from the paper, which the blind or illiterate man afterward signs, then, at least if there be no negligence, the signature so o})tained is of no force; and it is invalid, not merely on the ground of fraud, where fraud exists, but on the ground that the mind of the signer did not accotnpany the signature; in other words, that he never intended to sign, and therefore, in contemplation of law, never did sign the contract to which his name is appended." And again, after remarking the distinction between the case under consideration and those where a party has written his name u])on a blank piece of paper, intending thai it should afterwards be filled up, and it is improperly so filled, or for a larger sum, or where he has written his name upon the back or across the back or across the face of a blank bill stamp, as indorser or acceptor, and that has been fraudulently or improjterly filled, or in short, where, under any cir- cumstanres, the party has voluntarily affixed his signature to com- mercial paper, knowing what lie was doing, and intending the same to he put in circulation as a negotiable security, and after also showing that in all surli cases the party so signing will be liable for the full amount of the note or bill, when it has onee jiassed into the hands of an innocent intlorsee or holder, for value before maturity, and that such i.s the limit of the protection afforded to such an indorsee or holdpr, the learned judge proceeded: — 390 KUiiiTs or iioLDKU. [aut. v. ** Rut, in the case now luulor consideration, the defendant, accord- ing to the evidence, if believed, and tin- linding of the jury, never intended to indorse a bill of t'xchange at ail, hut intended to sign a contrai't of an entirely ililTeri'nt nature. It was not liis design, and, if he were guilty of no negligiMu-e, it was not even his fault, that the instrument he signed turned out to be a l)ill of exdiange. It was as if lie had written his name on a sheet of paper for the purpose of franking a letter, nr in a lady's album, or an order for admission to Temple Church, or on the fly-leaf of a book, and tliere had already been, without his kiiDwlcdge, a hill of exchange or a promissory note payable to order inscribed on the other side of the })a])er. To make the case clearer, suppose the bill or note on the other side of the paper in each of these eases to be written at a time subsequent to the signature, then the fraudulent misapplication of that genuine signa- ture to a ditferent purpose would have been a counterfeit alteration of a writing with intent to defraud, and would therefore have amounted to a forgery. In that case the signer would not have been bound by his signature, for two reasons — first, that he never in fact signed tlie writing declared on, and, secondly, that he never intended to sign any such contract." " In the present case, the first reason does not apply, but the second does apply- The defendant never intended to sign that con- trait, or any such contract. Pie never intended to put his name to any instrument that then was or thereafter might become negotiable. He was deceived, not merely as to the legal effect, but as to the actual contents of the instrument." The other case first above cited (Whitney v. Snyder) ^ was in all respects like the present, a suit upon a promissory note by the pur- chaser before maturity, for value, against the maker; and the facts offered to be proved in defense were the same as here; and it was held that the evidence should have been admitted. In Nance v. Larey (5 Ala. 370), it was held that where one writes his name on a blank piece of paper, of which another takes posses- sion without authority therefor, and writes a promissory note above the signature, which he negotiates to a third person, who is ignorant of the circumstances, the former is not liable as the maker of the note to the holder. In that case the note was written over the signa- ture by one Langford, and by him negotiated to tlie plaintiff in the action, who sued the defendant as maker. Collier, C. J., said : — " The making of the note by Langford was not a mere fraud upon the defendant ; it was something more. It was quite as much a forgery as if he had found the blank, or purloined it from the de- fendant's possession. If a recovery were allowed upon such a state of facts, then every one who ever indulges in the idle habit of writing hi= name for mere pastime, or leaves sufficient space between a title and his subscription, might be made a bankrupt by having promises III.] DEFENCE^. 391 to pa}' money written over his signature. Such a decision would be alarming to the community, has no warrant in law, and cannot re- ceive our sanction." And in Putnam v. Sullivan (4 Mass. 54), Chief Justice Parsons said : — " The counsel for the defendants agree that, generally, an indorse- ment obtained by fraud will hold the indorsers according to the terms of it, but they make a distinction between the cases where the indorser, through fraudulent pretenses, has been induced to indorse the note he is called on to pay, and where he never intended to in- dorse a note of that description, but a different note and for a different purpose. Perhaps there may be cases in which this distinction ought to prevail. As, if a blind man had a note falsely and fraudulently read to him, and he indorsed it, supposing it to be the note read to him. But we are satisfied that an indorser cannot avail himself of this dis- tinction, but in cases where he is not chargeable with any laches or neglect, or misplaced confidence in others." (See also 1 Parsons on Notes and Bills, 110 to 114, and cases cited in notes.) The judgment below must be reversed, and a venire de novo awarded.^ By the Court. — It is so ordered.' §94 CHAPMAN v. ROSE. 56 New York, 137. — 1874. This action was upon a promissory note of $270, signed by de- fendant, payable to E. A. Miller or bearer. Defendant entered into a contract with Miller to act as agent for the sale of a patent hay fork and pulley. A contract was filled out by Miller and signed by both; also an order, which was signed by defendant, for one of the hay forks and two pulleys, for which, by the order, defendant agreed to pay nine dollars. These were delivered to deferxlaiil. Another })aper was then })resented to defendant for his signature, which Miller represented to be but a duplicate of the order. ' Arcord: (Hhhs v. lAnnltury. 22 Midi. 479; De Camp v. flamma, 29 Oh. St. 4fi7; I'uffrr v. ,S'»m/;i. r,7 III. .')27; drcrn v. Wilkic. !)8 Iowa. 74. — H. (To thi- HJinif vth-ci, sec- llomr S'at. Hank v. Hill. ]V,ri Ind. 220, and Yakima VaUry Hank v. MrMUntrr, .37 WrhIi. .'JflO. In a noto to thp latter raso in I L. N. R. 107.'!. it Ih «ai. 43 TTun. 241, cited with approval in I'nftr v. Krrl-ry, 1,37 N. Y. 313)."— /7,/^frofif V. Mojr. 20 Misc. (N. Y.) 032 (1897). Negligence on the part of the one sit'ning renders him liable to a holder in due course. Shirts V. Overjohn. 00 Mo. 30.5: Citizens' Sat. Bank v. Smith, .'>,') N. II. .')93; Kellogg V. Curtix. fi.') Me. 59; Nebekcr v, Cutsinger, 48 Tnd. 436; Ort v. Fowler, 31 Fans. 478. — H, III.] DEFENCES. 395 signed his name four times through the openings. Lord William Nevill also signed, and defendant believed he was signing as witness to the former's signatures. Defendant had just come of age, had known Lord William Nevill intimately for some years, and had no reason to doubt his honor. The following questions were put to the jury, who gave the answer appended to each: — (1) Did the plaintiflF take the promissory notes in good faith? [It is admitted he took them for value.] Answer. — Yes. (2) Is the defendant's account of the circumstances under which he signed his name substantially true? Answer. — Yes. (3) Was the defendant, in signing his name as he did, recklessly careless, and did he thereby enable Lord William Nevill to perpetrate the fraud? Answer. — No; not under the circumstances. (4) Were the signa- tures to the documents given by the defendant in misplaced confi- dence in the statements of Lord William Nevill as to their nature? Answer. — Yes. (5) Did the defendant sign his name to be used by Lord William Nevill for any purpose he chose? Answer. — No. (6) Did the defendant attach his signature to tlie documents without due care ? Answer. — No ; not under the circumstances. On these findings the case was reserved by the Lord Chief Justice for further consideration. Lord Russell of Kili,o\ven, C. J. — I have now to consider in the light of these findings which of the parties is entitled to judgment. It is clear that tiie proof of the signature of the defendant to the promissory notes, coupled with proof of their delivery to the plaintiff under the apparent authority of the defendant, makes out a prima facie case for the plaintifT. Is it a conclusive case? Here two ques- tions arise — (1) Is the defendant prcchidod or estopped from setting up the true circumstances under \vlii( li his name cmne to appear on the documents in question? (2) If not, do those true circumstances afTord an answer in y)oint of law to the plaintilV's claim? I. As to the first f|iiestion the defendant is not, in my judgment, estopped or precluded from setting up the actual facts upon any principle of law. Apart from statute such preclusion or estoppel can only arise (in cireumslances like the f)resenl ) where the defendant had so eondueted himself that it would be contrary to natural justice to permit him to assume a pctsition inconsistent with that which he had ostensibly occupied, or which he led others to believe he occupied, and upon which others harl, misled by his conduct, been suffered to act. In the present case the suggestion on the |)art of the plaintiff is that Ww defendant luul not userv, whether or not it amounted to the criminal offense of forsjery. 1 think it well to point out that cases like the present differ widely from those in which the party sought to be charged has agreed and intended to enter into contractual obligation by bill or note, but has been defrauded into agreeing, or been defrauded in the manner in which the bill or note has been dealt with. In such cases he is liable on principle and authority, to any one who has dealt with the bill or note in good faith and for value. It was in argument admitted that the case of Foster v. Mackinnon (17 W. TJ. 1105, 1 L. Tk. C. P. 704), is in point, and is an authority binding on me if the iTills of E.xchange Act of 1882 has not altered the law as there declared. I find that the law has not been so altered. I see nothing in the act to warrant the suggestion that it has been altered, and it is noteworthy that all the text-writers deal- ing with the Bills of Exchange Act, 1882 (including, indeed, the draftsman of the act), treat that case as an existing authority. The facts in Foster v. Mackinnon were, that an old man of feeble sight was induced — without, as the jury found, any negligence on his part — to sign his name on the back of a bill by the fraudulent state- ment that it was a guarantee which, in fact, he had undertaken to sign. The Court of Common Pleas (consisting of Bovill, C. J., and Byles, Keating, and Montagu Smith, JJ.), held that he was not liable, and this in an action by what was then called a bona fide holder for value and without notice, of which '' holder in due course " is now the legal equivalent. In these islands, cases in litigation of frauds such as that here prac- ticed are of rare occurrence, partly because of the existence and character of our stamp laws, but in the United States of America, where no such laws exist, there are many authorities dealing with points similar to that in the present case. (Douglas v. Matting, 4 Am. Rep. 238 [20 Iowa, 498]; Taylor v. Atchison, 5 Am. Rep. 118 [54 111. 106]; Whitney v. Snyder, 2 Lans. 477; Walker v. Ehert, 9 Am. Rep. 548 [20 Wis. 104]"; Griffiths v. Kpllogg, 20 Am. Rep. 48 [30 Wis. 200]). The great w^eight of United States authorities sup- ports the view of the common law expressed by the English judges. I have thought it right to say so much, but in truth these authori- ties are not necessary for the purposes of this case. They are all cases where the bills or notes had been negotiated to persons now III.] DEFENCES. 399 called " holders in due course." It follows, if such a holder cannot in a case like tlie present recover, a fortiori that the plaintiff — who, as named payee, is one of the immediate parties — cannot recover. In the result, therefore, my judgment must be for the defendant, and the plaintiff must be enjoined from in any way dealinfr with the notes, and the same must be canceled so far as they purport to be the notes of the defendant. ARTICLE VI. LiAinLriv OK Pauties. [. Maker: absolute, primary liability; admissions. 1. PlUvSKNTIMKNT l''OIt PaYMKNT IJnNKCESSARY. Sec Noii. Iikst. Law. § I'M), post, \)p. •177-480. 2. LiAuiLiTY ON Lost or Dkstuoyki) Tnstkument. § 110 McGREOORY v. MoGREGOTJY. 107 Massachusetts, 543. — 1S71. Action against makers on notes alleged to be lost. Verdict for plaiutilT, who filed a bond for protection of defendants from liability on lost notes, to the apj>roval of tlic judge. Gray, J.' — Destruction Iiy lire is one mode by wliicli property may be lost, and an allegation that a note has been lost is fully sup- ported by proof tliat it has been destroyed by fire. It is well settled in this coniiuonwenltli, that an action at law may be maintained on a lost promissory note, whenever a bond of in- demnity will afford complete protection to the defendant; and that such an action may be maintained against the maker of snch a note, upon filing a siifiicient bond of indemnity. All the makers of the notes described in these three counts are defendants in this action ; and they do not stand like an indorser of a promissory note, who is entitled, upon taking it up to the possession thereof, in order that he may have his recourse over against the maker, or negotiate it again ; or like the acceptor of a bill of exchange, who may need it as a voucher in settling his account with the drawer. (FaJes v. Russell, 16 Pick. 3L5; Almy v. Reed, 10 Cush. 421 ; Boston Lead Co. v. McGuirk, 15 Gray, H'J ; Tower v. Appleton Bank, 3 Allen, 387; Tuttle v. Standish, 4 Allen, 481; Savannah National Bank v. IJaskins,^ 101 Mass. 370.) Ji.dgment on the verdict for the plaintilf.^ 1 Omittinp other questions. — TT. 2 Uolfis acoe[)tor of lost bill liable only in efjuity. Accord: Pierson v. FJutch- inson. 2 Camp. 211. — H. 3 If a note or bill is shown actually to have been destroyefl, most courts allow an action at law. Dm Arts v. Lepgett, 16 N. Y. 582; Dean v. Speakman, 7 Blatchf. (Tnfl.) 317. P.ut not if it is voluntarily destroyed by the holder. BlafJe V. yolnnd. 12 Wend. (N. Y.) 173. Some courts make a distinction between instruments lost before maturity and those lost after maturity, allow- ing an action at law on the latter. Thayer v. King. 15 Ohio, 242; Mowery v. [400J £.J MAKER. 401 3. Admission of Existence and Capacity of Payee. § 110 McMANN V. WALKER. 31 CoLOBADO, 2G1. — 1903. The defendant in error executed and delivered his promissory note, in the city of Denver, payable to tlie Sprague Collection Agency. The payee was a foreign corporation, and at the time of this transaction iiad iiul, iiur has it since, complied with the law requiring such cor- poiatiuns to pay certain fees before engaging in business in tliis state. (Scss. Laws, 1(Sr dcsfroypd bills and nntrs. '.' nriniol on N'r-'. Inst.. 8§ l.»7.'5-14S.'). Tlip ni.iftor i- ^ov* rncf! l,y t iliitc in Now York. Code <'iv. I'ruc. § liUT. — IJ NKOOT. INBTRHMRNTH — 26 402 LUlllLlTV OF PAUTiKS. [aHT. Vl. 5 Colo. 71.) See, also, .'Sundheim v. Uilbert, 117 Ind. 71, where the subject is quite fully discussed and niauy authorities cited.* The defciulant, by K'^i^K '^ "'^^'-' which is not the subject of statu- tory enactment, thereby conclusively admitted as to third parties purchasing before maturity, and in good faith, the legal existence of the payee, and its authority to take such note, and to negotiate and transfer it by indorsement. Section 60,-' Negotiable Instruments Act (Sess. Laws 18J>7, p. '.^'23, c. 64); 4 Enc. Law (2d Ed.) 474, 475; ^Volke V. Kuhne, 109 Ind. 313; 1 Edwards' Bills and Notes (3d Ed.) § 363 ; Bigelow on Estoppel (4th Ed.) 512. The plaintiffs were in no manner connected with the original trans- ftction, and thoy violated no law in purchasing the note from the payee. They purchased it in good faith, before maturity; it was negotiable in form; and the maker cannot be heard to say, as against them, in these circumstances, in the absence of a statute to the contrary, that the payee committed an illegal act in taking, or had no authority to dispose of, it, in the usual course of business, because by its execution and delivery he is precluded from raising any of these questions as against the purchasers, who obtained it for value, before maturity, without notice of the fact upon which he relies to defeat it. The courts cannot undertake to render the statute relied upon by defendant effective by imposing penalties which it has not provided, or placing them where they do not belong. If defective because no sufficient pro- vision is made for its enforcement, that is a matter for the Legisla- ture to remedy. According to the undisputed facts, the plaintiffs were entitled to a recovery on the note. The judgment of the County Court is therefore reversed, and the cause remanded, with directions to ren- der judgment in favor of the plaintiffs. . Judgment reversed." < Sw also Alexander v. Hazelrigg, 123 Ky. 677, ante, p. 375, and Arnd v. Sjobloni. 131 Wis. 642, ante, p. 383. — C. 5N. Y., § 110. — C. • Maker of a note payable to the order of "A. B. Attorney-General " cannot dispute his ripht to transfer it. Wolke v. Kuhne, 109 Tnd. 313. Maker of a note payable at "A. B." cannot deny the existence of such a place when the statute requires negotiable instruments to be payable at a place certain. Broicn v. Firat .V. li., 103 Ala. 123. Contra, where the statute requires it to be pavaV)le at a bank. Parkinson v. Finch, 4.5 Tnd. 122. — H. [In Cantor v. f'eterfton. 2 Wash. 204. it was held that the maker of a pro- missory note payable to the order of a married woman guarantees her capacity to indorse and transfer the same; and tiie fact tliat tlie note is community property will not affect the title of a bona fide indorsee for value before maturity, where he has no notice that the note is community property. HoYT, .1.. said: "The maker promised to pay Mrs. Eliza E. Pool, or order, and in making the note so payable lie guaranteed, to every person taking such note in good faith, her ability to order the same paid to another — that is, to indorse it — and as to every sucli person buying in good faith and for value such guaranty was conclusive. That the maker of negotiable paper thus guar- U.] ACCEPTOB. 403 § 110 FEAZIER V. MASSEY. [Reported herein at p. 220. "l f II. Acceptor: absolute, primary liability; admissions. 1. Presentment for Payment Unnecessart. See Neg. Inst. Law, § 130; post, pp. 477-480. 2. Admissions as to Drawer and Payee. § 112 FIRST NATIONAL BANK OF LISBON v. BANK OF WYNDMERE. 15 North Dakota, 299. — 1906. Action by the First National Bank of Lisbon against the Bank of Wyndmere. Judgment for defendant, and plaintiff appeals. Engerud, J. This is an appeal from an order sustaining a de- murrer to the complaint on the ground that it does not state a cause of action. The complaint states the following facts: The plaintiff and defendant are banking corporations, located, respectively, at Lis- bon and Wyndmere, in this stale. On July 1, 1005, the defendant caused to be presented to plaintiff for payment a forged check pur- porting to have been drawn by Bixby & Marsh upon the plaintiff bank in favor of Theodore Larson for $60.25, dated June 27, 1905, and indorsed in blank by the payee. It also bore the indorsement of the defendant, and each of the several banks through whoso hands it had passed in the usual course of transmission from defendant to plaintiff. Each indorsing bank had e.xpressly guaranteed the genuine- ness of previous indorsements. Bixby & Marsh were depositors in plaintiff bank, and had to their credit subject to check a sulVicicnt amount to pay the check in (piestion. The plaintiff bank l)elieving the check genuine, paid it and charged it to the account of Bixby & Marsh. The name of this firm had been forgtil, luit this fact was anteea the capacity of the payee to indorne and tranaf«»r the same seems to arise from the rn'c«"iin(i<'d upon reanon. It is lik«!wise ahiindantly siipporlod by authority. S<'c Danii-l, Ncr. Inst., § 9:J, and ca^es thiT*' citod. 'Iliis rule has hocn frcipicntly npiilii'd to noteH madf- to and transfi-rrcfl \>y infants. Sec soclion 227 "f tlic authority al>ove cited. Likewise tf) nuirritd women under the di^^aliilit ies of tlie common law." P. 207. — r.l ' In like manru-r tlie drawer (drey v. Cnoprr. H Doutr. ((.'». post. p. tIK). and acceptor (Taylor v. f'rokrr, 4 Esp. 187; Smith v. }f.*() miles from Lisi)on, called at the hank and examined the cameled vouchers. Bixhy & Marsh declined to allow credit to plaintiff for the spurious voucher, lin mediately on that day, the plaintilV notified the defendant hank of the forgery, and de- manded repayment ; at the same time returning the forged check to defendant. The defendant refused to refund. Juclgment is demanded for the amount of the check and interest. The question presented hy this case is one that has never lieretofore come before this couit. It will be noticed that the complaint does not charge the defendant with any bad faith or neglect of duty in indorsing and putting in circulation the forged check, and we must therefore assume that the defendant indorsed, and caused the check to be presented for payment in good faitli in the mistaken belief that it was genuine. Tiie plaintiff upon whom the check was drawn, accepted and paid the check under the same mistaken lielief that the drawer's signature was genuine. If we had not read the numerous cases which have been cited dealing with this question, we would have thought the proposition was a very plain one, readily solved by the application of fundamental principles of law and common sense. The defendant had received from the plaintiiT without consideration a sum of money which it was not rightfully entitled to, and the sole moving clause which induced the exchange of money for the spurious check was the mutual mistake of the parties to the transaction with respect to the genuineness of the writing. Tn the absence of any showing that the defendant had been misled or prejudiced by the plaintiff's mistake so as to render it inequitable to compel repayment, the defendant ought to refund the money had and received. Un- fortunately, however, this just and simple solution of what seems to us a plain proposition, has not generally prevailed. A number of courts have laid down the unqualified rule that where the drawee of a check to which the name of the drawer has been forged, pays it to a bona fide bolder, he is bound by the act, and cannot recover the pay- ment. National Park Bank v. Ninth National Bank, 46 N. Y. 77.* * (This case was reported herein in tlie first edition of this work with the following note: ] In the ca>e of a hill payable to drawer's order the acceptor admits the capacity of the drawer to draw and to indorse; he admits the genuineness of the signature as drawer, but it .seems not the genuineness of the signa- ture as indorser. liraithwaite v. fJardiner, 8 Q. B. 473; fimith v. Marsark, C. B. 480, 18 L. .T. C. P. 6.5; Halifax v. Lyle, .3 Exch. 44(); liceman V. Duck, 11 M. & \V. 2.51 ; Garland v. Jncomh, L. R. 8 Exch. 210. See Bills of Exchange Act, § .54, subsec. 2(?)). In like manner he admits the authority of an agent to draw, but not his authority to indorse. Robinson v. Yarrow, 7 Taunt. 4.5.5. The acceptor does not admit tlie genuineness of the borly of the hill. Hence if it has been raised he is not bound on his acceptance, and if he has paid a n.] ACCEPTOB. 405 The reason generally assigned to justify the adoption of this rule is stated in Gerniania Bank v. Buutell, 60 Minn. 189, as follows: "The money of the coniniercial world is no longer coin. The exchanges of commerce are now made almost entirely by means of drafts and checks. It was largely in deference to this fact that the recovery of money paid on paper of this kind to which the drawer's signature was forged, was made an exception to the general rule as to the recovery of money paid under a mistake of fact. In view of the use of this class of paper as money, it was considered that public policy required that as between the drawee and good-faith holders, the drawee bank should be deemed the place of final settlement, where all prior mistakes and forgeries should be corrected and settled once for all, and if not then corrected, payment should be treated as final ; that there must be a fixed and definite time and place to adjust and end these things as to innocent holders; and tliat time and place should be the ])aying bank and the date of payment and that if not done then, the failure to do so must be deemed the oonstructive fault of the payee bank, which must take the consequences."^ According to this line of cases the whole duty and risk of determining the genuineness of a draft or check rests upon the drawee, and as Lord Mansfield is reported to have said in Price v. Neal, 3 Burr. 1351, the holder " need not inquire into it," provided he acquired the paper for value in good faith. Bank of St. Albans v. Farmers' tC Mechanics' Bank, 10 Yt. Ml; Neal v. Coburti, 92 Me. 139; Deposit Bank v. Fayette National Bank, 90 Ky. 10; Bernkeimer v. Marshall, 2 Minn. 7H (Oil. Gl). Of this extreme view it is well said in 2 ^forse on Banking (4th Ed.) § 101: "This doctrine is fast fading into the raised bill or chpck, he may recover tlie money. Marine N. B. v. 'Nat. City /?/.-., 59 N. Y. r,7: \\'hitc v. Continental lik., 04 N. Y. 31(1 ; Rnlinfilon v. Wnod.i, 45 ("al. 40(). FJiit see Ward v. Allen. 2 Met. (M.-iss.) ."i.T. Tie is nf)t under a duty to take precautions apainst sul).sef|uent frauiluient Jilteriitions; it is the drawer whr) has control over its form. Scholl'irlil v. I^ondishoromili, ISHfi, A. C. 514. — IT. •In another |iiir< of (liis ca«e Mitchkii,, .T.. said: " From wliat cNaiiiitiat inn we have been able to make of the authorities, we have arrived at llic con- elusion that there are very few w«'II considered cases which po further than lo hfdil tiiat the bank may recover back money paid on a clieck to whicli the sifjnature f)f one of its customers was forfjeii, wlien there was a bick oT f.'ood faith on the part of tJie payer- towards the bank, as wlien he knew tlu' clieck was forjjed, or knew of circunistances casting suspicion on its f.'enuineness not known to the l)ank, and which he did not communicate to it. or where tlie holder was ncfrlitrent in not making due inquiry as to the valiility of the check before he took it. anti the drawee, luivinp a ripht to jiresume that lie had maile «uch inquiry, was itself tlu-rehy excused from makinp inn)p('r, lias no otber foundation tban tbe same premise wlri«li tliey very properly bold to be faiiacious — -namely, that checks and drafts on banks or individuals should be governed by tbe same rules as apply to bank notes which circulate as money. If it is conducive to the best interests of the business world to put checks and drafts on tbe same fodting as bank currency, and if it would tend to make checks and drafts a inore safe and convenient circulating medium of exchange, to shift the whole risk of loss by forgery upon the drawee instead of letting it rest upon those who are credulous enough to assume the risks of parting with value for such paper, the legislative brnncli of the government cnn he trusted in cstnhlisli that rule, if such a radical departure from funflainental princij)leB of law is deemed wise. The court has no power to do so. 408 LiAHii.irv OK rAi{i[i:s. (akt. vi. Being I'oiiviiui'il, ;is wo ;iri', lIuiL tliis iloclriiie advocated by the great majority of tlu' cases which have come to our attention, to the effect that a drawee of a check shoukl be excei)ted from the ordinary rules rehitiiiij to the right to recover money jjaid by mistake, is un- sound and has never been aih)i)teil in this state by usage or statute, it woukl be notliing less than usurpation of Icgishitive power by this court to declare that iide to be the law of tiiis state because courts in other states have so held. That the rule in (|n('stion is unsound in priiu'iple and unjust, is almost universally admitted, and the courts are showing an increasing tendency to discard it. WC think, therefore. that we are showing no disrespect to precedent in taking the stand towards which the modern decisions are unmistakably tending, and from which it is generally conceded there should have never been any departure. We, therefore, reject as unsound the doctrine that a drawee of a check should be excepted from the general rule in relation to the recovery of money paid by mistake. The drawee is presumed to know the signature of the drawer of the checTc~or clratt ; and the holder of Silcli check or draft wlio has a((iuii-ed it iiT good faith has the right to act in reliance on that presumption, provided he himself has omitted no duty, the performance of which would have prevented the success of the fraud. ronse(|uontly, if the drawee pronounces the check genuine by paying it or otherwise honoring it, the holder who has acted in good faith and without negligence, may safely rely upon the judgment of the drawee, and act accordingly. The drawee cannot, under such circumstances, recall his acceptance or payment to the detriment of the party who has rightfully relied upon his decision. In such a case the party who received the money has the superior efpiity, and he may justly retain the money although he was not originally entitled to receive it. But, as is usually the case, when the party who has collected the check had previously cashed it or taken it in exchange for commodities, there is no reason why he should not I'cfund. Every one with even the least experience in business knows that no business man would accept a check in exchange for money or goods unless he is satisfied that the check is genuine. He accepts it only because he has proof that it is genuine, or because he has sufficient confidence in the honesty and financial responsibility of the person who vouches for it. If he is deceived he has suffered a loss of his cash or goods tlnough his own mistake. Tlis own credulity or recklessness, or misplaced confidence was the sole cause of the loss. Why should he he permit ted to shift the loss due to his own fault in assuming the risk, ujjon the drawee, simply because of the accidental circumstance that the drawee after- wards failed to detect the forgery when the cliecl; was presented? Our views find much support in many of the cnsc; v/hich still cling more or less tenaciously to the r^Hi^ence riilf. rofahlv tlie followinir: Bank- v. Bank, ir,1 Mass. 280; Ellis cO Morton v. Trtist Co., 4 Ohio St. II.] ACCEPTOR. 409 628; Bank v. Banh, 88 Tenn. 299; Bank v. Bingham, 30 Wash. 484; Bank v. Bank, 22 Xeb. 769 ; Bank v. Bank, i Ind. App. 355. The case of McKleroy & Bradford v. Southern Bank, 14 La. Ann. 458, 74 Am. Dec. 438, directly supports our views, and we are gratified to note that our views are in accord with those generally advocated by the text-writers. We, therefore, hold that drawees of checks and drafts are not to be excepted from the general rule which permits the recovery of money paid by mistake. We hold that a drawee wlio has by mistake paid a spurious check or draft may recover the money paid unless the party receiving the money has been misled to his prejudice by the drawee's mistake. If any such facts exist, they are best known to the defendant, and it is his duty to prove them. The complaint discloses prima facie cause of action by alleging the pay- ment by mistake. The order appealed from must be reversed, and the demurrer over^j^, ruled. All concur.^ ""/ /f^"^ §112 STATE BANK OF rTTTCAnO r. FTKST NATIONAL BANK OF OMATTA. 127 Northwestern (Nebraska) 244. — 1010. Root, J. This is an action hy the drawee of a forged draft to recover from a holder thereof money paid to satisfy that instrument. The plaint iir prevailed upon the defendant's demurrer to the j)etition. The ilefendaiit a|)peals. — - The plaintifT alleges in its petition that the defendant, through its agent, the Continental National Bank of Chicago, on November 29, 1907, caused to be presented to the plaintiff, through the Chicago Clearing IIou.se, a certain draft of which the following is a copy: $800. THE GERMAN BANK. No. 9.G38. Et'REKA, South Dakota, .Vou. 23, 1007. Pay to tho ordor of ("has. Vitcrna, .i!KO().O0, eipht hnnflrpcl dnllara. E. Mooo, .4. Cashier. To the State l?ank of Chicago, Chica^'o, 111. The in.strumcnt was iuflorscd : "('has. Vitcrna. Pay to the order of Continental National Jiank, Chicago, III., First National Bank, Omaha, Nfbr. L. L. Kountze, Cashier." The [tlainlifr further alleges that, l»elievitig the instrument to he the genuine draft c)f said l'>. Moog, it a((e|ited the saiue and )»aid it to the defendant through the Continc^ntal ,\ntioruil Bank; "that the defendant, prior to the presentatinn, accey)tance and payment of said draft as heroin})cforo alleged, paid to Charles Viterna named in said draft as payee, knowing him to be said Viterna, eight hundred ' 'Fhis raip jh rnporforl in 10 T^. N. S. 40. with oxhaiislivp noto ontitled ' Right of drawee of forged check or draft to recover money paid thereon." — C. no LIAHIMTY OK PARTIES. [ART. VI. dollars ($S00), the amount named in said draft, without any knowl- edge or information as to wliother said draft would be accepted or paid by the plaintiff, and without taking any steps to ascertain whether or not said draft was a genuine draft of the above-named E. Moog, assistant cashier of the German Bank of Eureka, South Dakota." The plaintiff also alleges the draft was forged, but its true character did not become known until December 12, 1907. Imme- diately thereafter the plaintiff advised the defendant of said fact and demanded repayment of the $800, which demand was refused, ('ounsel for the respective litigants stated at the bar that the negotiable instru- ments statute does not control this case, and we shall treat their statement as correct for the purposes of this case.^ 2 But see Nalional Bank of RoUa v. First National Bank of Salem, 125 Southwestern (Sprinjifield Ct. Ay\^., Mo.) 513. At [lagc 516, Guay, J., said: " From a review of thes;e authorities, we are satisfied that leaving out of view our Nepotiable Instrument Act of 1905 (Laws 1905, p. 243 (Ann. St. 1906, §§ 463 — 1 to 463 — 197]), the great weight of the modern cases sus- tains the theory that the payee [drawee?] cannot recover from tlie purchaser without basing his action upon the negligence of the latter. In Germania Bank V. Boutrll. supra, the demurrer to the petition was sustained because there was no allegation of negligence on the part of the defendant. . . . " In addition to the authorities, the Negotiable Instrument Act of 1905 con- tains the following sections: "'Section 62. [N. Y., § 112.] The acceptor, by accepting the instrument engages that he will pay it according to the tenor of its acceptance; and admits: The existence of the drawer, the genuineness of his signature, and his capacity and authority to draw the instrument; and the existence of the payee and his capacity to indorse.' " ' Section 188. [X. Y., § 324.] Where the holder of a check procures it to be accepted or certified, the drawer and all indorsers are discharged from liability thereon.' "Judge BROADDt_s, in Bank v. Bank, 109 Mo. App. 665, supra, in answer to the argument that absolute payment was not an acceptance, said: 'An accept- ance binds the acceptor to pay the bill, and he cannot be heard to deny that he has funds in his hands for the purpose. A payment of the bill is more than an acceptance, for the one is an obligation to pay; the other a discharge of the indebtedness represented by such bill. If the one concludes the drawee it is inconceivable why the other would not.' We fully concur in the views of .ludge Broaddus. as quoted above. If a mere promise to pay a check is binding on the bank, why should tlie absolute payment of the check not have the same eflect? The adoption in this and otlier states of our Negotiable Instrument Law was for the purpose of having in the statutory Inws of the states a uniform law in regard to commercial paper. A confiision was known to exist on many of the everyday transactions concerning such paper, and it may be said that there was no rjuestion upon which the courts were more in conflict than upon the question involved in this ease. After a careful examination of the new law. we are inclined to believe that it was intended to adopt the law as declared in Price v. Nfal. supra." Followed in \ationnl Bank of Commerce v. Mechanics' Am. Nat. Bank, 127 Southwestern (St. Louis ( t. App., Mo.) 429. These two cases are criticised in 70 Central Law Journal (June 10, 1910) 417-418 n.] ACCEPTOR. 411 1. The great weight of authority sustains the proposition that as between the drawee and a good faith holder of a draft, the drawee bank is to be deemed the place of final settlement, where all prior mistakes and forgeries shall be corrected and settled once for all ; and if not noticed and payment is made, the money cannot be recovered back. Price v. Neal, 3 Burrows, 1355. Germania Bank v. Bontell, 60 Minn. 189. The cases are annotated in a note to First National Bank V. Bank of Wynctmere, 15 N. D. 299, 10 L. R. A. (N. S.) 49, 125 Am. St. Rep. 588 [reported herein at p. 403.] Courts and text- writers generally recognize that the preponderance of authority is in favor of the rule, but it seems to conflict with a well-established principle of law that money paid by mistake may be recovered back, and has not been accepted without qualification by all of the Ameri- can courts. North Dakota refuses to follow Price v. Neal, supra, and has held that the principles of equity should control a transaction The court in Nat. Bank of Rolla v. First Nat. Bank of Salem, aupra, stated that " In support of our views, we are sustained by the late case of Title Guarantee d Trust Co. v. Haven, 126 App. Div. (N. Y.) 802." While this latter case was reversed in lOG N. Y. 487, nevertheless the N. Y. Court of Appeals, in a dictum, also expressed the opinion tiiat section 112 of the N. Y. Nepotiabic Instruments Law codified the rule enunciated in Price v. Neal Wii.LARD Barti.ei^. J., at p. 492, said: " Botli the referee and the judge who wrote the prevailing opinion below thought that the case was controlled by section 112 of the Negotiable Instru ments Law which provides that tlie acceptor of a negotiable instrument admits ' the existence of a drawer, the genuineness of his signature, and his capacity and authority to draw the instrunu-nt.' This enactment is merely declaratory of the common law. The loading English case in which it is enunciated is I'rire v. Neal (.3 Riirrow, 1.3.54), decided by Lord Manrftflp in 1762. The leading New York case to the same effect is National Park Bank v. Ninth National Bank (40 N. Y. 77). But the doctrine of these decisions, now found in the rule formulated by section 112 of the Negotiable Insf rtimcnts Law, applies only in favor of one who is a holder for value of the instrument which turns out to have been forged. Thus, Lord Mansfikio in Prirr v. Neal (itupra) dwelt upon the fact that the bill of exchange tiiere in (piostion had been indorsed to the defendant ' for a fair and valuable consideration which he had bona fulr paid;' antl in the leading New ^'ork case (Xatiannl Park Bank v. Ninth Nnfinnnl Bank, supra) it appeared that the draft had Ix'cn dis- counted by the Livingston National Hank and indorsed to the defendant which was a bona fide holder. The rule, therefore, that he who accejits a negotiable instrument to wliieh the drawer's name is forged is botind by tlie act and can neither repuflinte the aeeejitance nor recover the money pair!, has no applica- tion in b<'half of f)ne who has acrjuired the paper in the absence of any con- sideration whatever therefor either present or past. Such was the case here according to the finding of the referee. So far as appears, the check of the Oreen ctate, whirh proved to be forged. %vas not given in payment of any existing or nnteredent inflebtedness either on the part of that estate or even of the forger. For these reasons we agree with the learned juflge who wrotn for the minority in the Appellate Division, saying: 'Section 112 of the Negotiable Tnvtniments Law iipon which the referee based his decision ha> nothing to do with the question.'" — C, ■Ill' MAiuLrrv OF rAiniKs. [akt. vi. Uotwocn the ilrawoo and a IioKIcm- of a for^anl check or draft. First .\ational Ihink- v. Jiaiil,- nf Wi/iidiiirrr, siijird. The position assumed by North Dakota is in harmony with su.i^i^estions made by many text- writers hut, so far as we an* advised, is not sustained hy the ojnnion of any oth(M- court. Intcrmcdiale the cases adherin hroad rule iMonml^-aleil in l^rirr v. Neal, supra. 'J'he Massachusetts Supreme Court hohls that tlie faihire of the drawee to detect the forgery at the time the draft is presented anoit of the jn'inciple announced hy it and hiter l)y tiio South C'aroliiui I'ourt. In the ^lassai'husetts case (he t'asliin,!^ hank was named as j)ayee in a for^rd chet'k payahlr lo its oi'dei', so the inslrument couhl not become current except hy the haid\'s indorsement. The court hohls that tlie payee was nepflip^ent in taking the ( he(l< fi-om a stranger without proof of his ideiiliiy. and by indorsing I he check, gave it curren(\v and standing. In the Georgia case 1he draft was payal)le to bearer, and the opinion is sound, based npon the negligence of the cashing haidc in not requiring the party from whom it purchased the instrument to identify himself, hut so far as it holds upon the re- ported facts, that the indorsement by the holder was a warraidy to the drawee that the drawer's signature was genuine, it is unsound in principle and will mit be accepted as a correct statement of the law. Firsl Xaliunal Bank v. Wyndmere, cited by ])laintilf, supra, docv sustain its argument, but we are of opinion that the Orleans case, supra, conunits this court to the docti-inc thai the drawee must estab- lish the cashing baidc's negligence, or bad faith, to justify a recovery. Since the drawee should only recover in this suit in case the cashing bank was negligeiit or has acted in bad faith, the burden is upon the former to plead such negligence or mala fuhs. The ])Ieader in the instant case in our opinion has not stated in !us petition facts sufll- cient to establish that the defendant was negligent, or that it acl^d ii bad faith in purchasing from Viterna the forged draft in question. Bk. Belmont v. liational Bk. Barnesville, 58 Oliio St. 207, wliile liol(Jin<^ that a rf'strictfd iiulorscnicnt ns 'for collection' i'.as not lliitt cflcct, iipiiarciitly concfflos that an nnrctrictcrl indorsement does liave that effecl." This case is reported in 7 A. & E. Ann. Cas. 744, with note entitled " Unre- stricted indor.s(>nr nt of draft or check as warranty that instrument is genuiiK."" As to the hf-arintr of the Ncpotialile Instruments Law upon the doctrine of Fnrrt v. Proplr's Rank, fiuprn, attention is called to the following comment of Mr. Crawford on section IKi of th*' New York Act. providing that "Every indorscr who indor.ses without (juaiiflcation, warrants to all suh-iMjuent holders in due course." etc. On page !)0 of tin- Ihiid edition of liis work on the N«'frotial»Ic Instruments T.aw. the draftsnrui nf tlir Act says: " I'mlcr this section, as imrler the rule of the law merchant, the warranty is in favor of Hulmrqiifnt lioldcrx only, and since tlie adoption of the statute, as well as before, the indorser docs not warrant to the drawee that tlic .~i!,n)ature of the drawer is genuine. Farmers' and Merchant ft' Bnvk v. limik nf I'ulJirrfnnI, 115 Tenn. 64, 70-71. Thus, if a check purporting to he drawn hy A. should be indorsed by B. and cashed hy ('., the indorsement of B. would be a warranty in favor of C. but not in favor of the bank on which the check is drawn." But see William shiirfjli Trust Co. v. Turn Sudcn, 120 App. Div. (N. Y.) 518. reported herein at p. 417. — C. ri.] ACCEPTOR. 417 The judgment of the District Court, therefore, is reversed, and the cause remanded for further proceedings.^ § 112 WILLIAMSBURGH TRUST COMPANY v. TUM SUDEN. 120 Appellate Division (New York) 518. — 1907. Appeal by the plaintiff, the Williamsburgh Trust Company, from a judgment of the Municipal Court of the city of New York, borough of Brooklyn, in favor of the defendant, rendered on the 10th day of January, 1907. Woodward, J. : This is an action to recover money paid by mistake — the amount of four certain checks payable to bearer which were forgeries, pur- porting to be signed by L. F. Rand and indorsed by Peter R. Tum Suden. The checks with Tum Suden's single and unqualified indorse- ment were presented and paid to him by the plaintHf. It was shown at tfie trial that Tum Suden had been in the habit of cashing checks for Rand, and that the forged checks were cashed, in part, for a maid servant in the employ of Rand, the other part of their face value being retained by Tum Suden for groceries previously furnished to Rand. As the checks were negotiable without indorsement, it is evident that Tum Suden's indorsement would divert the trust com- pany from that careful scrutiny which otherwise it would have been likely to give them. It was Tum Sudeu who negotiated the checks and put them ink) circulation, and as by his un(|ualiried indorsement he facilitated the forgeiy his ))Osilion is not that of an indorsee who holds a forged check sanctioned by a prior indorsement. If Tum Suden suffered loss or damage by cashing the checks, it is evident that such loss was sustained before the checks were honored by the trust company. T fail to see, therefore, how the trust company, when it paid the checks, can be held responsible for a loss previously snstainecl. As there is no proof that the mistake of the trust com- pany has been to the prejudice of the respondent, 11 is but right that I e should refund the money hnd and received. The evidence shows lliat Tum Suden, for several months prior io Hie time (if these forgeries, had been aceuslomed to cash eliecks for liiinil. It follows, therefore, thjit Tuin Suden. who hnd li;id every ()Ii|t(irl unity to become acquainlefl with K'nnd's signature, luis no riudit '• For a latf riisc iilTirniiiii; in fjciit'ral tiu- doctriin' of Price v. y« oxliaii-l ivoly con'-i. 4.15.-11. (•JO i.iAiiii.rrv or paktiks. [akt. vi. to thorn, ami what wa? olTiM-cd for sale was sonioihing (luito difTercnt from this chiiin." Tho saiiic distinction has heon considered and ajipliod by the courts of France. {Dtilac c. Chisel et Cie., Lyon.-;, Nov. 30, 1819, Journal du Pahiis, 1, 1S5'3, 32.) The defendant in error does not dispute that tlie foregoing prin- ciples exist in and are controlling under the Louisiana law, under the law of France, and also under the civil law generally from which tiie law of Louisiana is derived. But whilst thus admitting, he denies that the contract of sale, involved in this case, was governed either by the Louisiana code or the general principles of the civil law. This proposition rests on the (contention that when the (.'ivil Code of Louisiana was compiled, its framers contemplated the simultaneous enactment of a Commercial Code which was then drafted, and there- fore omitted from the former code the necessary provisions to govern commercial contracts, under the hypothesis that the latter would also be enacted; that in conseijuence of the failure to adopt the Com- mercial Code, the courts of Louisiana have held that cases arising under the law merchant are governed by that law in the absence of an express statutory requirement to the contrary. From this premise the conclusion is drawn that as the contract in question involved the sale of negotiable bonds, the obligations resulting from the sale are commercial in their nature, and are controlled by the law merchant, by which it is asserted the vendor in such a case, when selling in good faith, warrants only that the signatures to the paper sold are not forgeries. In a restricted sense the part of the proposition relat- ing to the operation of the law merchant, in the state of Louisiana, is well founded. {Tlarrod v. Lafayre, 12 Martin, 29; Wagner v. Kenner, 2 Rob. La. 122; Barry v. Insurance Co., 12 Martin, 498; McDonald v. Milloudon, 5 Louisiana, 403.) Whilst this is true, the contention is yet erroneous in a twofold sense; first, in presupposing that a mere contract of sale of commercial paper, without recourse, is governed as to the obligations, between the vendor and vendee, by the law merchant; second, in assuming that in such a sale, either under the principles of the civil law or what the argument presumes to be the law merchant, the only warranty resting upon the vendor is that of the genuineness of the signatures to the paper sold. [Citing autliorities from Louisiana and French courts.] None of the authorities referred to by counsel for defendant in error sustain the proposition heretofore stated with reference to the supposed existence and applicability of the law merchant, and the results which it is claimed flow therefrom. On the contrary, both in England and in the United States the doctrine is universally recognized that where commercial paper is sold w^ithout indorsement or without express assumption of liability on the paper itself, the contract of sale and the obligations which arise from it, as between vendor and vendee, are governed by the common law, relating to IV.] SELLER : WARRANTIES. 423 the sale of goods and chattels. So, also, the undoubted rule is that in such a sale the obligation of the vendor is not restricted to the mere question of forgery vel non. but depends upon whether he has delivered that which he contracted to sell, this rule being designated, in England, as a condition of the principal contract, as to the essence and substance of the thing agreed to be sold, and in this country being generally termed an implied warranty of identity of the thing sold. Benjamin on Sales (4th Am. ed., sec. 600), says: " When the vendor sells an article by a particular description, it is a condition precedent to his right of action " [to recover the price agreed to be paid by the vendee] " that the thing which he offers to deliver, or has delivered, should answer tlie description ; " [and, in sec. 607, the author says :] " Under this head may also properly be included the class of cases in which it has been held that the vendor who sells bills of exchange, notes, shares, certificates and other securities, is bound, not by the collateral contract of warranty, but by the principal contract itself, to deliver as a condition precedent that which is genuine, not that which is false, counterfeit or not marketable by the name or denomination used in describing it." It is upon this general principle of the common law, not upon any peculiar doctrine of commercial law, that the cases in the common law courts proceed. [Discussing Jojies v. Fyde, 5 Taunt. 488; Fenns V. Harrison, 3 T. R. 757; WUHnson v. Johnson, 3 B. & C. 428; Young v. Cole, 3 Bing. N. C. 724; Lamert v. Heath, 15 M. & W. 486; (lompertz v. Barilelt, 2 El. & Bl. 849; Gurney v. Womersley, 4 El. & Bl. 133.] The cases in the American courts, whilst declaring the same rule as that recognized in England, place it upon a theoretical basis differing somewhat from that pronounced by the English courts; that is, instead of pronouncing it a condition of the ])rincipal con- tract that the thing sold, in its essence and substance, must be de- livered, declare that there is an implied warranty of identity, or, in other words, that tlie tiling soM is what it purports to lie Danii-l, in his treatise on Negotiable Paper (§ 733«), calls attenlioii to the different definitions given to the same obligation by the .American and English courts, and indicates the view that the form of expression used by Benjamin in the pa.^sage already quoted is the more accurate one. Aside, however, from the mere garb in which the thought is clothed, the American and English courts are in full accord. This is shown by the case of [JIley v. DnnaUlson (04 U. S. 2!), 15). where Benjamin on Sales is approvingly referred to, as also fhnn} v. Mien (57 Penn. St. 482). and Wehh v.'Oflell (49 N. Y. 58.",). hcth of which cases, as also the line of .American adjudications which enforce the same doctrine, are noted in the marein of this opinion.' « Thrall v. 'Sewcll, l'.> Vt. 202; />i/on.<( v. Miller, fJratt. 427; Aldrirh v 4'M LIABILITY OF I'AHTIKS. [aUT. VI. Afanv of tlio controvorsios covered by the cases referred to arose in .'onseqiUMice of the sale of a fori^ed iiotei but the ])riiu'i))les upon which all the authorities proceed do not confine the rijjht of recovery to such a case, but rest upon the general doctrine to whicli we have already referred. In fact, no case is reported wherein the obligation, as between vendor and vendee, in the sale of negotiable pay)er, is claimed to be I'ontroUed other tiian by the general principles of the common law, though in three cases, Baxter v. Dnren (2!) Maine, l-U), Fisher v. Hieman {Vi Maryland, 497); and Ellis v. Wild (6 Mass. 321), the deduction was made from the law respecting the sale of goods that on a sale of negotial)le paper there was under the principle of caveat emptor no implied warranty even that the signatures to the paper were not forged. Ellis v. Wild was, liowever, expressly over- ruled in Merriam v. Wolcott (3 Allen, 258, 260); and from the allusions to Baxter v. Duren, contained in tlie later Maine decisions previously noted in the margin, it is doubtful whether the early ruling in Maine would now be followed there. The three cases referred to, it is needless to say, are practically disregarded by the entire current of American and English authority, and stand alone. They ni dis- avowed by the defendant in error here, since his argument admits that there is a warranty of the genuineness of tlie signatures to an apparent negotiable instrument, there])y conceding the subsistence of the obligation to warrant the existence or identity of the thing sold, and vet seeking to avoid its consequences by limiting it to non-existence resulting from a particular nullity. There is an exceptional case (Littauer v. Goldman, 72 N. Y. 50G, — 1878), which holds that the common law obligation, as to the implied warranty of identity in the thing sold, in the case of commercial paper, extends only to tlie genuineness of the instrument. The case was one involving the nullity of a usurious note, and, if correctly decided, would be authority for the proposition that there was a peculiar species of warranty in tlie sale of commercial paper, differ- ing from all others; in other words, that there was a law merchant of warranty where there was no commercial contract. The opinion Jackson, .5 K. I. 218; liarton v. Trent, .3 Head. 1()7; Delaware Bank v. Jarvix, 20 X. Y. 22G; Merriam v. Wolcott, 3 Allen, 258; lioll v. Vaffcrty, 21 Irid. 411; Svanrci) v. Parker, 50 Penn. St. 441 ; Morrison v. Lovell, 4 W. Va. 340; Wehh V. (Klell, 40 N. Y. ."iRS; Worthwr/tfrn v. Coirles, 112 Mas«. 30; Hmjder v. Reno, 38 Iowa, 329; (liffert v. West, 33 Wis. 017, 37 Wis. 115; Hannum v. Richard- son, 48 Vt. 508; Husscy v. Kihley, 00 Me. 1!)2; Hurst v. Chambers, 12 Busii (Ky.) 155; Allen v. Clark. 40 Vt. 300; Bankheail v. Oven, 00 Ala. 457; f^mith V. Meyair. 10 T\nn«. 330: Challiss v. McCrum. 22 Kans. 157; Rof/ers v. Walsh, 12 Neb. 28; MiUiken v. Chapman. 75 Me. 300; Dnskam v. Tillman., 74 Wis. 474; Palmer v. Courtney, 32 Neb. 773; Ware v. McCorma^k, 96 Ky. 139; Brown v, Ames, 59 Minn. 470. IV.] SELLER : WARRANTIES. 425 in this case illustrates the same contradictory position presented here by the argument of the del'endant in error, to wliicli wo have just called attention, that is, that it admits the common law rule and then denies its essential result by eliminating conditions of non- existence which are necessarily embraced by it. It follows that this New York decision leads logically to the view expressed in the Maine and Maryland cases just referred to, for either the principle of warranty of identity must be accepted or rejected; it cannot be ac- cepted and its legitimate and inevitable results be denied. The rule there announced was in conflict with previous decisions in New York, and the decision is strongly criticised by the Court of Errors and Appeals of New Jersey in Wood v. Sheldon (42 N. J. L. 431, 425.)^ In Criifert v. West (3.S Wisconsin, 617,-1873), where a note was sold which was void for usur}', the vendee was allowed to recover the consideration paid by him, and his right to do so was based upon the general doctrine that one making a sale is bound as a con- dition of the principal contract to an implied warranty of the exist- ence of tlie thing sold. [After discussing Ilannuni v. Richardson, reported herein at p. 432, the court continues:] Nor is there any foundation for the assertion that Otis v. CuUum (02 U. S. 447), and the cases of Orleans v. Piatt (00 U. S. 676), and .}':tna Life his. Co. v. Middleport (124 U. S. 531), both of which cite Otis v. Cullum, support the doctrine that a sale of commercial paper without recourse is not, as between the vendor and vendee, governed by the ordinary rule of the common law. On the contrary, that case expressly rested its conclusion on the decision in Lnwrrf v. ffralli, siiprn. wliidi hiller case, as we have seen, wliilst enforcing 1 Notwithstanfling tho abovo criticism of Litta'urr v. Gnldmnn, Mr. Crawford, in commenting on section ll.'j of tlio New York Ncpo(iiil)Io In'^trnmontu T^aw, says: "It will i)c noted tliat the warranty mentioned in tlie next section, that the instrnment is valid, is omitted from this section. The inference from sneh omission is. that a person ne;,'otiatin{; commercial paper hy delivery merely, or by a qnalified indfirsmient. docs not warrant that it is nn enforcihle contract, as. for example, that it is not void for iisnry. This was the New York rule {l.iltnurr v. (inldwau. 72 N. Y. rjOfi ) , and while it has been criticised irifl iliHaii[)roved by the Snprenii' Court of the Cnited St.iles ( l/n/cr v. [firhnrdt, 1 0.T C S. .3H.') ) . it srcms to be the more convenient rnle in practice. The contrary rnle wr)nbi often work preat hardship, anil wonld make the bnsi- ness of deal inn in c(»mmercial |>aper extremt-ly ha/.ardons. A broker, for example, bnyin^ and scllin;: notes and bills, may assnre himself that an instru- ment is ^^ennine, and that tlir- parties had capacity to contract, but he rotild not always know the circnmstances iimler wliich the paper was made. On thn other hand, the New York rnle which is conceived to lie the rnle of the stattite, does no injury to the |)Mrchaser; for if he desires a warranty, he has only to exact it. or to re<]iiirr' tlie indorsement of the seller (sec section 117)." Craw. Neg. Inst. Law (3d od.), p. 88. — C, 4'>?H l,lAl!ll-^^^ ov i- \ii rii:s. [art. vi. the princ'i[)los of the cominoii law, loiisidcied that under the particular facts there prcseiitetl it was a (|iu'>ti(Mi for the jury to detenuine whether the serip delivered was the kind of si rip whieh the defendant had ordered jiurehased. 'That case nut t)iily, as has already heen staled, eoneerned non-ne^^otiahle jiaper. hut its decision involved no question of the scope of the warranty, hut solely what was the thing bought. Nor does the case of Otis v. Ciilhun justify the assumption that this court laid down the rule that a mere sale of commercial paper, as hctween vendor and vendee, when the sale was made with- out recourse, created some peculiar and exceptional warranty to he considered in this particular as the la\v merchant. Tt is true that in expressing the general doctrine Mr. Justice Swayne said : "' The seller is liahle ex dpiirfn for had faith, and e.r contractu there is an implied warranty on his part that they helong to him and are not forgeries. Where there is no express stipulation there is no liahility beyond this." But in using this language, as to the extent of tiie warranty, the mind was directed to that form of non-existence which more commonly ohtains, and the expression is a mere illustration of the rule de eo cjiiod phrumque fit. If this were a case wliere a vendee claimed to recover hack the price paid by him on a purchase of negotiable securities, which ])ass by delivery from hand to hand, on the averment that after the sale it had developed that they were not valid (although not forgeries), because the law under which they had been issued was constitutionally void or vUra vires, the claim of implied warranty of existence would be M'ithout merit, for the reason that such a state of fact would present a case of a sale of securities whether valid or invalid, hence engendering no implication of war- ranty of existence. Under the state of facts tlnis supposed, the pur- pose of the parties to make a contract of that nature would legally result from the fact that they were both necessarily equally charge- able with notice of want of power, and therefore Avould be both pre- sumed to have acted with reference to such knowledjje. This is Otis V. CuUum. But it is not the case at bar, since it is here admitted that both parties, in entering into the contract of sale, contemplated valid securities, of which there were many outstanding, and those delivered were void, not because of a want of power to enact the law under which they were issued, or because they were ultra vires for some other legal cause, but because they were stricken with nullity by a constitutional provision adopted after the act authorizing the issue of the securities, and where nothing on the face of the bonds indicated that they were illegal. The distinction pointed out by the foregoing statement not only illustrates the correctness of the decision in Otis V. Cullum, but olso demonstrates the error of attempting to extend it to the state of facts presented in the case under considera- tion. Indeed, in examining and applying' Otis v. Cntlurn the fact that it does not control a ca=e like this has been recognized. (Daniel, IV.] seller: warranties. 487 Neg. Inst., § 734rt; Rogers v. Walsh, supra; Cincinnati, New Orleans, etc.. Railway v. Citizens' National Bank, 24: Week. Law Bull. [Ohio], 198, 211.) The foregoing analysis of the principles and review of the authori- ties governing the law of sale of negotiable paper, transferred with- out recourse, as between vendor and vendee, clearly demonstrates the unsoundness of V.x fo itions upon which the defendant in error relies, since it affirmatively establishes that there is no peculiar warranty, in a sale of commercial paper, and that the reasoning by which it is attempted to prove its existence is a mere misconception of the prin- ciples of the common law relating to the sale of goods and chattels. In passing, however, it is worthy of note that whilst the civil law enforces in the contract of sale generally the broadest obligation of warranty, it has so narrowed it, when dealing with credits and incor- poreal rights, as to confine it to the title of the seller and to the existence of the credit sold, and, e converso, the common law, which restricts warranty within a narrow compass, virtually imposes the same duty by broadening the warranty as regards personal property BO as to impose the obligation on the vendor to deliver the thing sold as a condition of the principal contract or by implication of warranty as to the identity of the thing sold. By these processes of reasoning Iht- two great .systems, whilst apparently divergent in prin- ciple prai til ally work substantially to the same salutary conclusions. There are n:any questions discussed in the brief of counsel which we do not lioticc, and which we content ourselves with saying are without m.crit. The views above stated are controlling and decisive of the ca.«e and lead necessarily to the reversal of the judgment. As the case was heard upon a stipulation waiving a jury and upon an agreed 8tatenu:'nt of facts, it i-; our duty, in reversing, to direct that the proper judgment be entered lielow. (Fori Srnff v. TJirl-mnv. 112 IT. S. l.'iO, and ca^es there cited.) Tt follows that - The judgment of tlio Circuit f'nurt must bo reversed, and the case he remanded with directions to rnter judgment for y)laintilfs for eight thousand three Inindrfd and eighty-three dollars and seventy-five cents ($8,383.75), with interest from judicial demand and costs. g 115 rn.XLMSS r. McCRUM. 22 Kansas, l.'}?.— 1870. Action to recover damages upon an imj>lied warranty in the sale of certain notes. Demurrer to the petition overruled, Defendant appeals, 4l'S LIABILITY OV PAKTIES. j ART. VI. The opinion of the court was ileliveied hy — iJKiiWKi;, J. — On Deeeinher 1, IS'i 1, [)laiiitin in error loaned one Edward A. l\<,a' $'^'50, ami took his note tiierei'or in the sum of $2G5, payahle to IJiihard Pruhasio or bearer, and secured by niort^^age. Long after its maturity, and in l-STtJ, several payments having been made thereon in the meantime, plaintill' in error sold the note for its then fate value to defendant in error. At llic time of such sale he indorsed it, "Without recourse. — W. L. C'luilliss."' McCrum sued on the note. Ege pleaded usury. The plea was sustained, and Mc- Crum recovered $229.00, less than the face value of the note, for which sum he brought this action. A demurrer to the petition was overruled, and this ruling is now presented for review. (^an the action be sustained? Of course no action will lie on the indorsement, for by his written contract Challiss expressly declines to assume the liabilities of an indorser. If sustainable at all, it must be as against him as a vendor, and not as an indorser, and upon the doctrine of an implied warranty, 'i'he theory of the defendant in error is, that every vendor of a bill, bond or note impliedly war- rants that it is what it purports on its face to be — the legal obliga- tion of the parties whose names appear on the instrument; and that the character of the indorsement or the lack of an indorsement in no manner affects this implied warranty. On the other hand, the counsel for plaintiff in error lays down the broad proposition that " there is no such thing as implied warranty in the sale of chattels;" and that, in the absence of express warranty, the maxim caveat emptor is of universal application. Tt is clear that the character of the indorsement cuts no figure in the question; as stated, no action will lie on it. But further, the restriction is only as to his liability as indorser, and in no manner affects his relation to the paper as vendor. An unqualified indorsement is the assumption of a conditional lia- bilitv. The indorser becomes a new drawer, and is liable on the default of the drawe/;. " Without recourse," does away Avith this conditional liability. It leaves the indorsement simply as a transfer of title, and the indorser liable only as vendor; yet it leaves him a vendor, and divests hira of none of the liabilities of a vendor. It makes the transatttion the equivalent of a delivery of paper payable to bearer, and transferable by delivery, (f/ontnan v. liichardson, 48 Vt. 508.) Independent, therefore, of any matter of indorsement, what im- plied warranty is there in the transfer of a promissory note? Two things are clear under the authorities: First, that there is an implied warranty of the genuineness of the signatures; and, second, that there is no warranty of the solvency of the parties. It is unnecessary to more than refer to a few of the authorities upon these propositions: (Byles on Bills, pp. 123, 125, and cases in notes; Jones v. Rijde, 5 Taunt. 488; Gurney v. Womcrshy, 4 El. & Bl. 132; Gompertz v. IV.] seller: warranties. 429 Bartlett, 24 Eng. Law and Eq. 156; Terrxj v. Bissell, 26 Conn. 23; Merriam v. ^Yolcott, 3 Allon, 259; Aldrich v. Jadson, 5 R. T. 218; Lohdell V. 5aAer, 3 Mete. 4G9 ; 1 Addison on Cont., p. 152; Ellis v. Wild, 6 Mass. 321 ; Eagle Bank v. Smith, 5 Conn. 71 ; Shaver v. £'/f/e, 16 Johns. 201; Dumont v. Williamson, 18 Ohio St. 515; 2 Parsons on Xotes and Bills, ch. 2, § 2.) But in the case at har, the signature of the maker was genuine. The objection is, that it was never his legal obligation to the full amount for which it purported to be. How far is there any implied warranty in this respect? A reference to some of the leading cases will throw light upon this question. In Thrall v. Newell (19 Vt. 203), it appeared that one of the makers of a note was insane. The vendor made a written assign- ment, in which was a description of the note, and the court construed this as an e.xpress warranty that the instrument was the legal obliga- tion of the apparent makers, and one being incapable of contracting, gave judgment against the vendor on account of this breach for the amount received by him. While the judgment of the court is rested upon the fact of an express warranty, the judge who writes the opinion expresses his individual conviction that the same result would follow on a mere transfer without any express warranty, and quotes approvingly an extract from Rand's edition of Long on Sales, that '• there is an implied warranty in every sale that the thing sold is that for which it was sold." In Lohdell v. Baker (3 Mete. 460), it appeared that the owner of a note procured the indorsement of a minor, and then put the paper in circulation. He was held liable to a subsequent holder. Chief Justice Shaw, delivering the opinion of the court, says: " Whoever takes a negotiable security is understood to ascertain for himself the ability of the contracting parties, but he has a right to believe, without inquiring, that he has the legal obligation of the contracting parties appearing on the bill or note. Unexplained, the piircliascr of such a note has a right to believe, upon the faith of the security itself, that it is inflorsefl by one capable of binding him- self by tfie contract which an indorsement by law imports." In Hannum v. Richardson ( IH Vt. 508), a note was given for liquor sold in violation of law, and was by statute void. Defendant knew its invalidity, transferred it by an indorsement without recourse, and he was held liable to bis vendue In Drlavare linnl- v. J arris (20 X. Y. 226), a usurious note was Bold, and the vendor wrb adjudged li;ililf, not merely for the money received bv him. ))ut also the costs paid by bis vendee in a suit against the makers f)f the note. In the opinion. Mr. Justice Comstock uses this languafje : "The authorities state the doctrine in general terms that the vendor of a chose in action, in tlie absence of express stipulation, 430 LIABILITY OF PAKTIKS. [aRT. VI. impliedly warrants its legal soundness and validity. In peculiar cir- ruMistanees and relations, the law niiiy not iini)ute to iiiin an engage- ment of tliis sort. I'ut if (luTc aiv exceptions, they certainly do not exist where the invalidity of the deht or security sold arises out of the vendor's own dealing with or relation to it. In this case, the defendant held a promissory note which was void, iiecause he had himself taken it in violation of the statutes of usury. When he sold the note to the plaint ill's and received th(> cash therefor, hy that very act he attirmed in judgniml of l;i\v thai the instrument was un- attainted so far at least as he had heen connet'ted with its origin." ^ In Young v. Cole (3 Bingham N. C. 724), certain honds were sold as CJuatemala bonds, which turned out afterward to he lacking the requisite seal, and the vendor, though ignorant of the defect and innocent of wrong, was compelled to refund the money. The thing in fact sold was not the thing supposed and intended to be sold. In Gomperiz v. Bartlett (24 Eng. Law and Eq. 156), the plaintiff discounted for the defendant an unstamped bill, purporting on its face to have been a foreign bill, drawn at Sierre Leone and accepted in London, luit which was in fact drawn in London. If actually a foreign bill, it reipiired no stamp, and was valid; but being an inland bill, it required a stamp to make it a valid bill in a court of law. The acceptance was genuine, and the acceptor had previously paid similar bills. But the acceptor becoming bankrupt the commissioner refused to allow it against his estate because not stamped. There- upon the plaintiff, who had sold the bill and been compelled to take it up, brought his action to recover the price he had paid for it, and the action was sustained. Lord rampboll, before whom the case had been tried, and who then held adversely to the plaintilT, said: " I then thought that the rule rnrrat emplor applied ; but after hearing the argument and the authorities cited, I think the action is maintainable, and upon this ground: That the article sold did not answer the description under which it was sold. If it had been a foreign bill, and there had been any secret defect, the risk would have been that of the purchaser; but here it must be taken that the 2 " The defendnnt in the case cited [MariAn v. Jarvis'S had knowledge of the nsury, which was not the fact hero, and honco it differ^; from the case at bar, and is not decisive of the question. . . . The law in regard to the transfer of negotiable bills of exchange and promissory notes, as laid down for a century or more, only excepts two cases as coming within the doctrine of an implied warranty, viz.. a warranty of title, and that the instrument is genuine and not forged. Thore is no prfcedent and not a single reported case in the books in favor of tho doctrine that where a promissory note is infectod with usury, and that fact is unknown to the party who transferred it. that is an implied warranty of the validity of the note." — lAttnuer v. GoJflmnn. 72 N. Y. 506. S<"e criticism of Littnvrr v. Oohlmnrt. in Meyrr v. RichnrrJs, 1^.3 IT. S. 385, 411, and Woori v. Sheldon, 42 N. J. L. 421, 424. — H. [But see Mr. Crawford's approval of Littaucr v, Goldman, in note 1, ante, p. 425. — C] IV.] seller: warranties. 431 bill was sold as and for that whicli it purported to be. On the face of the bill it purported to be dnnvn at Sierre Leone, and it was sold as answering the description of tliat which on its face it purported to be. That amounted to a warranty that it really was of that description.'' In Ticonic Bank v. Smiley (27 Me. 225), an overdue note was trans- ferred with this indorsement, " Indorser not holden ; " yet it was decided that the indorser was liable to his vendee for any payment made on the note before the transfer, or any set-otf existing against it of which the note gave no indication and the vendor no information. In Snyder v. Reno (38 Iowa, 329), it was held that there is an implied warranty that there has been no material alteration in the paper since its execution. The court says : " We have no doubt tliat there is an implied warranty of the transferer that there is no defect in the instrument, as well as that the signature of the maker is genuine." (See also, Blethen v. Lovering, 58 Me. 437; Ogden v. Bhjdenhurgh, 1 Hilton, 182; Fake v. Smith, 2 Abb. [K Y.] App. 76; 2 Parsons on Notes and Bills, ch. 2, § 2, and cases in notes; Terry V. BisseU, 26 Conn. 23; 1 Daniel on Neg. Inst., § 670.) In this, the author thus states the law: "When the indorsement is irithnnt recourse, the indorser specially declines to assume any responsibility as a party to the bill or note; but by the very act of transferring it, he engages that it is what it purports to be — the valid obligation of those whose names are upon it. He is like a drawer who draws without recourse; but who is, neverthe- less, liable if he draws upon a fictitious party, or one without funds. And, therefore, the holder may recover against the indors(>r without reronrse. (") if any of the ])rior signatures were not genuine; or, (2) if the note was iiivaliil between the original parties, because of the want, or illegality of, t]]o conFideration ; or, (3) if any prior party was incompetent; or, (I) the indorser was without title." These authorities fully sustain the ruling of the district court. The note was not the legal obligation of the maker to the full amount, .'^s to the usurious [xirliori, it was as it were no note. This wns a defect in the very inception of the note. It was known to the vendor and arose out of his own dealings in the matter.'' I'v all these au- thorities there is an inij)lied warranty against such a defect, and the vendor is liable for a breach thereof. The suggestion of counsel that the change in the usurv law, by the legislation of 1872, afTected the right of recovery upon the note, has been already decided adversely, in the ease of Jcnness v. Cutler (12 Kas. r.no)." All the justices concurring, .fudgment affirmed. « It will bo otwervod ttiat tliin bringH the case witliin .siiltd. 1 of § lir). — H. 132 LIABILITY OF PARTIES. [AUT. VI. § 116 HANNITM v. RICHARDSON. 48 Vi:hmont, 508.— 1875. Assumpsit for false wairanty in sale of a promissory note. The note was made by Liiieoln payable to Mcintosh, for an illegal con- sideration rendering it void by statute ; was indorsed without recourse by Mcintosh to defendant and williout recourse by defendant to plaintiff. Judgment for plaintilT. The opinion of the court was delivered by Pierpont, Cii. J. — It may be observed in the outset, that this action is not brought by the plaintiff as the indorsee of the note referred to against the defendant as the indorser, and the action is not based upon the indorsement, but is brought upon an alleged \y^T- rnnty by the defendant that the note was a valid and binding note, based upon a valid and lawful consideration, when in fact it was given for an illegal consideration, and was at its inception void. On trial the plaintiff introduced evidence in support of his declaration. After the evidence was in, the defendant insisted that as it appeared from the note that it was indorsed by the defendant " without re- course,'" the legal effect of the indorsement could not be varied or controlled by evidence outside of the indorsement itself — that the same was conclusive in that respect; but the court held that such indorsement was not of itself conclusive of its legal effect in such sense as to exclude the evidence aliunde; and submitted the case to the jury in accordance with such ruling, and it is upon this decision and the charge of the court in respect to it, that the only question that has been raised and discussed by the defendant's counsel arises. What would have been the effect of this objection if the action had been based upon the indorsement, it is not necessary now to inquire. By indorsing the note " without recourse," the defendant refused to assume the responsibility and liability which the law attaches to an unqualified indorsement, so that in respect to such liability, it may perhaps be regarded as standing without an indorsement. Tf it be so regarded, then in what position do these parties stand in respect to the transaction? The principle is well settled, that where per- sonal proporty of any kind is sold, there is on the part of the seller an implied warranty that he has title to the property, and that it is what it purports to be, and is that for which it was sold, as under- stood by the parties at the time ; and in such case, knowledge on the part of the seller is not necessary to his liability. The implied warranty is, in this respect, like an express warranty, the scienter need not be alleged or proved. Edwards, in his work on Bills and Promissory Notes (p. 188), says: "One who transfers a negotiable instrument by delivery or by indorsement, impliedly guarantees that it is genuine, and that he has title to it. The rule is the same in rv.] seller: warranties. 433 regard to personal property. The vendor of a chattel always gives an implied warranty of the title. (15 Johns. 240; 6 Cow. 484; 4 Duer [X. Y.] 191 ; 6 Johns. 5.) Though the indorser transfers the note upon condition that it is to be collected at the risk of the indorsee, he is, nevertheless, responsible if the note proves to be a forgery." (Edwards, 289.) In this case the note in question was given for intoxicating liquor sold in this state in violation of law, and therefore was void at its inception ; in short, it was not a note, it was not what it purported to be, or what it was sold and purchased for; it is of no more etTect than if it had been a blank piece of paper for which the plaintiff had paid his fifty dollars. In this view of the case we think the defendant is liable upon a warranty that the thing sold was a valid note of hand. The plaintiff has declared as upon an express warranty. If he could prove one, very well; if he could not, the implied warranty is just as available to him, the declaration being according to its lesral effect. This view of the case relieves it from all embarrassment growing out of the question as to the admissibility of parol testimony to vary the indorsement, as the effect of the indorsement is really not in- volved in the case. And the ruling and charge of the court were really more favorable to the defendant than he had the right to ask. The exceptions to the overruling of the motion in arrest were waived. The exceptions to the refusal to set aside the verdict as against the evidence, this court refuses to hear, the decision of the County Court being conclusive in such cases. Judgment affirmed.'' 2. Title of Seller. ^ 115 WILLIAMS V. TISHOMINGO SAVINGS INSTITUTION. 57 Mississippi, 633. — 1880. (iKC)U(iK, (\ J., delivered the opinion of the court. The appellants, having indorsed to the appellee a Itill (if exchange, to which they claimed title tlinmgh a forged indnrsemenl, now insist that they ineurred no responsibility by their indorsement, except a guaranty that the drawee would pay it on presentation. Hut the rub' IS well settled that an indorser warrants tlie genuineness of the prior indorsements on the bill, and also bis lille lo the jiajier. Should it 1)6 ascertained, even after payment of the bill, that any of the * WIiPTP tJii- staff ofinHtitiitinn fnrliirls thp onfurrcnu'tif of any t the cnn- sidrration of whirh was a slave, tlic inilnrsor of a noti* is nevrrtlii'lcww liablr on his in«lorsfm«-nt. altliouf.'li tlio f>ri[.'inal ronsiflprat ion iM-twcen tho maker and the payee was a slave. (Irnhnm v. Miu/uire, 39 Ga. 531. — H. NEOOT. IN8TRD1IENT8 — 28 4;U i.iAiiii,rr\ DK I'Aiii'iKS. | aim', vr. imlorsonients aw forijod, llio drnwoc ciin recover hiU'k the aiuount of the bill from tin' person to whom he |i;ii(l it ; .uul so eiieh j)ro(:e(iing iiulorsor may reeDver from the person who indorsed the hill to him. The drawee is hound to know the si,s]:nalure of the drawei', hut not of the indorser. The jud^inent, whieii is in aecordanee with these views, is Atlirmed.'^ 3. Capacity of Puioh Parties. § 115 EIJWTN IK DOWNS. 15 Ni:w YoKK, 575. — 1857. Action against indorser of notes signed by a firm of married women, and indorsed l)y defendant for their accommodation. Plain- tiff took the notes with knowledge tluit the makers were married women. Judgment for plaintiff. Shanki.and, J. — Tlie note was void, as against the makers, be- cause they were married women, and incapable of contracting obliga- tions in that form. But when the defendant indorsed tlie note, he impliedly contracted that tlie makers were competent to contract, and had legally contracted, the ol)ligation of Joint makers of the note. He also assumed the legal obligation, in most respects, of the drawers of the bill. The fact, known to the plaintiff at the time he took tlie note, that the makers were married women, did not deprive him of the character of a bo7ia fide purchaser. Nor does the payee's knowl- edge that the drawee is a married woman, discharge the drawer in case of non-payment of the bill by the drawee. Nor is the indorser discharged, though the name of the maker is forged. (1 Comst. 113.) The fact is not found that the plaintiff was aware the note was accom- modation paper. The plaintiff was a bona fide purchaser within the law merchant. Neither the complaint, nor the finding of the referee, tell us who transferred the notes to the plaintiff. The legal presump- tion is, that he received them fi'om some legal holder in due course of business. The judtrment should be affirmed. Btkiwx, J., delivered an opinion to the same effect. All the other judges concurring. Judgment affirmed. 5 Accord: State Bank v. Fearing, 16 Pick. (Mass.) 633. — H. iv.] seller: warranties. 435 4. Knowledge of Invalidity or Valuelessness. § 115 BROWN V. MONTGOMERY. 20 New York. 287. — 1859. Action on a note. Defense, fraud. Plaintiffs sold defendants a post-dated check drawn by Farnham & Co. to the order of L. R. Farnhani, one of the firm, and by him indorsed. On the day of the sale jilaintifls employed Cuttino^, a bill broker, to sell the check. Cuttiiiu' oll'eied it to one Chard, who declined it on the ground that he held one drawn and indorsed by the same parties which had just been protested for non-payment. Cutting then sold it to defendants without disclosing the conversation with Chard. The drawers were, unknown to defendants, insolvent. The note in suit was given for the purcha.se price of the check. The court charged the jury that the non-payment and protest of the check, on the llth Apiil, was evidence tending to show insolvency in the drawers; that il was the duty of Cutting to communicate to the defendants what he had heard Chard say about the protest of that check, without regard to what he may have thought about the sol- vency of the drawers; and if he did not do so, and they were really insolvent, the plaintiffs could not recover on the note. The plain- tiffs' counsel excepted to both branches of the charge. There was a verdict and judgment for the defendants, which was affirmed at a general term. 'J'he plaint ill' appealed. r3KNio, J. — I think there was no error in the charge to the jury in the Superior Court. The law unquc^^tionably is, as it was assumed on the argument, thai iiolice to the plaintiffs' agent, Cutting, while ho was actually engaged in attempting to sell the check, of the failure of the drawers, was (•(|iiivalent, so far as the present action is con- cerred, to police to the plaintiffs themselves. What Chard informed him, was not j)recisely that Farnham k Co. I I I failed, but that their ihcck on the bank at which Ihcv kept their r •.•otint was that day protestepellant it is claimed that section 90 of the Negotiable Instruments Law (Laws 1807, c. 612, ]). 733) lias en- tirely swept away the defense of usury as against holders in due course, citing Sdilesinger v. Kelly, 114 App. Div. 546; Wirt v. Stubble field, 17 App. Cas. D. C. 284; Broadwai/ Trust Co. v. Man- heim, 47 Misc. TJep. 415, and the concurring memorandum of Mr. Justice Willard Bartlett in Schlesinyer v. (rUlioulij, 189 N. Y. 1, at page 34.'' It is not necessary in the present case, however, to pass upon the question of the availability to the maker of a note of the defense of usury as against holders in due course, because the liability involved in this appeal is that of an indorser, not of the maker, and the liability of an indorser is dealt with in otlicr portions of the act; section 116 providing: "That every indorser who indorses witliout (lualification warrants to all sul)sefpient holders in due course: * * * (2) Tliat tlie in- strument is at the time of bis indorsement valid and subsisting." In Packard v. Windholz, 88 App. Div. 365, one Truman made his promissory note to one Eaton, and then forged Eaton's indorsement, and next procured the defendant Windholz to indorse it. The note with these two indorsements upon it, was presented to tlic jjlaintiffs, who were note brokers; and l)y them was negotiated for the henefit of Truman. The defendant and those subsequent to him bidieved the indorsement of Eaton was genuine, and the ])laiidiffs learned he was responsible. The Appellate Division sustained the judgment in favor of the plaintiff's, holding that the defendant by his contract of indorse- ment guaranteed the genuineness of the signature of Eaton, the prior indorser on the note, and that tlie note was a valid and subsisting obligation, citing section 116 of tlie Negotiable Instruments Law. This ruling was upheld by the Court of Appeals without opinion. 180 X. Y. 549. T Sep Hchlp.iinpcr v. Lrhnuiirr, 101 N. Y. TO. ante, p. ^78, and Klar v. Kos- tiuk, 65 Misc. 199, ante, note 7, p. 380. — f: IV.] seller: warranties. 439 In Lennon v. Grauer, 159 N. Y. 133, it was held that the fact tliat the name of tlie maker of a note was forged did not discharge tlie indorser; the ground of the decision being that the indorsement of a promissory note implies a contract by the indorser with a subsequent bona fide holder that the instrument itself and all the signatures prior to the particular indorsement are genuine. Under the language of the statute, as applied by the above decisions, it must be held that in indorsing the note the defendant warranted its validity, and that he cannot be heard now to assert that it is void for usury, any more than for forgery or any other cause. Furthermore, apart from the provisions of section 116, it is an established rule that the obligation of an indorser is a new and independent contract, separate and distinct from the contract evidenced by the note. 4 Am. & Eng. Ency. L. (2d Ed.) p. 477, and cases cited; Morford v. Davis, 28 X. Y. 481 ; Don oh or v. Meel-or, 3.5 App. Div. 43. The judgment should be reversed, and a new trial ordered, with costs to appellant to abide the event. All concur.^ §116 UNITED STATES r. AMERICAN EXCEANGE NA- TIONAL BANK. 70 Federal Repobteb (Dist. Ct., S. D., N. Y. ) 232. — 1895. AcTioy to recover the amount of a pension draft wliich defendant had collected, as collecting agent of another bank; it appearing tliat the name of the payee had been forged upon tlic draft after her deatii. 'I'he court directed a verdict for derendant, and plaint ilf moved for a new trial. Browv, I). J. The pension diafl in this case was jiaid to the de- fendant bank by the subtrcasury, npun tiie forged indorsement of the payee's name after her death, 'i'he Hellairc \V,\\\k of Ohio had pre- viously cashed the draft upon the forged indorsement, and thereupon indorsed it "for collection" to the defendant bank at New ^Ork. The latter was the collecting correspondent of the Bellaire Hank as regards its funds in New York. The collection was made in good faith by the defendniit bardc and the proceeds remitted to (he Bellaire l»ank some months before the discoverv f)f the forgery. Tlie indorse- ment of the forged draft hy the I'lclhiire Hnids showed upon its face that the defentlnnt was to act as collecting agent only. The defendanl ■ Tnflorspmont n(lnii(«< flu* sitjnnfuro iind pnj);ipif a married woman. Ihlmuuds y Rons. 51 N. .1. I.. r)i7. Sr'p Ununum v, /{irhnrdson. 48 Vt. 50R. ante, k ♦32. — H. 440 LIAIIILITV OF I'AKTIKS. [aUT. VI. nt'vor had any property in the draft or its proceeds. Tlie later au- thorities sustain the proposition tliat in such a case where the collect- ing agent pays over the funds before any notice of irregularity or fraud, the remedy is against the principal alone. Bank v. Armslrung , 148 U. S. 50; ^yhite v. Bauh, 102 U. S. G85; Sweeny v. Easier, 1 Wall. 166; ^yeJh. Fargo cO Co. v. U. S., 45 Fed. 337; National Park Batik- V. Seaboard Bank, 114 N. Y. 28. In such cases the indorsement by the collecting agent, who has no proprietary interest, does not import any guaranty of the genuineness of all prior indorsements, hut only of the agent's relation to the princi- pal, as stated \ipon tiie face of the draft; and as this relation is evident upon the draft itself, the payor cannot claim to have been misled by the indorsement of the agent, or any right to rely upon that indorse- ment as a guaranty of the genuineness of the payee's indorsement. In the case of Onondaga Co. Sav. Bk. (64 Fed. 703), as I find upon examination of the record on appeal, no question like the present arose. The Onondaga Bank was in the same situation as the Bellaire Bank in the present case. It had cashed the forged draft and was col- lecting the money for its own benefit as owner of the draft. Its in- dorsement imported a guaranty of the prior signatures; and the de- fendant's remedy here is against the Bellaire Bank. The direction of a verdict for the defendant upon the undisputed facts was, I think, correct, and the motion for a new trial should be denied.® 9 Mr. Crawford says that the doctrine of this case has been changed by the Negotiable Instruments Law. In commenting upon § IIG on page 89 of the 3rd edition of his work on this statute, he says: " As this and tiie preceding section include the case of every indorser, the warranty as to genuineness will apply to one to whom the paper has been indorsed restrictively, ns, for example, where the indorsement is ' for collection.' This undoubtedly changes the law; for the former rule was that the indorsement of a bank to which paper had been indorsed ' for collection ' did not import a guaranty of the genuineness of all prior indorsements, but only of the agent's relation to the principal as stated upon the face of the paper; and it was held that, in such a case, the collecting bank was not liable after it had paid the proceeds to its principal, though a prior indorsement was a forgery. United Slates v. Ameri- can Exchange Nat. Bank, 70 Fed. 232; Nat. Park Bank v. Seaboard Nat. Bank, 114 N. Y. 28. But this rule was exceedingly inconvenient in practice, and hence it was deemed expedient to make every indorser a warrantor of genu- ineness. There is no hardship in this rule, for each indorser has a right of recourse against all prior parties. The former rule, however, introduced such an element of uncertainty that the clearing house associations throughout the country adopted rules to obviate its effects, and the bankers sent letters to their customers requesting tliat they discontinue the use of the indorsement ' for deposit,' ' for collection,' etc. In this, as in several other instances where the law was changed, the needs of the business community were deemed of more importance than technical principles." For a statement of the action of the clearing house associations, referred to above by Mr. Crawford, see also First Nat. Bank of Belmont v. First Nat. Bank of Barnesville, 58 Oh. St. 207, at p. 214. — C. IV.] seller: warranties. 441 6. Liability of Agent as Seller. § 119 WORTHINGTON v. COWLES. 112 Massachusetts, 30. — 1873. Action to recover back money paid by plaintiff to defendants for a promissory note signed by one Hanson, the indorsement upon which was forged. Defendants were note-brokers, who sold the note for Hanson, and paid him the purchase money, less commissions, before the forgery was discovered. Judgment for plaintiff. Defendants allege exceptions. MouTON, J. — This is an action of contract upon the implied war- ranty of the genuineness of tlie signature to a note sold by the defend- ants to the plaintiff. The plaintiff claimed that in the purchase of the note he dealt solely with the defendants, and upon their credit. The defendants claimed that they were acting as agents of Hanson in the transaction, and that their principal was disclosed to the plaintiff. Upon those points the evidence was conflicting. The defendants asked the court to rule " that if the defendants were in fact agents for Han- son, and disclosed their agency to the plaintiff, or the plaintiff knew it, or had reasonable cause to know it, the defendants would not be liable." Considered as an abstract proposition of law, this is too broad. It omits the necessary element that, in the dealing or transaction in question, they were acting as such agents. It may be true that the defendants were agents of Hanson, and known to be such by the plaintiff, and yet if, in the purchase of this note, it was understood by the parti(,'S that the plaintiff was dealing with and upon the credit of the defendants, they would be liable. An agent may deal so as to bind himself personally; it is always a question of the intention and understanding of the parties. The presiding judge properly refused to give the instructions in the form re(iuest('(l by the defend- ants. Instf-ad thereof, he ruled in substance that the question was, from whom did the plaintiff understand that he was buying the note — from the brokers or from Hanson ? and that if such a state of facts occurred, that the plaintiff understood, or ought to have understood as a man of reasonable intolligenfo, that he was dealing witli Hanson, the defendants would not be liable. These instrnetions were correct, as applied to the facts of the case. The plaintiff ilinlt with the defendants. His evidence tended to show that he eonfrncted with them as principals. To meet this prima farip case, the defendants undertook to "^how that in tliis transaction they were dealing as agents of a disclosed principal. Unless from their disclosures or other sources the plaintiff understood, or ought as a rea- Bonable man to have understood, that he was dealing with Hanson, he 4-r^' I,lvl•.ll.^l'^ OK iv\i;rii:s. [art. vi. had a right to assume that ho was (icaliii- with the (letViidants as priiu'ipals. The instructions jjivcn were In tliis cITcrt, ami wcw as favorable to the defendants as tlie instructions re(iuestod, with the athli- tion of the necessary (-|nah'lieatioi) thai tiie defendants were in this transaction dealing as the agents of Hanson. (Wilder v. Cowlrs. 100 Mass. 1ST: Merrlam v. Wolcoll, M Allen, 258.) Exceptions overruled.^ V. Indorser: secondary, conditional liability. 1. Indorser's Contract as Seller. [See preceding subdivision IV, pp. 419-1-12.] 2. Indorser's Contract as Assuhku of Payment. § 116 LONG V. STEPHENSON. 72 North Caholina, 500. — 1875. Action against indorser. Plaintid" alleged that the drawee refused to accept or pay, and that defendant on demand also refused to pay. Defendant alleged non-presentment to drawee and want of notice of dishonor. Judgment for defendant. Settle, J. — The authorities cited by the defendant's counsel establish beyond controversy : 1. That the draft should have been presented for payment.^ 2. That notice of non-payment sliould liave been given in reason- able time to the defendant.^ As both of these essential requisites to the maintenance of this action are wanting, we concur with his honor that the plaintifP is not entitled to recover. Judumei't aflii-med.'* 1 Accorfl: Mcridm National Hank v. (la-llaudet, 120 N. Y. 298; Rrown v. Ames, 59 Minn. 470; HufTcut on Agency, § 180. — H. 2 Post. Art. Vll. — H. 3 Post. Art. VTII. As to protest as a third requisite, see Art. XIIT. pofit. — H. 4 " The liability of the indorser is strictly conditional, dependent both upon due demand of payment upon the maker or acceptor, and also due and legal notice of the non-payment. The purpose and object of such demand and notice is to enable the indorser to look to his own interest, and take immedi- ate measures for his indemnity. The demand and notice being conditions precedent to the indorser's liability, it is incumbent on the holder to make clear and satisfactory proof of tliem before he can recover." Lawson v. Farmers' Bank, 1 Ohio St. 200. " The indorser of a bill of exchange, whether payable after date or after Bight, undertakes that the drawee will pay it, if the holder present it to him at maturity and demand payment; and if he refuse to pay it, and the holder V. 2.] INDORSER. 443 § 117 BRUSH V. ADMINISTRATORS OF REEVES. 3 Johnson (N. Y.) 439. — 1808. The plaintiflF declared on a promissory note, given by one Spring to Reeves, tlie intestate, and payable to him or bearer. The note was indorsed over by Reeves, and the present suit was brought by the indorsee against his administrators. There was a general de- murrer to the declaration, which was in the usual form against the indorser. Per Curiam. — The note was negotiable under the statute, and transferable without indorsement : but if the payee chose to put his name on the back, he became as much bound as an indorser, as if the note bad been made payable to him or order. It was ruled by Chief Justice Holt, in the case of The Rank of England v. Xcjririnn (1 Lord Raym. 442), that if a person indorses a bill payable to bearer, he becomes a new security, and is liable on the indorsement. The declaration at least is good on a special de- murrer. But the defendant may withdraw the demurrer, on payment cf costs, and pleading forthwith. Judgment for the plaintiff.' S 116 OOTFTOFT v. BALLARD. 41 Babboub (N. Y.) 33.— 1864. Aption against indorsers on note due Nov. 29 (Saturday). Notice of dishonor received about fi p. m. of that day. Service of summons and comf)liiint in this nction soon after on Ww. same day. Judgment for plaintiff. Bij llie Court, Mason, J. — The only question presented in fiiis rase is whefhcr a suit can be maintained against tlie indorsers of a note payable at a bank, and which has been duly protested, where the suit is commenced on the day of the protest, or the third day of grace. The rule in England, as understood !)y Chillji, is that the Kuit on liic third day of grace is premature. (Sec Chiftv on Bills, mo, 107, 400, Sth Lond. ed.) And such I understand to be the rule caiisr it to ho proto^fof^. nn'r i- fliat Ibe irregular indf)rser is a u'uarantor. Ulatchfunl v. MiHiken, 35 III. 438: Kinustand v. Koeppr. 137 III. 344: Arnold v. Bryant. 8 Bush (Ky.). (168 (by sfatut.-i ; Cornirr v. Kahlul. 67 Iowa. 13 (by statute) : Fullrrton v. //(//. IS Kans. 55H. T.-irol cvidiiicc is adtnissible (o show the actual cfintract. Milliiinn v. f/olbrook. 168 Til. 313. fii sjuue states the payee fir h'dder may treat the irn-trular indorser eithi'r as a comaker or suret\' as he may elect, but fiarol proof may show the true contract. Orrick v. Colxinn. 7 Gratt. (Va.) I8!»; Roanokr. etc.. Co. v. Walkins. 41 W. \'a. 7H7; Miller v. Clendennin, 42 \V. Vn. 416. .As to wbetbcr an irrcgulur indorsement construed as a guaranty is within the fltatute of frauds, there is a conflict. That it is: Culbcrtson v. Smith. 52 .Md. 62H: llaudrn v. Wridnn. 43 V. .1. T.. 128; llaucr v. Patterson, 84 Pa. St. 274. That it is not: Brrkuilli v. Xniirll, 6 Conn. 315; Stoucll v. Raymond, 83 III. 120; PetevHon v. Russell, 62 Minn, 220, — H. 448 1-IAIU1,1TY OF PARTIES. [aRT. VI. Spear, J. Whothor or not tho answer avers a defense to the eause of action set up in tlie jti'tilion is (lie e deemed an indorser in the commercial sense, because he must, in order to have that effect, place his name on the back otherwise than as maker, and the rule is, and was, that the person so placing his name is a maker unless he shows a different agreement between the parties. There is much plausibility in these contentions, and they or PAH Ill's. [art. vi. V. Butler, 127 Mass. 386; Cadi/ v. Shepard. 12 Wis. <;;?!»; B.Mijamin's Chanibors Bills | 2ml Am. tnl.|." 2".0; U (7//t'/-yi(; v. ,Sla,ihack, 15H N. Y. (il!'.) To go further ami decide Uiat the statute intended to create an imoiitestable liability against irregular indorsers would be to im- pute to the legislative wisdom a design repugnant to every notion of judicial procedure, especially in a ])rovision enacted in the interest of law reform." 'i'he judgment should be alTirmed, with costs. CuLLEN, Ch. J., TTaioiit, Vann, Wkhner, Willard Bartlett and lIiscoCK, JJ., concur. Judtrnient affirmed. ° § 113 NATIONAL EXCHANGE BANK v. LUBRANO. 29 Rhode Island, 64. — 1908. Action on note. PlaintiiT's declaration alleged "that D. T)i Luglio and Michael Tvubrano, doing busines'^ as D. Di Tjuglio Com- pany, * * * |)v thoii- note * * * hy fhoin signed as D. Di Luglio Company * * * promised said plaintiff to pay it or order * * * ;^nd the said defendant individnally then and there indorsed and delivered said note to said plaintiff." The declaration then alleged ]n-esentment to makers when due, failure to pay, and due notice to defendant of the dishonor of the note. Defendant . where the court, on page 666, says: " We are of opinion that the real contract bolween the parties can be shown now as fully as it could have been shown before the passage of the Xegotiable Tnstniineiits .Act. and that, as between tlie immediate parties, it is not jieeessary that the indorsement should be accompanied by appropriate words in writing, showing an intention to be bound in some otlier capacity. As to innocent holders for value, the rule, of course, would be otherwise, and the statute wniild npply." But in Rfiumpif^trr v. Knntz, 53 Fla. 340. at p. :!!:'). the cmnt saiii: "The main question for determination is: Does the indorsement in blank before delivery of a promissory note ... for the purpose of giving credit to the maker, .so fix a* matter of law not the status but llie li.iliilily and rights of such an indorser, as between the original partic. tli;\( i( r.nnnot be sliown that by the eouree of conduct of the parties attendin-x the indorsement, that the right of the indorser to have demand made nn tlie maker of the note for payment at maturity, was waived so as to make tlie indorser's liability not dependent upon =ucii demand? T.y the terms of the statute |nam(ly, the Negotiable Instruments T-awl when a person not otherwi'^e a pirfy to a nego tiable instrument places thereon his siimnture in blank before delivery, his status is fixed as that of an indorser. Where the statute fixes the status of a party to a negotiable instrument as being that of an indorser, parol evidence JB not admissible to vary such status." — C, V. 4.] INDORSER. 459 appeared that defendant's liability on the note was a joint liability with one D. Di Luglio, and not a several liability. IJemurrer was overruled and defendant excepted. Paekiiurst, j. * * * The first exception must be overruled. The declaration shows tliat the defendant, Lubrano, was a maker of the note as a partner with one D. Di Luglio, under the firm name of " D. Di Luglio Conipany," as signed on the note. If Lubrano had placed his name upon the back of the note before delivery, under the law of this state, as it cNi.^ted prior to the passage of the " Negotiable Instruments Act*' (c'lnptor fi7l, p. 222, Jan., ]8!)f)), he would simply have become a jniiit maker of the note. As he was a maker already, his relation to the note would not have been changed, and his liability thercniulcr would neither have increased nor diminished. His act would siiuply have been nugatory. Under the Negotiable Instruments Act, however, we think he may fairly be held to have made himself an indorser under the provisions of section 71," viz.: " A person placing his signature upon an instrument otherwise than as maker, drawer, or acceptor is deemed to be an indorser, unless ho clearly indicates by appropriate words his intention to l)e bound in some other capacity." See, also, Negotiable Instruments Act, p. 228, c. 674, § 25, cl. 6.' See McLean v. Bryer, 24 K. I. 599 ; Downey v. O'Keefe, 26 R. I. 571 ; Dcain/ v. Choquet, 28 \\. I. :5:]8. In other words, we are of the opinion that the defendant, by so indorsing said note, added to his lialulity as maker a several and distinct liability as indorser, thereby making himself individually liable for th.e pay- ment of the note, after due not ire of dishf)nor, and thei'eby also guaranteeing the signature on tiie face of the note, and that the plain- tiff had a right, if it saw fit, to sue him as such indorser, as it has done. The demurrer to the deehii'nt ion was therefore properly overruled.' 4. r)l{I)i:i! OK iN'DOK'SKIt's FjlArULITY. §118 MOOIfK V. ("TTSITING. 102 Mas.saciiu.sktts, r,!l4. — 1895. roNTiiACT. agairist T^ouis 'V. ("usiiing and IlarNey 11. Pratt upon the following promissory note: $600. 21 luhi. ISD.-J. Thr*><^ mfinths aftor dnU*. I promiso to pny to the orfir-r of Williniii Mnore five huniircd doilarH. I'jiyalilo at any hank in Boston. Value rcrcivi'd. IIaHVIV H. I'ltATT. { Indorsril ) : I,oiii'< T. <'ushin^, Williani Mnore. • N. Y.. S 113. — C. T N. Y.. § 36. — r. • Soe. also, Grrmnnin \nt. UnnJ; v, ]Inrinri\ I'JO Win, .'ill, nnlr, p. 460 LIABILITY OF PARTIES. | ART. VI. The case was subniittod to the Superior Court, and, after judg- ment for the plaintilT, to this court, on appeal, on agreed facts, in substance as follows: Before the delivery of (lie note Pratt requested the plaintiff to get it discounted, and the plaintilT refused unless there was a satis- factory indorser. Thereupon the plaintilT acconipanied Pratt to the otfice of Cushing, whom the plaintilT told that he was going to have the note discounted for Pratt, provided Pratt obtained a satisfactory indorser. The plaintifT asked Cushing if he was good for the amount, and Cushing said that he was. and that the note would be paid when due; and that he was willing to indorse the note for the neeommoda- tion of Pratt, so that the note might be discount(nl for 'iis benefit. The note was then indorsed by Cushing at the request of Pratt, and was delivered to the plaintilT, who thereafter himself indorsed it and had it discounted, and the proceeds were used for the benefit of Pratt. The plaintiff was obliged to pay the note, and Cushing alone de- fended. Pratt having been defaulted. Holmes, J. — This is a suit upon a note between two persons, who both became parties on it for the accommodation of the maker. The defendant Cushing indorsed the note before delivery, the plaintiff is the payee, and indorsed after the defendant. If the plaintilT had not known that the defendant indorsed the note for accommodation, he would have been entitled to recover. (Woods v. Woods, 127 ]\Iass. 141.) Knowledge of that fact under the circumstances stated does not affect his rights. Tn the absence of agreement, successive in- dorsers for the accommodation of a third person are liable in the same order as indorsers for value. (Shaiu v. Kvo.r, 98 Mass. 214; Danl. Xeg. Tnst. [3d ed.], § 703.) The conversation which took place between the parties, so far from expressing a different agree- ment, gave notice to the defendant that the plaintiff required his in- dorsement as the condition of becoming a party. It fortifies the presumption arising from the face of the paper. The suggestion on behalf of the defendant, that he signed also for the accommodation of the plaintifT, perverts, if it does not contradict, the agreed facts. It was ursred that the plaintifT took the note when overdue. But his rights and liabilities were fi.xed at the time of his indorsement. If the argument was sound, the judgment ought to have been for the defendant-indorser in Woods v. Woods. Judgment afHnned.* • Successive indorsements import a several, and not a joint, liability. A joint action cannot be brought against succps=(ive indorsers except by aid of statute. Wolf v. Hostetter. 182 Pa. 292. Snch statutes autborizinf; the join- ing of all parties to a negotiable instrument in one action arc common in the American States. N. Y. Todc fiv. Proc, § 454; Pomeroy, Remedies, §§ 402- 410: 3 Randolph, Comm. Paper, S 1660, — H, V. 4.] INDORSEE. 461 §118 GEORGE V. BACON. 138 Appellate Division (N. Y.) 208. — 1910. Action by Elizabeth W. George, as committee of the person and property of Clara G. Barnaboe, an incompetent person, against Charles R. Bacon. From a judi^'ment for plaintiff and from an order deny- ing defendant.'^' motion for a new trial, he appeals. Scott, J. This i.s an action for contribution by one indorser upon a promissory note against a subsequent indorser. The defendant ap- peals from a judgment upon a verdict directed by the court. The note was signed in the name of "The Bostonian's Incorporated," by its president. The corporation was engaged in giving operatic per- formances. Its principal otlice was in the city of New York at the office of Loudon G. Carleton (also an indorser), who was an officer and general director of the company. The defendant, Bacon, was manager of the company, and acted as treasurer while the company was traveling. Barnabee, the president, was one of the performers, as was also McDonald, an indorser. The incompetent plaintiff was the wife of Barnabee, and it was she who ultimately paid the note. The company appears to have been stranded in Pittsburgh and needed money to get home. The note, after it had been indorsed by all of the indorsers, was discounted at the New Amsterdam Bank, and the proceeds were checked out by the defendant. Bacon, in pursuance of the purposes for which the note was made. Bacon made the arrange- ments with the bank for the discount of the note, and procured it to be signed by the president. It does not appear whether or not the incompetent signed at his request. The incompetent's indorsement is the third in order, and Bacon's is the fifth. The defendant relies solely upon section 118 of the negotiable instruments law (Consol. Law, c. 38), which roads as follows: "Order in which inilorscrs are liable. As respects one another, indorsers are liable prima facie in the order in which they indorse; but evidence is admissible to show that as between or among fhemselves they have agreed otherwise. Joint payees, or join! iiidor.scrs who indorse are deemed to indorse jointly or severally." If there was sufTicient (tvidencc in the case to justify a (iriding that the parties had otherwise agreed among themselves, llic prima facie presum[)tion disappears, and fhe iiulorser who adually pays the note is entitled to contribution. And it is not necessary that there shall be proof of an actual formal contract in so many words. It is sulTlcient if the surrounding circumstanees indicate that the indorsements were made upon the common understanding that all the indorsers should partiripate in the liability. "Their lordships see no reason to doubt that the liabilities infrr sr. of the successive indorsers of n bill or promissory note must, in the absence of all evidence to the contrary, be dftnnnined according 162 I.IAnil.lTV OF TAIMIKS. [aKT. VI. to the ordinary iMiiuii)K>s of tlic l;i\v iiicrcliaiit. TTe who is proved or aihnittod to have iiiaik' a piidr iiKiitrscmcnt must, according to tlu'se priiu'iplos. iiHlcniiiify sul)S((|ucnl iiidorscrs. But it is a well- estahlishod rule of law lliat the whole facts and circnmstances at- tens in the ])resent case are that all of the indorsers wen- engaged in a common enterprise; that the money to be raised on the note was for tlie furtherance of that enterprise; and, so far as appears, that one iiulorser was as much interested in the enterprise and as much to he benefited hy raising the money as was any other. It is likewise a very significant circumstance, as bear- ing upon the mutual obligations of the indorsers to each other, that all (he indorsements were put on the note before it was issued, and solely to give it credit with the bank, and that no indorser gained any profit or advantage from the note except such as was shared by all in the pursuit of the common enterprise. Hagerty v. Phillips, 83 Me. 336. "The indorsements upon hills of exchange or promissory notes rest upon the theory that the liahility of indorsers to each other is reg- ulated by the position of their names, and that the paper is trans- ferred from one to the others by indorsement. But this rule has no practical application to accommodation indorsei's, where neither of them has owned the paper, and no such transfer has been made." Easterly v. Barber, 66 N. Y. 433, 437. We are therefore of the opinion that enough appeared to justify a finding that the indorsers upon the note, as between tliemselves, be- came joint sureties for the payment of the note, and that the incom- petent, having paid it, was entitled to contribution from her co-in- dorsers. The defendant offered no evidence and made no request to go to the jury, contenting himself with a motion to dismiss the com- plaint upon the plaintiff's proofs. It follows that the judgment and order appealed from must be affirmed, with costs. All concur. V. 4.] INDORSER. 463 § 118 WILSON V. HENDEE. 74 New Jebset Law (Ct. Err. & App.) 640. — 1907, Plaintiff was nonsuited on the trial and brings error. Pitney, J. — On May 12, 1904, one Walter D. Wilson made his promissory note for $920 payable to the order of the Vineland Na- tional Bank. Prior to its delivery to the payee the note was indorsed successively by Charles W. Wilson, the plaintiff herein, and by the defendant Hendee, for the accommodation of the maker. The paper having gone to protest at maturity, the plaintiff was obliged to pay, and did pay, the whole amount of it to the bank. The present action is based upon an alleged agreement made be- tween Hendee and the plaintiff prior to the indorsement of the note by either of them, to the effect that, if plaintiff would become in- dorser, Hendee would likewise indorse, and would pay the note at maturity, and indemnify the plaintiff and save him harmless against all loss by reason of his indorsement, in consideration of certain val- uable personal property to be placed in his hands by the maker. * * * It wnll be well to consider whether either the common-law rule or the Negotiable Instruments Act (P. L. 1902, p. 583) excludes the parol evidence upon which alone was rested the proof of the agree- ment for whose breach recovery was sought in the present case. The note in question was made by Walter D. Wilson to the order of the bank, and was indorsed by the parties to this suit prior to its delivery to the bank. As the law stood in this State before the en- actment referred to, their signatures would per se have created no imy)lied or commercial contract whatever, their liability to the payee would have depended upon extrinsic evidence to show the intent with which they became parties, and parol evidence would have been com- petent for the pur})os(' of showing such intent. Cliathhicl- v. Vnnncss, 35 N. J. Law, 517. Had the payee afterwards indorsed the note, and had it come to the hands of a hnna fiJe holder before maturity, the irregular indorsers might have been subjected to the liability of second indorsers. Crozrr v. Cliatnhrrs. 20 N. J. Law, 25fi. Buf, as between the origJDal [)arfies, the (|uesfic)n whether any contract was made, and, if so, what was the characfer of that contract, was to be determined by the intention of the parties as ascertained by parol evidence of the circumstances under whieh the indorsement was made; evidence of this sort not being objectionable on account of a tendency to vary a written contract, when no contract would arise except for such evidence. C'haHdnrJ,- v. Vanncss, 35 N. J. Law, 523. Even with respect to negotiable paper regular in form, our decision recognized the admissibility of parol evidence as between the im- mediate parties for tlie purpose of showing that a note or indorsement was made for accommodation, or made without consideration, or upon 'Hvl LIABILITY Ol' PARTIES. | ART. VI. n consideration that was conditional and was not performed. Gilbert V. Duncan. 0!1 N. J. Lnw, M]?, ; Td. .V21 ; Chaddock v. Vanncss, 35 N. .1. T.aw, 5'^0. But, as a general rule with resiu'it (o paper n\!^iilar in form, our decisions did not, even as hetwcen the ])jirties, admit of the introduc- tion of parol evidence to vary the commercial contract that was held to arise from the terms of the instrument ; for instance, as hetwcen successive accommodation indorsers, Johnson v. Ranisei/, 43 N. J. Law, 270 ; Middlcion v. ilriffitli, 57 N. J. Law, 4 12, 448 ; Klinfj v. Kelioe, 58 N. J. Law, 529; Folci/ v. Emerald Brewing Co., 61 N. J. Law, 428, 431. In other jurisdictions the rule adopted in this stale with respect to e.Kcludinfj parol evidence of the intent of the parties to a negotiahle instrument regular on its face, where such evidence would tend to vary the contract that the law merchant implies from the form of the instrument, was not uniformly adhered to, it heing held in many states that in actions between tlie parties parol evidence was admis- sible to show that they had agreed otherwise than as would appear from the face of the note. 1 Dan. Ncg. Inst. (Gth Ed.) §717, and cases cited; 2 Rand. Com. Paper, ^§710, 741, 778, 779, and cases cited; Crawf. Ann. Neg. Inst. Law (2d Ed.) § 118. In this state of the law our new IVegotiable Instruments Act was passed, P. L. 1902, p. 583. Prior to ils enactment a similar act, or one substantially similar, had been adopted in 16 American states, and had been enacted by Congress as the law of the District of Co- lumbia. Crawf. Ann. Neg. Inst. Law, preface to second edition. We must attribute to our Legislature an intent to render the law of this state respecting negotiable instruments conformable to the law in these other states. And at the same time it is obvious that the act was intended to do away with some of the distinctions established or recognized by our adjudicated cases respecting the form and mode in which a contract of indorsement might be entered into, and the effect of making such an indorsement, whether as between the ])aities or with respect to subsequent holders of negotiable paper. By section 63^ of that act (P. L. 1902, p. 594), "a person placing his signature upon an instrument otherwise than as maker, drawer or acceptor, is deemed to be an indorser unless he clearly indicates by appropriate words his intention to be bound in some other capacity." This, of course, abrogates so mucli of Chaddocl- v. Vanness, 35 N. J. Law, 517, 10 Am. Pep. 256, as held that an irregular indorsement of itself im- ported no implied or commercial contract whatever. Section 64^ is as follows: [Quoting it.] 1 N. Y., § 113. — C. 2N. Y., § 114. — C. V 4-1 INDORSEE. 465 It will be observed that this section deals with the rights of the payee and subsequent parties, and has not the etfect of defining the rights and liabilitiei of several irregular indorsers as between themselves. These are set forth in section 68,' which reads as follows: "As respects one another, indorsers arc liable prima facie in the order in which they indorse; but evidence is admissible to show that as i)etween or among themselves they have agreed otherwise," etc. Thi> does not, by express mention, sanction parol evidence: neither does it expressly exclude any kind of evidence, whether written or verbal. Ts parol evidence excluded by implication? If the legislative design was to admit only written evidence for the purpose indicated, it would have been unnecessary to say anything upon tlie subject, for by the common-law rules of evidence other writings explanatory of the real agreement would, of course, have been admissible. When we recall that a previous section had brought irregular and regular in- dorsers into a single categoi-y in the absence of an expressed intention to the contrary, that the first clause of section 68 renders the mere act of indorsement only prinia facie evidence of the contract as between successive indorsers, and that by previous decisions parol evidence as Ijetween irregular indorsers was for all purposes admissible, and as between regular indorsers was for some purposes admissible and for other purposes not, it is easy to arrive at the conclusion that the sec- tion was intended to admit parol evidence in all cases between indorsers for the j)urposes of showing what was the agreement amongst them- selves. This view biings our state into accord with the rule already laid down in some other jurisdictions as the common-law rule. At the same time it docs not destroy the value of the instrument as a rommercial instrument. fi)r it is not against those who subse(|uently take the instrument in llie course of commerce that the explanatory evidence is adniitled. W'lien we rememlier that the rules of the law merchant in this regard were established es])e(ially for the protection of subsefpient holders of the instrument, and that tlie liability of in- dor^er arises not frrmi any words expressed upon the pajier but from implications that originated in the necessities of trade and comm(»reo, il is reasonable to attribute to the Legislature an intent to leave the pa[)er o[)en to explanation by parol as between the indorsers them- selves. This is the effect that was given to section (iH of the act in the recent decision of tliis c(»urt in tbe ease of M(ir(ian v. 'I'lioin/ison, 7'.* X. J. Law, jll. In our opinion, thercfoie, (be act admits of the introduction of parol evidence to show the actual agreement made between several in- dorsers, notwithstanding it contradicts the prima facie inference ap- pearing from their successive indftrsements. * * * .Judgment for defcrnlant reversed and a new trial granted. 8N. v., § 118. — C. NBOOT. IN«Tf;round of prin- ciple to stand on, and I trust they will never again he cited as au- thority in this state. T do not mean that the very woids of an agreement are always to be followed. Construction is often necessary for the purpose of ascertaining what the parties intended by the words which they used. But when the meaning of the instrument has been ascer- tained, the office of construction is at an end; and the contract can only be enforced as the parties have made it. The defendant has very plainly contracted as a guarantor. If he is not liable as such, he is not liable at all; and if he is liable as such, he cannot get rid of the obligation by calling himself an indorser, or anything else. The undertaking of the defendant was not conditional, like that of an indorser; nor was it upon any condition whatever. It was an absolute agreement that the note should be paid by the maker at maturity. When the maker failed to pay, the defendant's contract was broken, and the plaintiff had a complete right of action against him. It was no part of the agreement that the plaintiff should give notice of the non-payment; nor that he should sue the maker, or use any diligence to get the money from him. The cases in Massachu- setts. Maine, and Pennsylvania, which hold a different doctrine, {Oxford Bank v. Haynes. 8 Pick. 423: Talhot v. Gay, 18 Id. 534; Gamage v. Ifutrhins, 23 Maine, 565; Gibhs v. Cannon, 9 Serg. & R. 198; Isett v. Hoge, 2 Watts, 128), are not law in this state. With us, proceedings against the maker are only necessary where there is a guaranty of collection.^ The point was decided long ago that a guaranty of payment, like the one in question, is not conditional, but an absolute undertaking that the maker will pay the note when due. (Allen V. Riglitmere, 20 John. 365.)-'' All of our cases go upon that 2 fiylvcater v. Dovmer. 18 Vt. 32: Fwent v. Stewart, 14 Oh. St. 246. — H. 3 Accord: fiaulc v. fJopson. .5.3 Conn. 453; Hance v. Miller, 21 111. 636; Htudn- baker v. Cotln. .54 Ind. .586: Ifoberls v. Hawkins, 70 .Midi. .566; Clay v. Edger- ton, 10 Oh. St. .549. [Elfiin City Bking. Co. v. Hall, 119 Tfnn. .548. — C] Contra: (Contrnnt conditional) Crooks v. Tully, 50 Calif. 254; Rockford .V. B. V. (Juyloril. 34 Iowa, 246; Neicton Wagon Co. v. Dicrs, 10 Neb. 284; Mizner v. Spier, 96 I'a. St. 533; oases from Mc., Ma.ss., and Pa., criticised in the principal ca«e. Hut tlie '_Miarantor may waive the holder's laches. Higour- ney v. Wetherell, 6 xMet. (Mass.) 553; Pattillo v. Alexander, 96 Ga. 60. — H. ni.] gUaBanTob. 469 ground. Some of them go so far as to liold, that the guarantor may be treated as tlie maker of a promissory note. {Manrow v. Durham, 3 Hill, 581; Luquecr v. Prosser, 4 Ilill, 420; 1 Id. 256.) That doctrine cannot be defended. Although tlie undertaking is absolute, it differs essentially from a promissory note. The guarantor does not promise to pay himself, but that the maker will pay. Still, such cases prove that our courts are far enough from holding the con- tract to be conditional. It follows from what has been said that the evidence offered by the defendant was properly excluded. Proof that when the note became due, and for several years afterwards, the maker was abundantly able to pay, and that he had since become insolvent, would be no answer to this action. The defendant was under an abso- lute agreement to see that the maker paid the note at maturity. If there had been an indorser on the note prior to the guaranty, and the plaintiff had allowed him to be discharged by neglecting to demand payment and give him notice, it may be that the defendant would have had a good answer to the action. But it is not neces- sary to consider that question ; for there was no indorser, and nothing has been done or omitted to discbarge the maker. If the defendant wished to have him sued, he should have taken up the note, and brought the suit himself. The plaintiff was under no obligation to institute legal proceedings. Tiie only remaining question is on the statute of frauds. (2 R. S. 135, § 2.) If the case is within the statute, it is impossible to get over the objection that no consideration is expressed in the guaranty. fSof the pxrellent article liy William P. Tiop^crs. Esq.. in C^ Tol. T.aw Rev. 220 (.April. IflOfi), entitlocl " Dpniand on principal before action apainst puar- antor," where the authorities are carefully analyzed. On pafje 2.'50. Mr. Itofrers says: "The lanpuaj;!' of the court in llryman v. Doolry et al. [(18!(.T) 77 ^Id. 102. Ifi.'Jl touchinf; the suhject of demand and notice, accords with the writer's views of the law on this suhject. The cojirt there said: 'It is to he regretted that u|)on such a (piestion there shouhl he such a conflict of judicial o|iinion. This conflict has mainly arisen from a departure from Ihf firmly settled rule of the common law in regard to con- tracts of guaranty, and the attemjit to engraft Jipon such contracts, in a modified form it is true, the law of demand and notice hy which the liability of an indorser of negotiable jiaper is governed. ... In the case of an ahs(dute guaranty, however, there is no condition aniu-xed to the contract itself, nor i-< any condition implied iiy law, re(|iiiriiig the guarantee to notify the gunrnntr)r of the default of the principal. On tlu' contrary, his liability is governed hy the same rules of law hy which the orij)|iort an action against him for a breach of his cf)ntract, it is not necessary to alle;.'e or prove notice of tb-mand upon and cbfaiilt of the principal to charge the guarantor.' " — C] 470 i.iAiiii.irv OF I'Ainii'S. [akt. vi. I know it was hoKl in Mtr v. Durham (;5 Hill, r)81), that a guar- anty like this was a promissory note, wliich imports a consideration, and was therefore valid. But that ease, which has been questioned elsewhere (Story, Prom. Notes, 597), as well as at home, cannot be law. An undertaking that another man will jK'rl'orm his contract is not a promissory note. It is not within any definition which was ever given of a promissory liote, and it cannot he held to be such, without confounding all legal distinctions in relation to the nature of contracts. But I think the statute of frauds does not ai)ply to this case. Al- though in form this is a promise to answer for the debt or default of another, in substance it is an engagement to pay the guarantor's own debt, in a particular way. lie docs not undertake as a mere surety for the maker; but on his own account, and for a consideration which has its root in a transaction entirely distinct from the liability of the maker. The defendant was a debtor to the plaintiff, and gave the note, with the guaranty, to satisfy that debt. This belongs to the third class of cases mentioned by Kent, Ch. J., in Leonard v. Vredenburgh (8 John. 38, 39). There was a new and distinct con- sideration, independent of the debt of the maker, and one moving between the parties to the new promise. In such cases, where the party undertakes, for his own benefit, and upon a full consideration received by himself, the promise is not within the statute. Tt would be good without any writing. The point was decided by the Supreme Court in Johnson v. Gilbert (4 Hill, 178), and T do not think it necessary to refer to other cases holding the same doctrine.* The case of Manrow v. Durham, might have been placed upon the same ground on whicli I have put this, if Durham alone had signed the guaranty. He made the promise upon a new consideration, moving between the plaintiff and himself. But Moulthrop, the other defendant, was a mere surety, and as to him the case was clearly within the statute. Sthokg, J., also delivered an opinion. Jewett, Ch. J., and Gardner, J., were of opinion that the guar- anty was within the statute of frauds, and therefore void. Judgment affirmed. ■♦ " The reasoninp to take this promise out of the statute is (|uite subtle, and T should have much difficulty in yielding it my assent, hut for the authorities which I think ou<;ht now to control." — Eaul, J., in Milks v. Rich, 80 N. Y. 2f.n. 271. See also Darst v. Bates, 95 III. 493; Sheldon v. Butler, 24 Minn. 51.T-. Wyman v. Goodrich, 26 Wis. 21; Uassinger v. Newman, 83 Ind. 124; cf. Dojcs V. Sireit, 134 Mass. 140. One who signs as surety with the maker is liable as an original promisor; the statute of frauds does not apply to the case. Casey v. Hmhason, 10 Abb. Pr. (X. Y.) 368; Freeh v. Yawger, 47 N. J. L. 157; Paul v. Htackhouse, 38 Pa. St. 302. VII.] GUARANTOR. 471 4. Is THE Guaranty Transferable? (a) Is it negotiable? ^ TRUE V. FULLER. 21 Pickering (Mass.) 140. — 1838. Shaw, C. J., delivered tlie opinion of the court. The facts bear- ing upon this question may be thus stated. Morse made three promis- sory notes to Elisha Fuller, or bis order, payable in two, three and five years, rc^^peitively, from date, and gave a mortgage to secure the payment of them. The notes were indorsed in blank by tlie payee. On the same notes was indorsed a guaranty in tliis form: "I guar- anty the payment of semi-annual interest on this note, as well as the principal," and signed by the defendant. The notes thus indorsed were transferred, and the mortgage assigned. The mortgaged prem- ises were entered on for breach of condition, and the mortgage fore- closed. The notes have regularly come to the hands of the plaintiff. The court are of opinion that the plaintiff is not entitled to recover, because the guaranty in (piestion was not made to him, or whilst he was holder of tlie note; that it was not negotiable in itself, and was not made so by being written upon and intended to secure a negotiable instrument. This instrument being filled up and signed, is complete in itself, and it cannot be altered either by striking out words so as to convert it into a general indorsement, or by filling up, as in case of a blank indorsement. In the latter case, an indorser, by leaving a blank over his natne, tacitly agrees that any subsequent lawful holder may insert suitable words to render him liable in the same manner and to the same extent, iiiipli«/ /{nnk, 4H 111. 'M'>: houisrillr Co. v. Ctililinll, W Ind. 24r»; In rr (Imlilnrtl. f.C, Vt. 41 5. — 11. '•Whether it he a <,Maranty itKhir-^eiiieiit hy a hcdder. or he writt<'n 'in the bill by a third party, swms immaterial when this quetttion is involved, — U. Vi^ LlAltll,ll"» DK I'Altl'lKS, [aUT. VI. Tliis guaranty oxpivsscs no loiisiileration, nor does it name any person as the guarantor, to wlumi it is made. lint suppose tl)ese could be su})plied by \)i\vo\ j)rool', it could only enure to the person who was the iiolder at the time the guaranty was given, who was not the phiintiir. Had the defendant intended, by tlie credit of his name, to give a general eunency to the note, as a negotiable security, there was no reason why he should not have indorsed it generally, in which case he would have been responsible to any i)erson who might afterwards become the holder. As it is, it is no more a negotiable promise (ban if it had becTi written on a separate paper, rei'ei'ring to the note, and guarantying it to the then holder. {Ti/ler v. Hiiiucij, 7 Miss. R. 47!) ; Laniourieux v. Hewit, 5 Wend. 307.) IMaintitf nonsuit. " (fc) Is it assignable? COOPER V. DEURICK. 22 B.\RBOt'R (N. Y. Sup. Ct.) 516. — 1856. By the Court, ]\Iai!V1N, J. — The action was upon a guaranty, written upon a promissory note. The note reads thus: — $58.26. Due Dcdrick & Bronson. or bearer, fifty-eight and twenty-si.x one lunuliedths dullars, for value received. J. S. Stillman. [Tlie frnaranty is. tluit] For value received. I hereby guarantee the payment of the within note. Feb. 19, 1849. (Signed by Defendant.) Upon the trial the plaintiff's produced the note and proved the guaranty written upon it, and rested. | Defendant asked for nonsuit: (1) That there was no evidence of the maker's signature; {'I) that plaintiffs showed no title or interest in the guaranty.] '' The justice gave judgment in favor of the plaintiffs. Several ol)jections are made to the judgment, it will not be neces- sary to state them particularly. It was not necessary to prove by wit- nes-ses the signature of the maker of the note. This was sufficiently proved, as against the defendant, by proving his execution of the guar- anty. (Cowen & Hill's Notes, notes 168, 869, 912.) * * * ".Accord: At'Doal V. Yeomans. 8 Watts (P:i.) .*?61 : Irish v. Cuticr. 31 M ■. 536. Contra: '\V(hfppenheimer, 15 Wash. 290. See 2 Daniel on Neg. Inst., §8 1774-1784. — H. [Accord: I'Jdfjeili/ v. I.nirnon, 170 Mass. 551: coniiiunted on in 14 llarv. Law Rev. 299. — CI ' Other questions omitted. — H. ^n.] GUARANTOR. 473 As to the evidence of their title to the guaranty, the note was pay- able to Dedvirk c^- Bronsoii, or hearer, and the guaranty was written upon it. The possession and production of the note wns [iriina facie evidence of title in the jilnintiflV, and n? tlio guarai't\- \\,is upon the note, in in\ opiiiion, the possession of the note nnd tlic iruaranty were prima facie evidence of risjlit in the plaintiffs to the guaranty. Since the code, the real jinrty in interest is to hriiig the net ion. The old question, therefore, whether the futiu of the contract justifies the action in the nanit^ of the plaintiffs, no longer exists; hut the question is, lias the pUiinlill the title oi light to the contiiict or the cause of action? If he has. he may inMiiitain the suit, ujion the contract, in his own name. In ni) opinion, when a guaianty is written upon a note and the note is transferred, nothing heing said touching the guaranty, the conti'aet of guaranty passes with the note. In other words, the sale and delivery of the note with the guaranty upon it furnishes prima facie evidence of a sale of the contract of guaranty. In the present case the defendant was one of the payees of the note, and the note was also payable to bearer. Tie transferred the note and guarantied the payment. In my opinion, any one who should become the holder of the note could maintain iin action upon the guaranty, unless it should be shown that the contract of guaranty was not trans- ferred at the time the note was transferred. (See McLaren v. ^Vat- sov. ?6 Wend. 425.) The statute of limitations did not commence running in favor of the defendant until the cause of action accrued upon the contract of guaranty. The contract of guaranty was not within tho statute of frames. The consideration, "for value receivccl," was sufficiently expressed to satisfy the rerpiirements of jhc statute. (Douqias v. llowland, 24 Wend. :ir); Wnlsnv's Ex'rs v. McLaren. V.) id. .557.) The judgment should he allirmed." EvERSON V. Ckke, 12? N. Y. 200.^1800. A. indorsed and «1elivered a negotiable promissory note to ("., attached to which was an nllonqe containing this guaranty: "For jiayment received of C, wo do hereby guarantee to said ('. the payment of the note hereto annexed, etc." (Signerl by defendants.) ('. indorsed the note to plaintiff "without recourse," ami executed and delivered an assiixn- ment of the same and the guaranty. In an action by plaintiff against defendants on the guaranty, the trial court granted a nonsuit on the grounrl that the guaranty was special, personal to ('., and rlid not " Acrorri : flni-hnrrl v. Cnnprr. 43 Afinn. 100: /'hrlps v. Snrqrnf, fifl Minn. 118. — H. 47-i LIABILITY OF TAUTILS. [aRT. VL pass to plaintifT, niul that iiu cause of action had accrued on the guar- anty at llic tiim- (if t'c ,i.-~iuiii! i-nt. Udil : I'j-ior. As the note and guaranty arc lo lie (onslnicil (o^i^thcr. niid ;is the iu)te is not personal and s|>ecial. hvA L;i'iict;il ;iimI negotinhlc. Ihc guaranty is also to be regarded as genci'al ami will llicrcforc i)ass hy assignment. '■' 5. Defenses Available to OuArwVNTOR. PUTNAM V. SCHUYLER. 4 Hun (N. Y. Sup. Ct.) 1G6. — 1875. Learned, P. J. :^ Mrs. ITenriqnes, in her lifetime, made two notes to Dr. Allen, the plaintilT's testator. After her death the defendant guaranteed them, by writing under each, as follows: For value received 1 hereby guarantee the payment of the aljove note. L. W. Schuyler. On the trial the defendant offered to prove that Dr. Allen was the medical attendant of Mrs. Henriques ; was in the habit of advising her as to financial and other matters; that she reposed confidence in liim in relation to her affairs; together with certain other matters tending to show that the notes were obtained by fraud, and that they were without consideration. The evidence was objected to on the ground that, by executing the guarantee, the defendant had admitted the notes, and was estopped ; that the defense of fraud was personal to Mrs. Henriques and her representatives; that the defendant could not impeach the settlement between maker and payee. The evidence was excluded, and the defendant excepted. I assume, from the manner in which the case is presented, that it was not really claimed on flic trial that these matters would not have been competent in behalf of the representatives of Mrs. Henriques. Their exclusion was on the ground that they were not competent in behalf of the guarantor. On this subject, of the right of a guarantor to set up d3fences which would undoubtedly be valid in favor of the principal, there is an apparent conflict. But a little discrimination will show that the conflict is only apparent. First. There i» n class of cases in which the owner of a note or bond has a.5signed it, with a guaranty. In these, it has been held that the guarantor could not show that the instrument was invalid. Jt would be uniust to permit him to assign an invalid instrument; to 9 For the rlistinetion between special (non-assignable) and general (as.sign- able) guaranties, see Ernyi/iritir \ftt. Bank ▼. Kaufman, 93 N. Y. 273; f^aivyer T. Bopgood, 13 N. Y. St. Rep. 711. — H. VII.] GUARANTOR. 476 guaranty its pajTnent or collection; to receive the value, and then, when sued on his guaranty, to assert that the original instrument was invalid. He is estopped. {Remsen v. Graves, 41 N. Y. 475; Zabriskie V. C. C. and C. R. R. Co., 23 How. [U. S.] 399.) The case of Mann V. Eckford's Execuiors { 15 Wend. 503), is of this character. The Life and Fire Company, of which Eckford was president, assigned to the Western Insurance Company a hond and mortgage. Eckford guar- antied the bond and mortgage, and the money paid for it, expressing the amount. The defendants, his executors, were not allowed to set up usury in the bond and mortgage, against the plaintiff, the receiver of the insurance company. Second. The guarantor is held liable in those cases in which the debt is justly owing, although, from some defect or incapacity, the principal is not liable in an action. Thus, where the makers of a note were married women, incapable (then) of making a note, the accommodation indorser was still held liable. (Enrin v. Downs. 15 N. Y., 576; see Kimball v. Newell, 7 Hill, 116.) The guarantor of a lease is liable, although only one of the two lessees executed the lease. (McLaughlin v. McGovern, 34 Barb. 208.) In that case, Judge Bacon speaks of this class of cases, mentioning, among others, the guaranty of goods sold to an infant. So the guarantor of a note purporting to be made by two, where the signature of one is unauthor- ized, is liable. (Sterns v. Marks . 35 Barb. 565.) In all these cases the debt is justly owing to the plaintiff: and through no fault of his, he is unable to recovor against the principal, or one of the principals. ' Third. A guarantor cannot set up. by way of sot-off, a claim dis- tinct from that on which he is sued. The right of set-off (that is, as distinguished from a defense arising upon the claim itself) belongs only to the principal debtor, and can be used only at bis option. Such is the fjoctrine of flilh'spie v. Turranre (25 N. Y. 306). and this is all which that case decides on this point. By indirection, however, it implies that a defense to the claim (as distinguished from a set-o(T), is available to the guarantor. To the same effect is Lewis v. MrMillen (41 Barb. 420). Fourth. But there are still other cases which are not etnbracnd within either of those preceding classes; cases where the plaintifT is the original party to the contract, and therefore has not received it by assignnient from the guarantor; where the proposed defense is not the incompetency of the principal to contract; and where it arises > A piinrantor i« not (li«chnrerr| nirroly hfcaiisp ttip prinripnl Ims a pond pfTsnn.il (If'fcriHp, as covfrttirc. infancy or insanity. Hnifis v. SInlls. 4.1 Ind. 103; f!ro}rninp v. f'arnon. 103 Mass. 2f>l ; }\'iii;iin'.s Apprnl, 100 V-.i. St. 155; I>rf V, Ynndrll, 09 Tp\. 34. Rnt a failuro of ronsidc-ration in vncli a ru'^p, as t)Ptw«>f>ii the principal and jdainlifT, diRcharges the snrctv, Halcr v. h'rnnrtt, 64 .Mo. R2. — H. 476 MAltll.nv OK PARTIES. | AUT. VI. out of the I'ontraot itself, and not by way of set-off. In these the guarantor has boon porniittod to make the defense. He has thus, as to the ori«TinaI contract, been allowed to set up usury (}forse v. Ilovnj, \) Paige, 1!)7; I'arshnll v. Lamoreanr, 37 Harli. IS!)) ; duress of his principal (Osborn v. Eohhins, 36 N. Y., 365; Strove] V. (Irannis, 26 Barb. 122) ; partial failure of consideration {Sau'i/er v. Chatnbrrf<. 13 Barb. ()22). And T find no case wliich inti- mates that when a person has obtained an ol)ligation from a principal by fraud, he can wipe out the fraud by obtaining a surety to the ob- ligation. Assuming that, in justice and equity, the obligee, by reason of fraudulent acts on iiis part, has either no claim, or a less claim, against the principal, 1 see no reason why he should stand in a better position against the guarantor. The distinction which has been pointed out, viz., that inability on the part of the principal to contract is no defense to the guarantor, while fraud in the contract is, may be found in the civil law. This says that personal defenses do not pass to others, but that defenses, inherent in the thing, such as, among others, fraud and duress, are available to sureties. (Dig-, 44, 1, de exceptionibiis, c. 7, § 1 ; Cod. 2, 24 [23] de fidejuss, 2.) " If, in the principal obligation, there is any essential vice which may annul it, as if it has been contracted by force, if it is contrary to law, or to good manners, if it be founded only on a fraud, or on some error which may suffice to annul it; in all these cases the obligation of the surety is likewise annulled." (Sfra- han's Doniat, bk. 3, tit. 4, § 5, art. 2 ; id., bk. 3, tit. 4, § 1, art. 10.) The defendant offered to prove acts of the plaintiff's testator, tend- ing to show that he obtained the notes improperly from the maker; that he took advantage of her confidence in him, and that she did not owe him. If these facts be true, he ought neither to recover of her representatives on the notes, nor of the defendant on her guaranties. The judgment should be reversed, and a new trial ordered, costs to abide the event. Present — Learned, P. J., Boardman and James, J J. Judgment reversed, and a new trial ordered, costs to abide the event. ^ 2 Accord: Bryant v. Crosby, 36 Me. 562 (fraud); >^v:{ft v. Beers, 3 Denio (N. y.) 70 (illegality); Griffith v. l^ilfjrra res. cmiirrcr overruled.-"' 1 " To Hay that the cuit ia the rlnmnnd is to ropont nn immpaninji phraswi a^ thti"* usTil. whirli no niiniliiT of roprtilions can riiiiki- Hciisiljic. ,\ dcniarnt note is diip frirtlnvilli, tind licncc rnti he Hiiod without dr-manil." Whrrhr v. War- ner. 47 N. \. .')I9. tifddinjr that tlio Htatiitc of liniilations hr^'ins ft) rnn frotn the Hate of the note. — II. * Sep 2 .\me»' CaTH on Bills and Notes, p. 01, note 2. — II. ' Rut a certifieate fif deponit is not due nntil dernancl is nia Mas". 487; Bmiley v. Fry, 100 N. Y. 202 ; MrCnuiih v. JamiHon, 107 I'a. St.. 336. Contra: [477J PRESliNTMKNl' |-()i; l'\\ MI'INT. lONTliOMKI, ;y v. I'lLLlOT'l t) Ai.ahama . 701. 1 S 1 1 , 47S PRESENT mi: NT l(»H 1'\\MI:NT. [art. VII. § 130 This ailitMi \v:is fniiinu'Dcrd hcloii' ;i jii>liii' of I he peace, by the defendant in error, on two notes, for twenty (loll.iis each, in tlie fol- lowinjj form : 'I'lio Real Estate Rank, No. 52. of Calfdoiiia. Mis-is--iiiiii. promise to pay John Elliott, or bcaror, twenty dollars, on demand, at I heir l)atd;]]. At p. S;;.). Morton. .].. s;iy«: " It i«s scHloti in tliis slalr. botli nt rnmnion Irnv and rppcntlv liv stntutp fnanirly. tlic Nr<.'otiiil)lc Tnsti nn;«'n(s L;i\vl, nnd by tho woi7!il of nntliority in tliis conntry. contrary to tli" I;i\v in Knrcssary in order to onlilln tlip lioldrr to maintain an action nj'on tin- note or h\}\ aenin^t tlin niakrr or acppptor. Uunqlra v. I'nlien. S Mas«. 4S0; ('mini v. IVmrf. 17 Mass. :'^ '". \la. 701; noiiiihrrli/ v. WrsI frr\ Hnt,f,-. 1.1 C.n. 2S7 ; fioirir v. niim", \ CM ^ .1 )7.'-,." Tliis rasp is reportpd in 7 A. A E. Ann. Cn-. 000. wit'i no*- < iiiil.a •• I'lCM-nl tm-nt and dmiand nt plapp nampd in notp |iayaldc> cm ilemand ,i» eimdilion prpepdr>nl to siiil ngaiust miker," — C. •tSO rRESENTMKNT FOK PAYMENT. | AliT. VII. ]| results from tlic view here taken, tlint there is no error in the judgiJieiil of the Cireiiil C'uiut, and it is tlierel'ore al'lirnied. ' v*. PUKSENTMENT NeCESSAIIY TO ClIAKfiK DUAWEIt OK InDOISSER. ^130 LONG r. STKIMI ENSON. [Reported herein at p. .'/'/,2.l8 II. What constitutes sufficient presentment. 1. By TIoi.Di-n oi: AuTiioiiizEi) Ri-i'ni:si:N'rATivE. § 132 SUSSEX BANK /•. BALDWIN. 17 Ni:\v .1i;ij.si:y Law [2 IlAmiisox] IST. — 1840. Dayton. .1. — 'i"'his ease was tried at the Sussex ('ii'ciiit of May, A. D. 1S;^S, find verdiet had for the plaintifl'. Sundry I'casons are now relied upon to set the same aside, and I will consider lliein in their order. The defendants are the indorsers of a promissory note made hy Conrad Teese, Oct. 24, I83(), foi- five hundicd and li\e dollars and sixty-one cents, payahle six months after date to the order of Wm. A. Baldwin & Co. (the defendants), and hy them ind(n-,-ed to the plaintiff. The first reason assi;^ned is, that the note was not duly presented to the maker for payment. That it was presented at an improper place, to wit, the offlee of Teese, the maker, and hy an im- proper person, to wit, one Deniiis, ^ho swears that he acted as the clerk and nnder the directions of Wm. Tuttle, who was himself merely the apcent of James TTedden, the notary j)ul)lic. As to the place of presentment,*' the ohjection may l)e dis]>nsed of very hrieflv. Tt is a ])oint not properly arisin^" iimler the evidence in the rase. Dennis, the witness, sweai's tliat '^Fee-c. the malcer of the note, told him, Dennis, to present his notes fof |iaymeid at that plaee, and that he had heen in the hahit of doin',;- so. This esto[)s " Spp for a full Hisoiis.'sion nf tlio .niitlioritips, Mnriffinrtirrj/ v. Tiilt. II Calif. .307. 'Hip Amorican cases liavo almo.st uniformly held that piesciitnient of .1 bill or note pavaljjf at a particular place i.s unnecessary in order to maintain an action ajrainst the acce))tor or mnker; an omission to do ^o ni-'icly stops interest and damapes in ease the acceptor or maker was ready at tlip time and place to pay. flills v. Place. 48 N. Y. .520; Cnx v. Knfioval linvk, 100 I J. S. 704. 71.3: Eldrrd v. Ilawes, 4 Conn. 4G5; Carley v. \'ancc, 17 iMass. 38!). — H. «See {•§ H,']-144.— II. 9 See § 133. — H. II. 1.] BY WHOM MADE. 481 Teese from objecting to the place of presentment; and that which IB good against the drawer, is good against the indorser. (State Bank V. Hurd, 12 Mass. 172; Whitwell v. Johnson, 17 Mass. R. 449.) But it is thought advisable that this point be put at rest in this State by an expression of opinion by this court. It appears by the evidence that the office in question was the regular place of business of the maker; and I have no doubt where a person has an office or a known and settled place of business for the transaction of his moneyed concerns — whether he be a banker, broker, merchant, manufacturer, mechanic, or dealer in any other way, a presentment and demand at that place (as well as a presentment and demand at his residence), is good in law. It must not, however, be a place selected and used temporarily for the transaction of some particular business, as settling up some old books or accounts merely, but his regular and known place of business for the transaction of his moneyed concerns. The counting room of a banker or merchant may be a proper place for a demand, though the manufactory or work- shop would not. Yet if the manufacturer or mechanic have an office, or known place of business for the purpose aforesaid, a good demand may be made there. (Bank of Cohimbia v. Lawrence, 1 Peters, 582; Williams v. The Bank of United States, 2 Peters, 100; Byles on Bills, 118; State Bank v.Hiird, 12 Mass. 173.) Nor is there anything in the objection that the presentment was made by an improper person. Tt appears by the evidence that Tuttle did the business of Hedden, the notary public, and it must have been with the consent and knowledge of the bank that he employed and directed Dennis, who was his clerk, to present the note in question to the drawers, and put him in possession of the note for that pur- pose. If the note had been paid on presentment, he could and would iiave delivered it up to the drawers, and that would have exonerated them from further liability. An authority to make a demand, may he created liy parol, and tlie mere possession of the paper, is evi- dence enough of such authority. (3 Kent. C 108; liank of Utica v. Smith, 18 J. H. 230; Shea v. lirett, 1 Pick. 101 ; Morris v. Foreman. 1 Dal. 103; Freeman and others v. liuynlon, 7 MasS. 187.) There is an impression current in some degree, even with the bar, that a presentment of a note must l)e by a notary, or at least on his behalf, and that he must protest it upon non-payment, Ix-fore the indorser is liable. But this is not so.' The record of n demand and notice, etc, by a notary, entered in his liook, according lo our Ptatute, of 21st February, 1820, ITarr. ('. 210, may serve to refresh his memory, or in case of his absence or death it may be used as evidence of the fads contained in it ; but such demand and protest by a notary are not essential to a recovery against the indorser. It 1 See § 189. — H. NKOOT. INBTKUMENT8 — 31 IS',? PRKSRNT.MKNT KOI! PA V M KNI'. [aUT. Vll- was not so hy the rniinnon or iH)mini'n'ial law. nor is it rccjuircd by our statute. If a notary act in tlie premises, and make the protest, althoujjh sanctioned hy general custom, it is not strictly an oHlcial act (Mchols V. Webb, 8 Wheat. 32(5; 3 Kent C. 93-4; 1 Saund. on Pi. & Ev. 25)5.) Any person may present at its maturity, a promissory note of which he is put in possession, and if paid in the ordinary course of husim^ss, and taken up, the payment is good ; and if not paid, the denumd is good as a ground work for notice to the indorsers, and that without any protest.^ The rule is otherwise as to foreign hills of exchange, which must be protested by a notary, and their official seal is plenary evidence in all foreign courts and countries, of the dishonor of the hill (ride cases above cited). 2. The ne.vt objection, is to the notice to the indorsers.^ The name of James Fledden, the notary public, was printed at the foot of the notice, not written; and this is assigned for error. There is nothing in this objection. The law prescribes no form of notice, its object is merely to appraise the party of the non-payment — to put him upon inquiry, that he may protect his rights. This is as well done by a notice with a printed as with a written name. The signature of the notary would carry with it in a large majority of cases no higher degree of certainty than the printed name; for it must in most cases be unknown to those to whom notices are sent. The notice in this case came from a proper source, and stated the proper facts; that is enough. It is needless to cite authorities upon this point. [The learned judge then decides that the notice was sent in du(; time, and that there was no usury. Nevins, J, dissented on the last point.] Rule made absolute.'* 2 Baer v. Leppert, 12 Hun (N. Y.) 516. — H. 3 See § 166. — II. * The drawer may provirie in the instrument that it shall not 1)0 presented hy a speeified person.' Com. Nat. Bk. v. First Nat. Hk.. 118 N. C. 783. — H. [In Farmers' Bank v. Johnson, Kinf/ d Co., (>8 S. E. (Ga.) 85. it was held that where a check was drawn on a hank located in another town than that in which the drawer resided, and immediately following the direction to the drawee hank there were stamped, at the time when the check was drawn, the words, " Payahle through fa named hank in another city of the same state] at current rate," this was a material part of the direction; and the drawee bank was not required to pay the cheek when not presented through the bank thus named, but directly by a third bank. — C] II. 2.] AT WHAT TIME. 483 2. At THE Proper Time.* § 131 JOHNSON V. HAIGHT. 13 Johnson (N. Y.) 470. — 1816. Action by holder against iiulorsers. Spencer, J., delivered the opinion of the court. On the second point, the defendants are entitled to judgment. The third day of grace fell on the 29th day of November, and pay- ment was not demanded of the maker until the :30th. The law is perfectly settled, tiiat a note must he demanded on the third day of gi'ace, unless that falls on Sunday, and then it must be demanded on the second day of grace. (2 Caines, .34.3; IG East, 2.50.) Here there is no excuse for delaying the demand on the maker, and there is a palpable want of due diligence, which discharges the indorser. Judgment for the defendant." § 131 CCMMEnC'IAL NATIONAL BANK v. ZIMMERMAN. 185 New York. 210.-1000. Appe.m, from a judgment of the Appellate Division of the Supreme Court in the fourth judicial department, entered June .5, 1 !»()."). attirm- ing a judgment in favor of defendant Zimmerman entci-ed upi)d>\ Carroll v. Upton, 3 N. Y. 272: Hunt v. Mayhee, 7 ib. 266, 272.) In the present ease the defendant offered no evidence and there was no dispute about the facts. The trial judcre had before liim the facts of tlie discount of a demand note, bearing interest; that the indorsement by Zimmer- man was witbout consideration and for the maker's accommodation; that its payment was secured by tiie deposit of certain securities; that notwitbstandin.fi: that, some two years after the making of the note the plaintiff had complained to Zimmerman of its non-payment and twice, a year later, had written that the maker was in default as to the interest, no steps were taken to charge the indorser, by pre- sentment of the note for payment and by protest for non-payment, until more than three and a half years had elapsed. Tf the finding that the note was not presented within a reasonable time depended for its justification upon the evidence, we should be, undoubtedly, concluded from reviewing it by the rule of unanimous affirmance. But viewing it, as I tliink we must, as a fpiestion of law to be decided by the court upon the ascertained facts, it depended upon the inter- pretation of the statute as applied to the facts and. in my opinion, the decision of the trial court was correct. It is argued by the appellant that the defense, that the note was not presented within a reasonable time after its issue, was one which should have been specially pleaded in the answer. This objection was not taken upon the trial: but. assuming that it could properly be raised upon the appeal, it is untenal)le. Tbe burden is on the holder of a note, when seeking lo charge an indorser. lo prove due and timelv presentment and tbe ffivinsr of notice lo the indorser of its dishonor. Tbe obligation of the indorsei- is conditional upon all the steps having been taken by flir bolder, wliicli the statute lias pre- scribed as to presentment and as to noticf of iKm-paymenl, etc. The Negotiable Instruments Law is tbe codififntion of tbe law mcnhant upon the subjects treated and. in scttinir forlli what is re(|uircd of the holder of a note, it casts upon liim tbe burden to prove tbat the re(|uirements were all complied witli. They were necessary comii- tions i)f bis right to recover. Presentment of a demand note within a reasonable lime is a reijuirenuMit of l!ie statute and the liaitility of tbe indor.«er to make good the contract of I lie maker, unbke tb;it cf a guarantor, is conditional and depends iijKm tbe bolder's having n.ade a ease under tbe statute of .in obligation, wliicb be has caused to mature and. bv Mppropriale legal steps, tr) become an inrooksville, Florida. On October 1, 1881, Lamon indorsed it to J. M. Reddick. On Oct. 3, 1881, Reddick indorsed it to A. N. Chelf. On Oct. 13, 1881, Clielf indorsed it to ITancoek & Edrino^ton, who indorsed it to Witz, Biddle & Co., who indorsed it to the Union Rank of Baltimore, who indorsed it to the "Repul)1ie" Bank of New York, who, on Oct. 21, 1881, presented the same for payment, which was refused on the ground that Snider & Son had no funds in the hands of the drawees. The instrument was duly pro- tested, and notice was forwarded to the indorser Parker, at Grenada, Afiss., and also to the other several indorsers. All the indorsers of the paper in question resided in the town of Brooksville, Florida, except Witz, Biddle & Co., and the two hanks referred to; and it was held in that town until the indorsement to Witz. Biddle k Vo., who resided in Baltimore, Md. There were daily mails from Brooks- ville hy which a letter could reach New York in five da3's. .7. Ar. Reddick, one of the indorsers, as well as an indorsee, after having paid the amount of the check oi" hill of exchange to his in- dorsee, brought this action against J. B. Snider, surviving partner of Snider & Son, and W. J. Pai'ker, to recover the value of said instrument. On the first trial the jury found for the defendants. This verdict was set aside by the court. On the second trial the jury found for the plaintiff. The defendant, Parker, appealed from the judgment of the court. ^ See also Turner v. Iron ,Chief Mining Co., 74 Wis. 355, and Leonard v. Ohon, 99 Iowa, 162. — C. II. 2.] AT WHAT TIME. 489 Arnold, J., delivered the opinion of the court. It is uncertain froiu the evidence wliether the drawees of the in- strument upon which appeUants were sued were bankers or not; but whether the paper be called a check or bill of exchange, it expressed no time for payment, and was, therefore, pa3'able on demand. A bill or check, payable on demand, must be presented for payment within a reasonable time. What constitutes reasonable time in sucli case, is a question of law to be determined by the court, when the facts are ascertained. (Baskerville v. Harris, 41 Miss. 535.) No delay in making presentment of paper payable on demand, can be termed reasonable, if it is more than is fairly required, in the ordinary course of business, without special inconvenience to the holder, or by the special circumstances of the case. {Phcevix Ins. Co. V. Grai/, 13 Mich. 191.) Such paper contemplates immediate payment. It cannot be said that it is intended for circulation. One who holds a bill or check payable on demand, beyond the time neces- sary, in the usual course of business, for its presentation for pay- ment, does so at his peril. The general rule, derived from the authori- ties, but subject to modification by special circumstances, is, that if the drawee of such jiaper, resides in a different place from that in which it is drawn, and the instrument must be sent by mail for pre- sentment, it must be mailed on the day next after that on which it was received by the holder. (1 Danl. on Neg Inst., § 005; 2 id., g§ 1586, 1592; Byles on Bills [7th Am. ed.], 211, 212, 213; Chitty on Bills [13th Am. ed.], 133; Foriner v. Parhaw, 2 S. [ vcrdul as to him is set aside, and Ibi' lir.-l \c'rdiit as to liiiii is rcsloird, and judgment reiideivd tliereou, hero, in bis i'a\oi-.'' §131 (OLlMlilAN I'.ANKIMi (OMrAXY t;. BOWEN. I.M W iscoNsiN, 21H. — 1908. ,U'sv. 1", l"ii:',. i!'|. linnl^iiiLT linn known as tbe Farmers' & Mer- ebants' Baid<. of Hnn'jor. Wis., sold to tbe defendant a $400 draft, dated on that dav, payaltle to defendant's order, and drawn by sucli firm on tlie National l'aid< of \oitb America, at Cbiea.sxo, lib Tbe draft was sent to tbe defendant at P>arron, Wis., and was indorsed by him to A. K. Tabbert, to whom it was forwarded by mail, at Spokane, Wash., June 16, 1903, and was there received by him June 20th thei-eafter. He was at Spokane tem]wrarily and was on his way to the eity of San Francisco, Cal. July 14, 1903, he indorsed the draft and sold the same to the plaintiff at such city, receiving $400 therefor. On that day, in due course, plaintiff sent the draft by mail to the Bankers' National Bank, of Cliicago, 111., by which it was received July 18th thereafter, and was then, as requested, duly presented to the drawee for payment, which was refused, whereupon it was duly protested for nonpayment by a duly authorized notary public, who forwarded a manifest thereof with notices of protest for A. E. Tabbert, the plaintiff and the defendant, to the plaintiff at San Francisco, Cal., and also sent due notice to the National Bank of North America at Chicago, 111., and to the drawer at Bangor, Wis., July 19, 1903. Plaintiff upon receipt of the manifest and notices duly sent the one for defendant to him at Barron, Wis., by whom it was duly received, and sent the one for Tabbert by mail to his post-office address and reputed place of residence, that being San Francisco, Cal. There- after due demand was made on defendant for payment of the draft, and the same was refused. July 28, 1903, the property of the drawer was placed in the possession of a receiver, who duly paid upon the draft $144.49, January 6, 1904, $61.93, May 20th thereafter, and $30.96, June 5th following. Plaintiff was tlie owner of the draft at the time of the commencement of the action, and at the time of the trial thereof there was due thereon $210. 8 A note indorsed when overdue must be presented within a reasonable time. lAfiht V. Kinfishiiri/. M Mo. 331. ante. p. 97. For prpsontment for aepeptanoe. sop § 241. For presentment of cbeclss see § 322. The Negotiable Tn-trnments T.aw has atiolished the distinotion between bills payable on demand and bills payable at sijrlit. Sec § 2(». See on rea.sonable and nnr(;ison:iIile debiy. 2 Ames' Cases on Tlills and Xotes, 277, note. — IT, n. 2] AT WHAT TIME. 491 The pleadings presented issues for decision involving facts as above detailed. The catfu was tried by the court resulting in findings of fact in accordance with the statement, and a conclusion of law that plaintiff became the owner of the draft in duo course, and was en- titled to judgment for ^'.MO, with costs. Judgment was accordingly rendered. Marstiali,, J. (after stating the facts as above). Counsel for appellant have presented quite an extended argument, referring to many authorities, as to the law antedating and indepondentlv of the negotiable instrutuent statute (chapter n.'ifi. p. 6S1. Laws 1X00) to support the proposition, that appellant was released from liability on the instrument in question, because of the period intervening between his parting therewith and the presentation thereof to the drawee for payment. Such statute was enacted for the purpose of furnishinsK in itself, a certain guide for the determination of all questions covered thereby relating to commercial paper, and. there- fore, so far as it speaks without ambiguity as lo any sueh (piestion, reference to case law as it existed prior to tlie enactment is unneces- sary and is liable to be misleading. The Negotiable Instruments Law is not merely a legislative codifica- tion of judicial rules previously exi-sting in this state nuiking that written law, which was before unwritten. Tt is, so far as it goes, an incorporation into written law of the common law of the state, so to speak, the law merchant generally as recognized here, with siu'h changes or modifications and additions as to make a system harmoniz- ing, so far as practicable, with that prevailing in other states. That it contains some quite material changes in previous rules governimj <')nimercial paper we have had occasion heretofore to point out. IhuJrjc v. Smilh, 130 Wis. .?3n : Auklniul v. Anmhl. M]] Wi^. r,i. The primaj-y question discussed bv aT)pellant's counsel, it is l)cli(>ved n fully covered by flie Negotiable Instruments Law. Tlter(> are a i-'ultitude of decisions resrarding the chafactcu- of a lull of exchanue :mi(| that of a check, as those terms are nse(I in business f rayisactions, and to what extent the incidents of one are idcniical with those of llie other, which decisions are so variant in llicir pliiasiriLr of the matter as to produce more or less confusion in icspcct thereto willi Many appan-nt, and sonie real, confiicls, to niiiedy wiiu h was (Uic of (he principal objects of the law. To that end it was [trovidcd in serlidii KiSd/' "A lull .if cNclmiiue is an unconditional f»rdcr in writ in;: addrcsscrl bv one persersoii to wIhuu it is aildrcssed to pay fui demand or at a fixed or delermiiiable future time a sum certain in money to order ftr bearer," and it was further 9 N. Y. ? 2in. — f. '^n? fRfiSKNTMKXT KOK rAYMi;NT. [aHT. VII. provided in scclion l(>Sl-l,' "A clicck is a hill of ox{lianf::c drawn on a l>aiik. |)Mval>l(' on (IriiKiiid." As to wlu'tluT liio incidents of tho spocios of bills of exclianf^c; last intMitionod are the same as those of bills of exehanji^e jijenerally, it was further provided in llie seel ion last referred to, " Except as herein otherwise provided, the provisions of this act applicable to a bill of e\elian!::e payable on demand a})ply to a check." The only exception referred to material to this case is contained in section 1081-2,^ in these words: ''A check nnist be presented for payment within a reasonable time after its issue or the drawer will be discharged from liability thereon to the extent of the loss caused by the delay." Keepinj; in mind that the discharge from liability above referred to because of unreasonable delay after the issuance of a check in presenting it for payment, is of the drawer only, and that this action is against the payee who indorsed the instrument in question without qualification and put it in circulation, we turn to section 167.S-1,'' which provides, as to a bill of exchange payable on demand, which from the foregoing obviously includes a check or draft on a bank of the character of the one in question, " presentment for payment will be sufficient if made within a reasonable time after the last negotiation thereof." From the foregoing it seems plain that as regards the payee of such an instrument as wc have here, who puts the same in circulation with his unqualified indorsement thereon, and all subsequent parties thereto so indorsing the same, presentment for payment is sufTicient, as regards their liability, if made within a reasonable time after the last negotiation. A bill of exchange payable on demand, regardless of its character, put in circulation, so long as its circulating character is preserved may be outstanding without impairing the liability of indorsers thereof. Formerly the length of time within which a bill of exchange might circulate without impairing such liability was more or less uncertain, rendering it very difficult to determine any one case by the decision in another. ''J'hat difficulty was removed, so far as practicable, by the provision that only the time need be con- sidered intervening between the last negotiation and the [u-esentment. That is recognized as a radical change in the law as it formerly existed. Section 105, Selover's Negotiable Instruments Law. As to an ordinary bill of exchange put in circulation, it was quite anciently held that the period between July 18th of one year and January IGth of the next year was not necessarily unrea.sonable. Gowan v. Jarkson, 20 Johns. (TST. Y.) 176. Perhaps one might now keep a bill of exchange for such length of time as to destroy its IN. Y. § .121. — C. 2N. Y. § 322. — C. 3N. Y. § 131. — C. 11. 2] AT WHAT TIME. 493 circulating character notwithstanding he ultimately passed it along to anotlier person, l)ut thai situation, as we view the case, does not exist here. Applying tlie law as afoiu^said to the facts of this case it is readily seen that the delay in presenting the paper for payment hetween its date and the negotiation tn the hank at San Francisco is immaterial. Appellant unqualifiedly indorsed the paper and put it in circulation by sending it to Tahhert at a distant part of the country, probably knowing that he was a traveler. Tahhert received the paper while journeying with the intention of going to vSan Francisco and held' it till he arrived there and then negotiated it. It was promptly pre- sented for payment thereafter and so in time, as regards that cir- cumstance, to preserve the liability of appellant. The court decided, as indicated, that Tabbert was a traveler with San Francisco as his destination and properly held. that such cir- cumstance sufficiently explained, if any explanation were necessary, the lapse of time between his reception of the paper and his negotia- tion thereof, preserving its circulating character and warranting the finding that the respondent came thereby in due course. The point is made that the instrument was not presented to the drawee for payment during hanking hours. The Negotiable Instru- ment Law at section 1078-2," provides that "Presentment for pay- ment to be sufficient, must be made: * * * at a reasonable hour on a business day. * * * " The evidence shows that the paper, after taking its course through the clearing house, was presented to the drawee for payment on the afternoon of the same day between the hours of 3 and fi o'clock. The proof is to the effect that such was the customary way of doing such business in Chicago, where the drawee was located. That is, as we understand it. that the business day of the bank continued after the closing of the clearing house transactions so as to enable banks holding paper for collection, re- fused recognition in such transactions, to be presented for payment as was done in this case. That satisfies the statute. What constitutes business hours of a bank, within the meaning of the statute, has refer- ence to the general custom at the place of the particular transaetion in question. In case of a transaction occurring in a foreign jurisdic- tion, as in the instance in (|uesti()n, the court cannot take judicial no- tice of what constitutes reasonable hours on a business day. Paniid on Negotiable Instruments (r)th ed.) g fiOl. It is a matter of proof, though in case of the notarial certificate of flic transaction, as here, being regular so as to furnish privtn farir. proof that the paper was duly presented for payment, that raises the presumption that the pre- «N. Y. § 132. — C. 41M present.mi;nt kou i-aymknt. |ai{t. vii. Bcutinent was made at a ])io])im' tiiiio. Cayiuja Couiili/ Hank v. Hunt, 2 Hill (X. Y.) 635. Judgment allirmed.* § 131 ROBINSON V. AMES. [Reported herein at p. 033.] § 132 FARNSWORTIT ,•. ALLEN. 4 Gray CMass.) 453. — 1855. AcTToy hv holder against iiidorscr. Defense, prepentmont and de- mand insufficient. Verdict for plaintiff. Defendant alleges excep- tions. The agent of the holder did not know the maker's place of residence. After inquiring it, he gave the note to a notary, who went to the house of tlie maker and arrived tiiere ahout nine o'clock in the evening. The maker and his family had retired for the night, but the maker an- swered the bell, and, upon the note being presented, refused payment. BiGELOw, J. — The note declared on, not being payable at a bank, or at any place where business was transacted during certain stated hours in each day, was properly presented to the maker at his place of residence. It was also the duty of the holder to present it within reasonable hours on the day of its maturity. No fixed rule can be established by which to determine the hour beyond which a present- ment, in such case, will be unreasonable, and insufficient to charge an indorser. Generally, however, it should be made at such hour that, having regard to the habits and usages of the community where the maker resides, he may be reasonably expected to be in a con- dition to attend to ordinary business. In the present case, taking into consideration the distance of the place of residence of the maker from Boston, where the note was dated, and where it was held when it became due: the means that were taken to ascertain the residence of the maker, and the season of the year at which the note fell due, we are of opinion that a presentment at nine o'clock in the evening was seasonable and sufficient. It is quite immaterial that the maker and his family had retired for the night. The question whether a presentment is within reasonable time cannot be made to depend on the private and peculiar habits of the maker of a note, not known to the bolder; but it must be determined by a consideration of the cir- cumstances which, in ordinary cases, would render it seasonable or 5 See also Plover Hav. Bank v. Mooflic, 135 Iowa, 685, post, under § 322. — C, !1. 2] AT WHAT TIME. 405 otherwise. {Barclay v. Barley, 2 Campb. 527; Triggs v. Newnham, 10 Moore, 240, 1 Car. & P. G'M ; WiJHtis v. Jadis. 2 B. & Ad. 188; Cayuga County Bank v. Hunt, 2 Hill [N. Y.], fi;35.) Exceptions overruled.^ § 135 NEWARK INDIA RUBBER MFG. CO. v. BISHOP. 3 E. D. Smith (N. Y. City C. P.) 48. — 1854. AcTiox by holder against two indorsers. Judgment for plaintiff. Defendants move for a new trial, which is granted as to Griffin, but denied as to Bishop. Bishop appeals. The note was payable at tbe Bowery Bank. On the day of maturity Bishop left his check with the teller to take up the note. Tiie note was not presented during banking hours and at the close of banking hours the teller left the bank having the check still in his custody. After banking hours the note was presented to a clerk who was at the bank and who examined the ledger and said there were no funds. Due notice was given. At the trial the jury were instructed as follows : " If funds were provided and set apart to pay the note, and if it was not paid for the reason that the note was not presented for pay- ment in the usual business hours of the bank, the indorsers are dis- charged. " A presentment of the note for payment at the bank, but not within the usual business hours, to a clerk who could not pay the note, is not a good presentment which will hold the indorser. " H is not enough that the clerk to whom at such a tiine tlie pre- sentment is made, have power to bind the bank to pay the note by certifying in writing on the note that it is good. " In order to make a presentment at such a time, a sufficient one, the pf-rson to whom it is made iriust have the power to pay the note anro- vidcd in the bank for that purpose. " WooimuFF, J. — I did not feel called upon to order a new trial in this case in favor of the apy)ellaiit Bishop, who had himself with- drawn the money provided to meet the note. Tie knew that the maker woidd not pay the note as early as the morning of the day it became due, for he had himself undertaken to provide funds for its payment. On learning that the note was not presented till after business liours, he liiniself takes the money which had been set af)art for the use of the jtlaintifT, and a[»[)rnfiriates it. Under such circum- Btances, the jury having rendered a verdict against him on the trial, 1 Compare Dana v. Hawycr, 22 Me. 244, hnlriing the hour unreasonable. — H. ■{b6 PRESENTMENT FOR I'AVMENT. [aIIT. VII. I did not think, and I do not now (liiiik, lliat the court should set that verdict aside as against cvideuci' foi- liis benefit, and to enable him to keep that inon(>v, when lie has not been in any manner or by any possibility injured by any defect in the presentment. The case of the defendant Griffith is very different. Tt is an undis- puted fact that if the note had been presented at the bank within the usual business hours it would have been ]iaid. It is equally clear that at the time the note was presented, there was no person in the bank who could pay it. The undertaking which the note and its in- dorsements imported was, that there should be at the bank during the usual hours of business on that day, funds in the hands of proper persons competent to pay them over, sufficient and ready to meet tliat note. Not that every person who might be employed about the bank, from the president down to the porter, and who might happen to be in the bank after it was closed, should at all hours, so long as the door was unlocked, be ready to pay the note. 1 do not question that there may be a good presentment at bank after banking hours, by which I mean after the hour until which banks are open for the purpose of paying notes which may be pre- sented. But I think that he who delays presentment until after that hour takes the risk of finding at the bank a person who can pay the note if the funds are provided, or who is authorized to refuse if they are not. The case of Garneft v. WoodcocJc (1 Stark. 475), which has been referred to in support of the sufficiency of this presentment, pro- ceeds upon the distinct ground that if a banker appoint a person to attend in order to give an answer, a presentment would be sufficient if made before 12 o'clock at night, and that in that case it did not appear but the person was stationed there for that express purpose; while the general rule that presentment must be made within the usual hours, is not at all repudiated but rather affirmed by that same case. And see Parker v. Gordon, 7 East, 385 ; Barclay v. Bailey, 2 Camp. 527 ; Wilkins v. Fadis, 2 B. & A. 188 ; Elford v. Teed, 1 M. & S. 88 ; Banl- of Utica v. Sjnith, 18 J. E. 230.) In this case it does affirmatively appear that the person to whom the presentment was made was not stationed there to give an answer. The funds were there, but he could not pay the note. Had he known that the funds were there, provided for the express purpose, still he could not pay the note, so that it was by reason of the omission to present within the usual hours, and for that cause alone, that the note was not paid at its maturity. I think that the charge was in this respect correct. [Ingraham, p. J., also wrote an opinion for affirmance.] Daly, J., concurred in affirming the order, but wrote no opinion. Ordf-r affirmed and a new trial denied.* 2 Approved in Salt Springs N. B. v. Burton, 58 N. Y. 430, 436. II. 2] AT WHAT TIME. 497 § 135 GERMAN-AMERICAN BANK OF ROCHESTER v. MILLI- MAN. 31 Miscellaneous (Monroe County Court, N. V.) 87. — 1900. Sdthebland, J. — This action was brought upon a promissory note dated January C, 1899, made by the defendant, payable three months after the date thereof to the order of \V. E. Williams, at the Central Bank. Rochester, N. Y., for $39 and interest. Before maturity the note was indorsed by Williams, the payee, and trans- ferred to the plaintiff. The day the note became due (April fi, 1S99), shortly after 10 o'clock, a messenger from the plaintiff presented the note at the Central Bank, and requested payment, which was re- fused because the defendant's account was not good. The banking hours at the Central Bank are from 10 a. m. until 4 p. m ; the bank- ing hours of the plaintiff are from 10 a. m. until 3 p. m. At about half past 3 of the afternoon of the same day the assistant cashier of the plaintiff, who is a notary public, presented the note at the If the bill or note is presented at a business office or a bank, it must be pre- sented during customary business hours. Parker v. Gordon, 7 East (K. B.) 385. But if the holder finds a person at such office or bank after business hours upon whom demand may properly be made, such demand is pood. Gar- nett V. Woodcock, 6 Maule & Selwyn (K. B.) 44; fialt Spritigs Xat. Bk. v. Burton, 58 N. Y. 430. See post, § 135. A notary's certificate need not name the time of day when presentment was made, for it will l)e presumed to be a reasonable hour. Cayuqn Vountxj lik. v. Hunt. 2 Hill ( N. Y.) 635. But where the notary's certificate states that he presented the instrument at the office of the maker at 5:20 p. ni., and found the door locked, it is error to refuse to hear evidence that this is not within the customary business hours. Clough V. Ilolden, 115 Mo. 330. Where an instrument is payable at a bank it is sudicient that the instru- ment be in the bank on the day of nuiturity ; the formal demand is made by the bank upon the maker's account, and if that be not sullicient to meet the note or bill, the instrument is dishonored. 1 Daniel on Nep. Inst., § 05(5. Mut it is held that the fihy«ical presence of tlu' instrument in the bank, unknown to the officers (as where the letter in which it was sent was mislaid unopened), is not a presentment and demand. Chicopec Hank v. I'liilaili Iphid Ihink, 8 Wall. (V. S.) 041. 8 147. Whether, if a note is j)ayable at a bank anayiiu'iit, wliirli was rcfusod Ijocause tlio dofeiulant's aiiouid was not <;i)od. 'V\\v notary iinniediatel)' pro- tested the note, and about 1 o'elock mailed noLiees ol" protest to tlie indorse!- and maker. After tlie notary had presented the note, and payment had been refused, Milliman deimsited in the Central Hank cash, and a eheek wliieh was treated as eash, sulTieient in amount to make his aeeount good for the note in suit. About 5 minutes before 4 oVloek Milliman (lei)osited enou-rh in the Central Rank to pay the note, and then went to the (Jernian-American Baid<, and told its cashier that lie had made his account .u:ood. The cashier told him that, as the note hail alicady ironc to protest, he would have to pay the face of the note and interest, and $l.r)() protest fees, which pro- test fees the defendant (U'dined to pay. The correct amount of the protest fees was $1.11. This action was commenced April IT), IS!)!). The defendant's ac- count remained "ood for the amount of the note from 5 minutes of 4 p. m. of April (ith until the morning of the day when the summons was returnable in this action, when defendant withdrew from the bank the amount of the note, witli interest up to the date of its ma- turity, wliich amount he at once paid into court when he filed his answer pleading a tender. The municipal court gave judgment for the face of the note and interest to the date of the judgment, besides $1.14 protest fees and the costs of the action. The defendant insists that by making his account good for the note and accrued interest before the close of banking hours at the Central Bank he fulfilled his contract, and that the two demands and refusals which had been made earlier in the day did not put ujKin liim the duty either of making a tender of the amount at the (Jerman-American Bank, or of paying the protest fees, and that the judgment appealed from is e.xcessive in awarding plaintiff interest from the maturity of the note to the date of judgment, with protest fees, and that defendant not plaintiff, should have been awarded costs. The respondent contends that it was not necessary for the notary to wait until the close of banking hours at the Central Bank, but that, the note having been once presented there for payment within banking hours, and payment being refused because of the want of funds, the note was thereby immediately dishonored, and was properly ])rotested before 4 o'clock; and that, if the maker desired to fulfill his obliga- tion after one presentment and refusal, he was bound to bring the money to the plaintiff's bank, and there tender the amount due, with the protest fees. The question thus presented is not free from doubt, and there is no reported case in this state which is precisely analogous to the one at bar. Numerous expressions may be found, however, in the opinions of the courts pronounced during a long series of years, which, al- though obiter dicta, deserve respect, and serve to indicate with some II. '^] AT WHAT TIME. 499 degree of eeitaiiity the views of the judges on the point involved here, lii Lliiciia^-c V Ladd, 44 Barb. GD, decided in 1865, the Supreme ( ourt held that, where a note was made payable at the store of one Child, and a demand was made between 8 and 9 a. m., during the ordinary business hours at the store, the holder was at liberty at onie to treat the note as dishonored, and immediately give notice of nojTiwyinent to the indorser, without waiting until the close of busi- ness hours of tiiat day. Judge Bockes, in tlie opinion, refers to the general rule that: " Tf payment be refused during the last day, the jiohle- may give notice of its dishonor; yet, if payment he subsequently mode or. that day, sucii notice becomes of no avail. True, the maker has the whole of the last day of grace within which to pay; but, after due demand and refusal, followed by notice to the indorser, the maker, if he wishes to make payment, must seek the holder for that purpose. " He recognizes, however, that more latitude is allowed the maker of a note payable at baid< than is permitted the maker of a note pay- able at some other place, for at page 72 he says: " ITe [the holder] was not re(|uired to remain all day at the place to receive payment; nor was he bound by any custom — as, perhaps, he might have been had the note been payable at a bank — to leave the note until the close of the day. But bis duty v. as at an end when he made presentation of the not( for payment, at the proper place, at a reasonable hour, followed by immediate notice to the indorser." Again, at page 73, he says: "■ There is a custom at banks which gives to the maker all of bank hours within whicli to pay, and, in order to meet this custom, the note when payable at a baid<, is usually left there, and demand is made at the close'of the day." * * * ' [After discussing Jlanlr v. EUlcrkin, 25 N. Y. 178, the court con- tinues:] Heference is made in the opinion to the case of CUlcii v. Averill, 5 Denio, 85, in which latter case, in the opinion of Justice Whittlesey, written in 1817, it is said: "It is understood to be the custom of l)anks holding promissory notes payable at their own counter to wait, on the f a note payable at a bank until the close of bank- ing hours to deposit money there to meet it, notwithstanding a pre- sentation bv the holder and refusal earlier in the day. a Referrinj? t«> Hank v. Criltittilru, 2 Tliomp. & ('. 118; Hills v. Place 48 N. Y. 520: Oshorn v. Ifnfjrm, 112 N. Y. 573. — C. 5U0 PitblSKNTMJiNT I'OK I'AV iMKNT. [AHT. Vll. Some of the toxl-book u ritcrs say this liaiik usage must be reeogiiiziul and enforeed by tlie eouils. Mr. Tiedeiiuui, in Ids work on Bills and Notes (published in 18'J8, wliiih eontuins a discussion ou the Negoti- able Instruments Law passed in New York in 1897), at section 121, says: "The acceptor or nud ^O'M'k it is said: "It would seem that in these cases of notice of dishonor given on the day on which the bill is payable the notice will be good or bad, as the acceptor nuiy or may not afterwards pay the bill. If be does not after- wards pay it on that day, the notice is good; and, if be does, it. of course, comes to nothing." T think the munici))al rourt should have ren pealed from is, therefore, modified so lliat j)liuntiff shall recover of the defendajit $30.59 damages as of May 5, 1895), and no more; and by striking out ilio allowiuue for costs, $!).!)(). Tiic defendant (api)el- lant ) is allowed on this ajipeal '$10 costs, besides disbursements. Judgment modified, with $10 costs to appellant. § 145 AN AMBIGUITY IN TPIE NEGOTIABLE INSTRUMENTS LAW.* [23 IIabvakd Law Review, 603-607.] When it is considered how carefully the Negotiable Instruments Law has been examined by critics,^ and how long the practical working of the act has been tested, it may seem odd to discover now an ambiguity in a section of the statute which involves a question arising every week in the business of every large bank. But such a discovery emphasizes the difficulty under which the draftsman of a statute labors in attempting to foresee all questions that may arise and in expressing clearly the rule which he washes to have enacted. A section of the Negotiable Instruments Law which has recently been found to be either ambiguous or to mean something which bankers have not suspected until recently is section 85. This section is as follows: " Section 85. Every negotiable instrument is payable at the time fixed therein without grace. When the day of maturity falls upon Sunday, or a holiday, the instrument is payable on the next succeed- ing business day. Instruments falling due on Saturday are to he presented for payment on the next succeeding business day, except that instruments payable on demand may, at the option of the holder, be presented for payment before twelve o'clock noon on Saturday when that entire day is not a holiday." ® The words in the section which have been italicised are those to which the following discussion relates; they are contained in the draft as recommended by the Commissioners of Uniform State Laws, and have been adopted in the law as enacted in most of the states.'' < This article is Ijv Professor Samuel Williston of the Harvard Law School. — C. 5 See the articles by Professor Ames, 14 Harv. L. Rev. 241, 442, and tlie article by Mr. McKechan, 41 Amer. Law Reg. N. S. 437, 439, 561. These articles together witli defences by Judge Brewster on the points criticized are reprinted in Professor Brannan's work on the Negotiable Instruments Law. 6 This section is numbered as section 145 in the New York Statute, and in Mr. Crawford's book which reprints the statute as enacted in New York. It is enacted in the Massachusetts Revised Laws as section 102 of Chapter 73. 7 In a few states changes have been made. Arizona, Kentucky, and Wis- consin omit the clause altogether. In Colorado the following words have II. 2.] AT WHAT TIME. 505 It has been the practice of banks, at least in the cities of New York and Boston, since tlie enactment of the Negotiable Instruments Law, to present on the following Monday all notes or bills whose date of maturity falls on Srturday. No presentment of such paper has been made, customarily, on Saturday. The propriety of this procedure was called in question in a case which arose not long ago in Boston. A large issue of interest-bearing notes of a railroad company was held by a trust company. By their terms these notes matured on Saturday and were payable at a specified bank in Boston. On the Saturday when the notes matured the railroad company had on deposit in the bank, where the notes were payable, sufficient funds for their payment. The notes were not presented until the following Monday, and when presented interest was demanded to the day of presentment. The bank, however, declined to pay interest for the interval between Saturday and Monday. By the provisions of the Negotiable Instruments Law,^ where an in- strument is made payable at a bank it is equivalent to an order to the bank to pay the same for the account of the principal debtor, and fur- ther, by another section," " If the instrument is by its terms payable at a special place and he [the person primarily liable] is able and willing to pay it there at maturity, such ability and willingness are equivalent to a tender of payment upon his part." It was claimed by the bank at which the notes in question were pay- able that the notes were due on Saturday and that the presence of funds in the bank where the notes were payable operated as a tender of payment and therefore stopped the running of interest. The large amount of the notes involved made the question of interest for even two days one of eonsequence, but even more serious cases may be sup- been 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 succeeflinp business day." In New York tlie year after the enactment of the Nepotiahle Innt rnmenf^ Law the words "or beeominp payable" were inserted after the words " fallinc due." This ehanpe has been copied in Kansas. In Massachusetts this clause of the statute as originally passed was identical with the firaft recommended by the Commissioners on I'niform State Laws, but the commissioners who prepared the Revised Laws of Massachu- setts inserted the words "or payable" after the words " fallinp due," and the New Hampshire statute has followed the form of the Massachusetts ReviM<'d [>aws. The insertion of the words "becoming [Jiiyable," or "or payable," seems to have ln-m marie on the assumption that t)ie words " failinp due " meant something other than " becoming payable." This nssumptinn neems unfounded. — See Mr. Crawford's note to section M.') of his book on the Nejfotiable Instruments Law. ".Sfrfion 87; Crawford's Nejj. Iii'-f. L.iw, sec. 117; Mass. I?ev. Laws. c. 73, sec. If>4. • Section 70; Crawford's Nefj. Inst. Law, sec. 130; Mass. Hev. Niws, c. 73, sec. 87. :,Oii im;i:si:nimi;nt I'oi; taymknt. [art. vii. posod involving llio same (luostion. A nolo maturing on Saiuiduy ma}- be liold l>y a bank for rollrrtiou for a lonvspoiuk'nL. In accord- aiu'o witb tbo custom \vhi( li has bci'ii prevalent the colleeting bank would make no presentment until Monday. IL may be supposed that on Saturday (be note would have been paid had presentment been nnnle, but that owing to sujiervening baid^ruptey, or other cause, the note is dishonored when ]iresented on Monday. If the iu)te was legally due on Saturday the collecting bank has been guilty of negligence and is liable to its correspondent. The same (piestion may be raised in deternnning when a right to interest accrues upon a note which matures on Saturday, and which does not bear interest according to its terms. The case of the railroad notes alluded to above was submitted to the counsel both of the railroad and the trust company. The lawyers con- sulted agreed in the opinion that the trust company was not entitled to interest after the Saturday on which the notes matured. In supi)ort of this conclusion it was pointed out that by the terms of the Nego- tiable Instruments Law^ " presentment for payment is not necessary to charge the maker, and that the provisions in regard to presentment seeni to relate to the steps necessary for charging indorsers and other persons secondarily liable. Furthermore, if it had been th(> intent of the statute to make a note maturing on Saturday for all purposes like a note nurturing on Monday, the second sentence of section 85 would probably have been framed so as to read " when the day of maturity falls upon Saturday or Sunday, or a holiday, the instrument is payable on the next succeeding business day." The contrast be- tween the words '* when the day of malvrity falls upon Sunday or a lioliday " as used in the second sentence of the section with the words in the third sentence, " Instruments falling due on Saturday," is a strong indication that the words " falling due" mean something other than having the day of maturity fall upon Saturday. That i.s, the words do not mean as the words in the preceding sentence do, falling due according to the literal tenor of the instrument, but according to its legal effect. A slight additional argument also may/ be built upon the failure to mention Saturday in a subsequent section of the Act which provides that " Where the day, or the last day, for doing any act herein required or permitted to be done falls on a Sunday or on a holiday, the act may be done on the next succeeding secular or business day." ' On the other hand it was urged on behalf of the trust company that the uniform custom of banks, since the enactment of the Nego- mSpotion 70; Crawford's 'S'-cr. Inst. Law, soc. 130; Mass. Rev. Laws, c. 73, Bee. 87. 1 Spption 194; Crawford's Neg. Inst. Law, .sec. 5; Mass. Rev. Laws, c. 73, sec. 210. II. 2.] AT WHAT TIME. 507 tiable Instruments Law, had been to treat instruments maturing on Saturday as if they were payable on Monday. "^Fhe anomaly was also strongly urged of regarding a note as dishonored by the maker so far as his own liability was concerned on Saturday, when, so far as the liabilities of parties secondarily liable were concerned, the maker had not dishonored the note, and could not dishonor it until IMonday. An action brought against the maker on Monday morning would tlien not be prenuiture, though so far as the indorsers were concerned the maker had not yet dishonored the note. The law merchant prior to the Negotiable Instruments Law certainly contained no precedent war- ranting such a result. The practical inconvenience which would follow from the construction given by counsel to the statute was also noticed. If that construction is sound every instrument falling due on Satur- day and bearing indorsements must be presented on Monday in order to charge the indorsers, but in order to start interest running, and in or- der to make sure that no chance of securing payment is lost, present- ment must also be made on Saturday, if the instrument is by its terms payable at a particular place. Though the question is not fr<'c from dou})t, since clear language must bo required to justify a result which is certainly an anomaly in the law of negotiable paper, yet on the whole the construction given by the eminent counsel consulted in the matter seems sound. The opinion of Mr. Crawford is in conforTuity with this view, although he does not seem to have perceivcil ihc nnomalous result oP not only authorizing but rc((uiring presentment for payment in order to charge indorsers on a day other than that on which the instrument was legally due.- Tbe legal situation in regard io the matter caused such uneasiness to certain bankers in UdsIou thai the ([uestion was presentetl by the Clearing House ( 'oinniit tee to iheir connseh who gave the following opinion : "The language of the statute is not clear, and until it has been construed by the Supreme Court of this Commonwealth we think that the only safe course for a bard\ to i)nrsue, wliicii holds ji note falling . notp (a). 508 PHESKNTMIiNI' KOi; PAYMENT. [ART. VII. rliusotts Lt'i^iplaturo (ho sintioii uiulci' discussion lias been amended 60 that the portion rchitin^ tn iiist i niiifiits falliii-r due on Saturday reads as follows: "When the (hiy of maturity falls u]ion Saturday, Sunday, or a holiday, the instrument is payable on the next suceeeding business day whii-h is not a Satui-day. Instruments payable on demand may at tiie option of the holder he pres(>nted for payment before 13 o'eloek noon on Saturday when that entin> day is not a holiday; provided, liowever. that no person receiving any check, draft, bill of exchange, or promissory note payalile on demand shall be deemed guilty of any neglect or omission of duty or incur any liability for not presenting for payment or acceptance or collection such check, draft, bill of exchange or promissory note on a Saturday; provided, also, that the same shall be duly presented for payment or acceptance or collection on the next succeeding business day." ^ 3. At the Proper Place. § 133 BROOKS V. HIGBY. 11 Hun (N. Y. Sup. Ct.) 235.— 1877. Action by holder against indorsers. The bill was drawn on N. F. Mills, 114 South Main street, St. Louis, and by him accepted. The notary's certificate stated that the bill was presented " at the place of business of N. F. Mills, St. Louis." It appeared in evidence that Mills had two places of business in St. Louis. Defendant moved for a non- suit, which was denied. Judgment for plaintiff. Smith, J. — As the draft was addressed to the drawee at a par- ticular place in the city where he resided, and was thus accepted by him, the particular place thus designated was the place of payment, and a due presentment and demand of payment at that place was necessary in order to charge the indorsers. (Story on Prom. Notes, § 227 and note 3, and cases there cited.) The certificate of the notary stated merely that the draft was presented and payment de- manded "at the place of business" of the acceptor, without specify- ing the place. As it appeared that the acceptor had two places of business in St. Louis, the certificate furnished no evidence whatever that the presentment and demand Avere at the place where the draft was payable. Tlie proof was fatally defective, and the motion for a nonsuit should have been granted. The respondent's counsel proposed to supply the defect on the ar- gument at have by the production of a fresh certificate of the notary showing that the draft was presented at No. 114 South Main street. • Chapter 417. II 3.] AT WHAT PLACE. 509 The rule allowing evidence of a fact imperfectly proved at the trial to be exiiibited at bar, in opposition to a motion lor a new trial, is, in general, confined to records or documentary evidence which proves it- self, and on which no question can arise in the cause, except such as is apparent on its face. {Bank of CJiadcstun v. Emcrich, 2 Sandf. 718; Dresser v. Bronls. 3 Barl). 429; Burt v. Place, 4 Wend. 501; Armstrong v. Perrij, o Id. 5""); Ritchie v. Putnam, 13 Id. 524; Hugh V. Wilson, 2 Johns. 46). Under the statute of 1833, a notarial cer- tificate is but presumptive evidence, &nd may be explained or con- tradicted by the party against whom it is produced. The new cer- tificate offered in this case cannot be received at bar to conclude the defendants; if it is to be used against them they are entitled to an op- portunity to meet it at the trial. We are also of opinion that the evidence required the submission of the question of usury to the jury. Judgment and order should be reversed and new trial ordered, costs to abide event. Present — Mullen, P. J., T.\lcott and Smith, JJ. Judgment and order reversed and new trial ordered, costs to abide event.* * A bill is drawn, accepted, and indorsed in Kentucky, wliere all tlie parties reside, biit is addressed " To C, New York, N. Y." The bolder knows these facts. The bill is in New 'N'ork on the day of maturity. II rid : I'resentinent wa« sufficient. If the instrument is payable in A., and the residence of the maker is in B., presentment should be in A. Cox v. .Vaackin. 120 App. Div. (N. Y. ^ .^.TS. a note was made payable at the " .lenkins Trust Tompany, Bath Beach Branch. Brooklyn." The trust company maintained principal offices in the business section of Brooklyn, N. Y., and plaiiitifT claimed that presentnu-nt at the princijtal offices of the company on the date of maturity was sufficient. TIookkr, .1., said: "Section 1.T3 of the Nepofiable Instrunu-nts Law . . . provides: 'Present- ment for payment is made at the proper place: (1) Where a place of pay- ment is specified in the instrument and it is there presented.' It must be observe«l in reference to this statute that it mentions a ' place of payment," and a place does not mean an individual, a corporation or in-^titution. The Bntb Beach Branch of the .lenkins 'I'rust Company, as those words were used in the instrument, referre^ Taylor v. Hnydrr, 3 Donio ( N. Y.) 145 — 1846. Note dntod Troy. N. Y. Maker thon nml af1cr\viii L. N. S. 303, with nute entitled "Necessity of actual presentation of eoni- niercial paper to effect its dishonor." — V. 5 " No valid presentment and demand can be made by any person without having the note in his possession at the time, .so that the maker may receive it in case he pays the amount due, unless special circumstances, such as the loss of the note or its destruction, are shown to excuse its absence." Arnold v. Dresser, 8 Allen (Mass.) 435: Mnsson v. Lake, 4 How. (U. S.) 202. But if the one making demand has the instrument but does not exhibit it, the present- ment is good where the maker does not ask to see the instrument, but refuses payment on other grounds. Legg v. Vinal, 165 Mass. 555. — H. [See also Bank of Vergentirs v. Cfimeron. 7 Barb. (N. Y.) 143, and Farmers' Bank v. Duvall, 7 Gill & J. (Md.) 78. — C] III."] WHEN' DELAY EXCUSED. 519 ment, and gave the requisite notice of non-payment to the defendants. The facts are as follows: The note in question matured on the 4th day of July, IHGl, and was payable at the banking house of F. and G. Willins, in the city of St. Paul, Minnesota. Some time in April, 18G1, the plaintiffs delivered the same to the bank oi Cooperstown, at Cooperstown, New York, for collection. At that time a letter, in due course of mail, would reach St. Paul from Cooperstown in about six days. The cashier of the bank of Cooperstown sent the note by mail to its regular correspondent, the Bank of St. Paul, in the city of St. Paul, for collection, in ample time, as the cashier stated, for it to reach its destination by ordinary course of mail, before the maturity of tlie note. When the letter reached St. Paul, the Rank of St. Paul had made an assignment, and the envelope having printed on it the words " From the Bank of Cooperstown," the postmaster at once returned it to the Bank of Cooperstown, with the indorse- ment " bank failed." The letter was received by the Cooperstown Bank in the original envelope, unopened, on the 9th day of July, 1861, and on the same day the note was returned by mail to St. Paul in a letter directed to F. & G. Willins, who caused it to be presented and protested on the ir)th day of July, 1861, the day on which it was received. The defendants contend that there was a want of diligence in not sending the note in time to guard against such contingencies as the evidence discloses, arid that the action of the postmaster in the premises is no sullicicnt excuse for the failure to present for pay- ment on the day of the maturity of the note. Professor Parsons, in his treatise on Notes and Bills, says: "Ordinarily any failure to present a note at the proper time, by reason of the negligence of an agent, would discharge an indorscr, but where the holder makes use of the public mail for the purpose of transmitting the note to the projKT place in .season to have a legal demand made, and without any negligence on his part, we should say that be would not lose his remedy on an indorscr, if through any accident or disorder, or the negligeiiee or mistake of the jjostofTiee clerks, the note docs not reach the destined place in season to make demand on the very day of maturity." (\'ol- 1, p- 'f'l-) '» supj)ort of his text he cites the case of Wutdhaw Hank v. Norlon (22 Conn. 2i:?). * * * Wc have been referred by defendants' counsel to the ossibility by virtue of which he cliiimcd to be dis- charged. In the present case the letter containing the note was not 520 PRESENTMIONT FOi; I'AYMKNT. [aUT. Vll. Tnis
  • indorser of a note, made for his accommodation, is discharged I'loni liability on his indorsement by the failure of the holder to demand ))aynunit of the maker, and to give the indorser notice of tiie non-payment of the note. '^Fo this question a negative answer must be given, on principle and authority. To the general rule, re(|niring such notice, there are well retognized exceptions. In its application to hills of exchange, the failuie to give notice will be excused as to the drawer, where he lias no funds in the hands of the drawee, and no reasonable ground to expect that his hill will be honored. The reason on which this exception rests, exists where a note is made for the accomniodation of the indorser, for the purpose of raising money ff)r Iiis benefit, by discount or ollierwise, he being the real debtor, and primarily bound for its ultimate jiayment. In Piich case, notice can amount to nothing, there being no party against whom he can have reeourse upon paying the note, and no possibility that be ean be injured by the failure to give iioliic. lie, like the drawer of ,i bill in such case, is without fumls. and has no right to expect the maker to ))ay the note. Fronrh v. Itank of Cohnn- bia. \ Vv. Ml : A>//.s- v. W'inlrr. T. 1 Me. 3!i!» ; 2 Dan. on Neg. Inst., § 10H:»; Tied, on Com. Paper, i^ •'?.'•'•. H being shown by the testi- mony of Read, willioul eonlradiction. that the noti' sued <»n was nuide for the aceorjiiriodatiftn nf Srotl. notiee of its dishonor was not re- quisite to charge the indoi'ser. * * * Judgment albiiued.' 1 Rop ,il«o hfrVriqh V. Hank of (Hfl nnmininn. 20 r.rnit. (Vh.) 7«5 ; Turnrr ▼. Sampson. 2 O. I',. Div. 2.T ; Wilhrrnir V. Slayhnrk. l.'iR N. Y. 04J»; Am. .Vo(. Bank v. Junk Urns., 94 Tonn. «'2I. post. p. Tu'.K — V. 524 PBE8ENTMENT FOK I'AYMENT. [ABT. Vll* •T. WnKN TMPossinr,R. §142 MOOKE V. COFFllOLl). 1 Devebki'x Law (N. Car.) 247. — 1827. Action ac^ainst indorsor. .hidc^niont for defendant. ]{.M,i., ,1. * * * It \v;is proved thai Host, tlie maker of the oblijjation, was a seafarini; man, and at or about the time the oblis;a- tion beeame payable, sailed from Washington, as master of a vessel bound to New "^'ork : and it did not appear that he had a domieil, or any establishment within the state, at which payment could be demanded. The maker being at sea, in his usual employment, and the indorsee not being bound to follow him beyond the state, it fol- lows, that if he had no such domieil or establishment, a demand should be dispensed with. In this view of the case, the defendant was liable upon his indorse- ment, without any express promise to pay, and the jury should have been so instructed — and consequently, for the judge's omission to give such instruction, there must be a new trial. Per Curiam. — Judgment reversed and a new trial awarded.^ § 142 WAEINCt v. BETTS. 90 ViRfiiNiA, 46. — 1893. Action against indorsers of a note payable at the "Business Men's Bank, Richmond. At maturity the bank was defunct. Demand (without presentment) was first made on W., a former officer of that bank (and also one of the indorsers), who replied that the funds had been distributed and there were no assets. Later in tlie day, at 5:30 P. M., the notary with the note in his possession went again to the oflfice of W., but it was closed ; he then went to the residence of W., but he was not there. He then protested the note and gave due notice to the indorsers. The maker lived at Danville, Va., at which place the note was dated. Lacy, J. (after stating the case), delivered the opinion of the court. The first question arising here is that raised I)y tlie demurrer. The declaration states a good case, and sets forth that on its due day it was duly presented for payment of the sum of money therein specified, required, payment refused, and that it was duly protested, etc. 2 But if the makpr have a residence, prepentment must be made there. Dennie v. Walker, 7 N. H. 199. I>'mand is not excused because the maker is an infant. Wyman v, Adams, 12 fuph. (M^ss.) 210. — H. rv.] WHEN DISPENSED WITH. 525 And the defendants' demurrer to the plaintiff's declaration was properly overruled. The claim of the defendants is that there was no presentment of the note, because when pa}Tnent was demanded of the indorser, W. L. Waring, Jr., manager of the late Business Men's Bank, Mr. Glenn did not have the note in his possession, and could not have presented it, but as has been seen from the facts found by the jury, payment was refused by Waring, and the note not asked for, but payment refused, and the statement made that he was not authorized to repre- sent the bank, which had ceased to do business and had distributed its assets. Presentment of tlie bill or note and demand of payment should be made by an actual exhibition of the instrument itself;^ or at least the demand of payment should be accompanied by some clear indica- tion that the instrument is at hand ready to be delivered, and such must really be the case. This is requisite in order that the drawer or acceptor may be able to judge (1) of the genuineness of the in- strument; (3) of the right of the holder to receive payment; and (3) that he may immediately reclaim possession of, upon paying the amount. Tf, on demand of payment the exhibition of the instrument is not asked for, and the party of whom demand is made decline on other grounds, a formal presentment by actual exhibition of the pnpor, is considered as waived. (Daniel on Xeg. Tnst., p. 1S5, § 054, citing Lockwood V. Crawford, IS Conn. ^C^^, and Fall River Union Bank v. WiUard, 5 Metcalf, 21 fi.) All the parties subpeqiient to the principal pnyer are hound only as his guarantors, and promise to pay only on condition that a proper demand of payment bo made, and due notice be given to them in case the note or bill is dishonored. \m\ we rcjicnt tins ns one of the fundaiuf-ntal j)rin(iples of the law of n('gotial)le paper; iind the infrequency and the character of the circumstances which will excuse the holder from making this demand, and still preserve to hiui all his rights as effectually as if it were made, will illustrate the strin- gency of the rule itself. (Parsons on Notes and Hills, vol. I, II"?.) The question of excuse, tlien, will depend upon wliether due diligence has been used, and presents the ordinary inquiry as to negligence. The principal excuses resolve themselves into two classes — First. The impossibility of demand. Second. The acts, words, or position of n pnrty, proving th;i( he had not right, or waived mII riglit to the demimd of (he \v;iiver of which he would avail himself. That impossibility should excuse non-demand is obvious, for the law compels no one to do what he cannot perform. But it must be actual and not merely hypothetical ; and though it need not be abso- lute, no slight difTiculty will have this effect. (Id.) »See § 134. — n. O'Jb rUKSKNl'MllNI' KOK I'AVMIONT. \A\VV. VII. The ciiTuin^taiU'fs wliicli will cxciisi' a (Irinaiid are such generally as aj>ply to a faihiro to pri'snit ami (linianil iiayiucnt within tlie re- (|iiired time, not ahst)lu(t'ly. ( I'arsons, 111, 11').) In this I'ase the present innil of (lie note was not made at hank within the usual hank luuii's. with the note in possi'ssion, hut as we have seen, this was excused in this case ( 1 ) hy th(> fact that there was no hank to present it at. and (".') hecausi' jiayiiK'nt was refused upon the crouiul that the hank had ceasetl to do husiness, ami its assets dis- tril>uted, and the noti' was not asked for, nor recpiired, ]iayment heing refused on other ui'oiinds; the ri^lit to have it pi'oduced must he con- sidered as waived. The note, however, was can-ied, durini:; the day, to the place of husiness of the late numager of the hank, and the indorser sought to he charged, and this heing closed, it was carried to his residence, and that being also closed, it could not be presented to him, and although it was not in banking hours, it was during the daytime and before the hours of rest. When the note is payable at a bank, it is to be presented during banking hours; and the payer is allowed until the e.vpiration of bank- ing hours for payment. But when not to be made at l)ank, but to an individual, presentment may he made at any reasonable time during ihe day during what are termed business hours, which, it is held, range through the whole day to the liours of rest in the evening. (Parsons, 447, citing Cayuga ('nuuli/ Baiil- v. TJiint, 2 Hill, 635; Nel- sov V. FoiieraU, 7 Leigli, 10 1.) And in the case of Farnsimrth v. AUen (4 Gray, 4 5,1), a present- ment made at p. m. at the nuiker's residence, ten miles from Boston, when he and his family had retired, was held sufficient. And in Bardaij v. Bailey (2 Campb. 5"?7) Lord Ellenborough sus- tained a presentment made as late as H p. m. at the house of a trader. It is only where [)resentment is at the residence that the time is extended into the hours of rest. If it is at the place of business, it must be during such hours when such places are customarily open, or, at least, while some one is tlierc competent to give an answer. (Parsons, 448.) In this case there was no presentment to the maker, who could not be found, which, however, was unnecessary under section 2842 of the Code of Virginia. The protest was in i\uc ff)rm, and duly protested, which was authorized by section 2849 of the Code, although the said note was payable at a bank in this state. And under section 2850 is prima facie proof of the facts stated therein, and is substantially in accordance with the finding of the jury. It therefore appears that such presentment as was requisite was made tr) the IrKhjrser and late manager of the bank, and that it was impossil)le to present the same at the bank named therein, as it had ceased to exist. We must, there- IV.] WHKN DISPENSED WITH. 527 fore, conclude that there has been sufficient diligence on the part oi the plaintiff, and that tlie judgment of the court below in his favor was right, and should be affirmed. Judgment affirmed. 4. By Waiver. § 142 J. \V. O'BANNON v. CURRAN. 129 Appellate Divlsion (N. Y.) 90. — 1908. Action by the J. \V. O'Bannon Co. against James M. Curran. A demurrer to parts of the complaint was overruled, and defendant ap- peals. McLaughlin, J. — This appeal is from an interlocutory judgment overruling a demurrer to the second and third causes of action set forth in the complaint. In each case the demurrer was upon the ground that the facts stated did not constitute a cause of action. The second cause of action alleged is to recover upon a promissory note made by the James Freeman Brown Company, a domestic corporation, dated October 12, ino.'i, and payable three months after date to the plaintiff at 73 Franklin street. New York. It is alleged in substance, with reference to this cause of action, that the defendant indorsed the note, and it was then delivered, before maturity, to the plaintiff, which gave full value therefor, relying on the credit of said indorsement; that before the note became due, and on the 7th of December, 1!M)3, an involuntary petition in bankruptcy was filed against the James Freeman Brown Company, and a rec-eiver appointed; that on the same day the defendant, as president of the company, pursuant to a vote of the board of din-ctors, filed a written admission of its inability to pay debts ann hy 15 a^'ainst drawer. Ilrld: Notice hv /\ would he i»f)od undiT ilocfrine of Chnpuuin v. Krnnr, (not, how- ever, if .A had been di>-cliar};cd hy lniU(n or had no riplit of action on the bill 5;>i) NoTici': OF DisiioNoii. [auc. Vill. § 162 'riJADKUS' NATIONAL BANK v. JONES. 1(»4 An-Ki.i.MK Division (\. Y.) -I.'!.'?. - 1!)05. Ai'l'KAi, 1)V iIk' (It rcii(l:iiit Irdiii ii juiluinciil in fiivor of i\w. plaintilT, and riiiin an ordci- iliiivin^ tl.c dcrcnilinil s motion Tor a new trial iiiado upon llic miniilcs. LaI'cii l.lN, .1. Till' iKlion is hioiii;!il to ii'( over of the dcrfniliint. as indoisor. liir aii.«iiiiil of two (iidniissoiy notrs and protest I'ei s. 'I'lie ijuestiitn pKs.nitii lor ih Icrndnnl ion is whether the I'vi It-i , ,•• shows as niatlcr of law t':>' uivini;' of due notice of protest to the dc fenchmt. ImiIIi iiotes \\v\f made at Siiaidon, Pa., hy tlie eo-paitii i shii) firm of ('. F. llechwitli ^' ("o. of tliat city. They were paynh!,' to the order of tlir defeinhmt, iiHh)rsed hy Idm, and then indorsed hy the niakerp and dcdivered to the plaint ill' hel'oi-e matui-ity at wlio-e bank they were payahle. ^' * * The notary s^ave dne and timely notice of pi'otest to the defendant's firni, who were liotli niakeis, and in foiin at least, suhs(M]nent indors- ers. If the ])laintilf had alleiri'(l that the defendant was a mend)er of the firm I am of opinion that he would he ehar!?eal)le with notice of the dishonor and with the notice g:\\vn to his firm as indorsers ((ioiran V. .lacksnn, 20 Johns. l?(i; Ihillldaii v. Mr/Joiif/all, 22 Wend. 204, 272; see, also, Neg. Inst. Law, iiv< 1 T()-l.sr)-l,S(j) ; hut this was not pleaded, and, sinee it was not an issue, thei'e is no justice or |)ro])riety in seizing upon this item of evidence, although admitted without ohjeetion that it was not ])leaded, for the purpose of iiolding the defendant. The verdict should stand or fall upon the issues as triech The notice to thi.' film, howevei-, was received either on tlie day the note fell due or on the morning of the day following. Willi it came under separate cover, adilresscd to the defendant, care of the firm, a formal notice of protest hy the notary in behalf of the plaintiff directed to the defend- ant, and the firm were requested to forwaid the same to him. Mr. Beckwith testified that immediately upon receiving this notice he in- closed it in an envelope and addressed it to l!ie defendant at his icg- ular place for receiving n:ail in the city of New York, which was in the care of his counsel on this a])peal. * * * If hf had takf-n it uji) : noticp by (' in A's mmo is ffnoi] «inco, ttioiitrli un- authorized, tlu* diawfr is not injured. In /enninfis v. KuhcttH, {A E. & 15. Olo — l.S;").")), .\ indorsed tlie hill to de- fendant and dffondint to fdaintifT. Plaintifl' I ik w the jieeepfor h.nd i-tnnpcd payment, and crr.liiith- "ttKI not fia\'. On t'i<- iI:m' after n':i + "''*'- •■■"■m't knowing whether the hill (which was payable at a distance) h:id ;ictuall> been di-honored. plniritiH' tolii defendant it ha hill is dishonnv .1 ii laet, and a partv to the hill unef|nivoea11y n'<«ert'' that tnet in :' nv*^'-"^ of di-- honor. 1 think von cannot inf|uire into the state of the party's mind, or his means of knowledge." — H. II. 1.] BY WHOM GIVEN. 637 Although it presumptively appears from the face of the notes and the indorsements that the defendant was an accommodation indorser for the makers [Smith v. Weston, 159 N. Y. 104; Nat. Park Bank v. German American M. W. & S. Co., 116 N. Y. 281), and, therefore, would not be liable to them and consequently they could not in their own behalf give him a valid notice of protest (Neg. Inst. Law, § 161; Cabnt Bank v. Warner, 10 Allen (Mass.) 522; Harrison v. Rnsrne, 15 M. & W. 231 ; Stanton v. Blossom, 17 Mass. 116, 120; Story, Prom. Notes, 7th Ed., § 303), yet they could on behalf of the bank and as its agents give the notice by forwarding it immediately as was done. (Neg. Inst. Law, §§ 162-163; Sewall v. Russell, 3 Wend. 276; Cha- noine v. Fowler, 3 Wend. 173; Lawrence v. Miller, 16 N. Y. 235; Smith v. Poillon, 87 N. Y. 590 ; Eagle Bank v. Hathaway, 5 Mete. (Mass.) 212; Rowe v. Tipper, 13 C. B. 249; Chapman v. Keane, 3 Ad. & El. ld3;Lysaght v. Bryant, 19 L. J. C. P. 160). It follows, therefore, that the judgment and order should be af- firmed, with costs. Ingraiiam and McLaiighlix, J J., concurred; Patterson, J., con- curred in result; Van Brunt, P. J., dissented. Judgment and order affirmed, with costs. § 163 STAFFORD v. YATES. 18 .ToMNSON (N. Y.) :?27. — 1820. Action by second indorser against first indorser. Defense, want of notice. Judgment for plaintiff. The note was indorsed for the accommodation of the maker. It was discounted at bank, nnd' on dishonor at maturity due notice was given by the agent of the bank to bolh indorsers. No notice was given by plaintiff to defendant. Plaintiff took up the note. Per Curiam. — We .see no ground to doiilil the correctness of the decision at the circuit. T^pon authority, as well as sound reason, it is sufficient that the first indorser had notice from any subserpient lioMer of the note, of the default of the maker, and that he would be looked to for pnvment ; provided such notice were given immediately after Buch default. The only object in rcjuiring notice is, that such in- dorser mav liave recourse to the maker, to indemnify himself. And whether, after such notice, the first indorser be sued by the second, or third indorser, is immaterial: and notice of nonpayment, etc., from either of them, enures to the benefit of all who stand behind him on the note. Judgment for the plaintiff. b'3S NOTICE OF DlSllONOU. [aut. VHI. § 165 OHIO LIFE INSURANCE AND TRUST CO. v. M'CAGUB. IS Ohio, 54.— 1849. Action against drawor ol' a bill payable to his own order and in- dorsed by him to plaintill' and by plaintilT to its agent in New York. Jndgnient for i)laintill'. Sp.VLDixci, J. — There are really but two questions presented in this case for our consideration: First. Was the notice of protest for non- payment transmitted with siilUcicnt diligence and diret'tness to the defendant? The bill matured and wont to protest on the 19th day of June, 1846. It was then in the hands of an agent of the plaintiff in the city of New York. Admit that agent to have been the actual cashier of the " Trust Company." He was then attending to an agency in the City of New York, and so far as it concerned the bill in question, which was discounted at the bank in Cincinnati and sent to him in New York for collection, he may as well be called an agent as any indifferent person. This agent, on the very next day after the protest in New York, sent the notiee l)y mail to his principal in Cincinnati, where it arrived on the 25th of June, and on the same day was again placed in the mail, directed to the defendant at Ripley. The most stringent rules of the law merchant will require no more than this. The whole objection of counsel is based ujjon the fanciful idea that the Ohio Life Insurance and Trust Company at Cincinnati was embodied in the person of its cashier, Wm. M. Vermilyc, in the City of New York; and that it was sending the notice of protest from itself in New York to itself in Cincinnati. We are not inclined to indulge in subtleties of this sort, and hold that Mr. Vermilye in New York, whether he be called agent or cashier, was employed by the holder of tlie bill in Cin- cinnati to present the same for payment; and, on payment being re- fused, to return it in due time, with the ordituiry notice of protest, to his employer in Cincinnati, whose duty it would be to communicate with the other parties to the bill. [Omitting a question of statutory construction.) .ludLMueid affirmed.* 5 Accord: Howard v. Ives, 1 Hill (N. Y.) 20.3; Church v. Harlow, 9 Pick. (Mass.) 547; Rcnshaw v. Triplctt, 23 Mo. 213. It has rocently been held by the English Court of Appeal (Collins, L. J., di^sentinp). that where a bill is forwarded by the A. Branch of the X Bank, due notice to the R. Branch of the same bank is sufficient to satisfy sec. 49 subsec. (12) and (13) of the Bills of Exchange Act, since the X Bank is the principal, and not a particular branch of that bank. Firldtnq d Co. V. Corry, [IRnR] 1 Q. B. 268. These provisions are substantially the same as § 105, and S 175 of the Nep. Inst. Law. — H. ii. 2.] form of notice. 539 2. Form of Notice. § 166 KING I'. HURLEY. 85 Maine, 525. — 1893. Emery, J. — This was an action by an indorsee against the indorser of a promissory note. i\t the maturity of the note, payment was duly demanded of tlie maker, and was refused, and notice thereof was sea- sonably sent to the defendant indorser. The defendant makes but two objections to the notice. First, that it did not state who were the other indorsers of the note. Second, that it misstated tlie amount of the note. The defendant, however, docs not sliow that he was in the least mis- led or confused by the omission, or by the mistake. On the contrary, it clearly appears that he understood the notice to refer to the note in suit. He was, tiierefore, fully informed of the dishonor of this note and that the holder looked to him for payment. This was suf- ficient to fix his liability. {Cayuga Co. Bank v. Warden, 1 N. Y. 413; 6 N. Y. 19.) E.xceptions overruled. ' § 167 WILLS r. BANK OF UNITED STATES. 11 WlIEATON (II. S. ) 431.— 18'J(i. Action against indorser on a note dated 20 July, IS 10, payable 60 days after date at the office of di.scount and deposit of the Rank of the United States, at riiilicotlic. The following notice of dishonor •was sent to the indorser: — ('HiLirOTiiE, 22n(l Srplrmbrr, IHlfl. Hir, Yoii will lifrfhy take nntifo, lliat a iif)l<' drawn by Wood & l-^ljcrt, dated 20th day of .Scptcmltcr, 181!(, f.I(Ml tlicn-ln-. flmiland ▼. Arlrinn. .30 N. J. L. 41 ; flmlfirs v. Shutrr. 22 N. Y. 114. Whrrp thf notirn mny ai)i)ly to nny ono of two or rnorr notos itulorspd hy the flcfrnrlnnt, thn noticp may l>r inrfTfrtiini. Cnnk v. Litrhfirld. N. Y. 270. But not, it spems. if tfif indorspr Ih not mislnd tlicrrhy. h. c, (on rotrial), 2 Bo8w. (N. Y.) 1.37. It i« unnecpssary that tlip notirp shmild inrliidp a ropy of thp protcnt. Dennistoun v. fitewart, 17 How. {V. S.) 606, potit. — M. Tilt? NoricK OF DisiioNOH. [art. VIll. (UMiKindtnl (tf llie iiiakor, that |>aviii(Mil was refused, and that tlie note was protosU'd for iioii-|iaviiu'iit. 'V\\v «»tdy iiifcreiice whicli the iiuloisor could reasonahly have drawn from such a noliee was that the holder of the note intended to look to him for payment. The lia- bility of the maker to the holder was fixed without presentment and protest, and therefore the only purpose which the holder could have had in sending such notice was to charge tlie indorser. The notice in this ease was, in my opinion, sulTieient, and the judgment below should be atlirmed.' 3. Mode of Notice. (a) Personal delivery. § 167 TTOBBS v. STRAINS. 149 Massachusetts, 212. — 1889, Action against indorser. Verdict for plaintiff. Morton, C. J. — Notice of the dishonor of a note is sufficient to charge an indorser if it is delivered to him personally, or is left at his place of residence or of business, or is deposited in the mail ad- dressed to him at his place of residence or of business, the postage being prepaid. (Pub. Sts., c. 77, § 16; Ban/v of America v. Shaw, 142 Mass. 290; Importers <£• Traders' National Bank v. Shaw, 144 Mass. 421.) The underlying principle of all the decisions upon the subject is, that reasonable diligence must be used by the holder in getting notice of the dishonor to the indorser. In the case at bar, the evidence tended to show that the plaintiffs, in due time, took a written notice of the dishonor, addressed to the defendant, to his ofTice, which was his place of business, and, finding no one in, left it there. The precise place in the office where it was left was not fixed with certainty, and the court instructed the jury, that, if they found that it was left in a conspicuous place in the office, it was a sufficient notice. This ruling was correct. The jury might well find that the notice was left in good faith in the defendant's office, in such way that he would be likely to see it when he came in. Such a mode of giving the notice would ordinarily be as effectual as if it were sent by mail through a letter carrier. We think the evidence shows a compliance with the rule of law requiring the holder to exer- 9 An indication of dishonor: " Has not l)een paid and I request (or demand) payment." Arnold v. Kinloch, 50 Barb. (N. Y.) 44; Page v. Gilbert, fiO Me. 485; Armstrong v. Thurston, 11 Md. 148; Pinkham v. Macy, 9 Met. (xMass.) 174. — H. II. 3.] UODF OF NOTICE. 643 f'?o rt';i,-oi)al)lt' diligence, iiiid t!i;it the iiotiee was sufiieient to eliarge 1 ,^ ill Ii" (';i!l a.-^ iiaioisei . [Ml: iiii. ..: -tjuet^lio:! ac? to uaiver.J E.xeeptions overruled.' {!>) Mail deli very. ', 1G7 SIIKLDOX V. RKXTIAM. A Hii.i. (N. V.) 12!t. — 1S43. Action aorain?t indorser. Note payable in (Jeneva. TTolder and indorser reside in Penn Van. Note diphonoved in (Jeneva ; notice.^ sent by mail from Geneva to holder in JVnn Van ; holder deposits notice for indorser in Penn Yan postotHce. Indorser asKs nonsuit on the j,^round that leaviiifi the notice in the postoffice at Penn Ya)i, there heing no evidence that the defendant received it, was insutlicient. Motion for nonsuit denied. Verdict for plaintifT. liif thf Coiiii. HitoNsoN, .1. — It seems to have heen assumed on the trial that Bahcock ownei! the note, and sent it to the hank, where it was made payable, for collection. Notice was sent to Babcock, the last indorser, with notices for the other indorsers; and if he was not mistaken as to the proper mode of service, he gave notice to the de- fendant Benham on the same day or the day after he received advices from the bank. Either day was suHicicnt. (Jlmrnrd v. Ives, 1 Hill, '.?';:',; Bank v. Davis, 2 Id. 151.)But as Babcock and the defendant, Penham, lived in the same village. 1 Ihink (lie service should have I'ccn personal, or by leaving the notice at the dwelling house or •lice of business of the indorsi'r, and tliat service through the post- o"!ce was not sulTicient. The postoffice is not a place of deposit for rot ices to indorsers, except where the notice is to be transmitted bv mail to another otiice. (li'aiisoiii v. Marl,-, ? Tlill, 5X7.) None of our cases have g<»ne further than that. New dial •n'Viti"! ■ • Vnticf H» n pliirp of liit«inp«« n^nv h" I-ft \vMI> .-"iv v-- r,n i- p'.o-/. fail/: V. MudfirtI, 44 N. Y. 514: Wrrr v. h'nisrr, 20 I.n. .Ann. 377. Sc nl-^«>. r- i in notifc jit tlir- rrsiHcncc of tin- ill'Inr^iT. r, N. [{mil,- V. Il'-t'l'. '■ '' ' «r. S.) 2.^)0: Hhikriii V. armit. >tn««. .180: liriKtlru v. f)nriy. ?r. *'• 4S- finur V. Hrnillru. Ifl M*-. 31. NoHcr )iv (olcnIiMiio lo !»'• ffTi-ol iv.- ii'<'st I- shown to hnvc actiinlly ronrlHMl tlic in7. p. 41fl; t>iit t!iM lifntMl- (l.''H i-.nt atiri(l_r.> t Iw ri-rl't (if 111- jti-lotm-r f«i »|f«i"n(it(! ^a NOTICK OF DISIIONOK. [aHI'. Vlll. §176 STA'I'K I^WK r. SOLOMAN. S-J 8i I'lM.KMiM (\. ^. Si i\ Ct., Ait. T.) 070.-1003. l'"ui:i:ii,M A .\, 1'. ,1. — 'I'liis lutioii \v;i,^ upon a ])i'oniiss(>rv nol(\ and liio o\\\\ \^>ne liti^alotl al ihr liial was wlu'llicr or luil milnc ol' llic uit^lioiior ol" tlu' note was jrisfn ainl ii(rivi'(l. I'lool' thai siicli mil ice was ilulv atklix'sseil and drjiosiUd in llie postollicc in a l)o.■^l [i.iid wiapjiL'i' was aildiU'iHl by lln' |)laintiir. "^I'lie court I'liar.u'cd tin- jury tiiat. tlie only (juestion for tlieni to ilecide was wiu'tlicr the delendanl K!- eeived notice of the presentation and protest of the note. " If he did/' said the court, "your verdict will be in favor of the jilaintilT; other- wise it will be in favor of the defendant. It is the duty of Ihi' plaiulill to establish by the weii^ht and preponderance of evidence thai a notice of presentation and protest of this note was served upon the (h'fen<1ant in this action." The plaintiff's counsel thereupon asked the court to eharire the jury " that it is not necessary for au indoiser to receive a notiee of protest. I'he mere deposit of a notice in a postpaid wrap- per in the postoffice of New York City is sufficient." To this rcpicst the court responded : '* It is not sufficient. It is prima facie evidctu-e of the facts stated by the witnesses." To this ruliiifi: the plaintiff's counsel duly excepted. The jury rendered a verdict in favor of the defendant, and the plaintiff now appeals. Tliis ruling of the court was in direct conflict with section 17() of the Negotiable Instruments Law (Laws ISD?. p. 711, c. ()12). Thai section provides: "Where notice of dishonor is duly addresscfj and deposited in the postoflice, the sender is deemed to have given due notice, notwithstanding any miscarriage in the mails." The testi- mony of the plaintiff's witnesses as to the addressing, mailing, etc., of the notiee was undisputed. If tlic jury believed t'lat tortin;o:\v, the particular address to which the notice shall be sent. Bartlctt v. Robinson, 3!) X. Y. 187 (lS(i8). Iiidcpondcnt of statute it has been held lliat where the indorsrr resides outside the corporate limits of tlie town where tlie instrument i« dishonored and is in the liabit of reeeivinc his mail there, lite post-ofTiee mav he used as a place of deposit in order to relieve the holder of tiie burden and expense of s<'ndinp a niessenj^er. liayik of Columbia v. Lairniice. 1 I'et. {['. S.) 578 (1828) ; Rnrret v. Evans, 28 Mo. 331 ; BrU v. St'tir Bank, 7 Blaekf. Iliid.) 4.')f); hut the contrary has also been maintained. Forhrs v. Oinnhn \iil. I'l:.. 10 Neh. 338 (1880); Brnirn v. Bank of Ahinfjflon. 85 Va. 05 (1888). It s-ch notice is actually received in due time it is unquestionably {^ood. Phelps v. Storking, 21 Xei). 443 (1887). Where there is a letter carrier delivery at offices and re-idenees the mail may be used though the indorser reside in the place where the instrument is dishonored, for in such case the mail is ii-id for transmission and not for deposit, f^hormnkrr v. Mpchanirs' Bank. 59 I'a. St. 83 (1868); }Valtrrs v. Brown, 15 Md. 285 (1859); but in such case a deposit of a notice not addres-ed to a strf-et and mnnher has been held not within the rule. B^nffiict v. Srhrnipp. 13 Wash. 47fi (189(i). By the statute above, notice by deposit is now sufficient. See § 174, subsec. 3, post. — II. II. 3.] MODE OF NOTICE. 545 whetlier the defendant received such notice is not material. The court should have so charged. To refuse so to charge constituted reversible error, for which a new trial must be granted. Judgment reversed, and new trial ordered, with costs to the appel- lant to abide the event. All concur.^ § 177 PEARCE V. LANGFIT. 101 Pennsylvania State, 507.-1882. Action against indorser. Holder handed notice duly addressed and stamped to a United States mail carrier, who was then in the bank to deliver mail. Judgment for plaintiff. Mk. Justice Gkeen delivered the opinion of the court, December 30th, 1882. We think the delivery of a letter to an official letter carrier is the full equivalent for depositing it in a receiving box or at the postoffice. When left in the former it is for the purpose of being taken therefrom by the carrier, and if left at the postoffice it must be taken from the receptacle there providefl for its deposit, either by the postmaster or by some one of his agents, to be placed in the mail. In either case the letter must come into the personal custody of some one lawfully au- thorized for the purpose, whose function it is to participate in the transmission of it from the sender to the mail. It certainly can make no difference whether the letter is handed directly to the carrier, or is first deposited in a receiving box and taken from thence by the same carrier. In the case of Sl'ilberk v. Oarhptt (7 Ad. Sc El. N. S., p. H-lfi), in which the very point was decided, Lord Denmari, C. J., said: " If a public servant belonging to the postntlice, takes charge of the letter in the exercise of his public duty, it is the same as if it were carried to the office." The postal regulations of the United Slates refjuire that carriers while on their rounds shall receive s " Prior to the fiiuetiiirnt of the Negotiable Instrumrnts Law, if notice of protest was sent l)y u letter, prejiaid, pro|H'rly addressed, and (U-positrd in the po^t-nfFiee, tlierc was a preminipt ion that it reaehed its desfinalioti \>y diM' eonrse of mail, hnt the presnniptinn could he rebutted by evidence slinw- inj^ that it was not received, and when such evirlenee was prtxiiieed, it was a (juestion of fact for the jury: -hiimn v. MrCarkdl, IT)! i'a. ;i'2.'}. Section lOf) f\. Y., <5 ITfij has changed the former law on this sulijcct by providin,"; that ' where notice fif dishoTior is duly addrwssed and deposited iti the post- ofTicp, the wender is deemed to have >.'iven «iue notice, notwit hxtandintr any miBcarriage in the mails.' Under this section due notice of dishonor is deemed tf) have be<'n jjiven when it is shown that the notice is properly ad- drensed and depositeil in th«' |)ost-o(rice, whether it has been received or not. In other words, the purpose and efTect of this section of the act were ximply to protect the sender of the notice against miscarriaf."- of the mails." Mica- TREZAT, J., in Zollnrr v. \l»ffy I he partners as such. The authorities are clear, and are ludieved to be uniform, that notice to one is notice to all. (iiayley on Uills, "i-sr) ; 1 Oon. R. 'MiH; 4 Cow. ]'2(i: t) Louisiana, (J.S-l ; :i Litt. 251.)" But it must a])i)ear that they are partners. In this case it so appears. Persons being joint j)ayees of a note, who severally indorse it, are entitled each to notice of non- payment.' They being joint, does not necessarily constitute them part- ners, llie act of assembly relied on by the appellant, found in Statute Laws of Mississippi, IL & H., 595, merely affects the remedy and not the right, and was passed to facilitate creditors in obtaining judgment for their just demands against one or all of several partners." §172 MORELAND'S ADMINISTRATOR v. CITIZENS' SAV- INGS BANK. [^Reported herein at p. 696.] 5. Time Within Which Notice Must Be Given. (a) Where parties reside in same place. § 174 ADAMS V. WRIGHT. 14 Wisconsin, 408. — 1861. This was an action against Wright as indorser of a promissory note, payable at the Bank of Oshkosh. The note was protested for nonpay- ment, and the complaint alleged that due notice of protest and non- payment was given to the defendant ; which allegation was denied by the answer. 8 Accord: Hubbard v. Matthews, 54 N. Y. 43; Fourth N. B. v. Beuschen, 52 Mo. 207. — H. [In Feiganspan v. McDonnell, 201 Mass. 341, it was held tliat wliere ttie indorsement on a promissory note is in the name of a copartnership, by the express provision* of R. L. c. 73. § 116 (N. Y. Neg. Tnst. Law. § 170). noticed to one of the partners of the dishonor of the note " is notice to the firm, even tliou{:h there has Ijeen a dissolution." — C.l 7 Accord: Willis v. Green, 5 llili (X. Y.) 232; Fihepard v. Ilairley, 1 Conn. 367. — H. 8 If notice is piven to a bankrupt before a trustee or assignee is appointed it must, of course, be criven to him personally. Ex parte Moline, 19 Ves. 216. If given after the appointment of the trustee it may be given to tlie banlr(H)f of Ihc i)!'rs()!i;il Bcrvicc of the notice of ])rotcst upon liim ; but the motion was denied. The defendant, as a witness in his own behalf, testified that no notice of said protest had been personally served upon liim ; that none had been left at his house to bis knowledge; and that he had nia('c in- quiries upon the subject of all the meiid»ers of his family, 'riic plninliff then recalled the notary, who testified that he was ac'inaintcl wilh the defendant's place f»f residence. Qucslioii. " llavi! you left notices of protest at his hou.se? " Objected to, and objection overruled. Atiswrr. " I have, several tinu'S." Qurslifni. " Slate whether in all eases in which you have made a record of the manner of service ujion the de- fendant, of the notice of protest and non-]>ayment of notes, y<'U h.ive made the same in the manner indicated by the record of protest." <)h- jcfted to, and objection overruled. Ansirrr "When T eonsiili'rcil it personal service, 1 entered it so in my record, and did not enter the facts and circumstances which constituted the service. * * * Tn one instance only — T enPTmt tell whether this is the one — 1 met a boy in the defendant's front y.nrd ; he said he was the defendant's boy; 5r)'3 NOTR'H OK DlSlUiNoi;, [aUT. VIII. must be actually tlolivored to the person of the indorsor wliere he re- sides within two miles of the resiilenee of the notary, it has been al- ready answered by this court, in tlic case of West fall v. Farwell, 13 Wis. 504. It was there held that the words " personally serve" were designed to include service by leaving the notice at the indorser's resi- dence or place of business, as well as by actual delivery to him, and that they were used in contradistinction to service by mail. As to tlie certificate being uncertain in not showing whether the notice was sent througii the postotfice or left at the defendant's house, we think that the words " left at his house, Ushkosh, Wis.," placed immediately after his name, indicate that the latter was the mode of service adopted as to him. The omission to say " dwelling iiouse" did not vitiate the cer- tificate. Notaries are only to be held to reasonable certainty in the use of language, and when they say that notice was left at the house of the indorser, all men would understand it to signify his dwelling house. Neither is the certificate defective in not stating the hour of the day when the notice was left, or with whom it was deposited, whether a member of the family or other person, or the particular circumstances attending the service, or that the defendant was absent. It is very generally said in tlie books, and tlio doctrine is laid down without any apparent limit or qualification, tliat the service by leaving the notice at the dwelling house or place of business, is equivalent to a personal delivery to the party to be notified. Judge Story says: " If it be not personally given, then it will be sufficient if it is given or left at or sent to his domicil or place of business." Story on Promissory Notes, § 312. Mr. Chitty says: "With respect to the mode of giving the notice, personal service is not necessary, nor is it requisite to leave a written notice at the residence of tlie party, but it is sufficient to send or to convey verbal notice at the counting house or place of abode of the party, without leaving notice in writing; and the giving such verbal notice to a servant at his home, the defendant having left no clerk at his counting house, as it was his duty to do, suffices." Chitty on Rills, 502. This is the language of the books generally, and no case has fallen under our observation wliere it has been held tliat the absence of the party to be notified was a condition necessary to sustain service by leaving the notice at his place of abode or business ; though it is said in Ireland v. Kip, 11 John. 231, that the notice must be per- sonal, or something tantamount, such as leaving it at the dwelling house or place of business of the party, if absent. See autliorities cited by Judge Story, supra. Nor does any case seem to have arisen requir- ing an accurate definition of the manner in which service by leaving notice at the domicil or place of business, when found open and oc- cupied, shall be performed. W^here the particular mode of service did not appear, I suppose the cases have gone off on the reasonable assump- tion that an officer engaged in a duty of that kind would perform it with proper care and prudence, and use the means most likely to attain II. 5.] WITHIN WHAT TIME. 553 the object in view — that he would go to the place of service and in- quire for the party to be notified, and, if present, deliver it to him in person, or, if that should be unsuitable or inconvenient, that he would hand it to a servant or some inmate of the place with a request that it be so delivered; and, if absent, that he would in like manner leave it with some person residing or doing business therein, with a similar request. Service at the place of business must be during business liours, but service at the residence is not so regulated.® It will be suf- ficient if made during any of the liours wben members of households are attending to their ordinary afl'airs. But these particulars of service need not be stated in the certificate. It will be sufficient if it shows service at the residence or place of business, which constitutes legal diligence, and the special circumstances will be presumed until the contrary is shown. We are not called upon to express any opinion as to the admissibility of the testimony of the defendant. He was permitted to testify without objection, that no notice in fact came to his possession or knowledge. It seems to be well settled law that it is no answer to service properly made at the dwelling house or place of business, that the party to be notified did not in fact receive it. After the defendant had given his testimony, the notary was re- called by tlie plaintiff, and testified, among other things, that he had protested several notes against the defendant, and that on one oc- casion, but whether on that of giving the notice in question he could not say, he met a boy in the defendant's front yard, who said lie was the defendant's boy, and gave him the notice and asked him to hand it to his father; that the boy turned and went toward the house, hut that he did not see him go in, as the door was not in siglit from where ho stood. The defendant thereupon requested the court to instnici the jury that giving the notice to the boy and requesting him to hand il to the defendant, was not personal service. Understanding the fcrm "personal service" according to the definition given in West fall v. Farv^rll, we are of opinion that the defendant was entitle•" that the indorser actually received the notice, it would present a ditVerent question. The plaiTitifT"s ease would not tlien stand on the ground of the otficial act of the notary. The instruction should have been given to the jury, and because it was not the judgment is reversed and a new trial awarded. (h) Where parties reside in ilifjerent places. § 173 LINDENBERGP]R v. BEALL. Wheatox {V. S.) 104.— 1S21. Action against indorser. Evidence that on tlie last day of grace tlie notice to the indorser was put into the postoflice properly addressed, etc. Tlie court held the proof of notice insufficient. Plaintiff brings error. The court were unanimously of opinion, that after the demand of the maker on the third day of grace, notice to the indorser on the same day was sufficient, by the s^eneral law merchant;'" ai'd tliat evi- dence of the letter containing notice having been put into the post- office, directed to t'n' defendant, at bis place of residence, was sufficient proof of the nolic to he left to the juiv, and that it was unnecessary to give notice to tlie defendant to produce the letter Itefore such evi- dence could be admitted. Judgment reversed. ^ 175 WHTTWELL v. JOHNSON. 17 MAS.'JACTIU.'iETTS, 449 1821. Action on promissory note payable to the order of defendant, in- dorsed by him to one Gerrisli. and by Gerrish to the plaintiffs. The note was lodged by the plaintiffs in the Massachusetts Bank for collcc- i*) Accord: Ex -parte Mnline, 19 Vps. 210; 2 Daniol on Noc. Inst., § 1030. — H. ". 5.] WITHIN WHAT TIME. . 555 tion. On the 14th of February, 1820, the day when the note became due, after making demand on the maker for payment,* tlie messenger of the bank carried two notifications for tlie indorsers (directed to them, but without any directions, to Xewburyport, the town in which they lived), to the store of the phiintifTs; and there was evidence tend- ing to show that these notifications, after being directed to Newbury- port, were put into the Boston postoffice the same afternoon. That directed to the defendant was produced, and the postmark upon it was the 15th of February. The post olTicer at Xewburyport testified that it did not arrive at his oifice until the morning of the 16th; and an officer of the Boston postoffice testified that if the note had been put into the office on the 14th, before eight o'clock in the evening, it would have been stamped the 14th, and if received after that hour, it would have been stamped the 15th, and would have gone into the morning's mail of that day, which arrives at Newbury port about noon. The jury were instructed that, if they were satisfied from a com- parison of the evidence, that the notice to the defendant as indorser was put into the postoffice on the Mth of February, before eight o'clock in the evening, the defendant was liable. A verdict was returned for the plaintills, and the defendant moved for a new trial, on account of the directions to the jury. Pahkek, C. j. * * * Supposing, then, the denuind [for pay- ment on the maker] to have been su(Tii.-icnt to charge the indorser, the question remaining is, whether seasonable notice was given to him of nonpayment. Tlie note became due on the 14th, and, according to the finding of the jury, the point is settled against the defendant. But, on the suppo'^ition that it was necessary that the notice should have been put into the postoffice on the day when the note became du(\ a petition has been presented for new trial, on tlie ground that evi- dence since the trial has been discovered which Ii;is a licMriiiiT on thnt point. As the evidence at the trial was by no means of a conclusive nature. it would be [)rop('r to have a furlhi'r in(|uiry if the point to he estab Jished was es.sential to tlu; decision of I he ciiiise. .\fler some df)ul)ts, and looking into the authorities, we are salisdcd (hat it was not neces- sary for the phiinliff to show that notice to the indorser was |)ut into the mail on the same diiy the note hecjimc due. What is seasonable notice is a rpiestion of law. upon tlie facts proved. It can- not be ref|uisite, ami wc do not find thiit it has ever been re(|iiin'd, to give notice to an indorser. living in another town, by the very next mail after the dishonor of the note, or on the same dnv. This would he an tinreasonnble hardship on holders of notes, especially as the maker may, before the day expires, take the note up. Tt is not to be expected • TIio part, of tlie case relating to Uie (Ivmainl on tlie maker for paymrnt in omitted. — (', l^5^^ NOTICI', OK DISHONOR. I ART. VIII. that moirluuits will Icavo oviM-ylliini,' olsc to aUiMid to this one subject on tho voiT day llu' iiolc is dishonoix'd. '\'\\v luwl day is early enougii, and if there should he two mails a day, wlu'ther tht- notice goes by the first or the second of those mails, we think is immaterial, provided it was put into the postofliie early enoui^h to go hy a mail of that day. We understand, from good authority, that the Supreme Court of the United States liave adopted the same rulf, and it is desirable that the same law should prevail on commercial subjects in all states. Judgment on the verdict.*' § 175 SMITH V. POILLON. 87 New Yobk, 590. — 1882. Action against indorser. The holder notified the third indorser by mail and inrloscd notices for the second and first indorsers. Tlie third indorser notified the second indorser and inclosed notice for the first. The second indorser received notice on the 6th and mailed notice to the first indorsers on the 7th, in time for the second mail of the day closing at 1 :30 p. m. The first mail of the day closed at 9 :30 a. m. The first iiidorsers (defendants) contend that they were not notified with due diligence. Judgment for plaintiff. Earl, J. — [After deciding that the presentment and prior notices were sufficient.] Smith was an aged man, upward of eighty years old. On the morn- ing of March 7 lie took the notices for tlie defendants and drove to Thomaston, for the purpose of consulting his counsel, and there, under the advice of his counsel, he wrote a letter addressed to the defendants, and inclosed it with the notice for the defendants in an envelope ad- dressed to them, and caused it to be mailed at Thomaston, in time for the mail which left there for New York, the residence of the defend- ant=, at 1 :40 p. m. That mail passed through Warren, on its way to Xew York, at 2 p. y\. There were two mails eaeli dav from Warren, one n Use of Post. — Prior to the statute it was held that where there are suc- cessive indorsers and the holder sends notice to the last indorser by mail in- closing tiierc'with notices to prior indorsers, the last indorser may use the post- office as a place of deposit for the notices to the prior indorsers who live in the same town as he. (Riit see FlhdfJnn v. Tirnhom. 4 Hill. 120. ante. p. 54.3.) Under this rule, it is held that such redeposit must Ik- in time to reach the prior indorser in the usual course on the day following; the day of receipt. Thus, if the last indorser receives the notices on the 10th, they must he redeposited in season to reaeh the prior indorsers in the usual course on the 11th. If de- posited on the 11th too late to reach the prior indorsers on that day, the in- dorsers are discharged. Shelburne Falls Nat. lik. v. Tmonnley, 102 Mass. 177; 8. c. 107 Mass. 444. It is this rule, established for the exceptional case where drop letters were permitted independent of statute, that is now extended to the use of drop letters generally under the statute. — H. ri. 5.] WITHIN WHAT TIME. 557 closing at about 9 :30 a. m. and the other at about 1 :30 p. m., and that letter went in the same mail that closed at Warren at 1 :30. The con- tention on the part of the defendants is, that the law required that that notice should have been mailed by the first convenient, practical mail on the 7th, and hence that it should have been mailed by the first mail on that day; and, to sustain their contention, our attention is called to various authorities. (Smedes v. Utica Bank, 20 Johns. 373; Mead v. Engs, 5 Cow. 303 ; Sewall v. Russell, 3 Wend. 276 ; Howard V. Ives, 1 Hill, 263; Haskell v. Boardman, 8 Allen, 38; Sussex Bank V. Baldwin, 2 Harrison (N. J.), 4S7 ; Burgess v. Vreeland, 24 N. J. L. 71; Lawson v. Farmers' Bk., 1 Ohio St. 206; Freemans Bank v. Per- kins, 18 Me. 292.) These authorities, while not entirely harmonious, undoubtedly tend to sustain tlie rule that the notice must be sent on the next day by the first practical and convenient post. The counsel for the plaintiff, however, contends that the rule is, that notice of dishonor in such cases may be sent to the prior party by any post of the next day, and he calls our attention to several authorities which tend to sustain his contention. (Chick v. Pillsbury, 24 Me. 458; Whitwell v. Johnson, 17 Mass. 449; 2 Daniels on Neg. Inst. 87; Story on Bills, § 288; Story on Prom. Notes, § 324; 3 Kent's Cora. 106.) From a careful examination of all these authorities and many others it is clear that the law is not precisely settled. It appears that at first it was supposed to be necessary that notice of dishonor should be given by the next post after dishonor, on the same day, if there was one. That rule was found inconveniently stringent, and then it was held that when the parties lived in different phices. between which there was a mail, the notice could be posted the next day after the dishonor or notice of dishonor. Some of the authori- ties hold that the party required to give the notice may have the whole of the next day. Some of them hold that when there are several mails on the next day, it is sufficient to send the notice by any post of that day. Other authorities lay down the rule, in gen- eral terms, that the notice must be posted by the first practical mikI convenient mail of fhc next flay; and that rule seems to be supported by the most authority in this state. What is a convenient and practical mail depends upon circumstances. It may be controlled by the usages of business and the customs of the people at the place of mailing, and tlie condition, situation and business engagements of the person refpiired in give fhc notice. The rule should have a reasonable ny)plieatif)n in every cnse, and whether sufTi'ient diligence has l)een used to ninil the notice, the facts being uny subdivision .'U, § I()78. (N.V., § ITS), of the Negotiable Instrument Statute, that, ' where the jierson {jiving and the person to receive notice reside in difTerent |)hices, the notice must be given • • • if sent by mail ' by dejiositing it ' in the postollice in time to go by mail the dav following the day of dishonor, or. if there be no mail at a convenient hour on that day. by the next mail thereafter.' Here notice was not sent till after time for mail on the first secular liay after dishonor, though there was ample opportunity to do so. The departure time for the mail was between !> and 10 o'clock of such day. That was certainly a convenient time within the meaning of the statute. No excuse is found in the evidence for not depositing the notice with postage fully paij)inion of the court. The Branch Bank of the State of Tennessee was the holder of a {•romissory note, payaMe at said hank, made by James H. Jenkins, to .Anthony Dibn-ll, and endorsed in the following order: A. Dibrell, S. 'I'urney. and J no. W. Simpson. Turney's residence is within one mile of the hank, at Sparta, so known to be to the bank, and to all tie other parties to the note. The note was legally due on the 1st day of February, 181:5, that being the third day of grace. It was on that day protested. On the second day of February no notice of t!ie protest for the non-payment of the note was either served on Turney personally or left at his residence. He had notice from the baidx, the holder, on the ."'d day of Feljruary. John W. Simpson, t!ie plairitifT, Ihc imnicilialc indorsee of Turney, gave him no notice wlintever. These facts being specially found by Ibe jury in Ihe case, the Circnit Court gave judgment for Turney, ;ind the pbiinlilT has a[»f)ejiled in error to tin's court. If is not insisted for . I'iv. ( N. \.) r^'.W , r).12. (Javnor. .1.. said: "The (ifiint is iil-; 3 lios. & Pul. 154.) A new trial must be granted, on the ground llmf the vci-dict is against evidence.® § 179 von EL r. STAPP. 132 Mis.soi HI .\imm:ai,s. l.'iO. — I!)()8. JoFiN'HON, J. — Action against the indorscr of a negotiable promis- sory note. 'J'lic failure of the holdr-r to give proper notice of dis honor is the defense ititerposed. Trial was Itefore the court wit bout the aid of a jury. .Fudgmeiif was entered for tiet'emlMnt, and plaintiir appealed. • Acronl : Montf/nmcry Co. Rank v. Mnmh, 7 N. Y. 4rtl ; Mercer v. Lanrastcr, a Va. Rt. IfiO: Shrlhurnr finnh v. Tniin.ilni. 102 Mnss. 177. W'luTP tlif indoTHfr lives in a town linviiiy two or nunc |iii.iti)niccs a nolire afMrcHiod to liini nt tlif town j;r'n«Tally i** snnioienl tinl«'.H.-< llic lioldrr know.'* or niltrlit rca^onalily know liis pnrlirnlar poslonicf n(I. ('.."" ?idght properly have been regarderl liy the trier of facts as a good nttticc. There is evidence tending to show that, before the notary sen! this notice, be went to the postoffice and tlien; inquired for Mr. FrosCs address, and was lold it was Washington, I). C., whereupon he nuiiled the notice to him as stated. This was on the 2M of December, 1H80. The Congress was then in regular session, but it had, on the day previous, taken the usual holiday recess, as was shown by a copy of the Congressional Record put in evidence. This recess was taken from the 22d of Decendier until the 5th day of January following. That a notice of protest sent 5T3 NorilK OF DkSllONOU. [art, VIII. by mail to a menibor of Congress while engaged in discharging his puhlir duties as siuli at \\'ashiiigton, is a good notice, lias been hold, both in Massachusetts and Mississippi. {ClKnilfdii \. Webster, 6 Mete. 1; Tunsiall v. Waller, 2 Snie<|. \', M. (;:iS. ) hi (he foruier of these cases, Daniel Webster, a senator from Massachusetts, was, when the notice of protest was sent to him by mail, at Washington, D. C., at- tending a special session of Congress at Washington, and he had at Boston, just as Mr. Frost liad at St. Louis, a place of business and an agent to attend to his business; and yet the court. Chief dust ice Shaw delivering the o])inion, held tiiat the notice tbus mailed to him was a good notice. The fact that Congress had taken this temporary recess may not have been known to the notary, and, if known, it would not necessarily indicate to him that Mr. Frost would be absent from the capital during such recess. If it should indicate this it would not impair the legal sutliciency of the notice; because the controlling rule is that wlicre the indorser has difl'erent residences and dilTcrent places of business, the notice must be sent to the place, where, u])on diligent inquiry, it seems most likely to reach him with certainty and promptness. (Cabot Bank V. RussellA Gray, 169, 170, per Shaw, C. J.) Nor can the circnmstance that the indorser was in the habit of re- ceiving his mail, not at the general postoffice in Washington, but at a special postoffice in tlic capital building, impair the legal sufficiency of this notice, unless tliis fact were known to the notary or would have been disclosed to him upon reasonable inquiry. That he did not know this appears from the evidence, and that it was not disclosed to him r-o-n the inquiry which he made at the postoffice in St. Louis also sufiiciently appears. It seems that this postoffice was the most proper place at which to make such an inquiry, for it must be supposed from the nature of Mr. Frost's public duties at the time that numerous let- ters were constantly received at the St. Louis postoffice for transmis- sion to him at his official residence at Washington. At all events, it cannot be said that this testimony was not sufficient to take the case to the trier of the fact upon the question of diligence. It lias been lield several times, that where there an; two or more postoffices in the town where the indorser resides, a notice sent by mail to the town gen- erally will be a good notice, unless a reasonable inquiry would have dis- closed to the holder or the notary the actual postoffice at which the indorser commonly received his mail. (Burlingame v. Foster, 128 Mass. 125; Morton v. Westcott, 8 Cush. ^125; Cabot Bank v. Russell. 4 Gray, 167.) The "towns" here spoken of are not cities or villages, hut Xew England towns, which correspond to townships in l^Tissouri and Illi- nois, each of which frequently contains several villages and s(>veral postoffices. III.] WHEN DELAY EXCUSED. 573 [The learned judge then holds that notice addressed to Selma was good, in view of tiie evidence that mail addressed to Selma was reg- ularly sent to Crystal City, the postoffiee nearest Selma. ^ Judgment affirmed. ^ III. Wlien delay in giving notice excused. § 184 JAMES V. WADE. 21 Louisiana Annual, 548. — 1869. Howe, J. — The defendant is sued as the indorser of a bill of ex- change drawn by W. R. Hughes on Moore and Browder, of New Or- leans, and by the latter accepted, payable on the fifteenth February, 1863. On the day of its maturity the bill was protested by a notary in New Orleans, and a notice deposited in the postoffiee in that city addressed to the defendant, at Winnfiold, parish of Winn, Louisiana. The record shows that in February, 1863, all postal and commercial intercourse was suspended between New Orleans and Winnfield. The war was then raging, and the deposit of the notice in the postoffiee in New Orleans had no effect in converting the conditional obligation of the indorser into an absolute liability. (19 A. 43, 63, 64, 72, 90; 20 A. 399.) If the holders of this bill desired to bind the indorser, it was their duty to have given him notice of dishonor within a reasonable time after the close of the war, and the resumption of commercial inter- course. There being no evidence that any notice except the one de- scribed above was ever given, the indorser must be held to have been discharged. * ♦ ♦ Judgment affirmed.' § 184 UNION NATIONAL BANK v. MARK'S ADMINT^TRATOR. r, HuHu (Ky. ) fill. — 1869. Action against drawer of a hill drawn in Missouri upon a drawee in New Orleans and presented July 17, li-(61, and dishonored. Judgment for defendant. 'Judge Habd^n delivered the opinion of the qour^. 1 Spp Fiank v. Unwlrit, 4 VVonfl. .328, nnfr, p. ^^e^(\. — IT. 2 Acord : Graham v. Sanfjstnn, 1 Md. .lO. Rut if the indorsor simply visits n plarp for a pnrpoup rh'arly trniporary and flpopial, he i« not "sojoiirninn " within the nilf of thf ahovc cascB. M'alhrr v. Ntrlson, 14 Oh. St. 89. — H. » Accord: SorriH v. Prsparrl. 38 Md. 487; Dunbar v. Tylrr. 44 Misx. 1 : Har- den V. Rnyrr, H^ Barb. (N. Y.) 42.'). So. also, delay occasioned hy presence of malignant diaease. Tunno v. Laffue, 2 .lohns. ("as. (N. V.) 1. — H. 574 NOTiCK or disiionoi;. [aht. viu. Thie was an ordiiiary action by the aj)ii('llanl, as (lie holdiT of a hill of exehauge for $1,2G:3.5U, dated at Charleston, Missouri, i\\c loih day of Juno, 18(51, drawn by P. N. Marr upon Samuel Y. Tlionuis, New Orleans, Louisiana, jiayahle to the order of Thonuis Allen, and in- dorsed by him and Shelby Sheeks. It appears that the bill was presented for acceptance in New Or- leans on the 17th day of July, 1861, and thereupon protested for non- acceptance, of which notices addn^ssod to the parties were mailed by the notary to the agents of the plaintiff, but it does not appear they were legally forwarded to the defendants, who in their defense denied that due notice of said protest w^as given, and claimed exoneration on that ground. The principle is well settled, that, although the Jiolder of a bill of exchange, payable at a given time, is not hound to present it to the drawee for acceptance until it becomes due ; yet if he does so, and the bill is dishonored, he is bound to give due notice of the fact to the parties whom he intends to hold bound. {Landruni v. Trowbridge, 2 Met. 281 ; Story on Bills, §§ 227-228-284.) But the appellant ques- tions the correctness of the judgment dismissing the petition, on a trial of the case by the court, mainly on the ground that at the time of said protest the civil war had become flagrant, and so suspended commer- cial intercourse between the hostile sections of the country as to dis- pense with the necessity of notice of protest to bind the drawer and indorsers of said bill ; and especially so as the bill was not protested till after the passage of the act of Congress of the 13th of July, 1861, authorizing the President to issue his proclamation interdicting com- mercial intercourse between the citizens of certain belligerent states, although the proclamation was not issued till the 16th of August, 1861, near one month after the bill Avas protested. But this case must be ruled by the case of Lrallirr.'i v. TJir Cnm- mercial Insurance Co. (2 Bush, 296), in wdiich, upon a careful con- sideration of the subject, this court, referring to the proclamation of the 16th of August, 1861, as public notice of the congressional recog- nition of a state of w'ar, held that " before that time contracts and other acts of commercial intercourse were not made illegal by the war." Notwithstanding the disturbed condition of the country, which we know judicially to have existed when the bill was protested, it does not appear that there was at that time such obstruction of inter-communi- cation between the southern and border states as to prevent the trans- mission and delivery of notice of the dishonor of said bill. Wherefore, it not appearing to have been either illegal or morally or physically impossible to give notice of said protest, the judgment is af- firmed. * ♦ See criticism of this doctrine in 2 Daniel on Neg. Inst., § 1062. — H. ^•1 WHEN NOTICE DISPENSED WITH. 575 IV. When notice may be dispensed with.= 1. When Notice Need Not Be Given to Drawhb. § 183 GOWAN V. JACKSON. 20 Johnson (N. Y.) 176. — 1822. Atjion against drawer of l)ill drawn on J;uks«.ii and Brothers. The.e was no notice of dishonor, but to excuse this phiintilf offered to prove that defendant was a member of the firm on which the bill was drawn, and was allowed to do so. Judgment for plaintiff. Spencer, Cii. J. * * * Considering it, then, as established, (hat the partnership existed when the bill was drawn and presented, ihr question arises, whether notice of non-acceptance was required to he given to the defendant. It was proved that the bill was presented for payment on the 16th of January, 1818, and was then protested for non-acceptance; and it was presented on the lf5th of April, ISIS, for payment, and protested. In the absence of all other proof, tlic I)i!l must be considered as drawn by one partner of the firm, on the firm it- self, in relation to the partnership business; and, if so, then a knowl- edge by one of the firm of the dishonor of the bill, is, in point of law, knowledge by the whole firm. Daniel Jackson, the partner in London, had notice that the bill was refused acceptance and payment, for lie was the person who thus refused. In Pnrfliniisr v. I'drJcer and others (1 Camp. N. P. H2), Lord Ellenborough held, that where a bill had been accepted by one of the defendants, this was sudiciciit evidence of its having been regularly drawn; and that, the acceptor being likewise a drawer, there would be no occasion for the plaintiff to prove, that the defendants had received express notic-e of the dishonor of Ihc liill, as this must necessarily have been known to one of them, and (he knowl- edge of one was the knowledge of nil. This is a very just and reason- able principle; for although Joseph . Jackson is alone sued on the bill, yet, as has been already observed, it must be deemed a )iar(nersliip transaction, !)im] a knowledge by one of the firm of Ihc dishonor of !li.' bill was nil that ought to be rcfpiired. diiilLMiicnl for (lie |)l;iin(i(fs. " •'• Rpo on«>B. nntr. imrJor §§ 13(1-140-142. — ('. "Arrnnl: fflult v. I'nr. -2 Hew. {\\ S. ) I,'-)?; /•',///,•,• v. IJonprr. .'i Cr.iv (MnHH.) .1.14. FirriTinis Drawkk. — ExriiHo of |.rpHPiit!jii-n» (nutr. § 142), nnd nofirc in the cnHf of n firtitimm rlrnwof scmix to he ()n«f(| upon tlio ronsnn flint tho drawpr must know tlint th" dr.TW.'c i« (ictitioim .qn'l. thorcfori'. that the bill can' not ho prfsfnfpfl or [laifl. He if, thon-fort", from tin- otit'^ot tlir ori(.'iri;il prom- JBor. Nmilh V. nrllnmit, 2 Stnrkip, 22.T ; f^rnrh v. ffruilt, 4 Tniint. 7.11. Drawtk Uituoit TAPArrTY to ('f)NTRACT. — 'Iho rcnMon in this ra«ip in not HO clonr. rrpxcntnu-nt dorH not Hfcm to ho (liepon'»r(I with (nt}tr, § 142. hnt »ce S 139). Then why notico, since it nv.xy Ik- thut the (iraweo {«aj- an infant) 576 NOTICE OF nisiioNOR. [art. vm. § 185 CATHELL v. GOODWIN. 1 Harris 4 Gnx (Mu.) 468. — 1827. Action by payee against drawer of bill of exchange. No notice of dishonor, .ludgnient for defendant. DoRSKY. J. * * * 'Pile tliird position was that most obstinately contended for, whicJi was conceived to be inipregnably fortified by tiiat part of the rule established in Eichelberger v. Finley and Van Lear (7 Ilarr. & Johns. 381), wliich dispenses with notice only where the drawer had no reasonable grounds to expect tliat his bill would be hon- ored. The reasonableness of such expectation is matter for the court, and not for the jury, to decide. If the facts, upon which the question arises, be admitted or be undeniable, then the question becomes exclu- sively a matter of law to be pronounced by the court ; but if the facts be controverted, or the proof be equivocal or contradictory, then it be- comes a mixed question both of law and fact, in which case, the court hypothetically instruct the jury as to the law, to be by them pro- nounced accordingly as they may find the facts. What are the facts to be found in this case justifying the drawer's expectation that his draft would have been paid ? So far from having funds in the drawee's hands, he was his debtor — no proof of such a commercial in- tercourse between them as would imply a mutual credit — no previous promise by the drawee to accept this or any other draft for the drawer's accommodation — no consignment of goods to the drawee, which the drawer had any reason to expect would be received in time to meet his bill, but the only proof is, that the drawee informed the payee that he expected funds of the draAver would shortly come to his hands, with which, when received, he would pay. That funds afterwards did ar- rive, but whether in one month, or five years after, does not appear. What may have been the expectations of the drawee, as to the receipt of funds from the drawer, is immaterial; they are not even admissible evidence in this cause. But if they were, they can have no influence on those of the drawer — into whose expectations only is the inquiry to be made. The facts in the case of Legge v. Thorpe (12 East, 170), and Claridge v. DaHon (4 Maule & Selw. 226), atTord much stronger evidence of a reasonable expectation in the drawers that their bills will honor and pay the bill? Sep the reasoning in Wyman v. Adams, 12 Cush. (Mass.) 210, which, however, was a case of indorsement. See post, § 186. Presentment to Drawer. — This clause seems to cover the case where the drawer is. before the presentment, appointed the executor or trustee of the drawee's estate, and presentment is. therefore, made to him in his representative capacity. Actual knowledpre here is. therefore, equivalent to notice, daunt v. Thompson, 7 C. B. 400. Rut presentment must, to insure this result, be made to him in his representative capacity. Mnr/rndrr v. linnk, 3 Pet. { U. S.) 87. And. it seems, to him personally. Groth v. Gyger, 31 Pa, St. 271. See fost, { 186. — H. IV.] WHEN NOTICE DISPENSED WITH. 577 would be honored, tlian those in the present case ; yet there they were adjudged insufficient. The " reasonable grounds " required by law are not such as would excite an idle hope, a wild expectation, or a re- mote probability, that the bill might be honored, but such as create a full expectation, a strong probability of its payment; such indeed as would induce a merchant of common prudence and ordinary regard for his commercial credit, to draw a like bill. The facts in this case con- stitute no such reasonable grounds. We therefore think that the rounty Court erred in instructing the jury that the plaintiff was not entitled to recover, and consequently reverse their judgment. Judgment reversed, and precedendo awarded. ^ 2. When Notice Need Not Be Given to Indorser. § 186 HULL V. BYERS. 90 Gkokgia, 674. — 1892. Action by one indorser against a joint indorser for contribution. Defense, want of notice and protest. Notes were made by the Augusta Athletic Association and indorsed by plaintiff, defendant, and others, being a majority of the directors of the association. At maturity, the association was insolvent. Bleckley, Chief Justice. — Good sense, good morality, nnd good law are one and the same so long as they are not sundered vio- lently by legislation or ignorantly by judicial error. Their unity and identity, so far as one of the (piestions in (his case is concerned, we find still intact. There is no statute to drive, neither is there any prece- dent to lead, decision into absurdity or injustice. We can and do hold that accommodation indorsers who n^prosent their insolvent i)rin(ipal in procuring a Unxn of money for the jjrincipiil's use, upon a proniissorv note wliicli they cause to be riuide in his name and which they indorse in their own names, they having at the time full control of his business and all his assets, and their relation to him iieing such as to make it their duty to see that the note is provided for and paid at matiiritv. are not entitled to notice of its dishonor. May he they do not stand in his shoes; if they do not, it is because they are his slK>enuil77, post. p. (>'.)(]. — C. 3 Acconl: Ithnilrrwnn v. I'rirr, .lO N. .1. L. 2f)G; h'hrU v. /'of, 'J How. ((I. S.) 457. — I r. (In Mrrrantile Rank of Mrmphin v. Itunhy, 120 Tenn. 0.'j2, 067. McAlliHter. J., said: "In oiir ofiinion the fncfH diHcloHcd in thin rccoril show that this note was in rrality fx*'pnt»'i] for the IxMudit of cvpry porson whoHc nanir apjionri upon it. As alroady stntod. it is f«tahlishofl in proof that this was an oMiga- tion of the B. T. Rushy rorporaf ion. and that thow pjirfics wcro all stork- liolderH and directors, and that tiic note wa« executed for the purpose of re- 580 NOTICE OF DISHONOR. [aBT. VIII, 3. When Notice to Drawer or Indorser Dispensed With. (a) Due diligence. § 183 Hansom t-. Mack, 2 Hill (N. Y.), 587, 593.— (1842). By the Court, Bronson, J. — The next inquiry is, whether the defendant was discharged in consequence of the misdirection of the notice. It was sent to North Adams, when it should have heen sent to the Appling oUice. The defendant's place of residence not being known, the notary made inquiry of Kobbins, the second indorser, who professed to be able to give the necessary information, and was interested to speak truly. The answer of Kobbins was, that the notice should be sent to North Adams — that being the oflice where the defendant got his letters and papers. Although liobbins was mistaken, the notary was well warranted in acting upon information thus obtained, without pushing his inquiries further. There was due diligence, and that is enough. {Bank of Utica v. Bender, 21 Wend. 643.) That case was affirmed on error brought in June, 1841. Drawers and indorsers can easily prevent mistakes of this kind, by writing under their names their places of residence or the place where they desire notice should be sent in case the bill or note is protested.* (b) Waiver. § 180 GOVE V. VINING. 7 Metcalf (Mass.) 212. — 1843. Action against indorser. Defense, want of demand and notice. The indorser, shortly before maturity, re(]uested tlie holder not to sue the note until the maker saw the holder. Shaw, C. J. * * * The court are of opinion that when the indorser, at or shortly before the time when the note becomes due, says to the holder, that an arrangement for its payment is about being made, and in direct terms, or by reasonable implication, requests the holder to wait or give time, it amounts to an assurance that the note will be paid — that the promisor or indorser will pay newing an outstanding indebtedness of the corporation. . . . Our conclu- sion on thi.s branch of the case is that C. B. Blackburn was not entitled to notice of dishonor, since he was a joint maker and equally interested in the note with his co-makers and indorsers." — C] * Accord: Jjamhert v. Ohiselin. 9 How. (U. S. ) .5.52; Central N. Ji. v. Adams, lis. Car. 452. Merely consulting; a directory is not due diligence. Bacon v. Hanna, 137 N. Y. 379. Nor casual inquiries. Spencer v. Bank, 3 Hill (N. Y.) 520. See 2 Daniel on Neg. Inst., §§ 1114-1123. — H. IV.] WHEN Notice dispensed with. 581 it — and is a waiver of demand and notice. It tends to put the holder off his guard, and induces him to forego making a demand at the proper time and place ; and it would be contrary to good faith, to set up such want of demand and notice — caused perhaps by such forbearance — as a ground of defense. (LeffingweU v. White, 1 Johns. Cas. 99 ; Mechanics' Bank v. Griswold, 7 Wend. 165 ; Leonard V. Gary, 10 Wend. 504; Taunton Bank v. Richardson, 5 Pick. 436; Thornton v. \Yiinn, VI Wheat. 183; Wood v. Brotvn, 1 Stark. R. 217.) Judgment for the plaintiffs.^ R .\ waiver in the instrument itself binds all subsequent indorsers. Phillips V. Dippo, 93 Iowa, 35. It is not tlierefore a material alteration in such a case to write above the indorser's name, " Payment guarantied." Iowa \'alley State Bank v. Sigstad, 1)6 Iowa, 401. P.\R()L \V.\ivKR AT Time of Indorsement. — In some jurisdictions it is held that a parol waiver made at the time of the indorsement may be shown on the theory that such evidence does not vary the terms of the written contract but establishes the waiver of a condition otherwise imported into the contract by the rules of the law merchant. Nchynied v. Frank, 86 Ind. 250; Lane v. Steward, 20 Me. 98; Dye v. i^eoit, 35 Oh. St. 194; Anniyille Nat. Bk. v. Ketterinq, 106 Pa. St. 531. In other jurisdictions it is held that such evidence does vary the terms of tiie written contract, and is therefore inadmissible, (juldman v. Davis, 23 Cal. 256; Farwell v. St. I'aui Trust Co., 45 Minn. 495; Rodney v. ll'j/.son, 67 Mo. 123; Beeler v. Frost, 70 Mo. 185; Rank v. Smith, 47 Barb. (N. V.{ 480. Some jurisdictions now provide by statute that all waivers must be in writing. Maine R. S., c. 32. § 10. A parol waiver, subs<-(|uent to the time of the indorsement, is (independent of statute) good. Markhmd v. \frl)anicl, 51 Kans. 350; Rodney v. Wilson, 67 Mo. 123; 2 Daniel on Neg. Inst.. § 1098. A promise to pay the instrument, made by an indorser after maturity and after he is discharged for want of demand or notice, is, in analogy with the promise to jiay a debt barred by the statute of limitations, held to be binding. Rosa V. Hurd, 71 N. V. 14; Rindf/e v. Kimball, 124 Mass. 209; Breed v. Hill- house, 7 Conn. 523; Oxnard v. Varnum. Ill Pa. St. 193; Smith v. Curlee, 59 111. 221; Parsons v. Dickinson, 23 Mich. 56. (ontra: Sebrce Deposit Bank V. Moreland, 96 Ky. 150. where it is held that such a promise is presumptive evidence that demaiul ami notice were liad. but that the prcsumpt io?i may bo rebutted. In order that the indorser may be bound Ity such subse(|uent j)romisc he must have knowledge of the lacheH, and all the material facts constituting Buch laches. Parks v. Smith, 155 Mass. 20; Bank v. Bank, 40 Oh. St. 351; Schierl v. Baumel. 75 Wis. 69. But it is not necessary that he should umler- stand the legal r-fTc'ct of Huch laches. Cheshire v. Taylor, 29 Iowa, 402; (livens V. Bank, H5 111. 444; Sfatthews v. Allen, 16 Gray (Mass.) 594. Waiver, at or before maturity, of presentnu-nt and notice upon an iii-lrument indorwd by a partnership may be by one of the |)artners, as agent of the others, and this even thf)ngh the partnership is flisHolved, since it does not create a new liability. Seldner v. Mount Jaekson N. B., 66 Md. 488; Star Waqon Co. v. Swezey, 52 Iowa, 301. But it seems that waiver after maturity, the firm being discharged for want of [ir<'Hentment or not ire, would not n-vive the obligation. 2 Daniel on Neg. Inst.. § 1109a, citing Burt v. l,on(j. 1 Bob. (La.) 83; Mauney v. Coit, 80 N. (•. 300; Baer v. Leppert, 12 Hun (N. Y.\ 516. — H. 582 NoTirK or nisiroN'oi;. [aut. viii. § 180 BURGETTSTOWN NATIONAL BANK v. NILL. 213 Pknnsylvania Statk, 45(5. — 1900. Action against indorsor who oiirlitcon months after maturity in- dorsed on the note a waiver of protest, .ludgnient for plaintilf and defendant appeals. Mkstkkz.vt. .1. * * =): 'pi,^, p|;iintiH"s cashier called on the de- fendant in March or A|)ril, llHIl, and secured his signature to tlie writing on tlie bat'k of tlie note waiving protest. Until that time the defendant says he had no notice that Svvaney, the maker, had not paid the note. He was then told, as averred in the aflidavit, " that the note in the form in whicli it then was, not having been protested and no notice of disiionor liaving been given to affiant or demand made upon affiant for the payment thereof, was objected to by the bank examiner." The defendant, therefore, knew before he signed the waiver of protest that no demand. for payment ]iad been made and that no notice of the dishonor of the note had been given him as the indorser. Hence he had full knowledge of the laches of the holdo-r of tlie note when he w^aived protest of the instrument. Under these facts, which are disclosed by tlie affidavit of defense, the defendant could waive the laches of the holder in making demand for payment and in giving notice of the dishonor of the note, l Am. & Eng. Enc. Law (2d Ed.) 453; Day v. Ridgway, 17 Pa. 303; Annville National Bank v. Kettering, lOfi Pa. 531. "An indorser is entitled to notice of protest of a negotiable note," says Mr. Justice Coutler in delivering the opinion in Day v. Ridgway, " because tlie contract is that the maker will pay at maturity; and the strict punctuality, which is the life of the commercial law, authorizes the indorser to presume that he has paid, in the absence of any notice to the contrary. But the right to receive notice in order to make him liable, like any other right, may be waived by the indorser." In the Kettering Case, Ster- rett, J., delivering the opinion, says (page 533) : " Xo principle of the law merchant is better settled than that demand and notice of the non- payment of a negotiable note may be waived by the indorser, either orally or in writing, or by acts clearly calculated to mislead the holder and prevent him from treating the note as he otherwise would ; but there is some diversity of opinion as to what constitutes a waiver of these necessary prerequisites to charge the indorser." The indorser may waive protest after the date of maturity of the note with like effect as if done prior to that date. Barclay v. Weaver, 19 Pa. 396; JloadJey v. Blifis, 9 Ga. 303 ; Sheldon v. TJorton, 43 N. Y. 93; 7?os.s v. Jlnrd, 71 N. Y. 14; Rindge v. Kimhall, 124 Mass. 209 ; 1 Parsons on Notes and Bills, 594 ; 2 Randolph on Com- mercial Paper, § 1450. Tn Barclay v. Weaver, this court said (page 401) : " Tt seems, therefore, that the duty of demand and notice, in order to hold an indorser, is not a part of the contract, but a step IV.] WHEN NOTICE DISPENSED WITH. 683 in the legal remedy, that may be waived at any time in accordance with the maxim ' QuHihet potest renunciare juri pro se introducto.' " In some jurisdictions it is held that tlie waiver, when made after the maturity of the note, must be with full knowledge of the indorser's laches and that it rer|uires a new consideration. But it is settled by numerous American authorities that a waiver of ])rotest need not be supported by a new consideration. Neal v. WooiJ, 23 Tnd. r>23 ; Hughes v. Bowen, 15 Iowa, 416; Cheshire v. Taylor, 29 Iowa, 492; Sheldon v. Horton, 43 N. Y. 93 ; Tebbets v. Dowd, 23 Wend. 379 ; Wall V. Bry, 1 La. Ann. 312; Lane v. Steward, 20 Me. 98. We know of no decision of this court holding that such waiver must be supported by a new consideration. The contrary rule, however, is distinctly recognized in Barclay v. Weaver, 19 Pa. 396. In that case Mr. Justice Lowrie, in construing the contract of an indorscr of negotiable paper, says (page 400): "The most, therefore, that can be said of an indorsement of negotiable paper, is that from it there is implied a contract to pay, on condition of the usual demand and notice, and that this implication is liable to be changed on the appearance of circumstances inconsistent with it, whether those circumstances be shown orally or in writing. Rut it may well be questioned whether the condition of demand and notice is truly part of the contract, or only a step in the legal remedy upon it. If it is part of the contract, how can it be effectually dispensed with without a new contract for a suflRcient consideration, especially after the maturity of the note? Yet there are decisions without number that a waiver of it during the currency or after the maturity of the note will save from the consequences of its omission. This could not he if it was a condition of the contract, for then the omission of it would discharge the in- dorser both morally and legally; and no new promise afterwards, even with full knowledge of the facts, could be of any validity. Tf, how- ever, an indorsement without other circumstances be regarded as an implied contract to pay, provided the holder u.^c such diligence that the indorscr loses nothing by his negligence or indulgence, then it accords with all these decisions. Then the law, and not the contra(;t, declares the usual demand ami notice to be in all eases conclusive, and in some cases necessary evidence of such ililigence. * * * j|^ [the law I therefore is perfectly consistent in declaring that an in- dorscr i.s bound by a new promise, after he knows of the omission of demand and ruttice; for this is an admission that he was not entitled to it, or has not sufTererl for want of it. It declai-e^ demand and nf)tice necessary, in .'^ome eases, to save an indorscr from loss, and it declares that his own ailniission niny be submitted for tli(>m." It is manifest, therefore, that from the nature of the inrlorser's contract a new consideration is not re(|nired to support a waiver of protest before or after maturity of the [taper. * ♦ * 58-4 NOTich: of dishonor. [aim. viii. The assignments of onur aix' ovorrulotl, and the juil^nnont of tlie court below is affirmed." § 182 SEAw V. McNeill. 95 North Caroun.\. 535.— 1886. Action against iudorscr of inland hill of exchange for 5^90 npon the margin of which were the words " No protest." There was no notice of dishonor. After dishonor defendant offered to pay $G0 for the draft. Judgment for plaintiff. Ashe, J. * * * His Honor charged the jury that they might consider the words " No protest," on the draft, and the language and conduct of defendant when he was informed by the plaintiff of the non-payment, and the offer to pay $00.00 ; and that if the defendant had offered to pay $G0.00, as alleged by Shaw, it amounts to a waiver. We find no such error in the charge as entitles the defendant to a new trial. There is some fluctuation in the decisions of the courts upon the question, how far a promise to pay a part of a draft is a waiver of demand and notice of non-payment. For instance, it has been lield by some of the authorities, tiiat when the promise is only as to part of the sum, it is only a waiver pro tanto, and the plaintiff could only recover that amount. {Fletcher v. Froggart, 2 Car. & P. 569, 12 E. C. L. R.) On the other hand, it has been held, that "a promise to pay generally, or a promise to pay a part, or a part pay- ment made with a full knowledge that he has been fully released from liability on the bill by the neglect of the holder, will operate as a waiver, and bind the party who makes it for the ])ayment of the whole bill." (Dixon v. Elliot, 5 Car. & P. 437; Margetson v. Aitkin, 3 Car. & P. 388; Harvey v. Troupe, 23 Miss. 538.) So it would seem, that the weight of the authorities, supported the charge of the judge in this particular. But aside from this, his Honor, in his charge to the jury, told them they might consider the words " No protest," written on the margin of the draft, as evidence of a waiver of notice of presentment and non-payment. The words " No protest," written on the margin of this draft, must have been put there with an object, and we can conceive of none other than to dispense with the notice of present- ment and refusal to pay, otherwise it is unmeaning. 8 This case is reported with notes in 3 L N. S. 1079 and in 5 A. & E. Ann. Cas. 476. See also Sebree Deposit Bank v. Moreland, 96 Ky. 150, reported in 29 L. R. A. SCJ, with exhaustive note entitled " Necessity of new consideration to sup- port a waiver of failure to pive notice of dishonor or subsequent promise by andorser." — C. rv.] WHEN NOTICE DISPENSED WITH. 585 It is well settled that protest, being a part of the custom of mer- chants wliich is essential in foreign bills to fix the drawee and indorsers with liability, is nut necessary for such a purpose in inland bills. [Hubbard v. Truy, 2 Ired. 134; 1 Parsons on Notes and Bills, 643.) But e'.en in foreign bills the protest may be waived. There the words, '' I waive protest," or " Waiving protest," or any similar word?, infer that tlie protest is waived, and when applied to foreign MM^, was universally regarded as expressly waiving presentment and notice, the protest being, according to the law merchant, the formal and necessary evidence of the dishonor of such an instrument. In waiving " protest," the party is considered not only as dispensing with a formality, but as dispensing with the necessity of tlic steps which must precede it, and of which it is merely the formal, though necessary, proof of what the law required. (2 Daniel on Neg. Inst., § 1095.) But when the waiver of protest is applied to inland bills, the protest having no application to such instruments, there is a diversity of opinion in the courts and text-books, whether such a waiver would have the effect of dispensing with notice in an action upon an inland bill. But the better opinion is, that as the word "protest" has by general usage a well-known signification, and wherever it is used, it is supposed to mean something more than the formal declarations of a notary. Hence, Mr. Daniel, who is a very high authority on the subject, says, " The weight, as well as the number of authorities, predominates in favor of construing a waiver of * protest ' to signify as much when applied to inland bills and notes, as when used in respect to a foreign bill." "Inland bills and promissory notes may be protested, by statutory enactments, in many statrs, and the protest is accorded the same effect as to them, when it is made, though it is not necessary to make it, and the weight, as well as the number of authorities, pre- flominate in favor of construing a waiver of protest to signifv as much when applird to inland bills and notes, as when used in respect to a foreign bill." (§ lOiTya, and <^t> Noi'ici: oi' KiMioNoK. [Aicr. Vlll. ((•) yoficr of lion -piii/»i rut irhrrr arvrplaitcc refused. ^ 187 \)K \j\ 'I'OUni: r. I'.AIU'LAY. 1 Stakkik (K. H.) 7. — IH14. Action iiifiiiiisi (Ir.iwn- of a hill. DrtViisi', want of i)rolest and notico. T'lit on riiiilici- imniiry, it (iifiicd oul llial (lie (It'Tmidaiits' oltjcc- tioii (lid not ndatc to llir want of pi-otcst ii|)()ii IIk' first dishonor ol' tho hill, hilt to the wanl of pi-ntcst on the hill hcinjr refused payiiicnl on a snhso(]iient prescMitnicni ai tlie defendants' request. " Upon this explanation. Lord Ellenljoroncfh was of ojiinion Ihaf the answer amounted to an admission of liahiliiy, since the second protest was perfectly gratuitous and unnecessary." § 1005: Broun v. Hull. :\?t rirntt. (Va.) 23. 31 {(Urtinn). Tn llio cas- of iiilaiKi bills and promissory notes, the conclusion is ccncral tliat "waiving protest" waives presentment for paynu-nt and notice of dishonor. Lancaster First N. B. V. Uartniaii, 110 Pa. St. 190; Johnson v. Parsons, 140 Mass. 173; Jaccard v. Anderson. 37 Mo. 91 ; Carpenter v. Rcynnhls. 42 IMiss. 807; Ifoml v. Ilnlhnhrek, 7 Hun (N. Y.) 364; Porter v. Kewhalt. r)3 Barb. (N. Y.) 407; Voildinfjton V. Dai-is, 1 N. Y. 186. — H. [In Sprayuc v. Fletcher. S Or. 3(17, tlie (Icfi'iulaiit, wlio was an aecoiniiioda- tion indorscr, indorsrd on the back of a note before due llicsc winds: "I hereby waive notice of protest for nonpayment." Held, not to be a waiver of demand of pai/rnrnt from the maker when due. Afi^reements of this character are to be construed strictly, and not extended beyond the fair import of the terms. Prim, J., at p. 300, said: " In tliis case the indorscr docs not say that he will waive demand of payment, but that he will ' waive notice of protest for nonpayment.' Demand and notice are two distinct thincs, both of which are necessary to charge an indorscr, and only one of them is waived by the indor:^er in this case. But it is claimed by appellant that tlie indorsement operated as waiver of both, and tl)e following d<'cisions are cited to sutain the proposition. (Coddwptnn v. Davis, 3 Denio, 10: Mntthey v. CaVey, 4 (al. 63; 19 Ind. 110). In Coddington v. Dams, the indorscr wrote to the holder as follows: 'You need not protest. 'I. 1!. ( .'s note due. elc. 1 will waive the necessity of protest.' This wns lidd -unicicnt to di'speiise witli a presentment and notice of non-payment, on the gi'onTid that tlie word ' protest,' as u.=€d by the indorscr, in connection with the promissory note, was under- stood to mean the taking of such steps as were required by law to charge an indorser; that is, protest was understood to include botli demand and notice. Although in a technical sense, the term protest menns only a formnl declara- tion drawn up and signed by the notary, yet as used by commercial men it includes all the steps necessary to charge an indorser. (Hurrill's Law Diet. 349; 2 Ohio, X. S. 345.) The case in 4 California is in j)oint, but not a singh! case is cited in the opinion to sustain it. The cnse in 19 Indiana does not come up to this case. There the ntrreement was that ' protest and notice of pro- test were waived,' and were held suflicient to include waiver of demand. Thus it will be seen that none of the cases cited sustain the proposition of appellant except the California cnse, while there are numerous decisions holding the con- trary doctrine. (6 ATass. 524: Freeman v. O'Brien, 38 Iowa, 400; Rcott v. Qre'en, 10 Penn. St. 103.) " — CI IV.] WHEN NOTICE DISPENSED WITH. 587 (d) Effect of omission io give notice of non-acceptance. § 188 DUNN V. O'KEEFE. 5 Maule & Selwin (King's Bench) 282. — 1816. Defendants drew a bill of exchange on Rirkets, Thorne, George & Co., flatofl June 1!), ISi;?, and payable one month after date to the order of one Sinclair. Before the maturity of the l)ill, Sinclair indorsed it to the plaintiff, who on July 13, LSI 3, presented it to the drawees for acceptance. The drawees refused to accept, and plaintiff thereupon duiv notified defendants of the dishonor of the bill. The defendants pleaded in bar of the action that before the indorse- ment of the bill to t!ic plaintiff and its presentment by the latter for acceptance, the bill had been presented by Sinclair to the drawees for acceptance, that they had refused acceptance, and that notice of such refusal had not l^ccn given to the defendants. Judgment for plaint ill', and defendants bring error. Lord Ei.LENnonorGii, V.. J. — At a very late period, after the law nierchant, as it regards the subject of bills of exchange, had obtained for many centuries, the cases of Bhsard v. Uirst ^ and Goodall v. DoUey ' were decided. I do not mean to insinuate anything against the authority of those decisions. They establish this, that if the ]iarty holding a l)ill of exchange, receive notice df its dishonor, he is boinid to communicate this to the drawer. Va\{ it has not yet been determined that the want of notice operates further ihan a j)ersonal disclinrgc of the drawer, as against the party failing to give tiic necessary notice, nor that an innocent indorsee shall be barred of his action by any latent defect in the transfer, or concoction of the bill, evcepl in the two cases of the bill being given on a gaming or nsnrions consi(lei;il ion. The inconvenience of a more extended do( trine nnist be np|)arent ; for, suppose the holder io be the eleventh person into whose bands an un- accepted bill has passed, in succcssiori, by indorsement; the bill ariives at maturity, and is |tresenle(|, in due course, for pavnienl. and pay- ment is refuscfl, anfl notice is givi'ii to the diMwcr. Acconlitig to tlie doctrine of to-day, the bolder is not in a co?i(liliun to maintain liis ac- tion, uidcKS he can steer ( lear of any vice which the bill mav have ac- rpiired, by having been fcndered for acceptance by some one of the numerous holders through whose liand.^ if has passed. A IruiL' iu<|uirv must be instituted through the whole series of indorsees, i?i order to ascertain if any previous presentment was made, and in what man- nrr it was dealt with. \Vf»uld it be jiossible to conduct the negofiation of bills of exchange if all this investigation were necessary? What «.'; Burr. 2B7n. — r. » 1 Tprm Rep. 712. — C. 588 NOTICK OK DISHONOR. [ART. VIIL means has the holder of gaining this iiil'oniiation ? Must it he ob- tained by piivato inquiry i' That, as it seems (o me, wuuKl tend tu easl, about bills of o.xeliange, a preearious i-haraeter, that would alloct their creilit, and, j)erha])s, totally exeUulc them from eiiculation. The cases of l^lcsard v. //('/>•/ and (ioodall v. DoUcy, decided, that the in- dorsor should he discharged, hot that was as between the indorser and the j>arty guilty of laelies, whieli the plaintifT, in hotli those cases, was. It may he material (o give the drawer notice, in order to enable him to withdraw his elfects. This, therefore, may form a sound ex- cejition as against the party guilty of laches, but it is a very different consideration, whether it shall vitiate the bill in the hands of an in- nocent indorsee, like the oases of usury or gaming. Tt is argued that the drawer is only conditionally liable, if the bill be dishonored by non- acceptance or nonpayment, provided he has notice. But it is no part of the condition, that he shall be discharged quoad every holder, if the dishonor be not within the knowledge of the holder. Such a position, I believe, is not laid down in any case, and would, as it seems to me, be carrying the doctrine further than is necessary or convenient, in- volving, perhaps, the negotiation of bills of exchange in precarious un- certainty. The drawer who issues his bill into the world, without pro- curing its acceptance, is not without some degree of blame. Tie issues it in an imperfect state, and cannot justly complain of the neglect of any indorsee who takes the bill in tliis state, being cognizant of no circumstances to vitiate it, and looking merely at the names upon it. Upon the whole, it appears to me, that no authority has pronounced that a bill of exchange shall be void security, in the hands of an inno- cent indorsee, who has no knowledge that the bill has ever been dis- honored, because a former holder has omitted to give notice to the drawer that the drawee has refused acceptance ; and that such a doc- trine would be destructive of the very policy and effect of this species of instrument, by rendering its credit of so precarious a nature, that no person would be found willing to trust to it, especially if a |i\\mber o^ names were indorsed upon it. Bayley, J. * * * The drawer might avoid all difficulty by draw- ing the bill payable to his own order, and procuring an acceptance be- fore issuing it. If he draw it payable to a third person, and issue it in its unaccepted state, the imperfection lies at his door, and he must take the consequence. * * * IIoLROYD, J. — I am of the same opinion, that there ought to be judgment for the defendant in error. This conclusion, I think, fol- lows from gome of the principles laid down in argument on the other side. T agree in the position that the drawer undertakes that the drawee shall accept and pay. Tf the holder tender the bill for accept- ance, and acceptance is refused, he knows that the drawer is thereby defeated in his expectation : therefore, it becomes his duty to rr\va |ioticp to \y^o drawer, nnd if he ncTlect thi^. ho i'; Tui'tv of lacbpfj, v.] PB0TE6T AS EVIDENCE. 589 and ought to suffer for his negligence rather than the drawer. This was the ground on which the case of Blesard v. Hirst was determined. But such is not tlie present case, where tlie bill, in its unaccepted state, has passed into the hands of a bona fide indorsee to whom no laches is imputable. Upon the principle already laid down, the drawer, in such a case, holds out to the indorsee that the bill will be accepted and paid ; and if this fails, ought he not to suffer rather than the indorsee who hath no knowledge whatever that the bill has been dishonored ? The case of Roscotv v. Hardy ^° differs from this, because there the plaintiff took up the bill of his own wrong, after the holder by his laclies bad discharged the drawer and prior indorsers, and therefore it was properly holden, that the plaintiff could not recover against a prior indorser. The greater part of the learned counsel's argument would apply to the case of a stolen bill, where the felon has indorsed it to a bona fide holder; but what says the law in such case? Not that the indorsee takes the bill on the individual credit of the felon, so that he must stand or fall by the felon's title, but that he shall recover on his own title, seeing that he might take the bill on the credit of all the names which appear on the bill. Usury and gaming considerations render the bill void in its original formation. I remember tlie case in Douglas^\ where the court reluctantly yielded to that doctrine. This is not the case of a void bill ; the indorsee is chargeable with no negli- gence, and T, therefore, think that the drawer is still liable. Judgment affirmed. V. Duties of holder: protest. § 189 SUSSEX BAXK v. BALDWIN. " [Reported herein at p. Iff^O.] §189 BANK OK b'OCII KSTKI? v. DRAY. 2 Uiu. (N. Y.) 227.— 1842. Attion against indorser. Defense, want of notice. The bill was drawn in Rochester, N. Y., payable in Boston, Mass. Tt was presented by a notary in Boston and on dishonor a certificate of protest was I" 12 Kast, 4.34. — ('. 11 Spp fjOtrr V. Wnlirr, Oniifj. 7.1f>. • 2 Whrn protf'Ht i^ npcfHsnry, (ho prnfrst fvon mny ho ropovoroH ns rinmnprs. Morfian v. Hrintzrl, 7 Cranrh ( TI. S. ) 27.T : Tirknnr v. Hrnnrh Hank. .T .Ala. l.ir>. Whoro protont it* usolosa, prntost fooH rnnnf>t ho rocovorod. German v. Ritchie, 9 Knns. lOR; Wnnlry v. Van \ nlkmhurfih, \(] Knns. 20; WadfirH's Surer. rhorr v. Woodlief, 23 La. Ann. 473; Bwayze v. Britton, 17 Kans. 625. Statutes now generally ARTICLE IX. DiSCHAKGK OF NEGOTIABLE InSTKUMENTS. I. Discharge of the instrument. 1. Payment and Re-transfer. § 200 STODDARD r. BURTON. 41 Iowa, 582. — 1875. Action against the maker on a lost or stolen promissory note pay- able to A, the bearer, on or before Jan. 6, 1868. Defense, payment to the holder (Thompson) on Oct. 11, 1866. Judgment for plaintiff. Day, J. * * * The defendant asked the court to instruct the jury as follows: " 12. The note in controversy was payable on or before a certain date. This made the note payable at a fixed time absolutely, and sooner if defendant saw fit to pay it sooner. Such were tlie express terms of the contract, and, therefore, no presumption of bad faith can arise from the simple fact that defendant paid when he did, though by its terms payment could not have been demanded or enforced at the time. Defendant had the right to pay whenever he chose to do 80. The court refused this instruction, and gave the following: " 8. A promissory note, payable on or before two years after date, is due at the end of two years and not before; the rule of law being that the note becomes due at the time when the payee or legal liolder or owner of the same has the right to demand payment, and this is true, although the note provides that the payor may at his option pay the same before the time fixed when it shall absolutely become due. " " 9. The payment of a note by the payor before it becomes due, to a stranger who may have possession of the note, will not protect and discharge the maker, if said note has been stolen, or otherwise sur- reptitiously comes into the hands of the party presenting the same. " Other inst ructions given embrace the same doctrine. inak«' a notarial (^rtiflrnto prima fnrir pvidcnrc of tho pivinp of notice. A« to thpsn «t,Tfiitp« nnd tlioir rnn«triirtinn. soc 4 Am. * Knir. Knryr. l.nw f2nd H.). pp. .18n-3ft3. Whoro n nntnry'n cprtifipatc may inphulp a portiflpntp of notjpp of fiJMhonnr. snph rprtifirat*- iif noticp may 1h> writtpn hrlow ihf l>ody of thp pprtifipntp and pvpn Jx-lnw thp HPal. Olcott v. Tiofja H. Co., 27 N. Y. 646; Jnrftnn v. I,onf]. ]W .Ma. 414. — TI. [Wl] bd'i niSl'll AliliK OK INSTRUMENT. 1/"'^. IX. There was error in giving these instruelions, and in refusing that asked. The note was ])ayahle to the hearrr, niul there is a presumption t!iat the person in possession of it, and wlio ])resented it for payment, was the ow^ner. It lias heen dechired in general terms, that tlie 'pay- ment of a note whieh has been lost or stolen, before it is due, does not discharge the maker from liability to the real owner, because the payment is out of the ordinary course of business. (2 Parsons on Notes and Bills, 255, and eases cited. )^ But the note in (juestion, by its express provisions, at the option of the maker, is payable at any time within two years from its date. Whilst the holder could not enforce payment before January 6, 18G8, yet the maker might claim the right to make payment before that time. It cannot be sai(i to be out of the ordinary course of business for tlie maker to insist upon a provision which was incorporated for his benefit. Xo p^psumption against the buna fides of the defendant can • arise from the time of making payment. The defendant asked the court to instruct in substance that, if Bur- ton paid the note to Thompson in good faith, Thompson being in pos- session of it, and believing him to be the owner, without actual no! ice or knowledge that it was stolen, then Burton was protected by such payment, and that mere suspicion on Burton's part as to Thompson's right to demand payment or negligence in making inquiries was not enough to invalidate payment ; but to do so, it must appear that Bur- ton had acted in bad faith. The court refused this instruction, and in substance directed that a payment made under circumstances that would put a reasonably prudent man upon inquiry as to Thomp- son's right to receive payment would not protect nor discharge de- fendant. This action was erroneous. Mere suspicion that a person in pos- session of a note payable to bearer may not be the owner, will not e-xonerate the maker from payment; but there must be circumstances amounting to clear proof that he is a fraudulent holder. ^ (Story on Prom. Notes, § 613, and cases cited; Gage v. Sharp, 24 Iowa, 15; Lake v. Reed, 29 Id. 258; Goodman v. Simonds, 20 Plow. 343; 1 Par- sons on Notes and Bills, 238; 2 Id. 212, 279.) For the errors discussed, the judgment is Pe versed. ' 1 Disapproved in Bainbridpe v. City of Louisville, 83 Ky. 28.5. — Jl. 2 See § 95. — H. 8 See § 148. Cf. Buehler v. McCormiclc, 160 III. 200. If an instrument is paid before maturity and a eancellation lepend stamped npon it, and it is afterwards stolen, the cancellation mark effaced, and the instrument put into circulation, a purchaser for value w^ithout notice cannot recover on it apainst the maker. District of Columhin v. Cornell, 130 U. S, 655. f Distinguished in Ehrlich v. Jrnninfja. 78 S. C. 269. — C'.l If a nepotiable instrument is lost or stolen and the true owner duly notifies the maker, the latter must, at his peril, make sure that a subsequent payment I. 1.] PAVAIENT AND liETiiAXsFER. 593 § 200 AC^AWAM NATIONAL BANK v. DOWNING. 169 Massachusetts, 297. — 1897. Action against Edward B. Downing as maker of a note. After the note niatuied, plaintiif look a new note for $450 from the indorser, William B. Downing, which included the amount of the note in suit and another note of $2UU given hy X. Plaintiff retained possession of the note in suit and said note of $:200. Morton, J. — Tlie defendant is the maker of the note in suit, As hetween him and Wilham B. Downing, tlie indorser, it was an accom- modation note. But there is nothing to show^ tliat this was known to the plaintiff, or that it took the note otherwise than in good faith and for value. Whotiier the $450 note operated as payment of it was a (juestion of fact depending on the intention of the parties, and the other circumstances surrounding the transaction. (Brigham v. FmIIi/, 130 Mass. 485; Dodge v. Emerson, 131 Mass. 467; Green v. Russell, 132 Mass. 536; Eames v. Cushman, 135 Mass. 573; Woods v. Woods, Vn Mass. 141 ; Cotton v. Bonk, 145 Mass. 45, 12 N. E. 850.) The courf' must have found that it did not, and its finding is conclusive. (Brig- ham V. Lally, supra.) There was nothing, we think, in the arrange- ment between the plaintiff and William B. Downing tiiat operated to release the defendant. His liahility to the plaiiitilT was an absolute one. Delay on its part to enforce payment, from whatever motive, or however long continued, if not for si\ years, would not release him. We do not see that the case is altered because the delay was at the rcrjuest of the indorser, and accompanied by an agreement between the plaintiff and him that the defendant's overdue note should be re- garded as security for the new note given by William B. Downing. E.xceptions overruled.* is to a holdor in due roiirso. Rainbridpe v. Citt/ of f.fniiftvilli-. 8.3 Ky. '28S ; <'hnppehar v. Martin, 4.'i Oh. St. 120. If payment he inadf to on'' who has no( thi' i)OHs<'ssion of the inHtrunicnl, it in at the peril of the payor. Whclrr v. (luilil. 20 Tick. (Mass.) f)-}.'). So also, it sopiii-, if the one to whom payment is made does not aetuallv prodnee the instrument. Murphy v. linritirnl. IC'i Mass. 72. See also Wilvoct V. Anllmaix, M (Ju. 544; ( tiivpr.iilii Han/,- v. Turlc. 9(1 (Ja. 40.'i. If the instrument is indorsed in full, pawnent to any one exrefit the indnrnee (even to one in poH«e«sion of the instr\iment ) is nt the peril of the piivor. Douhla/'!s, 1 Cahabe & Ellis, 83; Thornton v. Maynanl 10 Com. PI. L. E. 695.) The prior cases were very fully and carefully reviewed by Baron Cresswell in the opinion rendered in Jones v. Broadhurst, and of the subsequent cases I deem it only necessary to say tiiat, along with some criticism and occasional doui)t, the doctrine has remained substantially un- shaken, and the case last cited was declared by Lord Coleridge to be the accepted law. It must not be forgotten, however, and I may prudently repeat, that the doctrine has no application to accommodation paper, and rests wholly upon the actual and ultimate indebtedness of maker or ac- ceptor as the party who ought to pay. In such a case as that, which correctly describes the one now before us, and where no disturbing facts affect the relations of the parties as fixed by the paper itself, I think the holder may sue and recover the full amount, receiving so much of the proceeds as represents a part payment by the indorser as trustee for him. It follows that the judgment should be affirmed, with costs. All concur, except Maynaku, J., dissenting. Judgment affirmed. ^ § 200 LANCEY r. CLARKE. C4 Xkw 'SOrk, 2W). — 187(5. Action by holder against iniikcr. Judtrmcnt for plaintiff at circuit Judgment reversed at (icncral 'rt-rm. IMaintilT aitpciils. Ivviti.. ,1. — 'J'he defendant made the note in suit for the benefit and accommodation of the nirii of Lambert and Lincoln. It was dis- counted aufl the proceeds passed to their credit by the North River Bank. Each member was therefore lininHJ, as to the maker, to pay the note, and thus save him from liability on account there(»f. Before the note became due the firm was dissolved, a?i(l Lincoln was to close up its business. Plaintiff lived in Caniida, and LiiKoJn wrote fiim, requesting him to take ujj the note and furnish the money for that purftose. Plaintifi", a few days l)efore the maturity of the note, .sent Lincoln the n)oney, which he placed in the baid< to his individual credit. Dn the day the note fell due he went to the bank, and, by his individual check, paid the note to the discount clerk, who knew at the time that it was an accommodation note. He s PavTTiPnt for honor rniiHt also he (list in^niHlicd Sep Nfir Inst L §§ 30(^- 306. — H. 598 DlSCiiAUQE OF INSTUUMKNT. [aUT. IX. did not assume to act us agent for any one, and did not ask to have the note transferred to any one, and did not mention plaintiff's name in any way. It is true that he asked to have the note protested so tluit lie eouKl hold the indorser and maker, hut lie did not disclose why he wanted to hold them. After he had thus paid and taken it, he sent it to the plaintiff. Upon such a state of faets, did plaintiff take his title from the hank or from Lincoln? If he took it from the hank, he took the phue of the bank, and his title and right to enforce it were as good as those of the bank at the time he took it. But if he took it from Lincoln, it being past due, he took it subject to any defense defend- ant could have made if sued by Lincoln, and in such case defendant's defense would have been perfect, lie could not be successfully sued by either of the persons for whose accommodation he made the note. Plaintiff did not take title from the bank. It matters not that he furnished the money, and that Lincoln promised to use it in taking up this note for him. It matters not that the note was protested so that the indorser and maker could be held, or that the bank did not intend absolutely to discharge and cancel the note. The question is, did the bank transfer or sell the note to the plaintiff? To make a sale or transfer takes two parties, one to sell and the other to buy, and the bank could not be made a seller without its knowledge or consent. It was not bound to sell or transfer the note. All it was bound to do was to surrender it upon payment by the person liable to pay it. A seller in such a case incurs some obligation by the sale, although he does not indorse the paper. lie impliedly warrants that the paper is genuine and all it purports to be on its face, and he cannot be drawn into this implied warranty without his consent. (Eastman v. Plumer, 32 N. H. 238; Delaware Bank v. Jarvis, 20 N. Y. 226; Morrison v. Currie, 4 Duer, 79; AJdrich v. Jackson. 5 R. I. 218; 2 Parsons on Notes and Bills, 2d ed. 37.) All the bank did in this case was to take payment of the note, and deliver it up to a party paying and liable to pay, after protesting it, so that he could make such use of it as the law and the facts would authorize. It did not transfer or intend to transfer it. The plaintiff, therefore, took no title to it from the bank, but he took it from Lincoln, and can- not, therefore, enforce it against the defendant. The order of the General Term must, therefore, be affirmed, and judgment absolute ordered against the plaintiff, with costs. All concur. Order affirmed and judgment accordingly.® 6 If an instrument i> rftransfprrfd to the maker or aceeptor at or after maturity, the transaction is treated as a payment, and the instrument cannot be reissued or negotiated. Ilarmcr v. Steele, 4 Exch. Rep. 1 ; liallard v. Green- hush, 24 Me. 330; Ferree v. .Vei/; York, etc. Co., 74 Fed. Rep. 769. But if it be tr&naferred to the maker or acceptor before mat\irity, the transaction may be I. 2.] CANCELLATION OR ftEKUNClATlON. 599 § 200 WOLSTENHOLME v. SMITH. [Reported herein at p. 634.] 2. Cancellation or Renunciation. § 203 LARKIN v. HARDENBROOK. 90 New York, 333. — 1882. This action was brought to recover the amount of a promissory note executed by defendant to Isaac C. Loper, plaintiff's testator, which the complaint alleged had been lost or destroyed. The referee found that said Loper executed to defendant a deed of certain premises, and in consideration thereof, the note in suit was executed, and delivered to the grantor, who thereafter volun- tarily and intentionally canceled, destroyed, and surrendered up the same to the defendant. Miller, J. — The note described in the complaint was given by the defendant to the plaintiff's intestate, upon the conveyance to him of certain real estate, and as a consideration therefor, on the 11th day of October, 1870. The referee before whom the trial was had has found that in or about the month of January, 1871, the grantor voluntarily and intentionally canceled, destroyed, and surrendered up to the defendant said security and note, and as a conclusion of law, the intestate discharged the defendant thereon, and that no recovery could be had either on the note or on the original con- sideration. We think that the finding of fact by the referee is suffi- ciently supported by the evidence, and that the conclusion arrived at was the legal and necessary result of said finding. The rule seems to be well settled by the authorities tliat where an obligee delivers up the obligation which he holds against another ])arty, with the intent and for the purpose of discharging the debt, where there is no fraud or mistake alleged or proven, that such surrender operates in law as a release and discharge of the liability thereon; nor is any consideration r('<)iiin'(l to support such a transaction when it has iM'cn fully executed. (Bon v. Law Diet., title release; Albert'i Ex'rs v. Ziegkr's Er'rs, 2\i Penn. St. HO; licach v. Endress, 51 Barb. 570; Doty v. Wihon. 5 Lans. 10.) shown to be a purcliaae and not a payment and the instrument may be re- issued. Attrnhornufih v. MnrJcrnzir. 2.') T>. .T. Ex. 244; Ffnqrrs v. HaUnqhrr, 49 111. 182; WiHt Hostnn Hank v. Thompson, 124 Mass. fyOO; Nirnpr v. /?o.-».t, 40 Pa. St. 18fi; Krkrrt v. Cnmernn. 4.3 I'a. St. 120. Contra: l.onq v. Cynthiana Hank. 1 Lift. (Ky.) 290; Ntark v. Alfonl, 49 'IVx. 200. If an instnimfnt Im rftransforrfd to onn of two or more joint makcrH, hrfore maturity, and rr-iHHiied by him, it .m-rmH that his transfcro*' cr<'ts only a rifjht of contribution aL'ain.st the other joint makers. The chho in te could not show by parol that the payee had re- leased him from liability on the note. — C. I. 1.] CANCELLATION OR RENUNCIATION. 605 § 204 LYNDONVILLE NATIONAL BANK v. FLETCHER. 68 Vermont, 81.— 1895. Action against a surety on a promissory note. Judgment for plaintiff. RowELL, J. — The defendant was surety for Walter on a second renewal note to the plaintiff bank. Walter had put $20,000 of securi- ties into the defendant's hands, in consideration of which he agreed to and did indorse for him to that amount, of which said note was a part. The bank knew that the defendant was surety, but did not know that he had security. Said note was taken up by a note that Walter sent to the hank, signed by him and purporting to be signed by the defendant, but on which he had forged tlie defendant's name. There were several like forged renewals, but the defendant had no knowledge of any of them till the bank notified him of the approach- ing maturity of the last one and informed him that it would not be renewed ; whereupon he went to the bank, saw the note, pronounced iiis name thereon a forgery, and refused to pay it, and thereupon, at its maturity, this suit was brought thereon and on the three genuine notes and another of the forged renewals. When the last genuine note was thus taken up, the bank stamped it " Paid," and sent it to Walter, who carried it to the defendant. who, when he saw it, was thereby induced to believe and did believe that it was paid and extinguished and he released therefrom, and thereupon, relying on that belief, be signed another note for Walter for the same amount, which otherwise he would not have done, and whereby he was damnified. The defendant never had anything to do with the bank concern- ing any of the notes except as aforesaid, but the business was all done by Walter. The defenflant conceded that the bank bcliovcd the forged renewals were genuine, and acted upon that belief in tnkitig them, and other- wise would not have taken flu'iu; but be chiiuHMl tliat the cashier was negligent in taking tbe first forged renewnl and stamping and giving up ns paid the last genuine renewal, for tliat the forgery was so manifent that, as a careful and prudent man, with both notes before him, he ought to have detected it ; and be asked to go to the jury on that question, claiming that if ilie negligence was found, the plaintiff would be thereby estopped from recovery on tbe last genuine note. The defendant also claimed that by stampitig said last mentioned note " Paid " instead of " Henewed," as the fact was, the bank made a false statement, to its knowledge, and that when it sent the note to Walter thus stamped, it ought to have known that he would show it to tbe defendant, and that tbe (Icfemlant would be lliereby induced to believe it was paid and extinguished, and to act accord- nor. nisrii.\iit;i: ok insiuumknt. [aRT. ix. iiii,'ly. to liis (nrjudirf, or, ;il Ir;is(, that il ou,i;lii to have known tliat siu'li would naliirallv ami jMohalil} \)v the fact, and that if the jury should thid that the haid\, in the exereise of the requisite eare and prudenee, oui^ht (o have so known, then what it did in this l)ehalf amounted to a repn^sentalion hy it to the defendant that the note was in fai't paid and extinguished; and if it was further found that the defendant acted u])on that representation to his })rejudicc, the plaintiir would he eslop])ed from recovery on that note. The defendant further (daimed, that if the parties are to be re- garded as equally innocent in the matter, and the taking of the first forged renewal and the stamping and giving up as paid of the genuine renewal were a mere mistake on the part of the bank, then the loss must still rest upon the plaintiif, which made the mistake, and on which the chances of business have placed it. But the court ruled against the defendant on all his claims, and directed a verdict for the plaintiff for the amount of the last genuine renewal, to which the defendant excepted ; and he now makes sub- stantially the same claim that he made below. It was undoubtedly the duty of the hank to act in good faith towards the defendant in the matter, but it was under no further duty to him. (Banl of Newbury v. Richards, 35 Vt. 281, 284.) The presentation by Walter of the first forged renewal was a representa- tion by him tliat it was genuine, and the hank, certainly w-ith nothing to arouse its suspicion, owed the defendant no duty to distrust Walter and to examine the two notes to see whether his representa- tion was true or not. No case is cited nor principle suggested requiring that. A bank is bound to know^ the signature of its depositor, and, therefore, if it pays a forged check purporting to be his, it must bear the loss. So the acceptor of a bill is bound to pay it although the drawer's name is forged, for the presentation of the bill is a direct appeal to him to accept it or to reject it. It is an inquiry as to its genuineness, addressed to the one who, of all others, is sup- posed to be best able to answer it, and whose answer is most satisfactory. He is, moreover, the person to whom the bill itself points as the legitimate source of information to others, and if he were permitted to dishonor the bill after he has once honored it, the very foundation of confidence in commercial paper would he shaken. But the drawee of a hill is not hf)und to know the signature of the payee, nor to examine and ascertain whether the indorsement is genuine; and if he pays on a forged indorsement, though to an inno- cent holder, he can recover the money. (Corn Exchange Bank v. Nassau Bank, 01 X. Y. 74; Insurance Co. v. Bank, HO N. 11. 442.) Nor is a bona fide indorsee, whether before or after acceptance, hound to inquire into the genuineness of a bill, in order to retain the money received by him from the drawee in payment thereof. {Price V. Neale, 3 Burr. 1354, a case that has never been departed I. 2.] CANCELLATION OR RENUNCIATION. 607 from.) So if a bank receives as genuine, fraudulently altered bills of its own, and passes tlieni to the credit of a depositor who acts in j^ood faiti % it is bound by the credit thus given, for it was its duty to know its own bills. {Bank uf the United States v. Bank of G'eorgia, ]0 Wheat. 333.) Uut the cr.se at bar is unlike the case of a drawee who pays or accepts a forged I)ill, or of a bank that receives as genuine, forged noies pu I ported to be its own, for here the bank was not bound to know the defendant's handwriting, and it was not its duty to examine with reference to ascertaining a thing that it was not bound to know. But by this we do not mean to say that it could shut its eyes that it might not see, or turn away lest otherwise facts might be disclosed at variance with what it represented to exist, for that would be bad faith and breach of its duty. It follows, therefore, that as here was no duty to examine, there was no negliijence in not examining. Xor was the representation of payment that the bank made, false to its knowledge, as claimed, but true in its belief, in substance and effect, for had the forged note been genuine it would, in law, have paid the other note and extinguished it as aflfording a cause of action against the defendant; and as knowledge of the falsity of tlie repre- sentation is not imputable to the bank, as it was not in a po.^ition that it ought to have known, there can be no estoppel on this score. The case comes to this, then, that said representation was a mis- take on the part of the bank, aiising from its non-culpable ignorance of the truth, and brought about by the fraud of Walter; and it would seem that a representation induced by fraud will not estop. (P.ig. Estop., 3d. ed. I!)].) I?ut it is claimed that if a mistake, the case is one that calls for the application of the rule tlmt when a mistake has been made from which one of two innocent [)arties must suffer, he must suffer who made the mistake, especially when, as here, the chances of business have placed the loss upon him ; and The Glnvreater linnlr v. 77/r Snlew Bnnl- (17 ^Tass. 33) is cited in support of this juopo-it ion. That was a case i[i which the phiiittitr had paid to the dcfciidaot, notes on which the name of its j)rcsidctit had bceri forged. I)i!t wliicli were otherwise genuine, anil had neglecte^s had been suffered to remain where the course of business lia. Ilildretli " for the original payee. This alteration was made without the knowledge or consent of Long, and he has never consented to or ratified the same. 'Witliin all the auihorities, the substitution of 0. B. Ilildreth in the place of the original payee was a change of the personality of one of the jiniiics lo the note, and therefore a material alteration. (Ban!,- v. IlnJl, 1 Tlal.'^t. X. J. L. 215; Stoddard v. Penniwnn, lOS :Mass. ?,GC> ; Draper v. Wood. 112 Id. 315; 17 Am. Rep., pp. 92, 106; 2 Daniel on Neg. Inst., §§ 1387- 1390.) 2 1 Accord: Uurnhnhlt Bnuk v. liossing, 95 Iowa, 1. — H. 2 See § 206. sub?ec. 4. — II. I. 3.] ALTEBATION. 609 If Horn and Long had been associated together in a trading part- nershij), then either member of the firm might have bound his co-part- ner by executing a promissory note in the name and on behalf of the firm, in any transaction pertaining to their partnership business. We suppose that under such circumstances, the material alteration of a note executed by the firm, with the knowledge and consent of one part- ner, would bind his co-partner, if the note had been given within the apparent scope of the business of the firm, as it is a general principle relating to trading partnerships that each partner is the lawful agent in the partnership in all matters within the scope of the business. (Deitz V. Regnier, 27 Ivans. 94.) A non-trading partnership, however, is controlled by rules differing from those controlling a commercial or trading one. {Deitz v. Reg- nier, supra.) Under the findings of the court, Horn and Long were partners only in (he running of a threshing machine, and such a part- nership is imur of occupation or employment only. It is not a com- mercial or trading partnership. There was joint ownership between Horn and Long in the threshing machine, and there was a co-partner- ship between them in the matter of operating the machine, with the intention of dividing the profits and losses equall}' ; but yet their busi- ness did not require the execution of negotiable paper as the proper, convenient, and usual mode of conducting it. In a partnership to \operateL_a--threRhing machine there does not exist the implied power in k;hpsey^a4— mtHiibcr!*— to- make promissory notes, and thereby bind /the~"Erni. Whoever deals with an individual jointly interested with /another in tlie operation of a threshing machine must, at his peril, ! inform himself of the nature of the partnership. The note in suit was signed by the makers in their individual names, and not as a firm. Therefore, ujmn the face of the note one of the makers had no right to bind the other without his consent to any material alteration. Horn had no authority to make a promissory note in the name of the firm or to bind Long, unless the latter had been previouslv consulted, and consented to the transaction. {Lanier v. McCahe, 2 Fla. 32 ; Prince v. Crawford, 50 Miss. 311; Cross! h wail v. Ross, 1 Ilumpli. [Tenn. | 23; Smith v, Sloane, 37 Wis. 2H5, 19 Am. Kep. 757; Deardorf v. Thatcher, 78 Mo. 128; 1 Daniel on Neg. Inst., §§ 3r).5-3.'i8.) If he had not the authorily to make promissory notes and draw bills of exchange and thereby hind the firm, he had no right to authorize a change of payee in the note executed by him and Long so as to bind Long thereby. The material alteration of a note willi flic consent of a niakcr is virtually making a new note and ante-dnfiiig it. We tlicreforc conclude that the nuiterial alteration of the note in question released Long. (Broughfov v. Fuller. 9 Vt. 373.) That the bank purchased the note before maturity, for a valuable considera- tion, and is, therefore, a hnvn fide holder f)f the note, does not prevent NKOOT. INBTnUMBNTS — 39 610 l>lS(MlAli(iK OF INSTKUMKNT. [aRT. IX. Ijoiii; from asserting the lualeriiil alteration of the note as a defense.' {Wait V. Pomcroij, v'O Mieh. Wo; Benedict v. Cowden, 49 N. Y. 396; Bank- V. Stowell, 123 Mass. 196; 2 Daniel on Neg Inst., §§ 1410- 1413.) [Omitting a question of practice.] The judgment against Long will be reversed and the cause re- manded, with direction to the court below to render judgment in his favor upon the findings of fact.* 3 " It is urged, however, that the plaintiff, being an innocent holder for value, can recover notwithstanding the alteration, because they propose to recover only the amount of the note as it was before the alteration. If such were the law forgeries by alteration would be protected by the law. The fraudulent payee would r\in no risk of loss because he would only have to transfer the note to an indorsee who might recover the original amount of the note by sim- ply proving that he was innocent of the fraud. But the law is not so charit- able to this class of persons." — ■Gettysburg Nat. Hk. v. Chisolm, 1(59 Pa. St. 5G4, 501); Citizens Nat. Bk. v. M'iUiams, 174 Pa. St. G6 (doubting the correct- ness of Kountz V. Kcnnefty, 63 Pa. St. 187, contra). There is some authority for the proposition that a banker after payment, has the right to hold an altered check for its correct amount as against the maker. Hall V. Fuller, 5 B. & V. 750; Susquehanna Bk. v. Loomis, 85 N. Y. 207; (cf. Crawford v. West ffide Bank, 100 N. Y. 50, 57) ; Kedington v. Woods, 45 Cal. 406. Compare Bills of Exchange Act, § 60, as to payment under forged in- dorsement. Under § 205 the holder in due course of an instrument fraudulently altered is now permitted to enforce payment according to the original tenor. Prior to the statute this could not be done, though it seems to have been allowed in the exceptional case of Worrall v. Ghenn, 39 Pa. St. 388. Where the alteration is by a stranger, or, if by a party to the bill, is innocent, many American courts allow a recovery upon the original consideration. See cases follow- ing. — H. * There may, of course, be a subsequent ratification of an unauthorized alteration. 2 Daniel on Neg. Inst., §§ 1401-1403; Dickson v. Bamberger, 107 Ala. 293; Matlock v. Wheeler, 29 Ore. 64. Blanks left in an instrument import a prima facie authority to the holder to fill them. Neg. Inst. L., § 33. But an alteration, although made in order to correct a mistake, and conform the written instrument to the actual intention of the parties, is fatal and destroys tlie validity of the instrument. Newman v. Kiiig, 54 Oh. St. 273, citing cases contra; Evans v. Foreman, 60 .Mo. 449. [But see Wallace v. Tice, 32 Or. 283, post, p. 612, and Osborn v. TJall, 160 Ind. 153, in note 8, post, p. 614. — C] A restoration of the instrument to its original form will not revive liability upon it. Citizens' Nat. Bank v. Richmond, 121 Mass. 110; Locknane v. Emmer- son, 11 Bush (Ky.) 69; Fulmer v. Seitz, 68 Pa. St. 237 (doubting Kountze v. Kennedy. 63 Pa. St. 187) ; Citizens' N. B. v. Williams, 174 Pa. St. 66; McDaniel V. Whitsett, 96 Tenn. 10. Matrriai, .Alteration. — As to what changes constitute a material altera- tion, see § 206: 2 Daniel on Neg. Inst., §§ 1373-1404; 2 Am. & Eng. Encyc. L. (2d ed.), pp. 222-248; Ives v. Farmers' Bank. 2 Allen (Mass.) 236. Burden of Proof. — There is a hopeless conflict as to the presumption and burden of proof in the case of the apparent alteration of an instrument. One class of cases requires the one offering the paper to explain any apparent altera- tion. Croswell v. Labree, 81 Me. 44; Simpson v. Stackhouse, 9 Pa. St. 186; I. 3.] ALTERATION. Cll § 205 SULLIVAX v. RUDISILL. 03 Iowa, 158. — 1884. Action on a note aiul upon original indebtedness. After tlie note was given by defendant, witli Fuller as surety, tlie plaiiitilf innocently procured W. A. H. to sign also as surety. Tlie court held the note void, but allowed a recovery against defendant upon the original consideration. Action dismissed as to Fuller. Beck, J. — This court has held that the signing of a promissory note by one as a joint maker, after the execution by the original maker, without his knowledge and consent, is a material alteration, which will defeat the instrument. (Hamilton v. Hooper, et al., 46 Iowa, 515; Dicl-erman v. Miner, 43 Id.*50S; Hall's Adni'x v. Mrlfennj, 1!) Id. 521.) '• It has also been ruled by tiiis court thai, when a ijrouiissory note has been innocently altered, without any fiaudulciit pui'pose, the payee may recover in an action brought upon the original consideration. (Krause v. Met/er, 32 Iowa, 506; Cloitgli v. Nrnv/. 49 Id. Ill ; Morri- son Bros. V. Huggins, et al., 53 Id. 76; Ecl-ert i(- Williams v. Pickel, 59 Id. 545.) Upon the facts found by the referee, which are not brought in f|uestion, and under the petition which sought to recover upon the original consideration, the Circuit Court rightly rendered judgment for plaintiff." (Irltyfshur,, .Y. /{. v. C'lnsolw. IfiO Pn. St. '^€,4 : Elnin v. Unll. S2 Va. fiSO; Cole V. HiHs. 44 N. II. 227; floirdry v. Robhim'i, 3 A])]). Div. (N. Y.) 353: Evniif: v. Drmin;/, 20 Wkly. Difj. (N. Y.) 71. Anotlicr and pciliaps weifjliticr class of onsos raises no pro«uiiiptifiti :>j:ainst the [)ap(T hut cahts tlif hiinicn upon tlic (k'fcuilant to provo aiiy allcjiod altera- tions. Wilson V. fJni/rN, 40 Minn. 531 : W'olfcrmnn v. BrU. fi Wash. 84; Yalima N. B. V. Knipr. fi Wash. 348: Hiuinti v. Mrrrhnnis'. <■!<■. hix. To.. 81 Iowa. 321 ; }ieil V. C'a.vc, 25 Kans. 510; Franklin v. llakrr. 4S (\\\. St. 200: yYcirHKin v. Kintj, 54 Oh. St. 273. See 2 Daniel on NC;.'. In^t. B 1417-M21; 2 Am. \ Knjr. Encyc. L. (2ns to s\ihsec|uent holders in due course uf negotiai)le instruments. See ante, p. 687, note. — II. H]'.' DlStllAKdK OK IN.STHUMENT. [aKT. IX. §205 WALLACE v. TICE. 32 ()KK(iON, 2H-S.— 1898. On August 11, 1891, dofendaiit 'Vice arranged with plaintiff for a loan, agreeing to give his note with one Herrall as security. Plaintiff wrote out the note, dating it "Aug.ll," and making it |)ayal)le one year alter date. Tice took it to Herrall the same day, signed it, pro- cured llerrall's signature, and returned to plaintiff with the note the following day. Before delivering her check for the money, plaintill changed the date in his presence from " 11 " to " 12." Plaintiff testi- fied that she made the change to correspond with the agreement of the parties, and Tice testified, in suhstance, that plaintiff made the change without objections from him. In an action on the note against Tice and against the administra- tor of Herrall, deceased, judgment was rendered for plaintiff, and the administrator appealed. WoLVEHTON, J. — This is a suit to restore the original conditions of a promissory note which it is alleged were changed by the payee, under mistake and misapprehension of the rights and agreements of the parties, and to recover thereon against the makers. Three questions remain for solution: (1) TTas a court of equity jurisdiction of the cause, as it remains dismembered of the alleged trust relations? (2) Can a recovery be had upon the altered note? And (3) is the name " Geo. Ilerral," appended to said note, his gen- uine signature? '' It may be conceded that the alteration made is material, and upon this premise we will determine the legal effect thereof. The rule may be said to be settled that a material alteration made fraudulently, and with vicious intent, by the party claiming a benefit under it, will avoid the note, and extinguish the liability, and henceforth no recovery can be had. Vogle v. Ripper, 34 III. 100. There is a strong current of authority, however, which holds to the doctrine that while an altera- tion, though material and unauthorized, which was innocently and honestly made, and without any fraudulent or im])ro))er motive, avoids the note, nevertheless an action will lie upon the original indebtedness if it is independent of the note, and has not been discharged by its execution. (Booth v. Powers, 56 N. Y. 22, 30, 31 ; Lewis v. Sclienck, 18 N. J. Eq. 459 ; Banl- v. Shaffer, 9 Neb. 1 ; Hunt v. Gray, 35 N. J. Law, 227; VogJe v. Piiyper, supra.) And many authorities permit the action to be maintained upon t1i(» note itself. (Horst v. Wagner, 43 Towa, 373; 2 Pars. Notes & B. 570; Duker v. Franz, 7 Bush, 273 ; Adams v. Frye, 3 Mete. (Mass.) 103; Smith v. Dunham, 8 Pick. 246; Milbery v. Stover, 75 Me. 69; Croswell v. Lahree, 81 Me. 44; Rogers v. Shaw, 59 Cal. 260 ; Murray v. Graham, 29 Towa, 520 ; McRaven v. Crisler, 53 T The portion of the opinion relating to tlie third question is omitted. — C. I. 3.] ALTERATION. 613 Miss. 542; Foote v. Tlamhriclc, 70 Miss. 157.) It was early held in Bowers v. Jewell, (2 N. H. 545,) that " it is reasonable and just to per- mit a party to show that the alteration was by consent of those inter- ested, was by accident, or under circumstances rebutting every pre- sumption of improper motives." In Lewis v. Schenck, supra, the agent of the payee altered the note soon after its execution, in the absence of the makers, by inserting the words " with interest from date," honestly believing that he could legally make the change to correspond with what he supposed to be the real agreement of the parties, entered into prior to the execution of the note ; and it was held that the alteration was under a mistake of fact, and the plaintiff was permitted to recover. In Croswell v. Lahree, supra, the words " or bearer " were inserted by the payee after delivery, and without the knowledge or consent of the maker. It was ruled by the lower court that if the alteration was made innocently, without any fraudulent or improper motives, it would not avoid the note, and the ruling was sustained by the Supreme Court. And in Duker v. Franz, supra, the change was from " 1868 " to " 1869," by making a " 9 " over the " 8," and it was held that it did not destroy the legal efficacy of the note. We think the following deduction is within the cases: That where the alteration is prompted by honest and pure motives, with a purpose of correcting the instrument to correspond with what the party hon- estly and in perfect good faith believed to be the true engagement of the parties at the time of the execution, the act does not destroy the legal efficacy of the note, and recovery may be had upon it when re- stored. See Rogers v. Shaw, supra: Kountz v. Kennedy, 6.'i Pa. St. 187, and Horst v. Wagner, supra. We come the more readily to this conclusion in view of our statute, which makes it incumbent upon the party producing a writing afjpcaring to have been altered after its execution, in a jjart material to the f|uestion in dis])ule, to account for the alteration before he will be permitted to give it in evidence. He may explain the alteration by showing that it was made by an- other without his concurrence, or was made with the consent of the parties affected l)y it, or otherwise j)roperly or innocently made. (Hill's Ann. Laws Or. § 788.) Now, it is perfectly apparent tliat Mrs. W'alhuc was not impelled by any fraudulent motive in making the change in the date of the note sued upon. It is also just as apparent that she was acting under an honest misapprehension of her right to make Ihe change to corre- spond with what she supposed to )»' the agreement with Tice nnd Her- rali to loan them $2,000 for one year, and that, in order to make the contract conform to what she understood the agreement to be — that is, to loan the money for a full year — she made the change, intending it for tfie benefit of the iiuikers. It was of no benefit to her, hut, on the contrary, o[>erated ah a real (h'triment ; of snuill f)ro|)<)rti()nH it may be, but it was actual and patent. If it were adjudged that for Buch 614 DliiCllAKdl': OF IXSTUU.MENT. [aUT. IX. an act, j)roinptod solely by the puri'sl inolivcs, yol involving a niisap- jtirlu'nsion of (he ri^Wit and aulliorily to do the act, the suitor should be turned away remediless, the result would be an obvious and palpable failure of justice in a great nuijority if not in every instance. The remaining question, touching tlic jurisdiction of a court of equity to entertain the suit, is not eidirely tree from doubt. But as the act which it is claimed avoids the instrument was done under mis- take and misapprehension, aiul the suit involves a discovery which is in some degree necessary to show the agreement and the mistake, the jurisdiction ought to be sustained. Such is the exact ruling of Lcivis v. Schenrk, supra. See, also, Nirh-rrson v. Siveft, 135 Mass. 514. The decree of the court below will therefore be atlirmed.* §205 McKEEHAN, TTTE NEGOTIABLE INSTRUMENTS LAW. [41 Am. Law Rf.g., N. S., pp. 580-582.] The criticism of this section [N. Y., § 205] ** is contained in a note published subsequent to tlie articles in the Harvard Law Review and is based upon the case of Jeffrey v. Rosenfeld, ^ decided by the Su- preme Court of Massachusetts in September, 190L 8 " We concede and affirm as a lefjal proposition that tlie payee or holder of a promissory note has no right or autliority, without tlie consent of the maker or makers thereof, to make any material alteration of the note for the pur- pose of correcting any mistake that may have been made in the execution thereof, unless it is shown that the alteration or change is made to correct the note so as to make it conform to what all of the parties thereto agreed or intended it should have been. An alteration for such purpose and to such extent the great weight of authorities sanction, and hold that it may be made without destroying the legal effect of the note or instrument. " Jordan, J., in Osborn V. Hall, 160 Ind. 153, 159, where recovery was allowed on the note itself. Contra, Merritt v. Dewey, 218 111. 509, where Scott, J., at p. 005, said: " One party to a written instrument which does not speak the actual contract of the parties does not have the right to alter the instrument to make it ac- cord therewith. If the right to so make such an alteration existed, the juris- diction and power of a court of chancery to reform written contracts which inaccurately state the undertakings of the parties would be entirely use- less." — C. 9 Section 64 of the English Bills of Exchange Act reads: " Where a bill or acceptance is materially altered without the assent of all parties liable on the bill, the bill is avoided, except as against a party who has himself made, authorized, or assented to the alteration, and subsequent indorsers. " Provided, that where a bill has been materially altered, but the alteration is not apparent, and the bill is in iTie hands of a holder in due course, such holder may avail himself of the bill as if it had not been altered, and may enforce payment of it according to its original tenour." 1 179 Mass. 506. I. 3.] ALTERATION. 615 At the common law, the material alteration of a negotiable instru- ment without the assent of all parties liable thereon avoided the in- strument except as against a party who made, authorized or assented to the alteration, and subsequent indorsers. The rule applied to an alteration made by a stranger as well as to an alteration made by a party to the instrument. Section 64 of the English act perpetuates the common law rule with the exception of a proviso inserted for the benefit of a holder in due course, under which he may enforce, accord- ing to its original tenor, a bill which has been materially altered, if the alteration is not apparent. The proviso, however, does not concern us in this discussion. The American courts early changed the common law rule to the extent of holding that an alteration made by a stranger was a mere spoliation or trespass, and that the holder could still enforce the in- strument in its original form. Now section 124 of the American act is practically the same as section 64 of the English act. Therefore, says Professor Ames, we are in this dilemma : " Either the English and American sections, although expressed in the same terms, must be interpreted diU'erently, or else the American law is changed, and, as it seems to the writer, for the worse. To avoid the second horn of the dilemma involves great straining, not to say perversion, of simple English words." How one can see any ambiguity in section \2\ [N. Y., § 205] is a mystery. It reads: "When a negotiable instrument is materially altered * * * it is avoided," etc. An alteration made by a stranger is not excepted, and certainly it is none the less an alteration because made by a stranger. To say that such an alteration is not covered by section 121 would be, as Professor .Ames says, "a throat straining, not to say perversion, of simple English words." .Tiidg> Brewster agrees with the critic on this point, 'i'he only person who has ever suggested a doubt as to the meaning of this section is Mr. Justice Morton, who wrote the opinion in Jeffrey v. Rnnenfvld, supra. In that case, a note secured by a mortgage was altered, though by whom did not appear. On a bill in cfjuity to restrain the fon-closurc of the inort!ra:,'e, the court sustained Ihc holder's right to foreclose wilhdul interpirling section 124 of the ((kIc, though Justice Morton, in an ohiirr (lichitn of some length, remarked that the (piestion of its inlcrpretation was one that rlcserved serious consideration. After referring lo the author- ities in this country which decided tiiat a material alteration made by a stranger will not avoiil (he instrument, ho adds: " ll would seem not unreasonable to suftpose that it was th(! intention f>f the fiainers of the American act that section 121 should be construed according to the law of this country rather than that of Englarul." As a generality, that remark is profoundly true and applies to all the sections of the new act. They should br* construed accordinir to .American law rather than English law. As applicable to the particular point under dis- 616 DISCIIAUGIJ OP IMSTKUMHNT. [aUT. IX. cussion, however, the roniark' \a of small value. Tf the language of seetion \'ii is clear and unmistakable, it should he given its plaia meaning. To construe it according to American law does not mean to knock it down sim))ly because it changes American law somewhat. The learned judge points out no ambiguity in tlie language of thia section. His sole reason for doubting its very ])lain meaning is that it changes the law. As a matter of fact, we learn from Judge Brew- ster that it was intended lo change tne law; that Mr. Crawford re- ported to the conference in l.S'JG in fa-or of ado])ting the common law rule as to alterations by a stranger, in order that the law of the two countries might be uniform on this important point, and in order that the benefit of written evidence might be preserved. This view was approved by the conference, and seetion 124 was inserted to restore the English rule. Professor Ames thinks that the change is for the worse, though he vouchsafes no reasons. Under such circumstances, the profession can- not be blamed for accepting without question the judgment of the learned and experienced experts who drafted the new act. But at all events there is no ambiguity in this section. Its meaning is unmis- takable. § 205 NATIONAL EXCHANGE BANK v. LESTER. 194 New Voek, 461, — 1909. Appeal from a judgment of the Appellate Division of the Supreme Court in the third judicial department, entered May 16, 1907, affirm- ing a judgment in favor of plaintiff entered upon a verdict and an order denying a motion for a new trial. The defendant was sued as the accommodation indorser upon a note for $375 made by one Frank L. Fancher and acquired by the plaintiff bank before maturity in the regular course of its business. The defense was that the note as originally made and indorsed was for $75 only; that the maker thereafter, without the knowledge or consent of the indorser, altered the note by inserting in the body thereof the words " Three hundred " immediately in front of the words " Seventy-five " and the figure " 3 " immediately in front of the figures " 75," thereby making the instrument apparently a note for $375 instead of $75 ; and that the maker thereafter caused the note as thus altered to be discounted by the plaintiff bank. The answer prayed judgment that the complaint be dismissed except as to the amount of the note before alteration, together with interest and protest fees, to wit, $78.66. The defendant also served an offer to allow the plain- tiff to take judgment for that amount. Upon the trial the court charged the jurv that if the note indorsed by the defendant was in fact a note for $375 on its face, the plaintiff was entitled to recover that amount and interest. I. 3.] ALTEIJATION. 617 The trial judge further charged the jury that if they found that there were spaees upon the note " so carelessly and negligently left by this indorser, Mr. Lester, that a person having custody of the note might run in a figure 3 and the words ' Three hundred ' so as not to occasion in the mind of the indorser [evidently meaning indorsee] any inquiry into its validity," they might find that the indorser con- ducted himself carelessly and negligently in the premises and thus invited the liability which the face of the note called for when presented to the bank. The defendant duly excepted to that part of the charge to the effect that if the defendant was negligent in leaving blank spaces, the jury must find a verdict for the plaintiff for the full amount of the note as it stood. The court then reiterated the proposition, saying that " if the jury find that the defendant was careless and negligent in leaving vacant spaces for the words and figures, such carelessness and negli- gence on his part would still make him liable for the note;" and to this the defendant also excepted. The jury found for the plaintiff in the sum of $375, with interest. The judgment entered upon the verdict has been unanimously af- firmed by the Appellate Division. WiLLARD Barti.ktt, J. — As this case went to the jury, they might well have found that the note in suit was a note for only seventy-five dollars when originally prepared by the maker and indorsed at his instance by the defendant, and that it had subsequently been altered to a note for three hundred and seventy-five dollars when dis- counted by the plaintiff bank. They were instructed in substance, however, that the indorser was liable for the amount of the note as raised by the alteration, if he had been careless and negligent in plac- ing his name upon the instniniciil while there were spaces thereon which permitted the insertion of ilio words and figure whereby it was transmuted from a note for seventy-five dollars into a note for three hundred and seventy-five dollars. Conceding that the contract which he actually signed bf)und him only to pay the stnallcr amount, the jury were permitted to find that in consequence of liis negligence in the respect indicated it had become a contract wlnCli bound liini lo pay the larger amount to a subsc(|ucnl intiocrni holder of the paper. In sup[)ort of the correctness of this ruling, the learned counsel for the respondent asserts the doctrine that "a party to a note who puts his name to it in any capacity of liability, w lien il contains blanks un- canceled facilitating an altcralion raisin;: llic amount, is liable for the face of the note as raised to an innocent holder for value;" and he declares that this doctrine has been approved and apparently adopted in Alaban)a, California, Colorado, Tllinoip, Kansas, Kentucky, Louisiana, Michigan, Missouri, Nebraska and Pennsylvania. In considering his proposition, it is im|)or(ant to bear in mind a radical distinction which exists between two clasHes of notes to which 6 IS DISCIIAUOK OF INSTHU.MKNT. [ART. IX. tlie adjudicated cases relate : ( 1 ) Those notes in which obvious blanks are left at the time when they arc made or indorsed, of such a charac- ter as manifestly to indicate thai the iiistrumeiits are inconijilete until such blanks shall he tilled up; and {'!) those notes which are appar- ently complete, and wliith can he regarded as containing blanks only because the written matter (U)es not so fully occupy the entire paper as to preclude the insertion of additional words or figures or both. It is a note of the latter class that we have to deal with here. One who signs or indorses a note of the first class has been held liable to bona fide holders thereof, in some of the cases cited by the respondent, ac- cording to the terms of the note after the blanks have been filled, on the doctrine of implied mifhnrity, while in other cases, relating to notes of the second class, the liability of the maker or indorser for the amount of the note as increased by filling up the unoccupied spaces therein, is placed upon the doctrine of negligence or estoppel by negligence. The cases cited by respondent in which parties to commercial paper executed by them while obvious blanks remained unfilled thereon have been held liable upon the instrument as completed by filling out such blanks on the ground of implied authority, require no further consideration here, as there is no suggestion that there was any blank of this character upon the note in suit. These cases are ^y inter & Locb V. Pool (104 Ala. 580;) Station v. Stone (61 Pac. Eep. 481, Col- orado) ; Cason v. Grant Co. Deposit Banh (97 Ky. 487), and ^ycidman V. Symes (120 Mich. 657). There were obvious blanks also in the notes under consideration in Vishcr v. Wrhsfer (8 Cal. 109) and Loiv- den V. S. C. Nat. Banl- (38 Kan. 53.3), and the decision in eacli of these cases appears to have proceeded upon the doctrine of implied authority rather than negligence. It must frankly be conceded, however, that tlie respondent finds sup- port for the doctrine which it asserts in the case at bar in the de- cisions of Pennsylvania, Illinois and Missouri, so far as the maker of commercial paper is concerned, and in tho.se of Kentucky and Louis- iana, in respect to the liability of a party who has indorsed or be- come surety on a note in which there were spaces (not obvious blanks) that permitted fraudulent insertions enlarging the amount. {Gar- rard V. Iladdan, 67 Pa. 8t. 82 ; Yocum v. Smith, 63 111. 321 ; Scotland Co. Nat. Bank v. O'Connel, 23 Mo. App. 165; Ilacheit v. First Nat. Banl- of Louisville, 114 Ky. 193; Isnard v. Torres cf- Marquez, 10 La. Ann. 103.) In Garrard v. Iladdan (supra) a space was left between the words " one hundred " and the word " dollars " in which " fifty " had been inserted after the maker had signed and delivered it; and the court held the maker answerable to a hnna fide holder for the full face of the note as altered on the ground of the negligence of the maker in leaving the space in the note which was thus filled up ^fter execution. I. 3.] ALTERATION. 619 " We think this rule is necessary," said Chief Justice Thompson, " to facilitate the circulation of commercial paper and at the same time increase the care of drawers and acceptors of sucli paper, and also of bankers, brokers and others in taking it." It is a little difficult to see how the rule tends to make bona fide purchasers more careful, as this last observation suggests. The case of Yocinn v. Stuith (supra) held the maker liable upon a note which had been raised after execution from one hundred dollars to one hundred and twenty dollars, the words "and twenty" having been inserted in a space left between the word " hundred " and the word "dollars." The court said that the maker had acterl with un- pardonable negligence in signing the note and loa^'ing a blank which could so easily be filled: that he had thus placed it in the power of another to do an injury and that he must, therefore, suffer the result- ing loss. This decision undoubtedly sustains the position of the re- spondent, although there was another element of negligence in that case which is not present here. It appeared that the maker there was informed by letter by the purchaser, very soon after the date of the note, that he had bought it and of its date and amount; yet he made no objection as to the amount until nearly a year later. In Scotland Co. Nat. Bank v. O'Connd (supra) the defendants executed and flelivered a note for $100 to one Smith, the body of which was in his handwriting, in a condition which enabled him to add the words " thirty-five " after " one hundred " in the written part and put the figures "$13/5" at the head of the note in the space where the amount is usually indicated by figures. The St. Louis Court of Ap- peals hold that the (Iffcnrlnnts were liable for $135 because they had delivered the note to Smith, who was their co-worker, " in such a fon- difion as to enable him to fill blnnk spaces without in nuv niniiner changing the appearance of the note as a genuine instrumont." Thf cases th\is far discussed were all of them actions against the makers of the raised paper. The same rule, however, was applied against an indorscr in Isnnrd v. Tnrrrs i{- Marqncz (supra) by the Su- preme Court of Ix)uisiana under the following circumstances: Marquez indorsed a note for $150 for the accommodation of Torres. The amount was raised to $1,150 jiiid ))urcliased by the ftlaintilf in irood faith as a note for that sum. The report states that there was testi- mony of experienced persons to the effect that if at the time of the indorsement the word onze (for eleven, the note being in French) and the adtlitioiiid figure befr)re 150 were ru»t there "the note would have exhibited blnnks which at least with regard to the written part were unusual and calculnfcfl to attract attention ami would have rendered the note unsalable in the market." In this opinion, upon inspection of the note, the court expressed its full concurrence. Tli indorser wns held liable for the amount of the note as raised on th' ground that he had not exercised the proper caution, To the same 620 DlSCIIAIUiK OF INSrUHMKNT. I ART. IX. effect is Ilackett v. First Nal. Ihink of Louisville {supra), wlicre it was held that a surety who had signed a note in which were written the words " five hundred " with spaces hel'ore and after them, which th» maker had tilled u|) by writing "twenty" hefore and "fifty" after them, thereby making a note for $2,550, was liable thereon to a pur- chaser in good faith. Tn this case the attention of the Kentucky Court of Appeals was called to the fact that the great weight of authority was the other way, but in view of the fact that the rule had been so established in Kentucky for a quarter of a century the court deter mined to adhere to it, in observance of the principle of stare decisis. This court is not thus constrained. The f|uestion involved in the present appeal has not been authoritatively decided in this state and we are at liberty to adopt that view- of the law which '=;eems to us most consonant with sound reason and best supported by well considered adjudications in other jurisdictions. The outcome of these adjudications is accurately set forth, as t Beems to me, by Mr. Kandolph in his treatise on the Law of Com- mercial Paper as follows: " Where negotiable paper lias been executed with the amount l)iank. it is no defense against a bona fide holder for value for the maker to show that his authority has been exceeded in tilling such blank, and -» grreater amount written than was intended. This was also once held to be the rule where no blank had been actually left, but the maker had negligently left a space either before or after the written amount, which made it easier for a holder fraudulently to enlarge the sum first, written. It has now, however, become in America an established rule that if the instrument was complete without blanks at the time of it- delivery, the fraudulent increase of the amount by taking advantage of a space left without such intention * * * will constitute a material alteration and operate to discharge the maker." (1 Randolph on Commercial Paper, § 1-^7.) The rule thus stated is sustained by the decisions of tbo courts of last resort in Massachusetts, Michigan, New Hampshire, Towa, Maryland, Mississippi, Arkansas and South Dakota. In my judgment it rests on a sounder basis than the opposite doctrine and accords bet- ter with such adjudications of this court as bear more or less directly on the question involved. The leading case sustaining this view is Greenfield Savings Bank V. iStou-ell (123 Mass. 196), in wdiieh the opinion was written by Chief Justice Gray, afterward an Associate Justice of the Supreme Court of the United States. The discussion is careful and exhaustive, reviewing all the important cases in England and America bearing upon the sub- ject which had been decided up to that time (1877), including that of the Supreme Court of Pennsylvania in Garrard v. TJaddan (supra), which was the principal authority the other way. T slinll not under- take to review the same authorities here or paraphrase the opinion of r. 3.] ALTERATION. 621 Chief Justice Gray, which deals with them in such a manner as fully to justify his rejection of the doctrine that the makers of a promissory note apparently complete when they sign it are liable for an amount to which it may subsequently be raised, without their knowledge or con- sent on the ground that they were negligent in permitting spaces to remain thereon in which the figures and words which effected the in- crease could be inserted. Tn support of his conclusion, however, he quotes some passages from the opinion of Christiancy, J., in Holmes V. Trumper (22 Mich. 427) which will bear repetition as suggestive of some of the reasons why the forgery of a promissory note should not be held to create a contract, which the party sought to be charged never consciously made himself or authorized anybody else to make in his behalf. Speaking of the alleged negligence in leaving spaces on the note, Mr. Justice Christiancy said : " The negligence, if such it can be called, is of the same kind as might be claimed if any man, in signing a contract, were to place his name far enough below the instrument to permit another line to be written above his name in apparent harmony with the rest of the instrument j * * * When- ever a party in good faith signs a complete promissory note, however awkwardly drawn, he should, we think, be equally protected from its alteration by forgery in wliatover mode it may be accomplished; and unless, perhaps, when it has been committed by some one in whom he has authorized others to place confidence as acting for him, he has quite as good a right to rest upon the presumption that it will not be criminally altered, as any person has to take the paper on the pre- sumption that it has not been ; and the parties taking such paper must be considered as taking it upon their own risk, so far as the question of forgery is concerned, and as trusting to the character and credit of those from whom they receive it, and of the intermediate hohlers." While a general reference to the cases cited and reviewed by Chief Justice Gray in Greenfield Savings Bank v. Stowell (supra) will suffice, there are some later decisions to which attention may be called. In Knnxville Nat. Bank v. Clark (51 Towa, 264) will be found a strong and well-reasoned opinion against holding a party to a note which has been fraudulently raised, after it left his hands, liable for negligence, because when he executed the instrument there were spaces left thereon (not being obvious blanks designed to be filled) which would permit of forgery. The trial court had rendered judgment against the innker for the amount nf the note as raised from $10 to $110 on a finding of negligence in leaving a space before the word "ten" and the figures " 10." "On this ground," said the Supreme Court of Towa, " the court proceeded and the decision is based on the reasoning of the civil lawyers. But coiild it be anticipated that such negligence would cause nnother to commit a crime, and can it be snid a person is negligent who does not anticipate and provide against the 623 i)isriiAi;(;K ov in'STRUMENT. [abt. ix. thousand ways through oi- liy wliicli criiiu' is coiimiittofl ? Is it not reipiirinij of tlic ordiiiai-y luisiiicss man iikh-c (liliuciicc than can he maintained on prinriplo, or is pracficahic, if he is required to protect and ijiiard Ids husiness transactions so that he cannot he h(dd liahlc for the erinunal acts of anoth(M-. If so, why should not the ne<:^linronce of tlie owTier of goods which are stolen excuse tlie hniia fide pur- chaser?" And referrinfT to the arsjunient that sucli a measure of lialdlity is re()uired to promote tlie free intcrchan<^e of commercial pai)cr (a view wliich seems to have been influeidial in the Penn- sylvania case of (larninl \. Iladdan) the court well said: "At the present day negotiahle ])a]>er is not ordinarily freely received from unknown persons. Forgeries, however, are not confined to such. l>ut the necessities of trade and commerce do not re(]uire the law to be so construed as to compel a person to perform a contract he never made and wliicli it is proposed to fasten on him because some one has committed a forgery or other crime." In Burrows v. Khink (70 Md. 451) the Maryland Court of Ap[)cals emphasizes the distinction between a note in blank as to the amount, when signed and delivered to another for use, and a note complete on its face when signed and delivered, in which has been written the sum payable, the date, time of payment and name of the payee. " Tn such case," it is held, "there can be no inference that the defendant author- ized any one to increase the amount, simply because blank spaces were left in which there was room enough to insert a larger sum." No one qiiestions the proposition that where a party to commercial paper intrusts it to another with a blank thereon designed to be filled up with the amount such party is liable to a hnna fide holder of the instrument for the amount filled in, though it be larger than was stipulated with the person to whom immediate delivery was made. (Van Duzer v. Howe, 21 N. Y. 5.31.) So, also, a note executed with a blank therein for a statement of the place of payment is not avoided in the hands of a bona fide holder for value by the insertion in the blank of a place different from that agreed upon by the original parties. (Redlich v. Doll, 54 X. Y. 234.) But where there is no blank for that purpose when the note is indorsed, the insertion of an obligation to pay interest is a material alteration which invalidates the instrument as against the indorser. (McGralh v. Clarlc, 56 N. Y. 34.) Tn the case last cited the note when indorsed ended with the word " at," followed by a space in whicli the maker, after indorsement, inserted a place of payment, adding the words "with interest;" but no sug- gestion appears to have been made that because the space left was large enough to allow the insertion of these words, the indorser was negligent and could be charged with the amount of the note, including the interest, on that ground. On the contrary, as the law then stood, he was relieved of all liability whatever as the effect of the unauthorized alteration. Now, however, under the Negotiable Instruments Law I. 3.] ALTERATION. 623 (§ 205) he would be liable on the paper according to its original tenor. To sustain the judgment in the ease at bar in view of the instruc- tions under which the issues were submitted to the jury, we must hold that the indorser of a promissory note, the amount of which has been fraudulently raised after indorsement, by means of a forgery, is liable upon the instrument in the hands of a bona fide holder, for the in- creased amount, because of negligence in indorsing the same when there were spaces thereon which rendered the forgery easy, though the note was complete in form. To d o this would be to create a , contract through the agency of negligence; for the action is not in/ tort for daihages, ]n\\ upon the contract as expressed in the Trote. Rut' apart from any (jiu'stinn as to the form in which the indorser is sought to be charged, I am of opinion that no liability on the part of the indorser for the amount of such a note as raised can bo predi- cated simply upon the fact that such spaces existed thereon. This conclusion I base upon the authorities to that effect which I have already discussed and upon what seem to me to be considerations of sound reason independent of judicial authority. An averment of negligence necessarily imports flic oxistonrc of a duty. What duty to subsoijiicnl holders of a piMiiii—niy note is imposed by the law upon a person who is re(jueste(l to indorse the paper for the accommo- dation of the maker and who complies with such request? It is a complete instrument in all respects — as to date, name of payee, time and place of payment and amount. There are, it is true, spaces on the face of the instrument in which it is possible to insert words and figures which will enlarge the amount and still leave the note ap- parently a genuine instrument — in other words, there is room for forgery. On what theory is the indorser negligent because he places his name on the paper without first seeing to it that these spaces are 80 occupied by cross lines or otherwise as to render forgery less feasible? It can only be on the theory tliat he is bound to assume that those to whom he delivers the paper or into whose hands it may come will be likely to commit a crime if it is comparatively easy to do fio. I deny that there is any such presumption in the law. Tf; would be a stigma and rcfiectioii upon the character f)f the mercantile com- munity and constitute an intolcraljle reproach of which they might well complain as without justificati(»n in practical experience or the con- duct of business. That there are miscreants who will forge com- mercial paper by raising the amount originally stated in the instru- ment is too true and is evidenced by the cases in the law reports to which we have had occasion to refer; but that such misconduct is the rule, or is so general ns to justify the presumption that it is to be expected and that business men must govern themselves accord- ingly, has never yd been asserted in this state, ami T am not willing to sanction any such proposition either directly or by implication. On 624 DISCHARGE OF INSTRUMENT. [ART. IX. the contrary, the presumption is that men will do right rather than wrong. (!Soe Bradish y. liliss, 'My VI. rj^G.) As was said by Judge Cullen in CriUni v. Chemical I\ai. Bank, (171 N. Y. 21!), 221), it'is not the law tliat the drawer of a check is hound so to prepare it that nobody else can successfully tamper witli it. Neither is it the law that the indorser of a promissory note complete on its face may be made liable for the conse(]uences of a forgery tiiereof simply because there were spaces thereon which rendered the forgery easier than would otherwise have been the case. 1 think the judgment of the Appellate Division should be reversed and a new trial granted, with costs to abide the event. CuLLEN, Ch. J., Gray, Haight, Werner, IIiscock and Chase, JJ., concur. , 't.. --^ , - ; . Judgmetft reversed, etc.^ § 205 NOLL V. SMITH. ' 64 Indiana, 511.— 1878. Action against maker by indorsee. Defense, that the notes had when executed a condition annexed that they were not to be paid unless defendant sold machines equal to the amount of the notes, and that the notes had been altered by cutting off the portion contain- ing the condition. Judgment for plaintiff. Niblack, J. [After stating the facts.] — We understand the gen- eral rule to be that the removal or detachment of a material con- dition annexed to, or forming a part of^ a negotiable note, without the knowledge or consent of the maker, will ordinarily be a sufficient defence to such note, even in the hands of an innocent holder, and especially when such removal or detachment is made under circum- stances which put the purchaser of the note fairly upon his inquiry as to the altered condition of the note, and this we construed to be the doctrine of the case of Cochran v. Neheker (48 Ind. 459), cited and discussed by the appellant; but that, when the note and con- dition are negligently so executed by the maker that the condition may easily be removed, without in any manner mutilating or defacing the note, and the note is thus, without objection, put in circulation in that form, the maker cannot be heard to deny his liability to pay the note in the hands of an innocent holder, notwithstanding the condition may have been detached from it before such innocent holder became the owner of it. Such was, in substance, the decision of this court in the case of Cornell v. NeheJcer (58 Ind. 425). See, also Woolen v. Ulrich (64 Ind. 120), approving and following that case. 2 This case is reported with notes in 21 L. N. S. 402, and in 16 A. &, E, Ann, Cm. 770. — C. I. 3.] ALTEBATION. 625 Upon the authority of theise last named cases, the judgment in hifl case will have to be allirmed. The judgment is affirmed, with costs.' § 205 Bbown v. Keed, 79 Pa. St. 370. — 1875. The original instrument was as follows : North East A/>ril, 3d, 187a. Six monihs after date I promise to pay to J. B. Smith or bearer fifty dollars when I sell by order Two Hundred and Fifty Dollars worth of Hay and Harvest Grinders, lor value received, with legal interest, without appeal, and also without defalcation or stay of execution T. H. Brown. Agent for Hay and Harvest Grinders. 3 Such an alteration is material and will prevent recovery by bona fide hold- ers. Scofield V. Ford, 56 Iowa, 370; Wait v. Pomeroy, 20 Mich, 425; Benedict V. Cowden, 49 N. Y. 396; Gerrish v. Glines, 56 N. H. 9; Stephens v. Darns, 85 Tenn. 271. Negligence of the maker may, however, estop him from setting up the alteration. Harvey v. Smith, 55 111. 224; Seibel v. Vauyhan. 69 111. 257; Fhelan v. Moss, 67 Pa. St. 59; Ziwmer»ia» v. Rote, 85 Pa. St. 188. — H. (Under § 205 of the Negotiable Instruments Law. the holder in due course 19, of course, permitted to recover on the instrument " according to its original tenor." See Bothell v. Schweitzer, 120 N. VV. (Neb.) 1129. A note to this case in 22 L. N. S. 263, says in part: "Prior to the adoption of the uniform Negotiable Instruments Law, wliich permits a bona fide holder not a party to the alteration of the instrument to recover according to its original tenor, it seems that the detachment of a paper originally attached to a bill or note, and modifying the terms thereof, either had the effect to render the instrument void, even in the hands of a subsequent bona fide holder, and prevent any recovery thereon, or to entitle such a bona fide holder to recover according to the tenor of the bill or note, and without reference to the conditions in the detached paper. In other words, the courts did not adopt the middle ground contemplated by the provision of the Negotiable Instruments Law already referred to. In some of the cases holding that there could be no recovery at all, for the reason that the detachment of the paper constituted a material alteration avoiding the bill or note even in the hands of a bona fide holder, the conditions contained in the detached paper would themselves have prevented a recovery, ^o that the result was the same as if the court had been of the opinion that the bona fid>- holder took the instrument subject to the conditions in the detached paper. 'Ibis fact, however, can scarcely limit the effect of the express language putting the decisions on the other ground. A reference to the case note to Sational Etch. Rank v. Lester, 21 L. U. A. (N. S. ) 4(»2, as to the duty of the indorser, maker, or surety of the commercial paper to see that spaces are filled so as to prevent raising, discloses the same tendency on the part of the courts, prior to the adoption of the .Negotiable Instruments Law, either to permit a recovery according to the tenor of the insfrunx-nt as alteref a bona fide IkiMit. while otherM allow a recovery. Doubtless the facts with respect tf) negligence will (lis=ipate Bome, though not all. of the apparent conflict among the cases on this |ioint." See also the note on " Instruments so executed that a portion thereof may be detached or altered," in 11 Am. St. Kep. 317. — C] NEOOT. IWflTRUMKNTS — 40 626 WSCllAKUE OF l>iSTKUMKNT. [ART. IX. The instruniont oITlmocI in evitk'iue was the left hand portion of the abovo. wliirh hurt" the indorseinenl "J. B. Smith." The paper hail liri'ii rut ill tut) without Brown's knowletlge. PhiintifT w^as a holder ill due itiuisf of the lu'notiahlo portion. Defendant offered to prove ihr alti'iatioii, and the dllcr was rejecti-d. Held: '* W'iu'thcr thi'ie was iiej^li^enee in the maker was clearly a (piostion of I'aet lor tlie jury. The line of demaication between the two parts nii<,dit have been so clear and disliiut and given the instrument so unusual an appearance as ouoht to have arrested the attention of any prudent man. l^iit it may have been otherwise. If there was no neglijifence in the maker, th(> fj^ood faitli and absence of ncijlitjenee on the ])art of the holder cannot avail him. The altera- tion was a forgery, and there was nothing to estop the maker from alleging and proving \\* * * \V(. think then that the evidence offered by the defendant below should have been received." * II. Discharge of party secondarily liable. § 201 Mccormick v. shea. 50 Miscellaneous (N. Y. Sup. Ct., App. T.) 592. — 1906. Appeal by the plaintiff from a judgment for the defendant and also from an order denying plaintiff's motion for a new trial. GiLDERSLEEVE, J. — The action is on a promissory note against the defendant, Thomas J. Shea, as maker, and defendant, Annie A. Shea, as indorser. Said Tliomas .T. Shea, the maker, does not defend the action. There is a very sharp conflict of evidence as to the facts, and the jury found for the defendant. Plaintiff appeals. It is conceded that, before maturity, the indorsement of said Annie A. Shea was canceled. This was done by a representative of defendant's attorney who scratched out the indorser's name in the presence of plaintiff. The parties were negotiating with respect to claims of each against the other, and it is the contention of defendant that as a part of a compromise plaintiff consented to the cancellation of said indorse- ment. Plaintiff, on the other hand, claims he never authorized such cancellation and protested against the same. He further claims that there was no consideration for such cancellation. Even so, if he did, in point of fact, authorize and agree to this cancellation, the indorser was released, as a person secondarily liable on a negotiable instrument is discharged "by the intentional cancellation of his sig- nature by the holder." Neg. Inst. Law, § 201 ; LarHn v. Harden- hrook. 90 X. Y. 333; Schwartzman v. Pofit, 94 App. Div. 474. The * See the preceding note as to the effect of the Negotiable Instruments Law. — C. II.] DISCHARGE OF SECONDARY PARTY. 62? fact tliat the crossing out of the iudorser's name was made not by the plaintiff personally, but by defendant's representative in liis presence, was a fact Avhicli the jury might have considered in deter- mining whether the plaintiff's or the defendant's version of the facts was the correct one. Q'hey believed the defendant's version. It is not sufficient for the purpose of a reversal, on the ground that the result is against the weiglit of evidence, that the Appellate Court may have reached a different conclusion upon the facts than that arrived at by the jury, if there is sufficient evidence to support the verdict. In order to justify a reversal it must clearly apjx'nr that the fair pre- ponderance of proof is really on the side of the defeated [larty. {Loretiz V. Jackson, SS jluii. 'iiV! : ('Union v. Freur, 107 App. Div. 571.) In the case at l)ai-. thei-c is ((tnsidcrahle evidence, which, if believed, justifies the verdict. This evidence the jury were at liberty to believe, and the Appellate Court tloes not feel warranted in setting aside the verdict. The learned counsel for the appellant urges that the court erroneously charged as follows: "Whenever any signature on a note appears to have been canceled, the !)urden of proof lies upon the party who alleges the cancellation w;is nuide under mistake oi- without authority; and, therefore, the i)laintiff' in this case has the burden of proof to establish that fact." There was no error here. The Nego- tiable Instruments Law, section 204, provides that: "A cancellation made unintentionally, or under a mistake, or without the authority of the iiolder, is inoperative: Imt where an instrument, oi- ;in\' signature thereon, appears to have been canceled, the burden of ))ioof lies on the party who alli'ges that the cancellation was nuule unintiMitionally. or under a mistake, or without authority." In the case at bar, the sig- nature of the imlorser appeared to have been canceled, nnd phiiiiliff claimed it was canceled without authority. '^Plie l)ui(len, therefore, was on him to show that it was so canceled without authority. IMiere arc no other exceptions that require discussion. The judgment and order apju'alcd from must be affirmed, with costs. §201 .1 i:\Kl\S r. MACKl'^XZIE. fi ri'iM K Canada, Q. I?, f) 1 1. -- IH-IO. .Tamfs MrKF^vzip; made a note payable to Joseidi Pierson or order, which Pierson indorsed; and after him, .lohn James McKcn/ie (dcfem1an( ) indorsed to Proby, who has since died leaving said Joseph Pierson one of bis (vxecutors. T'ierson is now, as Proby 's executor, plaintiff in an actum against defendant McKenzie. Plea, that Pierson is liable over to defendant in . Smith Rul)ber Company, a corporation doing business at Sctauket, Xew York, being indebted to the defend- ant, gave him three pronii.ssory notes, and accepted three bills of ex- change, representing such indebtedness and aggregating in the wbolf something more than five thousand dollars. All of tli(> notes and billf; were payable to the order of the defendant, were by him indorsed, and at his request were diseounted for his benefit by the plaintiff. Shortly thereafter the Rubber Company failed. That failure com- pelled the defendant to go into insolvency. The plaintilT presented its elaim against bis insolvent estate and received a dividend Ihereon. The defendant having since that time acquired otln'r property, the plaintiff brought this suit and attached such other property. Since the T Accord: F!rnr/i v. Van Dusm. 25 Mich. .151; f!purqrnn v. f^mitha. 114 Tnd. 463. Contra: Clark v. tiicklcr, 04 N, V. 231. — H. 630 niSCllAliCK OF instkumknt. [aut. IX. briiii:;ini^ of this suit the phuntill", in loiiimon with nearly all the ereilitors of the L. 1>. Smith Iviilihci- (.'()ui])an}', including the defend- ant, signed an agreement which is fully set out in the finding, but whieh it is not necessary here to repeat. For the purposes of the pres- ent discussion it is sulficient to say that that agreement provided, among various other things, that the creditors of the rubber company shouUl assign their claims to ct'rtain ])ei'sons called a reorganizing eoniniittee, and that this committee should i)roceed to reorganize the eompany and should issue to each of the several creditors in payment for their res])ective claims the stock of tlie reoi'gani/.cd company, which the creditors agreed to accept. When the ])lainti(r signed the agreement it added to its signature: — "reserving all i-ights against R. G. Holt, or against bis estate, or assignee foi- the benefit of his creditors." These words did not appear in the body of the instru- ment. The defendant insists that by signing the agreement the plaintiff assigned all its claims against the L. B. Smith Rubber ('om])any to the reorganizing committee, and thid as he is liable to the plaintiff only as a surety for that company the assignment of the claim against the principal debtor disi'harges him. Tiiat an umjualified release of a principal debtor will be a dis- cbarge also of the surety is admittedly good law. The plaintiff, bow- ever, claims that by the reservation appended to its signature it is not affected by that rule. The defendant cites two cases, either of which by its terms fully supports bis contention. But the authority of each of these cases is greatly weakened, if not entirely overturned, by later decisions in tbe same jurisdiction. Wchh v. TTeiviit (3 Kay & Johnson, 438), is substantially overruled by Green v. Wynn (L. R. 7 Eq. Cas. 31, and L. R. ^! Cb. Appeals, 204), and Farmers' Banh v. Blair (44 Barbour, fill), by Morgan v. ^mith (70 N. Y. 545) ; Colvo V. Davies (73 N. Y. 211) ;" Nat. Bank v. Bigler (83 N. Y. 51), and Shutts V. Fi7igar (100 N. Y. 539.) It is stated in De Colyar on Principal and Surety (118), that such a reservation as was made by the })laintiff pi-events there being any discharge of the surety, and gives as authority: (Kearslejj v. Cole. 16 Mees. & Wels. 128; Wyke v. Rogers, 1 De G. M. & G. 409; Boaler V. Matfor, 19 C. B. N. S. 76, 84; Owen v. Homan, 4 IT. L. Cases, 997; and Clo.'^e v. Close, 4 De G. M. & G. 176. See, also, Tobey v. Ellis, 114 Mass. 120: Kenv:orthy v. Snwi/rr, 125 Td. 28: BanJr v. Linrherger, 83 X. Car. 454; Morse \.' JIuntington, 40 Yt. 493; TTagey v. Uill, 75 Penn. St. 108; Mueller v. Dohschueiz, 89 111 176.) The weight of authority seems to us to be strongly adverse to tbe defendant's claim. There is anotber view of the case whicb makes it clear that tbe de- fendant is not entitled to a discharge by reason of the plaintiff's sign- ing the agreement. Whenever a creditor gives time to, or makes a II. J DISCHARGE OF SECONDARY PARTY. 631 new contract with the principal debtor, of which new contract the surety has knowledge and to whith he assents, he is not thereby dis- charged. {Adams V. Way, 32 Conn. 160; Codies v. Estes, 31 Vt. 653; Smith V. Winter, 4 Mees. & Wels. 454.) The composition agreement was beneficial to all the creditors of the L. B. Smith Rubber Company, provided all entered into it. The defendant and his trustee in insolv- ency signed it before the plaintiff did. It was obviously for the ad- vantage of each that the other should sign. Without some such ar- rangement neither could ever hope for any payment from that com- pany. With such an arrangement there was a chance that they might both be paid in full. The plaintiff signed with the knowledge that the defendant and his trustee had previously signed. A composition deed implies not only an agreement of the debtor with each of his creditors, but also an arrangement by each creditor with eacli of tha others. The signing of such a deed by any creditor is in some meas- ure a request to all the otliers to sign also. The circumstances of this case sliow pretty clearly that the defendant knew of and assented to the act of the plaintiff in signing the agreement. There is no error in the judgment complained of. In this opinion the other judges concurred. * § 201 CONTINENTAL LIFE INSURANCE CO. v. BARBER. 50 Connecticut, 5G7. — 18S3. Carpenter, J. — This is an action against the executors of the estate of the late Gardner P. Barber, deceased, who, when in life, in- dorsed a note for $8,000. The Superior Court found the facts and rendered judgment for the plaintiff. The defendants appealed. The reconl presents three (piestioiis. 1. Was the indorser discharged by the act of the plaintiff? The note fell due July 20th, 1874. On the 22d of October, 1871, the maker " Onp who takes a bil! as a lioMor in ;>() DISCllAliCK OF INSTKUAFKNT. [ART. IX. low that the statute has disposed of the eonlliet of authority upon this question by holding the aeconunodation acceptor or maker to his ap- parent engagement as a principal dehtor, and making him liahie, not- withstanding an indulgence given to the endorser or drawer for whose benefit he became a party to the instrument." The same question raised here was considered in the case of Cellers V. Mcacheni, 49 Or. 186,* and the conclusion was there reached that, under the new law, an accommodation maker was primarily liahie, not- withstanding any knowledge the holder of the iTistrumeTit might have had as to his relationship with the principal. To the same effect are the cases of Vanderford v. Farmers' & Mechanics' Nat. Bank, 105 Md. 164,^ and National Citizens' Bank v. Toplitz, 81 App. Div. 593.* "This case is reported in 13 A. & E. Ann. Cas. 097, witli note entitled, " Discharge of accommodation joint maker by extension of time to co-maiJ. 645 is entitled to a certain part of the debt due from the trustee to the defendant. There is no doubt that an order for a specific fund, identified by the order itself, may be a good assignment. (Kingman v. Perl-ins, 105 Mass. Ill ). We assume in favor of the claimant tliat an equitable assignment to him of a part of the debt would be good as between him and the plaintiff upon trustee process. {Dana v. Third National Bank, 13 Allen, 445, 447; James v. Newton, 14'^ Mass. :UUi, ,'574. ) Our difficulty is to discover any ground for saying that the instru- ment relied upon constituted such an assignment. On its face, the order given to the claimant by the defendant does not refer to a particular fund or debt, but is an ordinary negotiable draft, or unaccepted bill of exchange, drawn upon the town on the general credit of the drawer. An indorsement of the instrument by the claimant would have given the indorsee a right of action in his own name against the drawer, if the draft should be dishonored. But the fact that the order is a negotiable instrument on its face shows that it is not drawn against a particular fund. If it were dt-awn against a particular fund, it would not be negotiable. ' (Wheeler v. Souther, 4 Cush. fiOfi, fi07 ; JTarriman v. Sanhnrn, 4.S N". H. 128.) The case is stronger for holding a check upon a bank to be an as- signment, than it is for holding an ordinary draft to be so. A chock is supposed to be drawn against a fund deposited, for which, to bo sure, the bank is no more than a debtor; but a debtor on the implied term that the creditor has a right to split up the debt at will, and to require part payments in such amounts, at such times, and to such persons as he chooses. In general, the creditor has no right to draw above the amount of his deposit, and would be guilty of a fraud if he obtained money or goods for a check knowingly so drawn. Yet the weight of authority is that a chock is not an assignment either at law or in equity. ^ (Bnllard v. Randall, 1 Oray, 605; Dana v. Third Na- tional Bank, 13 Allen, 445, 447; Atinrney-Ocnoral v. Continental TAfe Ins. Co., 71 N. Y. :i2r^; First National Banlr of Mount .Jo,/ v. Cish, 73 Penn. St. 13; Hopl-inson v. Forster. L. "R. in Eq. 71; Srhroeder v. Central Bank of London. 21 W. I?. 710. Soc Larlrdr Bank v. Srhnler. 120 TT. S. 511, 511.) A fortiori, the same rule must hold good of an ordinary dnifl unac- cepted, which does not import the oxistoncc fif a dclit froni the diawcc to the drawer, but loaves the ninttor of the drawee's roimbursonionl to such private arrangements as may exist between the drawer and himself. And so are the decisions: (Whitney v. Fliot Nat. Bank, 137 Mass. 351, 355, 35fi ; National Rrrhange Ihivk v. Mrl^oon. 73 Maine, 498, 511 ; Bank of Commerce v. Bogy, 44 Mo. 13. See First • Sep Nep. Inst. L.. S 22. — H. 7. See NV". In-t. I... S .TJ.l. — II. nil) lUI.I.S OK KXCllANGH. [aUT. X. Nat. Bank of Canton v. Dnhiujue Southwestern Railway, 52 Iowa, 378.) 'riuTc is no extrinsic fact in the present case wliicli j^ives the docu- ment a (litFerent ell'ect from that whicli results from its tenor, if it be possible that its effect should be varied by parol. (See Whitney v. Eliot iXat. Bank; supra; (h-iffin v. Weatherby, L. R. 3 Q. B. 753, 759; First Nat. Bank of Canton v. Dubuque Southwestern Railway, 52 Iowa. 37S.) The defendant had done work for the town, and his only right to draw was in respect of the price of liis work. If we assume this fact to have been known to all parties concerned, still it only shows that the town was known to have means of indemnifying itself if it saw fit to pay. It does not enlarge the meaning of the draft be- yond that which it bears on its face, of a general request to the town to pay. Even a reference to a fund out of which a drawee may indemnify himself will not take away the negotiable character of the draft.** We may remark that the concluding words of the draft in (]uestion are " charge to account of." In some of the otliers, they are " charge to the account of," which is slightly more specific. But we do not see any sound distinction in favor of the latter. If the town had ac- cepted the order, having power to do so, it would have become liable on a direct and absolute contract to the claimant, very likely having a right to withliold an equal amount of its debt to the defendant. But mere retention of the draft was not acceptance.^ {Overman v. II o- hoken City Bank, 2 Vroom, 503.) Trustee charged. Judgment for plaintiff.^ 2. Inland and Foreign Bills. § 213 YALE V. WARD. 30 Texas, 17.— 1867. The bill on which suit was brought was in these words, with the indorsement of " Henderson, Terry & Co.," across the face of the note : — 8 Neg. Inst. L., § 22; ante, pp. 50-54. — H. 9 See Neg. Inst. L., § 225. — H. ' A.s to wlipthpr a bill is an assignment there liii.-< Ixcii ;i coiiflif't of au- thority, especially where the bill is drawn for the wliol*' of the fund. See 1 Daniel on Neg. Inst.. §§ 15-23; 2 Am. & Eng. Encyc. L. (2nd ed.), pp. 1062- 1064. That a bill drawn for the whole of a fund is not an assignment, see fihand v. Du Bui/isnn. 18 Eq. Cas. 283; First N. fi. v. Dubuque .Sf. R. It.. 52 Iowa. 378; Bush v. Foofr. 58 Miss. 5; lifink v. fiofiy. 44 Mo. 15. But an order for a payment of a particular, specified debt in full, is an assignment. Lewis V. Bank. 30 Minn. 135; Brady v. Chadbourne, 68 Minn. 117; Moore v. Davis, 57 Mich. 255. — H. II. J INTERPKKTATION. 647 $307.78. Xew Orle.xns. 2(1 May. ISCl. On the 12th day of December, after date, pay to the order of C. Yale. Jr. & Co., $307.78, value received, and charge the same to account of Matt. Wabd. To Messrs. Henderson, Terry & Co. To it was attached the usual formal protest, dated " United States of America, State of Louisiana," by a " notary of the parish of New Orleans, State of Louisiana," 14th December, 1801. Willie, J. * * * There being no allegation to the contrary, we must treat the draft upon which this suit is founded as a domestic bill of exchange. Neither the place where the draft was drawn, nor where it was accepted, is stated in the petition. The instrument itself, made part of the petition, purports to have been drawn at New Orleans ; but there is no averment that this place is beyond the limits of Texas. This court has held, that it will not take judicial notice of the division of other states into towns, cities, etc., and that knowledge of the fact that any place is within a different state of the Union must be derived from the allegations of the parties or the evidence contained in the rec- ord. (Andreics v. Hoxie, 5 Tex. 185; 4 Tex. 420.) The rights of the parties to this contract, therefore, must be ascer- tained, and their liabilities fixed according to the law of our own state.^ ♦ * * 3. Bill Tije.vted as Promissory Note. §214 FUNK r. RAP. P.TTT. [Reported herein at p. 1. ')().] i 2 Accord: Kearney v. Khifi. 2 P.. & AM. HOI: nhiuin v. CoUier. G Mo. .-iRS. A hill drawn and dated in Phil.Tdclpliin. pnMiMc in Inndni). hnt ."ctrMllv delivered by the drawers in London, is to be trenti-d iis a forciirn iiill i-i the hands of a bona f'ule holder. Lenniy v. h'alsloii. 2:i Pa. St. l.'U. A leptor, he was one supra protest, and hh ohligntion wns. that if the bill was not pnid by the drawee npon dun prcscntniont at its maturity, then upon protest for nonpayment, and due notice thereof to him, he would pay it. (Story on Rills of Ex., § 13.3; .3 Wend. 4rM.) There was no proof, in this case, of protest and notice, and for this reason the charge of the court was erroneous. The plaintitF was the payee. It was, therefore, clearly competent to show by parol the intention of the parties, at the time the contract was • By the Enplish and American decisions parol acceptance of an cxistini^ bill is MiflTicient. 1 Diiniri on Ni-;.'. Inst.. § r)04 rl srq. ; Sru(lon the bill. An acce()tancc by telc^^raph has be.ion is a deynrt'T" f'om fbo inrlicinl decision'* iipoi' this point. SpnuMivq v. Anrireirn, 48 Pa. St. 411; Jones v. Cnunril Rluffn Rnnlc, 34 111, 313. — H. 650 • ACCEPTANCK OF-^ HII.I.S. | AKT. XI. oiitorcd into, with rojxard to thoir scvoriil li;ihiliti('s iuiioii^ thoinselves, and the rcliiiion wliirli (lu'v wtTi- to Ih';ii Io I lie lull {liranck Bank at Mobile v. ('olciiiaii, M Ala. 1 ID.) Tlio I'vidi'nco of tin* dolVndant, wlio was a lonipetcnt witness under scition v'70l of the Ucn iscd (ode, ou<;lit to have been admitted. The judi,nn('nt is i-eversed and tiie cause remanded.^ § 220 JACKSON v. ?TTTDSON. [h'cpnrtrd herein at p. .] (r) DcUvcry Nrrrssnnj. DuNAVAN V. FiA'NN, 118 Mass. 5:57.-1875. Gray, C. J. — It was rii^htly held that the mere writincr of the aeoeptanee upon the hill, not communicated to the drawer or holder, and the detention of the bill in the defendant's custody, did not hind him, or operate as a payment of his debt to the drawer. {(.'lavei/ v. Dolbin, ('as. temp, llardw. "■^78; Jeune v. Ward, 2 Stark. 326; s. c, 1 B. & Aid. (;5;J ; Mason v. Barff, 2 B. & Aid. 26 ; Cox v. Troi/, 5 B. & Aid. 474, s. c, 1 Dowl. & Ryl. 38 ; Overman v. Ilohohen City Bank, 1 Vroom, 61, and 2 Vroom, 563.)^ 2 Accord: Davis v. Clarke, 6 Q. Ti. R. Ifi; ^mith v. Lockridge, 8 Bnsh (Ky.) 423. In Markham v. Hazen, 48 (Ja. .570, Die stranger-acceptor was lield as guarantor. If a bill is directed to an agent (A.) and accepted In* him in ttie name of his principal (X. Co., by A.), no one is bound: not the agent, for lie liiis not accepted; not the principal, for it is not the drawee. Walker v. Bank, M. Y. 582. If a bill is directed to a partnership (A. B. & Co.) and is accepted by one partner in his own name, it has been held that no one is bound; not the part- nership, for it has not accepted; not the partner, for he is not the drawee. Beenan v. A'asft, 8 Minn. 407. Contra: Oiren v. Van JTster, 20 L. J. C. P. 61. Soe note p. 306, ante. This is to be distinguished from the case of a bill directed to two or more drawees and accepted by one. See § 212, § 229, sub- sec. 5. — H. 3 Acceptance without re-delivery is inefTcct ive. Frrnvd v. Iniporfers' Rank, 3 Hun (N. Y.) 680. Except as provided in § 22.5. post. But '-ee 2 ^mcs' Cases on Bills and Notes, p. 790. An acceptance once completed by delivery is, in the absence of fraud on the part of the holder in f)rocuring the accept- ance, irrevocable. Treyit Tile Co. v. Fort Denrhnrn .Y. B., 54 N. J. L. 33, 599; Fort Dearborn, N. B. v. Carter, 152 Mass. 34. — H. 1. 2.] by separate instrument, 651 2. Acceptance By Separate Instrument. §222 FIRST NATIONAL BAMv OF ATCHISON v. COMMER- CIAL SAVINGS BANK. 74 IvANSAS, 006. — 1906. Demurrer to petition overruled. Judgment for plaintiff, and de- fendant brings error. BuRCii, J. — J. F. Donald, liaving funds on deposit with the First National Bank of Atchison, Kan., drew a check upon it for $350, pay- able to Maria C. Donald or bearer, which he delivered to the payee. The payee indorsed and delivered the check to C. B. Bennett, who, in turn, indorsed and delivered it to the Commercial Savings Bank of Adrian, Mich. Donald stopped payment of the check before it was presented for payment, and the Michigan bank sued the Kansas bank for the face of the check and interest, claiming it had been accepted in writing, and that it had been purchased for value on the faitli of such acceptance. The petition was framed upon the theory that an ar-ceptance is disclosed by the following telegrams: "Adrian, Mich., Oct.' 15, 1003. First National Bank, Atchison, Kansas. Is J. F. Donald's check on you $350 good ? Commercial Sav- ings Bank." " Atchison, Kas., Oct. 15, 1003. Commercial Savings Bank, Adrian, Mich. J. F. Donald's check is good for sum named. First National Bank." Of course, there is no dispute that the transaction is governed by sections 517 and 548, Cen. St. 1001, which read as follows: " No person within this state shall be charged as an acceptor of a bill of exchange, unless his accej)tance shall be in writing, signed by himself or his lawful agent. * " If such acc-eplance be written on paper other than the bill, it shall not bind the acceptor, except in favor of a person to whom such ac- ceptance shall liiiv(> been shown, and who, in fnitli thereof, shall have received the hill for a valuable consideration."* ' Neither is there ;iriy disjtnte that (lie writlen acce|ilance cf)ntein- plated by the statute may be made by telegrams. (7 Cyc. 7^)5.) The order contained in a check is for payment in nionev instantly iifion demand. Xo presentation for a(ce|itance .hkI no accef)tance is contemplatcrl, as in the ease f)f an ordinary hill of e\(li;inge. The bank is under no obligation to do other than pay. and flic ohlignljon to pay runs to the maker, and not to the holder. If it refuse to p;iy wlien • Rpp N. Y. Nop. Tn«t. T.nw. 5 220. — f. * See N. Y. Nff. Inst. T.nw, § 222. — C. 653 ACCEPTANCK OF HILLS. [ART. XI. it has funds of the inakrr in its posscssiun subjei'l lo cluTk, tlir holder has uo ivnanl} ajj;ain.si lh>.' hank, lli' niu?t luuk lu the maker. W hou an uiiiuiaiy bill of cxi'lianyx' is pix'suiitt'd for acceptance, the drawee is under tlie positive iluly of accepting or refusing to accept, and, if aeeeplajice be not [)lainly negatived hj whatever he does, he will be bound as an accej)tor, because acceptance is something contem- plated by the bill itself. A request upon a bank that it accept a cheek is a request for the creation of a legal relation between tlie holder and the hank, wholly without and beyond the purview of the paper. If such relation be established, it imposes upon the bank a liability to a party to whom it was not before bound at all, and it converls the privilege of the bank to pay if in funds into an absohite and unconditional duty to pay, no matter what may be tlie state of the depositor's account. Any one claiming to be the beneficiary of a contract of this kind inde- pendent of and collateral to the check must clearly show that the bank intended to make it. Neitlier law nor t'ustom hinds parties to tlie use of any set formula in arranging an acceptance. They may choose tlieir own words. Brev- ity is not simply allowable, it is commendable; but in all eases there must be no doubt that an absolute promise to pay was made. If the transaction involve two writings, a proposition and a response, they should be construed together. The true principle governing the in- 'terpretation of communications like the telegrams between the parties to this suit was grasped and stated in the case of Rees v. ]Varrick, 2 Barn. & Aid. 113. In that case the drawer wrote to the drawee as follows: "Yesterday we valued upon you, favor W. Johnson and Co. two months for 100 I. which please to honor." The drawee replied: "Your bill 100 1. to W. Johnson and Co. shall have attention." It was held by Abbott, C. .T., that, to make a letter an acceptance, it ought to be in terms which admit of no doubt ; that the phrase " slinll have attention "' is at least ambiguous; that it may mean the drawee would e.xamine and infpiire into the state of the drawer's account for the pur- pose of ascertaining whether or not the bill would be accepted; and that, unless the words used import a clear and unequivocal acceptance, no recovery may be had. Holroyd, J., said : " The very circumstance that it has been so often lamented that anything short of a written ac- ceptance on the face of the bill should be held to make a pa)ty liable as acceptor shows the inconvenience that arises from the great un- certainty which is thereby introduced. In this case the words con- tended to be an acceptance are that the bill ' shall meet attention.' The defendant does not say, as in Wynne v. liail-es, that the bill ' shall be paid and accepted ; ' but, in fact, only that he will attend to it. Con- sistently, then, with these words it might depend on the state of the ac- count between them, whether he would accept the bill or not." Tested by this rule, the defendant's telegram does not express an I. 2.] BY SEPARATE INSTKUMENT. 653 acceptance. The inquiry indicates no clear intention to extract from the bank a new contract to pa}- independent of its duty to Donald. It is entirely consistent with the expression of a simple desire for infor- mation relatinc: to Donald's standing at the bank. It fairly means : " Is J. F. Donald's account with you sufficient to make his check for $350 good ? " The answer is strictly responsive to the inquiry. It indicates no clear intention to make Donald's check good whenever presented and whatever the condition of his account. It is entirely consistent with the simple purpose to state Donald's standing at the bank on the day of the telegram. It fairly means : " Donald's account is now sufficient to meet a check for the sum named." The writings are not equal to the unambiguous and unequivocal, "Will you pay?" and " We will pay." Other cases recognize the principle here applied. In the case of Kahn, Jr. v. Walton, 46 Ohio St. 195, the inquiry was: " Are M. A. Walton's checks for $2,000 good?" The answer was: "Yes, sir." The court, in denying that an acceptance was disclosed, said : "The telegraphic correspondence between the bank and Kahn's agent amounted to no more than an assurance that valid checks to the amount stated, drawn by Walton, or that might be drawn by him, were then good. No particular checks were mentioned in the inquiry, nor any intimation given that the inquirer had received, or wns n])out to re- ceive, such checks; nor had the bank any means of identifying the checks to which the inquiry related. Its telegrams, thoreforo, did not commit the bank to the payment of any particular check. At most it was information that Walton had, at its date, money on deposit to the amount stated, subject to check." In the case of Cook v. Baldwin, (120 Mass. 317), it was lield that the words, " I take notice of the above," written upon a bill of ex- change and signed by the drawee, do not of Ihemsclves necessarily import an acceptance. In the case of Mycrfi v. Union National Banl\ 27 111. App. 251. the inquiry was: " Will drafts for thirty-eight lumdrcd dollars, niado by J. H. Snyder on you, be paid if presented Mondny?" The answ(>r was: " Draffs narufd are good now." f TTcld, no acccplnncc. ] Thosf authorifies are siifTicifiil lo ilhisfraic flic rule fli;il flic drawee of a bank check cannof be held liiible upon a claimed contract of ac- ceptance cxfrrnal fo fhc bill, unless fhe language used clearly and un- equivocally import ;)ti ;d»solufe promise fo pay. The decision in the case of Cnrrrtson v. North Atchison Banlr (C C.) 30 Fed. 163, relied upon by counsel for plainfiir, was adinued by the Circuit Court of Appeals [51 Fed. 16S|, upon fhe idetifical ])rin- ciple discussed above. The telegrams in that ease were as follows: "Will you pay James Tate's check on you, twenty-two thousand dollars? Answer." "James Tate is good. Send on yom- p;ipcr." 654 Acrrn ■. \ci': ok iui,i.s. [art. xi. The court paitl : " 'I'lic (ino^lion luit to the hnuk \v;is wholly free from ainhigiiify. It v.ns tlcai. .'init ami pointcfl 'Will you pay James 'J'ato's rlun k on ymi twenty two thousand dollars? Answer.' There can ho no (loi;l)t that it was St ivctcr's purpose in sending fliis telesrraiii to asicrtain whether the hank would hind itself to pay the check in case he took it in jiayinei;! foi- the cattle to he delivered to Tate, ("an there he any douht t'-al tlie liank' niu'^t have understood the purpose and nu>r!iin;,' of the di-pateh thus addressed to it ? '" | Held, an acceptance. ] The judiru"'ut airairi'^t the ('(^rei'tka- f hatd< is rexci-sed, and the cause remanded, with insi rui'tion (o su. I ■iii) ils deniuriei' to the petition. All the justices concurring. ■' 3. Promise to Accept Must Be ix Wru'ing, etc. § 223 BANK OF MICHIGAN v. ELY. 17 Wendell (N. Y.) 50S. — 18.37. Action of assumpsit against defendant as acceptor. Defendant wrote his agents: "If you want moie funds, you can make drafts on me payahle at the ofTiee of A. S. ]\Iarviu & Co., X. York, due in August next. '" * * 1 have authorized ?Ir. D. D. Patch to accept these drafts for me." The agents wrote plaintiff ( o'n::ui:iicating tlie contents of defendant's letter, and suhsequently liw.sinitted hills drawn on defendant, which ])laintiff discounted and ])as«ed to the drawer's credit. There was no evidence that defendant's letter was ever shown to plaintiff. Referees' report for defendant. By the Court, Neeson, Cii. ,T. — ^ It is ohjected t'lat the acceptance of the defendant, under the circumstances of the case, is not wit1iin the provisions of the Revised Statutes, however ohli^ratory it mav he upon the principles of the commercial h-nv. The )M()visions of the statute, 1 K. S. 7G8, are as follows: § 6. No person within this state shall he charged, as an acceptor on a hill of exchange, unless his acceptance shall he in writing signed by himself or his lawful agent. § 7. If such acceptan(;e he written on a pajier other tiian the hill, it shall not hind the acceptor excc])t in favor of a person to whom such acceptance shall have been shown, and who. on the faith thereof, shall have received the hill for a valuable con.^i leraticm. ' §8. An unconditional promise, in writing, to accej)t a l)ill hefore it is drawn, shall be deemed an actual acceptance in favor of every 5 This case is reportod with nofps in 1]S /m. Fi. Tlrp. .3-10, and in 11 A. E. Ann. Cas. 281. — C. * Re-enacted in substance in Neg. Inst. I.., § 222. — H. I. 3.] PROMISE TO ACCEPT. 655 person who, upon the faith thereof, shall have received the bill for a valuable consideration. ^ A brief recurrence to the law as it stood in this state before the adoption of these provisions, will aid in comprehending their object and effect. It was settled, (1) that a parol promise to accept a bill already drawn, was valid and binding, and amounted to an actual ac- ceptance; and (2) that a parol promise to accept a future bill, or one not in existence, was not binding, unless the bill was taken by the holder upon the faith and credit of such promise. If it was so taken, then it was binding and amounted to an actual acceptance according to some of the cases. (1 Holt, 181 ; 2 Kent's Comm. 85 ; 12 Wendell, 598.) There are other authorities which require the promise to be in writing. Now by the Revised Statutes, no person, within this state, can be charged as an acceptor of a bill, unless the acceptance be in writing, signed by himself or his agent; and if such acceptance be in writing, but not on the bill, still the party is not charged, unless the fact be disclosed to the person taking it, and he on the faith of such acceptance, pay a valuable consideration for the same. Tlie accept- ance here referred to relates to a bill alreadv drawn. By § 8, an unqualified promise in writing to accept a bill to be there- after drawn, is deemed an actual acceptance in favor of any one who, upon the faith of such promise, takes it for a valuable consideration. There is some difference in the phraseology of § 7 and § 8, in respect to the circumstances under which the credit is to be given to the prom- ise to accept. The language of the former, is " in favor of a person to whom such acceptance shall have been shown, and who on the faith thereof," etc., whereas, the 8th section contains only the latter branch of the sentence ; the other was in the section as reported by the re- visers, but was subse(|uently stricken out. No reason can 1k' ])erceivO(l for a distinction in this respect between the two cases, and we do not believe that any was intendcnl by the legislature; and that the differ- ence in the phraseology is altogether accidental. It can be of no pos- sible consequence to the accepir 's in what mode the liolder comes to the knowledge of the acceptance, whetlier l>y ins[)ection or by oral com- munication ; it is a matter that can only concern the latter. I f he acts upon the representation of a third person, he incurs the risk of l)eing imposed upon, as he must, as to the genuineness of the writing upon an inspection. The language, "shall have been shown," means notliing more than to express the idea that the holder must know of tlie acceptance; this is, indeed, the only effect of it. All tliis is undoubtedly implied in the next sentence, and the clause, therefore, might as well have been omittcfl altogether, as it is in the next section. In I'ierftnn v. IhinJap Cf'owytcr, .'')71), tho first case in which this • Re-enacted in Kiilisf anr*- in N'd to retnrn the bill, and had promised to pay it; to which ruling nnd to the refusal of a nonsuit the defendant excepted. We think the nonsuit should have been granted for the reasons stated by the defendant. * * ♦ (><'0 ACCM'PTAN'tM': Ol' lULI.S. [ AUT. XI. Tlio vortlii't is set asiilc ;uul a lu'u trial oiiliTi'd, costs to abide tlie eveut." WISNER V. FIRST NATIONAL BANK. 220 PennsylvaiMa State, 21. — 1908. Mestrezat, J. Samuel R. Bullock drew six checks on the de- fendant bank in favor of Charles W. Gallaer, Jr., who deposited them in plaintilf bank in New York city, which credited them to his account in that bank. The first check is dated December 27, 1901, and the last January 3, 1905. The plaintiff sent these checks for collection to the defendant bank, two of tlicni 1hrou's control it is not sent to the holder in the specified time. There can be no reason, and we will not assume that the lefrislature intended to do an unreasonable thing, why the law should make a distinction between the nonreturn of the bill by the refusal to relurn after a srteeific demand and the failure or neglect to return after a demand implied bv presenting the bill for acceptance. If such should be the proper interpretation of the section and a formal demand be necessary, then there is no provi- sion in any part of the entire act imposing a penalty for the default or neglect of the drawee to return the bill, althou'/h the consequencefl of such act on the part of the drawee are as prejudicial to the holder as if a refusal to return the bill hnd followed a prior snocifie demand. There is. however, no such casus nwissns in the act; but the enforce- 664 ACCEPTANCIi OV hll,LS. [akt. XI. nicnt of tlio roturii of tlii' l)ill, iK'i.'t.'i)U'(l or noiuicci'pU'tl, witliin the time designated, being the primal ol)j(.Ht of the seotion, the cause of its detention is wholly immaterial, and lannot ali'eet the drawee's liability as an ai-ceptor. The I'onstruction we ])lace on section 1157 is Jiecessary to protect the holder of checks and other negotial)le paper, it furnishes a complete statutory remedy for any default of the drawee in acting on the paper when retained by him, and does no violence to the language employed in the section. Tt carries out the obvious intent of the legislative mind in the enactment of the section, and establishes a fixed and certain rule to govern the drawee and the holder in the former's action on negotiable paper presented to and retained by him. Our interpretation of the statute coincides with the legislative con- struction placed u]ion a similar statute in the state of Wisconsin. In enacting a Negotiable Instruments Law the legislature of that state added to a section of it similar to section 137 of our act a proviso " that the mere retention of the drawee will not amount to an accep- tance.'' * The logical inference is that the mer(> retention of the bill would be an acceptance within the meaning of the language of our statute which contains no such proviso. It is not accurate to say, as suggested by the appellee, that under the Negotiable Instruments Law a bill can only be accepted by writ- ing signed by the drawee. It is true that verbal and ini])lied accep- tances have been abolished by section 132, which provides tliat the acceptance must be in writing and signed by the drawee. But sec- tion 137, involved in this case, declares that the action of the drawee in destroying a bill or in not returning it, as required by the section, sliall be deemed an acceptance of it. A constructive acceptance of a bill under this section is as effective to charge tlie drawee as an accep- tance in writing under section 132. Nor do the two sections in any way conflict. The former section requires affirmative action on the part of the drawee by assuming liability by a writing. The latter sec- tion declares his liability if he destroys the bill, or if by inaction he retain the bill beyond the specified time. An acceptance under either section obligates the drawee to pay the bill. In the state of New York a Negotiable Instruments Law has been enacted, and a section similar to section 137 of our act is included in the statute. The Supreme Court of that state in Stale Hank v. Weiss, 46 Illisc. Rep. 93, lias construed this section of the statute in conformity with the meaning we have given our own act. The case was decided in 1004, and it does not appear to have been carried to the Court of Appeals of the state. Moilefifm v. MnuJton, 79 N. Y. 027, relied upon bv the court below and the appellee here, was decided by •The actual worrHnr rf fliis arlrrtinn tn t>'" W'^^nn^in ctntuto i^ ?imply: Mere retention of the bill is not acceptance." — C. I. 4.] BY KEFUSAL TO EETUKN. 665 the Court of Appeals in 1880, and the syllabus of the case states that the court held that " refusal '' in the Xew York statute is " an affirma- tive act, or is made up of conduct tantamount to one, [and] it is also a willful or wrongful act." But the facts of the case did not require the court to determine whether the failure or neglect to return the bill within 24 hours was a refusal to return it within the meaning of the act. The bill was sent to the office of the defendant, who retained it for three or four months with the consent of the plaintiff, and under a promise to pay, relied on by the plaintiff. It will therefore be ob- served that the facts of the case did not require the court to deter- mine wliether tlie mere retention of a lull of excliange for 24 liours after its delivery to the drawee would constitute an acceptance. Again, if the case is still authority in that state for an interpretation of the act, it is singular that it is not cited or referred to in the very recent case of State Bank v. Weiss, supra, in which the court gave an inter- pretation of the same section of the Negotiable Instruments Law of that state diametrically opposite to the construction of the act an- nounced in the Mattcson case. We are of the opinion that, under section 137 of the Negotiable In- struments Law of this state, the faihire or neglect of a drawee to whom a bill is delivered for acceptance fo return the bill, accepted or non- accepted, to the holder within 24 hours after delivery, makes the drawee an acceptor of the bill. Tt therefore follows in the case in hand that, the defendant bank having failed to return the five checks to the collpcting bank within 24 hours after their delivery to the drawee, the latter must be deemed to have accepted the checks, and is therefore liable to the plaintiff for the amount of them. The judgment non obstante veredicto in favor of the defendant is reversed, anrj judgment is now directed to be entered by the court below on the verdict in favor of the plaintiff and against fhe de- fendant.' »Tliis casf is rrportorl in 17 L. N. S. 1200, with note entitled. " Dolcnfion of bill of oxrlianjif f>r cliock by drawoo ns accojiljuirr." A noto to thiH case in R Tol. T-aw Pfv. 508 (.lunr. inoS). snys: " Moro rctrntion is olf-arly not refusal when it is the holHer'a duty to demand its return. § 225 XoR. Inst. Law bas been construed as rcfjuirinp a tortious refusal, Mnltrsnn v. Moultnn, 70 N. Y. 027. alTj;. H Hun 20H ; nirl.iusoii v. .\farsh (l.sn4) 57 Mo. Ay)p. 500; If;/. Co. v. Jnwr.o (1000) 78 Ark. 100. but retention in the face of a customary dealing or notification that the drawee shall return a bill, or check. § .S21. woiibl seem to be a refusal within the meaninp of the section. Since bankinp usape requires prompt return of the check if payment is refused, its retention in the principal ense shoubl he suf- ficient to charpe tlie drawee ns acceptor. Hut. while correct in result, the decision seems erroneous in holdinp Ihat a nontortifius refusal will so charge the drawee." Mr. Crawforfl criticizes the principal cnse as follows: " It is (iifliciill to see how the statute could apply to such a state of facts. It refers only to 66G ACCK1'TANI"K OF HILLS. [AUT. XI. 5. Acceptance of iNcoMrLETE or Dishonored Bill. jl 226 HOPPS & CO. I'. SAVAGE. GO Maryland, 513. — 1888. Action against defendant as acceptor. Defendant accepted the draft tiefore the drawer (Waddy) signed it. The draft, payable "to order of myself," was then indorsed to plaintiff by Waddy. Plaintiff presented it to defendant who refused to accept or pay it and pointed out that Waddy had not signed it as drawer. Plaintiff then pro- cured Waddy's signature as drawer. Judgment for plaintiff. Miller, J. [after stating the facts] delivered the opinion of the court. * * * Tlie material facts are undisputed. Ilopps wrote the draft himself, accepted it, and then gave it to Waddy for the cases wliere the paper is presented for acceptance ; but where checks are remitted to the drawee bank, the obvious purpose is to present them for payment, and not mere aveeptnnee. Wliat the liolder desires in such a case, is that the bank shall remit the money, not that it shall return the check with its acceptance placed thereon." Craw. Neg. Inst. Law, 3rd ed., p. !56. An article in 25 Banking Law Jour. 638 (August, 1908), di.scussing the principal case, says: "It seems incorrect, in a way, to appl}' to checks the section which provides that [quoting § 225.] A check is not presented for acceptance, but for immediate payment; a bank is not obliged to accept or certify a check, only to pay it, and a check cannot be protested for refusal to ■certify, but only for refusal to pay. The delivery for acceptance provided by this section contemplates bills of exchange other than checks. But the Ne- gotiable Instruments Law defines a check as a bill of exchange drawn on a bank payable on demand, and declares that, except as otherwise provided, the provisions of the act applicable to a bill of exchange payable on demand apply to a check, and the Supreme Court of Pennsylvania says that there is no provision in the act which makes the section in question inapplicable to bank checks presented for payment, and that there is every reason why the section should apply." p. 041. Section 137 of the Pennsylvania Negotiable Instruments Law fN. Y. § 225] was amended by laws of Pennsylvania, 1001), No. IGO, p. 260, by adding the following: " Provided, that the mere retention of such bill by the drawee, unless its return has been demanded, will not amount to an acceptance; and provided further, that the provisions of this section shall not apply to checks." Commenting on this amendment, the Pennsylvania Committee on Uniform State Laws, in its IflOO report to the Pennsylvania Bar Association, says: " As was pointed out by the learned editor of the Lerjal Tntcllifjen^er (May 7, 1900), this act was passed probably to overcome the effect of the decision of the Supreme Court in Wisner v. First National Bank. . . . While, of course, anything that destroys the uniformity of any section of the net, whether by judicial decision or by statute, is to be deplored, it has been said in relation to this particular act, by eminent authority, that in thus changing the law as interpreted by the Supreme Court, the statute but follows the weight of authority in other states, so that substantial uniformity has not been affected." Report of Pa. Bar Ass'n for 1909, p. 136, I- 5] INCOMPLETE OR DISHONORED BILL. 667 express purpose of enabling him to raise money upon it. It is true it was delivered to him before Waddy had signed it as drawer, but there can be no doubt as to the fact that Hopps intended Waddy should sign and negotiate it. In such case the law implies an au- thority from Hopps to Waddy to sign his name as drawer. Four days after its date, and long before its maturity, Waddy indorsed the draft to Savage, and received from the latter its full face value. That Savage thereby became a bona fide holder for value is un- deniable. Even if he had then known that, as between Hopps and Waddy, it was v/ithout consideration and merely an accommodation bill, his position as sucli liolder would not have been affected by such knowledge. {Maitland v. Citizens' Nat. Bank of Balto., 40 Md. 540.) It is also true that Waddy's signature was not put to the draft until after Savage had become the holder. In other words, tlie draft, when indorsed to Savage, was in blank in respect to the drawer's name, but this blank was afterwards filled up in accordance with the intention of the parties when the bill was written and accepted. We are clearly of opinion the law autliorized this to be done. In fact the authorities go to the extent of holding that Savage would have been authorized to fill the blank by inserting his own name as drawer. Such was the decision of the Common Pleas Division in Harvey v. Cane (34 Law Times, N. S. 64) ; and in .S'mrrf and Wife V. Jackson, reported in a note to the same case, it was held that the name of the holder could be thus inserted after the maturity of the bill. (See, also, Schultz v. Astley, 2 Bing. N". f;. 514.) In the case before us the suit is by a bona fide holder for value before maturity, against the acceptor, and the drawer's name was signed in strict accordance with the intention of the parties. We hold that in stieh a case it makes nr) difference wlietlier tlie lil;nik was filled before or after the maturity of the draft. From these views it follows there was no error of which the appel- lant is entitled to eomphiin in the rulings of the couii iipmi (he instructions, and tiie judgment must l)e afhrnu-d. Judgment affirmed. S 226 STOrKWETJ> v. BT?;\Ar?,LF. 3 FNt)lANA, 42H. — lRr)2. Action against defendnnt as acceptor of a bill. .TudgmenI for defendant. Plaintiff offered to prove that defendant stated that he would accept the bill, but did not want it generally known that ho was accepting the drawer's bills, and would therefore write " protested " 6G.^ ACCEPTANC'K OF HIT.LS. [AHT. XI. across the face, 'vhich ho did and signed his name; tliat al'terward on the same day defendant again promised to pay tlic hill. This evidence was excluded. Bi.ACKFOun, ,1. [after stating the facts]. \Vc think that tlie parol evidence offered by the plaintiff was admissible, on the ground that it showed a valid acceptance of the bill by tiie defendant, after he liad written on it the word " Protested." Suppose the word "Protested," as written on the bill, to mean that the defendant refused to accept the bill, and the holder so understood that word ; and suppose, also, that evidence of what the defendant said, at the time of such refusal, was objectionable as con- tradicting the word " Protested," still the subsequent parol accept- ance would be good. We know of no reason why the drawee of a bill, who has refused to accept the same, may not afterwards accept it. It frequently happens that a bill, after being protested for non- acceptance, is accepted by a third person supra protest. The fol- lowing case is cited by Mr. Chitty: A foreign bill drawn on defend- ant was protested for non-acceptance, and returned, and afterward defendant told the plaintiff, " if the bill comes hack I will pay it," and this was held a good acceptance. (Chitty on Bills, 316, note I.) It is clear, therefore, that the fact of a bill's having been protested, does not prevent its being afterwards accepted by the drawee. The acceptance is not objectionable merely because it was by parol. By the law merchant, a bill, whether foreign or inland, may be accepted by parol as well as by writing, (Chitty on Bills, 316) ; and that is the law here. Per Curiam. — The judgment is reversed with costs. Cause remanded.* n. Kinds of acceptances. 1. General Acceptance. § 227 MEYER & CO. v. DECROIX, VERLEY Et CIE. L. R., 1891, Appeal Cases (H. L.) 520. Action bv indorsees against acceptors, upon the following instru- ment: " *" A promise to accept, even after a protest for non-aeceptance. is bindinsr; and a promise to accept made after the liiU becomes due according to its tenor, amounts to a promise to pay immediately." Grant v. Shaw, 16 Mass. 341 (1820). — H. Bin facsimile in 50 L. J. Q. B. 539. — H. II. 1.] GENERAL ACCEPTANCE. 669 RouBAix, Sept. 12th. 18S9. No. 501. £778 4s. 2c?. On Oct. 31st after dat* pay to order e Mr. L. Delobbel Flipo seven hundred and seventy-eight pounds 4s. 2d. Value received. L. Delobbel Flipo- To Messrs. H. Meyer & Co., Limited, London, Eng. [Across the face was written and stamped:] In favor of Mr. L. Delobbel Flipo only. No. 28. Accepted payable at Alliance Bank, London, for H. Meyer & Co., Limited. B. Manning, Abthub Manning, Directors. Arthur Ma.nni.ng, Secretary. The word " order " in the bill was struck out, but when or by whom did not appear. Plaintiffs, bankers at Lille, in France, discounted the bill for Flipo. They did not understand English and their attention was not called to the form of the acceptance until after the dishonor of the bill by the Alliance Bank. The Divisional Court (Cave and A. L. Smith, JJ.) held the accept- ance was a qualified one, rendering the bill non-negotiable, and gave judgment for defendants. The Court of Appeal (Lord Esher, M. Jl., Lindley and Bowen, L. JJ.) reversed that decision and entered judg- ment for the plaintiffs.^ Defendants appeal. Lord Hersciiell. — My Lords, the respondents in this case seek to recover from the appellants the amount of a bill of exchange ac- cepted by them. The defense set up is that the acceptance was a qualified one, and restricted the right to require payment to the payee alone, and that the acceptors are therefore under no obligation to the respondents who took by indorsement from him. It was not disputed at the bar that the acceptor of a bill of e.xchange may make his acceptance a qualified one. If he do so, the drawer may, of course, refuse to take such an acceptance, and treat the bill as dishonored: but if be takes the bill, the ol)ligation of the acceptor is not absolute, but subject to the qualification which he has intro- duced. I think, further, that it is beyond ilispnle that if an acceptor seeks to qualify his acceptance, and thus to modify the obligations which an acceptance ordinarily imposes, he must do so on the face of the bill in elear and unerpijvocal terms, and in such a manner that any person taking the bill, if he acted rea.sonably, could not fail to under- stand that it was accepted subject to an expressed qualification. About these propositions I do not think there can be any differ- ence of opinion ; the difficulty lies in applying them to the facts of the •This word was struck out by a pen mark. By the proviBinna of the Bills of Exrhnng*" Art (§ 8. siihHor. 4) tho wurds "order" or "bearer" are not necessary to render a bill negotiable. — H. 7 Sec 59 L. J. Q. B. 539; L. R. 25 C). M. D. .343. — H. G70 ACCEPTANCE OF BILLS. [ART. XI. particular caso. T\w bill in (lucsliou was lirawii in France by a per- son named Delobbol V\\]n) upon the appellants, and forwarded to London for their aeeeptanee. The bill is drawn on a })rinled form containing the wonl " order " inimeiliately preceding the name of Delobbel Flipo, which has been inserted as the payee of the bill. This word " order '' has been erased, but by whom does not appear, nor do I think it material. If, as suggested, it was done by the acceptors, they were not justified in making the erasure, and in any case there would be nothing to show a ])erson taking the bill that the word had not been struck out by the drawer at the time he inserted the name of the payee. 1 do not think, therefore, that the erasure of the word " order " can in any way assist the contention that the acceptance was a qualified one. That must bo determined by a consideration of the effect of the words written across the bill by the acceptors. For the purpose of accepting the bill the appellant company im- pressed upon it by means of a stamp the words " accepted payable at Alliance Bank, London," underneath which the signatures of two directors and the secretary were written. The acceptors wrote across the bill above the word " accepted " the words " In favor of Mr. L. Delobbel Flipo only :" between these words and the word " accepted " was written " Ts^'o. 28." In considering whether the effect of the words " In favor of Mr. L. Delobbel Flipo only " w^as to make the accept- ance a qualified one in the manner suggested, regard must be had both to the words used and to the situation in which they are placed. It may be that if the same words had been found in the body of the ac- ceptance following the word "accepted," they would have amounted to the qualification contended for. The presence of any words in the body of the acceptance would of itself suggest the idea that some qualification of it was intended ; but where the words are not inserted in the body of the acceptance, I do not think the same impression is likely to be produced, though the words may, of course, be so clearly intended to qualify the acceptance and so incapable of any other reasonable construction that they would be as effectual for the pur- pose. But in the present case the words written above the acceptance are not " Payable to Delobbel Flipo only," which is the meaning sought to be attached to them, but " In favor of Delobbel Flipo only," which do not seem to me necessarily to bear the same meaning. The words "in favor of," when used in relation to a bill of exchange, do not ordinarily mean that it is payable only to the person in whose favor it is said to be drawn ; the words are equally applied when the bill is made payable to his order. The words " In favor of," there- fore, are properly paraphrased by " payable to, or to the order of ; " but then it is said that the insertion of the word "only" after Flipo's name would show that this couhl not be the meaning intended. It muBt be remembered, however, that between these words and the aq-- II. 1.] GENERAL ACCEPTANCE. 671 ceptance " Xo. 28 " was inserted, which separates the words whicli it is suggested qualify the acceptance from the acceptance itself. Under these circumstances I do not think that it is impossible that a person taking the acceptance by way of indorsement might suppose that these words " In favor of Delobbel Flipo only " were, like the " No 28," a mere memorandum inserted by a party to the bill, and not intended to atfect the acceptance. It might be supposed to indi- cate that it was the 28th bill, or No. 28 of the bills accepted " in favor of Delobbel Flipo only," as distinguished from bills accepted in favor of Flipo and some other persons. I do not sav that this would be the interpretation given to it by a person wlio carefully and critically considered it. But that is not the question. It is impossible, as I have said, to disassociate the words used from the position and collocatioTi in which they are found, and if these be such as to suggest that the words are a mere memorandum, a person taking the bill, even if he exercised t!ie ordinary care to be expected in such transactions, would not be likely to examine or weigli them with the same care as if they were found in the body of the aci-ept- ance. In my opinion the qualification was not made in clear and unequiv- ocal terms, and in such a numner that any person taking the bill, if he acted reasonably, could not fail to understand that it was accepted subject to that qualification. I tliiiik, therefore, the judgment ought to be atnrmed." Loiu) Bf{.\mwell. — My Lords, I consider what was written and printed by the defendants on the face of the bill as one — one thing only — an acceptance and no more, not an acceptance and something elfie. Tliat being so, I am unable to see any difference between " In favor of Flipo only, ac(e])ted payable," etc., and "Accepted in favor of Flipo only, payable," etc I do not know where the hixJi/ of the acceptanfe begins, unless at the beginning of what is written. It is said that "In favf>r of Flijto f)iily "' docs not iiccc< bound even thoiii;li the bill of Intlinp i-^ not tendered until after the maturity of the bill. Smith v. Vertuc. 30 T^. .T. C. P. 56. — H. 5 " In Molloy and the other books thi-re in a whole parafrraph .ilioiit the partial arceptanee of n bill n( exchnnsre, nnd tiny allow it to 1h' pood." Wrqrrnloffr v. Kccne, 1 Stranpe, 214. 225. — H. « Namely, Sergeant Onslow's Act, 1 and 2 Geo. 4. c. 7H. See note on page 478, ante. — C. 676 ACClirTAMCK UK lllLLS. [AKT. XI. tiriilar biinker's niul not olsewhove. U' tliu drawee accepts generally, lie undertakes to pay the bill at maturity wiien presented to him I'or pay- ment, ir he accepts payable at a banker's, he undertakes (since the statute) to pay the bill at maturity when presented for ])ayment either to himself or at the banker's. If he accepts payable at a banker's and not elsewhere, he contracts to pay the bill at maturity provided it is presented at the banker's, but not otherwise. Here the bill was accepted according to the second of these three forms; i. e., payable at a banker's, without any restrictive words; so that presentment at the banker's (though if made it would have been a good presentment) was yet not, as against the acceptor, necessary. (d) Acceptance qualified as to time. § 229 HATCHER v. STALWOETH. 25 Mississippi, 37G. — 1853. Action by payee against acceptor on a bill payable at sight. Plain- tiif presented the bill to defendant, who wrote to plaintiff that he (defendant) would pay the order, but could not say when. Judgment for plaintiff. Mr. Justice Yerger delivered the opinion of the court. We see no error in this record. Where a party, on whom a bill is drawn at sight, offers or promises to pay at a future day, that amounts to an acceptance, if acceded to by the holder. (7 Pick. R. 34; Story on Bills, §§ 243, 244.) The proof in this case shows this to have been the state of facts; and we, therefore, must affirm the judgment.'^ (e) Acceptance by one or more drawees, hut not by all. § 229 TOMBECKBEE BANK v. DUMELL & LYMAN. [Reported herein at p. 687.] 7 Tf the bill is drawn payable on a ffiven date it may be accepted payable at a difforent date. RiiftfirU v. Phillips. 14 Q. B. 801; Green v. Raymond, 9 Neb. 295; Vanstrum v. lAljengren. 37 Minn. Ifll. If a hill is drawn payable two months after sight, and i.s presented on Sept. 14, and accepted " payable Xov. 14," this is not a qualification wliether there be davs of prace or not. Ro, if there be days of grace, and it is accepted " payable Xov. 17," this is also treated as an acceptance accordinir to the tenor of the bill. But an acceptance payable on any other day than the nominal or peremptory day of payment is a qualified acceptance. Kenner v. Creditors, 7 Martin N. S. (La.) 540. — H. ii. 2.'] qualified acceptance. 677 3. Effect of Qualified Acceptance. (a) Holder may refuse qualified acceptance. § 230 BOEHM v. GARCIAS. 1 Campbell, 425, note. — 1808. Action on a bill drawn on Lisbon, " payable in effective, and not in vals reals.'' The defendant was the drawer of the bill; and the question was, whether it had been dishonored for nou-aceeptance ? The drawees offered to accept it, payable in vals denarus, another sort of currency, wliich was refused. The defendant now proposed to show, that vals denaros was sufficient to answer what was meant by " effect- ive." Lord Ellenborough. — The plaintiff had a right to refuse this acceptance. The drawee of a bill has no right to vary the acceptance from the terms of the bill, unless they be unambiguously aiid une- quivocally the same. Therefore, without considering whether a pay- ment in denaros might not have satisfied the term " effective," an acceptance to pay in denaros was not a sufficient acceptance of a bill drawn payable in " effective.'' The drawees ought to have ai:i cjjtcd generally, and an action being brought against them on the general acceptance, the question would properly have arisen as to the mean- ing of the term. §230 Wintermute v. Post, 24 N. J. L. 420, 423 (1854). Haines, J. — The remaining and principal point arises from the tenor of the acceptance, " when in funds." This is a conditional accept- ance, and the plaintiff was not bound to take it. If he were not satisfied with it, he might have protested the note for non-acceptance, and looked to the drawer for its payment. liut having taken it without objection, he must submit to its terms, and before he can enforce it against the acceptor he must show funds of the drawer in his hands.' (h) Qualified acceptance discharges non-assenting antecedent parties. §230 Walker v. Bank. 13 Harhour (N. Y.) r,3fi (IK.V^)." Action against the bank, as agent, for negligence in not giving • Accord: Hterms v. Androncnqpin Water Power Co., 62 Me. 408, ante, p. 673; Petit v. Benson, Comb. 452, ante, p. 675; tlatchcr v. Ntaluorth, 25 Miss. 370, antr, p. OHi; (Ircm v. Raymond, 9 Neb. 295; Gibson v. Smith, 75 Ga. 33. If an aprnt, hh a bank, rfcoivps n qiialifu'il nrrcptanop without au- thority, the agent becomps liable to the principal for any loss ensuing there- from. Walker V. Hank 9 N. V. 582. — H. » .\frirm«(l 9 N. V. 5H2. — 11. 678 ArC'KPTANCK Ol' Itll.l.S. [AUT. XI. notice of dishonor of certain bills. 'VUe bills were drawn upon E. C. Hamilton and were accepted in this form: "Accepted, payable at the Am. Ex. Bank: Empire Mills by E. C. Hamilton, Treas." HuHHARn, J. — The only (piestion presented is whether Hamilton, the drawee, can be charged as acceptor. If he cannot, the defend- ants' liability is undisputed, because of their neglect to give notice of dishonor. It is an undoubted rule tiiat an acceptance dispensing with notice, must be absolute according to the tenor of the bill; not qualified, or varying in any material particular. (Story on Bills, § 2K), and cases cited in note 2; Chitty on Bills, 329.) The obvious reason is, that antecedent parties, if made liable, are entitled to full recourse against the acceptor, which they cannot have if the acceptance is conditional. It is also well settled that no one but the drawee named can become an acceptor, except for honor supra protest. (Story on Bills, § 121, et secj.) [The court then holds that no one was bound by this acceptance.] It follows, therefore, that the de- fendant should liave treated the bills as dishonored, and given notice of non-acceptance to the indorsers, who by the omission are dis- charged from liability. *° 10 See also judpes' answers to the 3d question in Howe v. Yowig, 2 Brod, 4 Bing. 165; 1 Daniel, §§ 510-511. — H. AETICLE XII. Presentment of Bills of Exchange for Acceptance. 1. In what cases presentment for acceptance necessary. § 240 HART V. SMITH. 15 Alabama, 807.-1849. Darg.'VN, J. — Tills was an action of assumpsit, on a bill of ex- change, drawn by the defendant in favor of the plaintiff, on Dc.^ha & Smith, dated the 2Q,i\\ February, 1H46, payable at si.s^ht. The only evidence introduced to charge the drawer was the bill, and protest, showing a demand of payment made of the drawees, on the Itli of March, 1840, and notice to the drawer. The court charged t!io jury, that the plaintiff could not recover. A bill, payable on demand, or at any fixed time, need not be pre- sented for acceptance, but a demand of payment, at the time the holder has the legal right to demand payment, is all that is neces- sary. And if the bill be not paid, the holder may protest it for non- payment, and on his giving due notice to the drawer and indorsers, their liability is fixed. (Eran^ v. BritJgps, 4 Porter, 345; 1 Peters, 2.5, 2 lb. no'; Chitty on Rills f lOth ed. ], 272.) Put when the time of payment is uncertain, and a presentation of the bill is necessary, in order to ascertain anrl fix the time of payment, as if the bill be payable at a number of days after sight, then the bill must be pre- sented for acceptance before payment is demanded. (Story on Hills, § 112, 227; Chitty on Pills [10th ed.], 272; Bayley on Pills | r>th ed.l, 217, 218.)' It is contended that a bill f)ayable at sight is entitled to days of grace, and therefore it must be presented for acceptance before payment can be demanded. T am free to confess, that my opinion, untrammclcd by .'uithority, would incline me to hold that a bill of exchange, junidhlc nl sit/hl. is not entitled to days of grace, and that paynn-nl may b(> demanded on presenting the bill; which, if refused, would authorize the holder forthwith to have it protested for r)(iu pavinciit. and. on giving no- tice to the drawer, to hold him liiiblc. P.iil the law seems to be settled otherwise. .Judge Story, in bis treatise on bills, says, "that days of grace are allowed on all bills, whether payable at a certain time after date, after sight, or even at sight. And although there 1 Neg. Inst. L. § 240. — II. [HTOJ 680 PRESENTMKNT FOR ACCEl'TANCK. [ART. XII. has been sonio divorsity of opinion, whelluT bills payable at sight are entitled to days of grace, it is now settled by the decisions, both in England and America, liiat days of grace are allowable on snch bills." (§ ;M*-*, p. I'^D.) To the same effect, see Chitty on Bills 1 10th ed.], 37G; Bayley on Bills [Sth ed.J, 244, 245; Selwyn's N. P. [9th ed.|, 351; Coleman v. Sayre, 1 Barnard, 303; Deliers v. Harriot, 1 Show. 165; Stephen's N. P., 876.) ^ Under the influence of these authorities, 1 feel constrained to hold that a bill payable at sight is entitled to days of grace; conse'w.y(fam\ 20 Wend. 321 ; s. C. 17 Id. 368.) * * * All the judges, except Marvin, J., agreed that a refusal to accept on the day payment is due is equivalent to a refusal to pay, and renders a demand of payment unnecessary.* On the question of evidence, all the judges concurred. Judgment reversed,' and new trial ordered. § 241 ROBTNSON v. AMES. 20 Johnson (N. Y.) 146. — 1822. This was an action of assumpsit, on a bill of exchange drawn by the defendants, merchants in Augusta, in tlie state of Georgia, on the 6th of March, 181!), upon Townsend and White, merchants, in the city of Xew York, for five hundred dollars, payable sixty days after sight, to Starr and Ross, or order, by whom it was indorsed to the plaintiff. Tlio cause was tried at the New York sittings, in Juno, 1821, before the chief justice. The bill was presented for acceptance on the 20th of May, 181!), and notice of non-acceptance sent, by mail, on the next day, to the drawers, by a notary, directed to them at Augusta, in Heorgia. On the 22d of Jnly, 18U), the same notary presented tli<' itill t<> the drawers for ]i;iynictit, which they refused, alleging the \v;int of funds. Notice of non-payment was sent through the post-ollice, two or three days afterwards, ad- dressed to the defendants, at Savannah, in Oeorgia. Townsend, one of the drawees, who was a witness for the plaintiff, testified, that on the 20th day of May, 1810, the drawees had no funds in their hands belonging to tiie defendants, and had then accepted drafts to the amount of three or four thousand dollars more than they had funds of the defendants, and that this was iiie last bill drawn ♦ Accord: Philpntt v. firynnt, 3 Cnr. & P. 244; Washinrjton BatC T. Triplrtt. 1 Pft. iV. S.) 2.').— If. '' On a question of oflinission of evidence. — II. 68'3 PRESKNTMKNT I'OU ACCKI'l'ANCE. (ART. XII. by tliein. Tliat the want of funds proi'coik'd troni a fall in the price of cotton shipped by the di riiidaiils to T. and W. ; thai by an agree- ment between them, the tlei'endants were authorized to make pur- chases of cotton, on the joint account of thcniselves and T. and W., and to draw on T. and W. I'dr the amount. That, on the 26th of April, 18i:t, T. and W. slopped payment. That after the Oth of Mari'h, and before the failure of 'V. and W'., they had received a con- siderable amount of cotton from the defendants, but had accepted the bills of the defendants to a larger amount than the value of the cotton so shipped, and the difference was owing to a loss on the cotton shipped : that, if the defendants were to pay all the bills, T. and W. would owe them five or six thousand dollars; but if T. and W. were to take up all the bills, the di-awees would owe them three or four thousand dollars. It was proved, that the mail which left Augusta about the 10th of Marcli, was lost; and that the mail goes from that place to New York, in ten days, and leaves the former place three times a week. That where bills are remitted by merchants, it is tlie usual course to send the bill by one mail, and to advise by the next. A verdict was taken for the plaintiff, for five hundred and seventy- two dollars, subject to the opinion of the court on a case, as above stated. Spencer, Ch. J., delivered the opinion of the court. The questions in this case are: (1) Whether the bill was trans- mitted in due time; and (2) Whether the want of fund in the hands of the drawees, will excuse the delay in presenting the bill, or the irregularity in the notice of the non-payment of it. 1. I am entirely satisfied that there is no foundation for saying the defendants are precluded from setting up laches, because they had no right to draw the bill. The case of Bicl-rrdikr v. Bnlhiwr (1 Term Kep. 10.5), is considered the first case deciding that notice to the drawer of the dishonor of the bill was unnecessary; and in that case the drawer had no funds, and knew he had none, in the hands of the drawee. The drawing the bill was consirlered a fraud, and it was held that he was not entitled to notice, and could not be injured by the want of it. It has, however, since that case, repeatedly been decided, that where there are any funds in the hands of the drawee, so that the drawer has a right to expect the l)ill will be paid, or where there are not any funds, yet if the bill was drawn under such circumstances as induced the drawer to entertain a reasonable ex- pectation that the bill would be accepted and [)aid, the person so drawing it is entitled to notice; and, a fortiori, he is entitled to have the bill duly presented. The rule is correctly laid down in Claridge V. DaUnn {\ Maule k Selw. 220), by Lord Ellenborough. The principle which has been stnted is very ably supported })y Tliief Justice Marshall, in Frr-u-^' v. T' c BirJr of Cnlvrnhin M Cranch'p I.] WHEN NECESSARY. 683 Bep. 153), where the principal authorities are reviewed. There is nothing more important, than that, in questions of a general mercan- tile nature, there should be a uniformity of decision; and, although the justice and equity of this rule may not, in some cases, be per- ceived, where the payee has purchased a bill, and it is drawn in good faith, and no conceivable loss has happened by the want of notice; yet, as there may be cases where, though there were no funds in the hands of the drawee, the drawer may be injured by the want of notice, it is better that the rule on the subject should be general and uniform throughout the mercantile world. ^ In the case of Miller v. Hackley (5 Johns. Rep. 375) ; Weldon and Furniss v. Burl- and anniher (4 Johns. Rep. 144) ; and Mason and Smede v. Franklin (3 Johns. Rep. 202), it was decided that if a bill was presented for acceptance, and the drawee refused to accept it, and notice thereof was duly given, a demand of payment, and notice of a refusal to pay, was unnecessary, because the drawer was fixed already.' 2. The only remaining question, then, is, whether there was laches in presenting the bill for acceptance; for there is no doubt that regular notice was given of the refusal to accept the bill, the day subsequent to the demand. I do not find, that where a bill of ex- change has been drawn payable at sight, or any specified number of days after sight, that there is any definite or fixed rule when the bill shall be presented for acceptance, other than this, that due dili- gence must be used. And it is certain, that with respect to such bills, and particularly where they are negotiated by the payee, there is much more latitude, as to the time of presentment, than where the hill has a flxofl period of payment. In the case of Muilman v. D'Egvinn (2 TT. Bl. Rep. 565), which is a very leading case on this mibject, tlip juflges felt tho difficulty of saying at what time such a bill should be prf'«enterl for payment. Ch. J. Eyre observed, that the courts had hocn very cautious in fixing any time for an inland bill, payable at a certain period after siglil. to be presented for acceptance. He said, that if, instead of driiwing llieir foreiixn l)ills paval)le as nsanrpn, in the old way, merchants chose, for their own convenience, to draw them in this manner and to make the time coininence when the holder pleases, he did not see how the courts could lay down any precise rule on the subject. But he thought the holder was bound to present the hill in a reasfinahle time, in order that the period might ef)nimence from which the payment was to take place; and that what was reasonable time must de[)end on the particular cir- cumstances of the case. I'lillr-r, J., said, lh;it h(> thought a rule might, thu8 far, l)e laid down as to laches, with regard to bills pay- ePpp NV". Tnst. T,nw. § IR.''. ppfl P 04.'). — TJ. TPec S 248. — H, GSl PBESENTMENT FOR ACOKI'TANCE. ( ART. XII. able at sight, or a cortain time after sij^lit, naiiu'ly, that they ought to be put in rirmhition. 11' they are eireulalid, he said, the parties are known to the worhl, and their credit is hjolved to; and if a bill, drawn at three days sight, was kept out in that way for a year, he I'ould not say there would be laches; but further than that, no rule I'ould be laid down. Heath, J., observed that no rule could be laid down as to tiie time for presenting bills, payable at sight, or a given time after; that in the French ordinance of 1673 (Postlethwaite's Diet. tit. l'»ills of Exchange), it is said, that a bill, payable at sight, or at will, is the same thing, and that this agreed with Marius. Now, here, the bill was put in circulation by Ross and Starr; and although it is probable, that the first of exchange was lost, by the loss of mail, we are not authorized to consider that as a fact in the case; but I cannot say, that upon such a bill there has been laches. We perceive how extremely cautious the judges were, in the case cited, in laying down any nile. The evident inclination of their minds was, that when the payee put the bill in circulation, the sub- sequent holder was not bound to any strict presentment. The drawers of the bill evidently did not mean to limit the time of pre- sentment, by making the bill payable at sixty days after sight. They meant to give a latitude, as to time, to the holder; and my conclu- sion is, that there is not such laches as will discharge the drawers. Judgment for the plaintiiT.® 8 Accorrl: Wnllnrr v. .Ir/i;/, 4 INIai^on ( U. S. C. C. ) 3.36; s. c, 5 Mason, 118, in which a " sixty days after sij^ht " l>ill drawn .Tune IS at Havana, Cuba, on W. in London, and there presented Oct. 31, havinp been locked up in the holder's hands in Boston, from July 6 to Sept. 29, was, on the second trial, found by the jury to have been presented within a reasonable time; Aymar V. licrrs, 7 Cowen. (N. Y.) 70.5. in which case a "three days after sifjlit " bill drawn Dec. 12 in New York, presented Jan. 10 in Pichniond. Va., havincj been in the payee's hands during that time, was held by the court to have been presented within a reasonable time, under the circumstances of the case; Bo'ton V. Tlnrrod. :Mart. (La.) 320: flnirnn v. Jack.inn. 20 Johns. (N. Y.) nfi: Montrlhm v. Charlp.i, 76 Til. 30.'S. In the following cases the delay was deemed to be unreasonable: Mullick v. Ra'lakissen, 9 Moore P. C. 60; Fernandez v. Lewis, 1 McCord, (S. C. ) 322; Duyyiovt v. Pope, 7 Blackf. (Tnd.) 367; PJwenix his. Co. v. Allen, 11 Mich. .501 : Vhamhrra v. TJill. 26 Tex. 472. Whether what is a reasonable time is a question for the jury or for the court has occasioned some conflict. The question was left to the jury in M'allacr V. A pry, .supra; it was decided by the court in Aymar v. Beer,';, aupra; it was held to be " a mixed question of law and fact " in Pre.e Smith v. Bank, L. R. 4 P. ('. 194; 2 Daniel. § 1I78. — H. •'• ExpUBe for delay in to l>e diHtin^iiislied from e.xcu.sc from presentment alto^rether. U. S. v. liarkrr, 1 Puitie, (U. S. V. (".) 156, 103; Aymar v. livtrs, 7 ( ow. (N. V.) 705; 1 Daniel, S 478. — H. •Reported also in 4 Wash. ('. ('. 404. — C. T See also Va/. Park Itnnk v. Snitla, 127 App. Div. (N. Y. ) 024. — C. HBOOT. INBTUUMBNT8 — 44 GyO I'KKtililNTiiENT Foil ACCEPTANCE. [aUT. XII, § 248 WINTHROP v. PEPOON. 1 Bay (So. Cab.) 4U8. — 1795. [Action against drawer of bill, brought before time for payment had expired. The bill was presented for acceptance, dishonored, and duly protested.] Upon tlie first ground, the court were clearly of opinion, that the action lay upon the jirotest for non-acceptance, although the time for payment of the bill was not expired. Every man, by the law of mercliants, who draws a bill, undertakes l)y the very act of drawing that the bill shall be accepted and paid, when at maturity, agreeable to the terms of the bill. And the very end and design of a protest, is to give notice of non-acceptance; or, if accepted, of non-payment ; in either event, the drawer becomes liable. And the holder, in case of a protest for non-acceptance, is under no obliga- tion to wait till the time for payment expires; because the drawer has broke part of his original contract, that is, that the bill should be accepted; and because also (if the bill should even be paid when due), the holder would lose the benefit of the credit in trade, which the acceptance of a bill would give him, as well as the use of the money, which he might obtain at a small discount. The obligation in every such case would be on the part of the defendant to show that the bill was afterwards paid, which might be given in evidence by way of mitigation of damages. But in this case, no payment, even at this day, is alleged ; therefore, the plaintiff is entitled to a recovery. (Doug. 55; 3 Will. 17; Kyd, 17.) ' 1 If a rif^ht of action arises on presentment for aeceptance, no new right arises on presentment for payment. Whitehead v. Walker, 9 M. & VV. 506. See Robinson v. Ames, 20 Johns. 14G, ante, p. 681; ,Sterry v. Robinson, 1 Day, (Conn.) 11. But if there is an acceptance for honor or a reference in case of need, there must be a presentment for payment, and protest for non- payment, before presentment to the acceptor for lionor or referee in case of need. Neg. Inst. L., § 286.— H. [See also Nat. Park Bank v. Sailta, 127 App. Div. (N. Y.) 624. — C] ARTICLE XIII. Protest of Bills of Exchange. I. What instruments must be protested. § 260 SUSSEX BANK v. BALDWIN. [Reported herein at p. ^SO.] i II. What constitutes sufficient protest. § 261 DKX X I S'l'OUX v. STEWART. 17 Howard (U. S.) 60G. — 1854. Mr. .Tr.STiCE riuiKW k-livered ilie opinion of (lie court. The plnintiffs declared ;iiraiiist the defendant, as drawer of a bill of exclianL'c, by tlie name and style of James Keid and Co., of which the followin£( is a copy: — No.—. £4.417 14.S. Ud. slV ifomi.E. fiept. 9. 1S50. Sixty flays after sigiit of tliis first of oxelianjje, (second and tliird unpaid), pay to tlie order of ourselves, in London, forty-four hundred and seventeen pounds, 14.';. lid. st'g, value received, and charge tiie same to tlie account of 1,058 hales of cotton p-r ' Windsor Castle.' Your obedient servants, Pr. pro. James Retd and Co., W'm. Moult, Jb. To IIy. Coke Booth, Esq., Liver])ool. f .Aceejitance across tlie face of the hill:] Seventh Octol)er. 1850. Accepted for two thousand five hundred and seventy- one |ioiinds eifjlilee?! shijjiniis and seven pence. Itein>,' balance unaccepted for acct. l.(l.')S b. cottdM, |.i. Windsor Castle, payable at Clyn and Co. Pr. pro. IIe.nry Co»e Booth. And. E. Hyunk. Mil.' !t Dcei-m. [ Inriorsed : ] Pay Me.s.sus. A. DenNISTOUN AND Co., or order. Pr. jiro. .Iami.s Hkw and Co. \Vm. Moi'i.T, .Tr. 1 .\^ to prutcHt of inland bills and promissory notes, see Nefj. Inst. L., § 189. See aNo Shair v. Hc\cill. It.") N. C. 5.T5, anir, p. 584. I'rotest is now neces- Hary in fhr'e cases: (1) foreign bills; (2) bills accepted for honor; and (3) bills pontaininp n reference in case of need, if the holder desires to resort to the referee. Nej.. Inst. I,.. § 28(i. Protest is proper, hut not necessary, in two cases (1) inland hills and promissory notes; (2) for better security, § 2flr». The protest fftr non payment after protest for non-ncceptnnce is unomnlous: it may In- necessary to meet tho requirements of forei^rn law, § 2G5. — II. [W11 6^2 PKOTEST OF BILLS. [AKT. XIII. After reading this bill, with its iiulorsi'iiioiit.s, the plaiiitill' otlered in evidence a regular protest, indorsed on a copy ol' a bill agreeing in every particular with the above, exeejjt that for " And. E. Byrne " was written " t'has. Jiyrne." The defendant objected to the reading of the protest in evidence, because it did not describe the bill of exchange produced by the plaintifTs, but a different bill. The court sustained this objection, and excluded the protest from tlie jury, which is the subject of the first bill of exceptions. A protest is necessary by the custom of niercliants in case of a foreign bill, in order to cliarge the drawer. It is defined to be in form " a solemn declaration written by the notary under a fair copy of the bill, stating that the payment or acceptance has been demanded and refused, the reason, if any, assigned, and that the bill is, there- fore, protested." A copy of the bill, it is said, should be prefixed to all protests, with the indorsements transcribed verbatim. (1 Pardess. 444; Chitty on Bills, 458.) However stringent the law concerning mercantile paper, with re- gard to protest, demand, and notice, may appear, it is nevertheless founded on reason and the necessities of trade. It exacts nothing harsh, unjust, or unreasonable. A protest, though necessary, need only be noted on the day on which payment was refused. It may be drawn and completed at any time before the commencement of the suit, or even before the trial, and consequently may be amended according to the truth, if any mistake has been made.^ The copy of the bill is connected with the instrument certifying the formal demand })y the puldic officer, as the easiest and best mode of identifying it with the original. Mercantile paper is generally brief, and without the verbiage which extends and enlarges more formal legal instruments. Hence, it is much easier to give a literal copy of such bills, than to attempt to identify them by any abbrevia- tion or description. The amount, tlie date, the parties, and the con- ditions of the bill, form the substance of every such instrument. Slight mistakes, or variances of letters, or even words, when the substance is retained, cannot and ought not to vitiate tlie protest. A lost bill may be protested, when the notary has been furnislied with a sufficient description, as to date, amount, parties, etc., to identify it. In indictments for forgery, it is not sufficient to state the " sub- stance and effect" of the instrument; it must be laid according to the " tenor," or exact letter ; but the law merchant demands no such stringency of construction. The sharp criticism indulged when »S«e § 262. — H. II.] ESSENTIALS Oi' PHOTEST. 693 the life of a prisoner is in jeopardy cannot be allowed for tlie purpose of eluding tiie payment of just debts. It is unnecessary tliat a copy of the protest should be included in the notice to the drawer and indorsers.^ The object of notice is to inform the party to whom it is sent that payment has been refused by the maker, and that he is held liable. Hence, such a description of the note as will give sufficient information to identify it, is all that is necessary. What was said by Mr. Justice Story, in delivering the opinion of this court, in Mills v. The Bank of the United States* with regard to variances and mistakes in notices, will equally apply to protests : " It cannot be for a moment maintained that every variance, however immaterial, is fatal. It must be such a variance as conveys no sufficient knowledge to the party of the particular note which has been dishonored. If it does not mislead him, if it con- veys to him the real fact, without any doubt, the variance cannot be material, either to guard his rights or avoid his responsibility." In the case before us, tlie protest had an accurate copy of every material fact which could identify the bill — the date, the place where drawn, the amount, the merchandise on which it was drawn, the ship by whicji it was sent, the balance on the cotton for which it was accepted, the names of drawers, acceptor, indorsers ; in fine, everything necessary to identify the l)ill. The only variance is a mis- take in copying or deciphering the abbreviations and flourishes with which the christian name of the acceptor's agent is enveloped. The abbreviation of "And." has been mistaken for ('has., and the middle letter E. omitted. The omission of the middle letter would not vitiate a declaration or indictment. Nor could the mistake mislead any per- son as to the identity of tlie instrument deseriljcd. We are of opinion, therefore, that the objection made to this ])rotest, "that it does not describe the bill of exchange produced, but a dif- ferent bill," is not true in fact, and should have been overruled by the court. This renders it unnecessary for us to notice the offer of testimony to prove the identity, which was also overruled by the court. The judgment of the Circuit Court is reverse. A certificate tliat the notary prc-entcd thf draft to "one of the firm of Warren, (lark i Co.," is insiifTicient for not stating; the name of tlie i)erson on whom demand waa made. Otsego Co. Bank v. Warren, 18 Barb. (N. Y.) 290. — H. Gi)6 PROTEST OF BILLS. [aUT. Xlll. §263 MORELANU'S ADMINMSTHATOR v. CITIZENS' NATIONAL BANK. 114 Kentucky, 577. — 1903. Opinion of the court by Judge Paynter — The issue herein arises over certain bills of exchange. There is no issue as to the drawing, acceptance, and indorsement of them. In this action it is sought to hold the accommodation drawer and in- dorser responsible on them. The payment is sought to be avoided by the drawer and indorser of same on the grounds that the law was not observed in noting protest, giving notice of protest, and writing the instruments of protest by the notaries public. Two of the bills over which there is a controversy are for $5,000 each, one for $3,685, one for $3,000, and one for $3,200. These bills were drawn by J. P. Moreland, accepted by S. D. Walden, and indorsed by J. P. Fuqua. It appears that the bills (unless the one for $3,685 was not) were protested on the days that they matured. As to that bill it is insisted that it was not protested until the day after its maturity. That defense is interposed in addition to the others here- tofore stated. T. N. Parish, notary public, protested the bills for $5,000 each on the days of their maturity, and indorsed on them, " Protested for nonpayment," and, in addition to that, gave the day of the month and year, to which indorsement he affixed his official signature. W. H. Moore was the notary who protested the bill for $3,000 and the one for $3,200. No memorandum noting the protest was left attached to either of the bills by the notary, nor was such indorsement made upon them. Either on the day the bills were protested or on a subsequent day the instruments of protest were written, but the evidence leaves no doubt that the notices of protest were duly mailed to the drawer and indorser of the several bills on the days they were protested. The first thing which we will consider is whether the noting by Parish was sufficient. Tlie autliorities seem to be agreed that the noting of initial protest was unknown to the law as distinguished from the protest, but that it has grown into practice within recent years. It seems to be well established that, if the instruments of protest are not written shortly after the demand and protest, the noting or initial protest is necessary as a basis for the instrument of protest. 2 Dan. Neg. Inst. (4th Ed.), section 939. This court in Read v. Banh, 1 T. B. Mon., 93, 15 Am. Dec, 86, had under con- sideration the question as to the necessity of noting. The court said : " The protest was drawn up so soon as the ordinary course of business would permit, or at least in sufficient time to supersede the necessity of noting the bill at the moment." The court seemed to be of the opinion that, if the instrument of protest was written as n.] ESSENTIALS OF PBOTEST. 697 Boon as the ordinary course of business would permit, or at least in sufficient time to supersede the necessity of noting the bill at the moment, then those sought to be held liable were bound. We are of the opinion that the inaorsements which Parish made on the bills were sufficient. The facts as to the bills protested by Paris differ somewhat from those protested by Moore. We will not go into the discussion of the question of the competency of evidence to prove the course of business of notaries in protesting paper; neither is it necessary for us to determine whether the instruments of protest were written on the day the bills matured, or on a subsequent day; hence the neces- sity is obviated of determining whether the proof is sufficient to im- peach the dates of the instruments of protest, they bearing dates that the bills matured. If the noting of protest was made, the in- struments of protest could have been prepared thereafter. Moore testified that when he protested the bills he attached to each of them a memorandum showing the protest, but when the instruments of protest were written he destroyed it, as he had no further use for it. Counsel for appellee urges tliat the preservation of these slips was essential to the validity of the protest in extcnso, as they form a necessary part of the record in establishing the steps that must be taken in order to fix liability upon the drawer and indorser. The object of noting is to have a record from which the instrument of protest can be written, so a notary will not be required to rely upon his memory as to the facts. If the noting was made, the destruction of it, whether it was purposely or accidentally done, could not in- validate the instrument of protest which was based upon it. Tt pre- serves the right of the notary to prepare that instrument, and, when done, the essential steps have been taken to fix the liabilitv upon the accommodation drawer and indorser. 'fhe bill having been pro- tested for non-payment and notice having l)(>en given to the drawer and indorser, the noting having taken place, and the instrument of protest having been executed, the liability of the drawer and indorser was fixed. The destruction of the paper upon which the noting was made could not relieve tlieni of the liability that had attarluMl by the necessary act of the notary. After the several bills were drawn, and before their maturity, Moreland made an assignment to K. P. Taylor for the benefit of his creditors. When the bills were protosted, notices of protest were not Bent to the assignoe, but to Morolnnd. It is insisted that, as the asBignee accepted the trust, and qualified as such assignee, notices of protest should have been given to him, instead of to Moreland, in order to bind tho trust estate. The exact question hern presented has not been bofore this court, although this court, in C'alJnhnn v. nnnh. H2 Ky., 2.31, fi T?.. ISR, hold that notice of the dishonor of a bill to one who is the assignee of the payee was sufficiejit. But the 698 PROTEST OF UlLLS. [AKT. XIII. court said: " \Ye must not be undorstootl as dctcnuiniiig wlictlicr a iiotiit' of tilt? dishonor of negotiable paper sent to tiie bankrupt or insolvent alone, and not to the assignee, would or would not be sulK- cieut, as thai (]uestion is not jiresented in this ease." The le.xt-writers upon this (piestion are extremely unsatisfactory. 1 Pars. Notes & B., TjOO, in sjieaking of tiie person to Avhom notice of protest should be given in the case of a bankrupt, says: "That perhaps the notice should be given to the assignee, if the holder knows or might know, by the exercise of due diligence, that the estate is in his hands:" but he adds: "But notice might perhaps even then be suflficient if given to the bankrupt." Byles, Bills, page 216 says: " If tlie drawer of the bill become bankrupt, notice must nevertheless be given to him, in all events, before the choice of assignees. If the assignees are appointed, perhaps notice should be given to them." Daniel, Neg. Paper, section 1002, says: "If the party be bankrupt, it is best to give notice to him, and to liis assignee also. If there be yet no assignee appointed, notice to him is sufficient, and perhaps it might be sufficient, even if one had been appointed. If given to the assignee alone, it would probably be sufficient." When a 'party assigns all of his property for the benefit of his creditors and places it in the hands of a trustee for distribution, all of his creditors are entitled to participate in the distribution of it. This is true whether the debts have matured or not. Moreland's liability on these bills existed at the time of the assignment, and, if it was preserved, then the holder of them was entitled to participate in the distribution of the proceeds of the assigned estate. He being personally liable to the holder, it was important to it that he receive notice of protest that that lia- bility might be preserved. When that liability was preserved, it seems to us to necessarily follow that the holder of the bills is entitled to participate in the trust estate, because the very purpose of his assign- ment was to pay his lia])ilities in full or pro rata, as the case may be. We conclude that notice to Moreland was sufficient to preserve his liability, and, if his liability continued, there is no csciipo from the conclusion that the holder of the hills which evidenced it was en- titled to participate in the distribution of the estate. * * * The judgment is affirmed. in. By whom protest should be made. § 262 CARTER v. UNION BANK. 7 HUMPHRKY (Tenn.) 54S. — 1847. Green, J., delivered the opinion of the court. This is an action against the plaintiff in error, as the indorser of a bill of exchange drawn in Memphis, Tennessee, by Arthur Bowen in.] BY WHOM MADE. 699 on Fort and "Wilcox, Xew Orleans, in favor of plaintiff in error, for $2,-')00, and by liini indorsed. TJie bill was presented at maturity, payment demanded and was protested for non-payment by A. B. Cends, a notary public of New Orleans. The instrument of protest states, that the notary "by his deputy, McDime, Jr., presented said draft to Mr. Fort, one of the members of the firm of Fort and Wilcox, the acceptors, at their office, and demanded payment thereof, and was answered that the same would not be paid." The protest was marie the Hth June, 1845. By an act of the General Assembly of Louisiana, passed the 14th of March, 1844, it is made lawful, for each and every notary public in Xew Orleans, to appoint one or more deputies, to assist him in making of protests and delivery of notices of protests of hills of exchange and promissory notes: Provided, that each notary shall be responsible for the acts of each deputy employed by him; and provided, that each deputy shall take an oath, faithfully to perform his duties as such, before the judge of the parish in which he may be appointed; and provided, the certificate of notice of protest shall state by whom made or served. The defendant, at the trial below, objected to the protest which was offered as evidence, which objection was overruled by the court, anri the evidence was arlmitted. The jury found a verdict for the plaintiff, and the defendant appealed to this court. It is now insisted, that this protest is not evidence of tlio present- ment and demand of the bill, because it states that tlio derunnd was made by the deputy of the notary. It is certainly true, as the general rule, that a foreign bill mu.<5t be presented by the notary in person, and demand of payment made by him, and that the demand by his deputy is not sufficient. But it is seen, that the law of Louisiana, where this bill was j^ayable, authorizes the employment of a (leftuty in this service, and that the protest must certify by whom the demand was made. In Story on liills (§ '■i7(\), treating of protest of foreign bills, it is laid down, that the protest "should be made out and drawn up in the form re(|iiired by the law or usage of the place where it is nuide, and that so es.sential is the production of the protest, that it cannot be supplied by mere proof of noting for non-acceptance, and a subse- quent protest for non-payment." And Afr. Thitty observes (('bitty on Bills, 333), "whenever nfitice of non-acceptance of a forei-jn bill is necessary, a protest must al.so l)e made, which, though mere matter of form, is l)y the custom of merchants iiidispensably neces- pary, and cannot be supplied by witnesses or oath of tite part v. or in any other way, and, as it is said, is a part of the constitution of a foreign bill of exchange." The mere production of this protest, in the case of a bill pavablo and protested out of the countrv. will bo evidence of its dishonor, *' and to it all foreign courts give credit.'* YOO PROTEST OF RILLS. [ART. XIII. And at page 156, he says: " With rospoct to the protest, it sliould always ho made according to thr hiw of the phico where t.lie payment oiiglit to liavo heen made, though, with regard to notice of dishonor, it must be given to the drawer within tlie time, and according to the law of the phice where the hill was drawn, and to the indorscrs according to tlie law of the ph\ce where the indorsements were made." These autliorities settle the question, and establish the following propositions : — 1. That a protest is indispensable to the dishonor of a foreign bill of exchange. 2. That the protest is to be made according to the law of the place where the bill is payable. 3. That the protest properly authenticated, is evidence by its mere production, of the presentment and demand, in all foreign courts, where the dishonor of the bill is required to be proved. 4. That no other evidence of the facts stated in the protest is competent. The protest in the present case was made according to the law of Louisiana, where the bill was payable, and, therefore, is evidence here of the dishonor of the bill. It is objected, that there is no evidence that Memphis was the defendant's place of residence. Tt appears, that annexed to the name of the defendant on the bill is added " Memphis, Tennessee." This we regard as part of his indorsement, and as suflRcient authority to authorize the holder to send the notice to Memphis. Affirm the judgment.* « " In many cases, pvon with ropard to fmri'-i bills of pxchange, the protest may, in the absence of a notary, bo made by other functionaries, and even by merchants. But where, as in Mississippi, a justice of the peace is authorized by positive law to perform the functions and duties of a notary, there is no ground to say that his act of protest is not equally valid with that of a notary. Quoad hoc he acts as a notary."— Mr. .Justice Story in Biirke v. McKay, 2 How. ( U. S.) 66, 72 (1S44). Conf. Todd v. A'm/,',9 Adm'r, 49 Ala. 27.3; Read v. Bank, 1 T. B. Men. (Ky.) 92. Costs for protest cannot be allowed where tlie protest is by a private individual not authorized to charge fees. Read v. Bank, supra. — H. ARTICLE XIV. Acceptance foe Honor/ BYLES, BILLS OF EXCHANGE, Etc. (13th ed.), 1879. [Chapter XX.] When acceptance is refused, and the bill is protested for non- acceptance, or where it is protested for better security, any person may accept it supra protest,- for the honor of the drawer or of any one of the indorsers. The method of accepting supra protest is said to be as follows, viz. : The acceptor supra protest must personally appear before a notary public, with witnesses, and declare that he accepts such protested bill in honor of the drawer or indorser, as the case may be, and that he will satisfy the same at the appointed time; and then he must subscribe the bill with his own hand, thus — " Accepted supra protest in honor of A. B.," etc.,^ or, as it is more usual, " Accepts S. P." And a general acceptance supra protest which does not express for whose honor it is made is considered as made for the honor of the drawer.* Any person may accept a bill supra protest; and tlie drawee him- self though he may refuse to accept the bill generally, may yet accept it supra protest, for the honor of the drawer or of an indorser.'' And 1 ("ailed in Fronoli, " Acceptation par Tntprvontion." Code de Commerce, 12(5. Byles, Ch. XX. - I am not aware of any authority to show that there may be an acceptance for lionor without a protest, and the statute G &- 7 Will. 4, c. 58, seems to assume that hills accepted for hf)nor are always protest(vl : see Vandrjrall v. Tyrrell, M. & M. 87; (Icralopulo v. Wieirr, 1() C. B. 690; Bayley (0th cd.), 181; Noupuier, Lettres de Change, §§ 584-55)1. Unless, indeed, there be a direction to another j)erHon in case of need: Chitty 1G5, 230. Wliere the direction, in case of need, is appended, it is said to be necessary to present a foreign bill to that other person. I?ut then he is more properly an ori<:;inal alternative drawee than an acceptor for honor. As to a direction " in case of need " on an indorsement, see Leonard v. Wilson, 2 C. 4. M. 589. There seems from that case no obligation to present an inland bill (where the direction in case of need is given by an indorser) to the party to whom, in ease of ne<'d, it may be presented. The referee, in case of need, appointed by the indorser, though agent to pay the bill is not agent to receive notice of dishonor: In re Leeds Banking Coinpantj, T.aw Krp. 1 Kcpiity 70; 35 L. J. Ch. 33. a Beawes, pi. 38. « Chitty (flth ed.). 344; Beawes 39. s Beawes 33. And it has In-en held in America that it is no objection that the acceptor supra protest takes the guarantee of the drawee, Byles on Bill^ (flth American edition), 403. [701] 70? ArCPiPTANCF, FOR TTONOR. [AKT. XIV. though we have seen tliat, after one j^vneral acceptance, there can- not lie another acceptance," yd, when a liill has hcvn accc])tcd nupra protest, for the honor of one l)arty, it may, hy another imlividual, be accepted supra protest, for the honor of anotlier.' In no one case is the lioUler obliged to take an acceptance for honor.'' The hoUler of a dishonored hill, who is olTered an acceptance for the honor of some one of the preceding parties to the bill, should first cause the bill to be protested, and then to be accepted su])ra protest, in the manner above described. At maturity he should again present it to the drawee for payment, who may, in the mean- time, have been put in funds by the drawer for that purpose. If payment by the drawee be refused, the bill should be protested a second time for non-payment,^ and then presented for payment to the acceptor for honor. ^ Doubts having arisen as to the day when the bill should be again presented to the acceptor for lionor, or referee, in case of need, for payment, the 6 and 7 Will. 4, c. 58, enacts that it shall not be necessary to present, or in case the acceptor for honor or referee live at a distance, to forward for presentment, till the day following that on which the bill becomes due.^ In a case which attracted much attention, it was proved that where a foreign bill, drawn upon a merchant residing in Liverpool, pay- able in London, is refused acceptance, the usage is to protest it for non-payment in London. The bill is put into the hands of a notary, and he formerly used to make protest at the Eoyal Exchange, but that custom is obsolete: the notary now is merely desired by the holder to seek payment of the bill, and on a declaration by the holder that the drawee has not remitted any funds, or sent to say where the bill will be paid, the notary at once marks it as protested for non-payment. The court (with the exception ]')erhaps of Mr. J. Bayley), seemed to think this might, if the bill were payable in Lon- don, bo, in ordinary cases, suflficient. But they were all agreed that it would not have been sufficient in tlie principal case to charge the acceptor supra protest, because the acceptance was in these words, — " If regularly protested and paid when due," and they said the drawees could not be said to refuse unless they were asked. The court also appear to have been clear that, though there might be cases in which an exhibition of the bill to a notary in London is sufh- ' Jackson v. Tludson, 2 Camp. 447. 1 Beawps, pi. 42. »Nutford V. Walcott, 12 Mod. 410; 1 Ld. Raym. .575, s. r. ; Boawos, 37; Gregory v. Walcup, Comb. 70; Pillans v. Van Mierop, 3 Burr, 1GG3. » Floare v. Cazrnove, 16 East, 391. 1 WUlinms v. Grrmainc, 7 B. & C 477, 1 M. & B. 304, s. c. a According to the Frrnch law the acceptor for honor la bound to pive notice to the person for whose honor he accepts. Code de Commerce, 127, 128. ART. XIV,] FORM AND ESSENTIALS. 703 cient, yet that in all cases a bill may be sent to the drawee, and indeed that such is the more regular course.^ By the 2 and 3 Will. 4, c. 98, it is enacted that all bills made pay- able by the drawee in any place other than his residence are, on non- acceptance, to be without further presentment protested for non- [ 'py ment in the place where they are made payable. The undertaking of the acceptor supra protest is not an absolute fj .'^agement to pay at all events, but only a collateral conditional viiragement to pay if the drawee do not. " It is," says Lord Ellcn- norough, " an undertaking to pay, if the original drawee, upon a presentment to him for payment, should persist in dishonoring the l)ill, and such dishonor by him be notified by protest to tlie person who has accepted for honor."* The learned judge proceeds to lay down the doctrine that a second protest is necessary; observing: The use and convenience, and, indeed, the necessity of a protest upon foreign bills of exchange in order to prove, in many cases, the regularity of the proceedings thereupon, is too obvious to warrant us in dispensing with such an instrument in any case where the custom of merchants, as reported in the authorities of law, appears to have been required."' And a second protest, for non-payment by the drawee, is, after acceptance supra protest, equally necessary, in order tbat citiier the holders may charge the acceptor supra protest, or the acceptor supra protest may charge the party for whose honor the acceptance was given. The object of an acceptance for honor is to save to the holder all those rights which he would have enjoyed had the bill been accepted in a regular manner. If the bill be drawn payable at a certain period after sight, and accepted supra protest, a second presentment for payment, and a protest and notice, is still essential for the purpose of enabling the holder to sue eitlier drawer or acceptor supra protest, or enabling the latter to sue the party for whose honor he has accepted. And the time which the bill has to run is computed, not from the date of the exhibition to the drawee, but from the date of the acceptance supra prntest.^ Presentment to the drawee, and protest, must be averred in the « MitrhffU V. Rarinp. 10 B. & C. 4; M. & M. 381 : 4 C. & P. .?r). * ffnnrr v. f'nzrnorr. K. East, .*?ni. Sop Vnnrlruall v. TyrrrU. ^\. k M. R7. In Amnricn it is hold that wlioro a Hrnft lias Imrp firntostni for nonarcop- tancp, thr holrlor is not boiincl to prosont it at maturity for payniont : I'J.Tctrr Bank V. (inrrtnn, H Now Hanip. fiO. Rnt tliis is not so whon tlioro has boon an acceptance nuprn prntrst. An arco|>tor for tho honor of tho ilrawor can- not recover apainst him without proof of present men t for accciitatire or payment, and refiixal. and notice to tho drawer: linrinq v. Cfnrk. Id rick. 220. Hp who accepts .<r(l CaniidK'll. .Xs it is liy the Fn-nch ]mw. ( odo dc (ontniiTr-c, art, l;"iH. and l.y tin- law nf Sp<.tlan dnuvn out in full, or extended, as it is called, till afterwards: Geralopulo v. Wiclrr. 10 C. B. 690. 2 Story on Promissory Notes, § 453. 8 Payment supra protest is a peculiarity of the law mercliant. Tlir payer for honor is practically in the position of an indorsee, except that ho dis- charges all parties subsequent to the one for whose honor he pays. It has been held that one who pays for the honor of the drawer cannot recover against an accommodation acceptor. McDouell v. Cook. 14 Miss. 420; Gazzam v. Armstronfi, 3 Dana (Ky.), 554; 2 Daniel, § 1255. But this doe- trine was founded upon a misapprehension of the facts of Ex parte Lambert (13 Ves. 179). and the doctrine is distinctly repudiated in Ex parte Swan, L. R.. Eq. 344. By Xeg. Inst. L., § 304. the payer for honor succeeds to the rights of the holder, both as to the party for whose honor he pays, " and all parties liable to that party." The clause quoted seems to leave the ques- tion of the liability of the accommodation acceptor still in doubt. — H. ARTICLE XVI. Bills in a Set. BYLES, BILLS OF EXCHANGE, Etc. (13th ed.) 1879. [Chapter XXX.] Foreign bills ' are often drawn in parts, all the parts together making what is called a set. Exemplars or parts of the bill are made on separate pieces of paper, each part being numbered, and referring to the other parts. Each part contains a condition that it shall continue paj^able only so long as the others remain unpaid. Those parts should circulate together; or one may be forwarded for acceptance while the other is delivered to the indorsee, thus relieving him from tlie necessity of forwarding his part for acceptance, but giving him the indorser's security imme- diately, and diminisliing the chances of losing the hill.^ Every trans- feror is bound to hand over to his transferee all the parts of tiie bill in his possession, and he may even be liable to hand them over to a subsequent transferee, if he have them still in his possession.^ The whole set, of how many parts soever it be composed, consti- tutes but one bill,* and the regular payiiicnt and cancellation of any one of the parts extinguishes all.'' A firm, who were both payees and acceptors of a foreign hill in three parts, indorsed one part to a creditor to renuiin in his hands until some other security was given for it, and then indorsed another part of the same bill for value to a third person. Tliey afterwards gave the first indorsee the proposed .security, and took back the first part of the bill from liim. Held, that the holder of the second part was not precluded from recovering against the firm: First, ])ecause the substitution of the security for the first part was not a payment; and secondly, because the firm were, as between themselves and the second indorsee, estopped from disputing the regularitv of their ac- ceptance and indorsement of the second part.* » Noujfiiipr (Iph LettrpH de Chanjjp. 1, 104. 2 Thf facility uliicli dniwin^j ii hill in sets iifTordH for itH prpsontnu'rit li.as bePTi li*'l(l to norclcriitp tli<' timo witliiii wliicti a tiill, p.iynlili' aflcr wif^lit, ought to bp [irpscntf'(l for acffjitanr-p. Strnkrr v. (Irnhnw, 4 ^t. & \V. 721. « /'innril v. Klnrhmnn. 32 L. J. Q. R. 82; .3 Rest * Smith. 38S. « S<-p Cnran v. Thnlmnnn, 13H App. Div. ( N. Y.) 2»7. — ('. s Hyh"< on RillH (Oth .Amoriran erlifiori), 57H. A contract to dolivpr up a kill (Ir.nwii in partn is a contrnrt to amort V. Robertson, 3 Dow, 218, 228; Beawes, 430; Poth. Ill; 2 Pard. 367. But not an inaccurate reference or an omission to name one part ob- viously by mistake. Bayley (Cth ed.), 30. 2 See Hohlfiuorth v. Hunter. 10 B. & C. 449. 3 Code de Commerce, art. 148. 4 See Holdfticorth v. Hunter, supra. ^' Cheap V. Uarley, 3 T. R. 127. See ^miih v. Mercer, 6 Taunt. 80; 1 Marsh. 453, s. c; Fuller v.' Smith, 1 ('. & P. 107; Ry. & M. 49, s. c. d'cour de Cassation, 4 Avril. 1832; Sirey, t. 32, 1. 29. 7 Dehers v. Harriot, 1 Show. 1(J3. ART. XVI.] ACCEPTANCE AND TRANSFER. 711 with such a person." If he should omit to state that the hill is a copy, or to write his own indorsement after the word copy, he may become liable on the copy as on an original.^ It is a common but not a safe practice for a drawer, to whom a negotiated part has come back with many indorsements on it, to sub- stitute a new part without such indorsements. The holder of such a substituted part may be deprived of his remedy against the acceptor by the intermediate act of the drawer." §310 WALSH V. BLATCHLEY. 6 Wisconsin, 422. — 1853. The plaintiff declared in trespass on the case upon promises, for money lent ; money laid out and expended ; money paid and received by the defendants for the use of the plaintiff, etc ; and gave notice of the cause of action, the indorsement by defendants upon the bill of exchange, copied, and served with the declaration as follows: Express Exchange Office. Adams & Co. Downievilxe, San Francisco. Exchange for $250. Oct. C, 1854. No. 9.917. At sight of this second of exchange — first and third unpaid — pay to the order of Phrelxi Blatchley, two hundred and fifty dollars value received, and place to account of exchange. Adams & Co. To Mf-s.sbs. Adams & Co., New York. (Countersigned ) , S. VV. Lang WORTHY, C. B. Macy, Agents. Indorsed by IMia*be Blatchley to Henry Dart or order, and by J. ITenrj Dart to P. 0. Strang or order, and by Strang to P. Walsli or order. The defendants plead the general issue; and by mutual agreement of counsel the cause was tried before the circuit judge, without the intervention of a jury, who found, and reported in writing with his decision, the facts and conclusions, and recited in full in the opinion of the court therein. By the Court, Cole, J. — This case was tried by tlic court without the intervention of a jury, and tlie judge found the following facts: First. That the action is brought ujuin the bill of exchange intro- duced in evidence, and describcfl in the plaintiff's declaration. That this bill, which is the second of the set, was indorsed by the defendants on a Sunday. Second. That the first of the set was sold by defendants to plain- tiff about the Ist of January, 1855. That the plaintiff, without delay, • (our Koyale de I'ariH, 14 .lanvier. 1830; Sirey, t. 30, I. 172. » Kalli V. Dennistoun, G Exch. 483. 712 BILLS IN A SET. [AUT. XVI. sent the same by mail to liis eorn'si)c)ii(lent in New York city, the residence of the drawee, for presentation for payment. 'J'hat by some dehiy in the mail the letter did not reach New York until the 9th of April following, at which time the letter, with inclosure, waa duly received by the said correspondent. That the bill was not pre- sented for payment. Third. That in the last of March, the plaintiff, fearing the said first bill was lost, procured the defendants to indorse and deliver to him the second of the set, and had it presented on the third day of April following for payment, to the drawee, and payment was re- fused. The bill was duly protested, and proper notice given to the defendants, who were indorsers. The conclusions of law which the court drew from these facts, were, " 1st. That the liability in this action, if any at all, is upon the second bill of the set, and not on the first; 2d. That because the said bill was indorsed on Sunday, that therefore such indorsement was absolutely void." We have examined with considerable care the authorities, and have not been able to find a case precisely like the present, although it would seem as if the point must frequently have arisen in the courts in this country, and in England. The case of Perreira v. Jepp et al. (cited in a note on page 449, 11 B. and C), would seem to have a strong bearing upon the case at bar. It was there held that he to whom any part of the set is first transferred, acquires a property in all tlie other parts, and may maintain trover even against a bona fide holder, who subsequently, by transfer, or otherwise, gets possession of another part of the set. That is, deciding that the first indorsement of one of the set vests in the indorsee the absolute right to the possession of the whole set. And we suppose it would follow, from this doctrine, that the indorsement of the second in this case was entirely unnecessary. The liability of the indorser arose from indorsing the first of the set for value. We think her liability was not increased one jot or tittle by indorsing the second of the set. Suppose slie had indorsed all of them in January, at tlie time she indorsed the first, is it not obvious that her liability would not have been different from what it is? It is conceded that the indorsement of the first was good, and this indorsement was entirely adequate to carry with it the second and third. (See Edwards on Bills, 304 and 162; floldstrortli v. TJnnier, 10 B. C. 449; Kenworthy v. Tlopkins, 1 Johns. Cas. 107.) Either of the set may be presented for accept- ance, and, if not accepted, a right of action arises upon due notice against the indorser. (Dovnes and Co. v. Church, 1.3 Peters, 205.) The bill upon which the protest was made was declared on and pro- duced, and it also appeared that the first had not been presented for payment. The court says, and we think properly and correctly, that ART. XVI.] ACCEPTANCE AND TRANSFER. 713 if the first had been presented for payment and protested, even as late as April Uth, that upon proper notice the iudorsor would have been held, for the delay in the mail would have been a sulhcient excuse for the apparent neglect in not presenting it for acceptance before. The case might have been relieved from all doubt or diffi- culty, had the indorsee declared upon the first of the set, and pro- duced on the trial the second, which had been presented for accept- ance and dishonored. (Wells v. Wliitehead, 15 Wend. 527.) This he did not poo fit to do, but we think he w^as entitled to recover even as the facts appeared before the court. The judgment is reversed, and a new trial ordered.^ 1 It seems that an indorsee has no right to demand the other parts except from his immediate indorser. Thus, the fourth indorsee cannot maintain an action again-t tlic second indorser for outstanding parts of tlie set. I'inard v. Klockmnnn, 3 B. & S. 38S ; s. c, 32 L. J., Q. B. P2. In an action against the acceptor on one part of the sot, the holder need not file the other part or parts. John.son v. Ojfuft, 4 Met. (Ky.) 19. In an action against the indorser on tiie second part, after dishonor by non- acceptance, the holder need not account for the first part; it is a matter of defence " to show either that some otlier bill of the set has been presented and accepted, or paid; or that it has been presented at an earlier time and dishonored, and due notice has not been given; or that another person is the proper holder, and has givijn notice of his title to the party sued; or that Bome other ground of (jcfcnce exists, which displaces the prima fnric title made out by the plaintiff." nntrvrn v. Church. 13 Pet. (V. R.) 205; Miller V. I'almrr, 58 Md. 452. But where the second of the set is protested for non- acceptance, the holder must produce that number of the set, becau.sc other- wise it may have been accepted supra protest for the honor of the defendant, and he be'lialde upon it. ^VrUfl v. Whifrhrnrl, 15 Wend. (N. Y.) 527. If the drawee accepts more than one part, he is liable on each to holders in due course. Holdsworth v. Hunter, 10 B. & C. 449; Hank v. Nral, 22 How. ( U. S. ) 90. If tlie drawee ilislionors one part, but sr.bscouently honors and pays ll-e other part, the drawer is discliarged. I'aiji; v. ^Varncr, 4 Calif. 396. — H. ARTICLE XVII. ProiSiissoky N:\\ to Mr. Siiiilli. and 1 Anne, c. !»). :"i(l, if not, I lie eause of aetiou ai:crued Sept. 'vJ, 1TS7, lliree nioiiliit< allei- llie tlale ot llie nulc, and tunse- quently ihat i>ix years had elajtsed before the suing out of tlie writ, and tliat the eause ol" aetion was barred by the statute of iiniitations. Vordiet for defendant, with leave to j)hiintiif to move to set that verdiet aside, and to enter .; verdict for liiin, i( this court thought he was entitled to recover. Motion accordingly. LoKD Ki;nyon, C. J., said, If this were res Integra, and there were no decisions upon the subject, there would be a great deal of weight in the defendant's objection ; but it was decided in a case in Lord Raymond (2 Lord l?aym. 1545), on demurrer, that a note payable to B.. without adding or to his order, or to bearer, was a legal note within the act of Parliament. It is also said in Marius that a note may be made payal)le cither to A. or bearer, A. or order, or to A. only. In addition to these authorities I have made inquiries among different merchants respecting the practice in allowing the three davs" grace, the result of which is that the Bank of England and the merchants in London allow the three days' grace on notes like the present. The opinion of merchants indeed would not govern this court in a question at law, hut I am glad to find that the practice of the coniiuercial world coincides with the decision of a court of law. Therefore, I think that it would be dangerous now to shake that practice, which is warranted by a solemn decision of this court, by any speculative reasoning upon the subject; and conse(|uently this rule must be made absolute to enter a verdict for the plaintiff. Rule absolute.^ §320 CARNWlJHiHT r. GRAY, Exectttor. 127 New York, 02. — ISOl. Action on the following instrument, executed by defendant's testator : — QuARRYViLLE, Heptcmhcr 2, 1871. Thirty days after death, I prnniiso to \k\\ to Cornelius Cani\vrij,'lit fifteen hundred dollars, with interest. Samuel P. Fremoh. Plaintiff gave no evidence of consideration, but proved the genuine- ness of the signature, put the note in evidence, and rested his case. Judgment for plaintiff. Defendant appeals. Brown. J. — When the plaintitF rested his case and again at the close of the testimony the defendant moved to dismiss the complaint 2 Grace is allowed on non-negotiable notes. Duncan v. Maryland Havings Inst.. 10 Gill & J. (Md.) 290; Duhuy.s v. Farmer, 22 La. Ann. 47S; Cox v. Reirharfit, 41 Tex. .501. Contra: fyurr v. .S'7iof/. 70 Tnd. l.')2. The matter is now iinimportant where days of trrnce are abolished. Nefj. Inst. L.. ? 145. — H. I. 3.] NO N- NEGOTIABLE NOTES. 717 upon the ground that no proof had been given that the instrument sued upon had any consideration. These motions were denied and the court instructed the jury that the instrument was a promissory note and imported a consideration, and that the burden rested upon the defendant to show that it was without a consideration. The exceptions to these rulings present the principal question argued upon this appeal. The statute of this state in reference to promissory notes provides as follows (1 R. S. 768) : § 1. All notes in writing, made and signed by any person, whereby he shall promise to pay to any other person or his order, or to the order of any other person, or unto the bearer, any sum of money therein mentioned, shall be due and payable as therein expressed; and shall have the same effect and be negotiable in like manner as inland bills of exchange, according to the custom of merchants. § 4. The payees and indorsees of every such note payable to them or their order and the holders of every such note payable to bearer, may maintain actions for the sums of money therein mentioned, against the makers and indorsers of the same respectively, in like manner as in cases of inland bills of exchange, and not otherwise.' Our statute is a substantial reenactment of the statute of Anne (3 and 4 Anne, c. 9), which provided that: "All notes signed by a person promising to pay to another his, her, or their order or to bearer" should be construed to be by virtue thereof due and payable to any such person to whom the same is made payable, etc., etc. This statute was held by the courts of England to include within its terms a non-negotiable note. (Smith v. Kendall, 6 D. & E. 123; Burchell v. Slocock, 2 Ld. Haym. 1545; 3 Kent's Com. 77.) In the case first cited Lord Kenyon said : " A note may be made payable to ' A.' or bearer, ' A.' or order, or to ' A.' only." Similar decisions were made "by the courts of this state under our own statute. (Down- ing V. Backenfitocs, :i Caine, 137; President v. Ilurtin, 9 Johns. 217; Kimball v. Ilnntinf/lon. 10 Wend. 075; flail v. Farmer, 5 Dcnio, 4!^!.) In Doiniinrj v. liachevstoes a non-negotiable note was declared on as within the statute and the defendant demurred on the ground that the declaration did not allege the transaction and consideration upon which the note was given. The court gave judgment for the plain- tiff, saying: "The very point was setflcd in Green v. Ijimq (April Term, 179H), in conformity to the adjudications in Westminster Hall." In President v. ffvrfin it was said: "The note set forth is a good promissory note within the statute, though it has no words bearer or •This stntiitp in now rrppalrd by N. Y. Nep. Inst. L., § 340, and is re- placed by 5 320. — H. 718 PliOMISSOUY NOTES. [AUT. XVII. order. Tliis is the established English hiw, and tlie same rule is recognized hy this court." In Kifiiball v. H Hiiliiiytoii the action was uj)on a due l)ill in this form : " Due Kimball &: Kcnston three hundred and twenty-five dollars payable on demand." Judge Nelson said: "The instrument is a promissory note witliin the statute. Neither the acknowledgment of value received or negotiable words are essential to bring it within the statute." (See also Carver v. Hayes, 47 Me. 257; Franklin v. March, 6 N. H. 364.) No authority is cited in the courts of this state or of England holding that a non-negotiable note is not within the terms of the laws cited, and we are of the opinion that the language of our statute includes a note payable to a person without words of negotiability. Tlie instrument sued upon being, therefore, a promissory note within the statute of this state, it follows that it imports a considera- tion. By the express terms of the statute the sum of money therein mentioned is declared to be " due and payable as therein expressed." That it is "due and payable" according to its terms is the legal conclusion which the court must draw from the instrument itself. A valid contract is thus declared to exist, and of course a considera- tion must be implied. Hence " value received " need not appear on the face of the note, as those words express only what the law implies. (Hatch V. Traijes, 11 Ad. & El. 702; Hall v. Farmer, 5 Denio, 484.) The effect of laws which make promissory notes negotiable, or which authorize actions of debt upon them, though non-negotiable, is to take them out of the common-law rule which requires that every contract must be shown by the party who sues upon it, to be sup- ported by a consideration, and enables the holder to maintain an action thereon without alleging or proving a consideration. In other words, a consideration is implied from the character of the instrument. (Feasley v. Boatwright, 2 Leigh, 195 ; Hatch, v. Trayes, supra.) The English statute was enacted to settle the controversy that prevailed, whether under the customs of merchants promissory notes were negotiable. They were thereby declared to be assignable or indorsable over in the same manner as inland bills of exchange were according to the customs of merchants, and holders were empowered to maintain actions thereon in the same manner as they might do upon any inland bill of exchange made or drawn according to the custom of merchants. Our statute contains similar provisions. Promissory notes and inland bills of exchange were, by virtue of these laws, put upon an equality. They were made negotiable if they contained words of negotiability, but whether negotiable or not, and whether they ex- pressed value received or not, it was no longer necessary in actions thereon to aver and prove consideration. Such was and is the rule as to inland bills of exchange. (1 Daniel I. 3.] * NON-XEGOTIABLE NOTES. 719 on Negotiable Inst., § 161; Raubitschek v. Blank, 80 N. Y. 479; Averett's Adm'rs v. Booker, 15 Gratt. 163; ]yeUs v. Brigham, 6 Cush. 6.) And the same rule under the statute was made applicable to promissory notes. (Tounsend v. Derby, 3 Metcalf, 363; Dean v. Carruth, 108 Mass. 242; Bank of Troy v. Topping, !) Wend. 277; 13 Id. 557; Chitty on Bills [9th Am. ed.], 78-181; Paine v. Nalke, 57 How. Pr. 273; Story on Promissory Notes, §51; 3 Kent's Com. 77, 78; 1 Parsons on Conts. [6th ed.], 249; 1 Parsons on Bills, 193.) The statute does not require a note to express value received upon its face, and no definition of such an instrument requires the expres- sion of that fact. The note sued upon, although by its terms payable after the death of the maker, was a valid instrument. A promissory note is defined to be a written engagement by one person to pay absolutely and unconditionally to another person therein named, or to the bearer, a certain sum of money at a speci- fied time or on demand. (Story on Prom. Notes., § 1: Coolidge v. Riigglf's, 15 ]\Iass. 387.) It must contain the positive engagement of the maker to pay at a certain definite time and the agreement to pay must not depend on any contingency, but be absolute and at all events. Tried by this standard the instrument set out in the com- plaint was a valid promissory note. The fact that it was payable after the death of the maker did not affect its character. (3 Kent's Com. 76.) It follows from these views that tlie motion to dismiss the com- plaint was properly denied, and there was no error in the charge of the court. The point made by the appellant that the court erred in its charge as to the burden of proof on the question of consideration, assuming that evidence pro anrl con upon the question was given, was not raised at the trial. The proposition made by the defendant at the close of the judge's ('har() TKOMlSSOliY NOTES. [ART. XVU. hiul yivoii ovideiu'o wliich, if boliovcil l>y tlio jury, overcanu' tlu- pre- t^imiptioii arising in rii\(«r of llu' iiotr. Tliis clriirly appoars I'roni the suitoinont 1 have quoti'il. 'riio o.xooptions to the admission of evidence present no error, and the judgment should be altirmed. All eoncur, except Follett, Ch. .1., and Vann, J., dissenting, and Pakkkh, .)., not voting. Judgment affirmed.* § 320 CROMWELL v. HEWITT. 40 Nfw York. 4fll. — 1869. Action against payee-indorser of two instruments as follows : — New York, March 22(1, 1801. $75. Sixty days after date I promise to pay to Richard Hewitt seventy-five dollars, value received. William Ryan. [Indorsed] : .Tames R. Hewitt, Richard Hewitt. Another of like tenor for four months was made and indorsed as above. * Accord: Eegeman v. Moon, 131 N. Y. 462. Contra: Bristol v. Warner, 19 Conn. 7, ante. p. 234; Currier v. Lockicoorl, 40 Conn. 349, ante, p. 42. The question as to whether a non-negotiable promissory note imports a considera- tion mu.st turn upon a construction of the statute governing promissory notes. Apparently the Xeg. Inst. L., § 320, has changed the law in New York, as the section roferred to includes only negotiable promissory notes. — H. [In Dcyo v. Thompson, 53 App. Div. ( N. Y. ) 9, it was held that under the provisions of the Negotiable Instruments Law a note in the following form, " On demand I promise to pay Helen Deyo three hundred dollars," does not import a consideration, and tlie burden is upon a party suing on such note to prove the existence of a consideration therefor by extrinsic evi- dence. Merwin. .).. .said: "The note was not negotiable and did not express consideration. In Carnwright v. Gray (127 N. Y. 92) it was held, of such a note, that it imported a consideration and that the burden of showing a want thereof was upon the defendant. This decision was based on the provisions of the Revised Statutes (Part 2, chap. 4, tit. 2, 1 R. S. 768) on the subject of promissory notes. These provisions were repealed by the Negotiable Instruments Law (Chap. 612, Laws of 1897), and I find no provision in that law that will allow us to hold that a note, like the present one. imports a consideration. In the Carnwright case it was evidently con- sidered that, in the absence of a statutory provision, there was no presump- tion of consideration and that the burden of proving it was upon the party who brought the action. And that seems to be the rule. (1 Daniel Neg. Inst.. 4th ed. § 162)." P. 12. This point does not seem to have been passed upon as yet by the New York Court of Appeals. — C] t. 3.] NON-XEGOTIABLE NOTES. 'Vil James Hewitt was originally made a defendant, but the action as to him was diieontinued, and this action is against Kichard Hewitt, the payee-iudorser. The plaintiff testified that the defendant was owing the plaintiff, and that it was understood between them that wlien these notes were passed over by him in payment, that they were taken solely upon his responpibility, and that he assured plaintiff that tiiey should be paid. The action was to cliarge defendant as guarantor. No presenta- tion to the maker for payment or notice of non-payment to Hewitt was shown. The court below held the suit could not be maintained, and dismissed tbe complaint. Plaintiff appeals. Masox, J. — This action was brought to recover of tbe defendant tbe amount of two non-negotiable notes of seventy-five dollars each, upon the following facts: One William Kyan made the notes pay- able to defendant by name, and the defendant transferred the notes to the plaintiff for value, and indorsed them over by writing his name upon the back. The notes were not presented for payment when tliey fell due, nor was any notice of non-payment given to the defendant, and the only question in the case is whether the ])laintilfs are entitled upon these facts to recover of the defendant the amount of the notes. The case of Richards' Ex'r v. Waning'' (1 Keyes R. 575), is an authority in point, and decides the very question in favor of t';e plaintiff. Tlie case liolds that the holder may overwrite the indorser's name with a contract of guaranty, or as maker of the note. That case must bo regarded as controlling, even should we think the i""=or)s assigned for the decision unsatisfactory. The judgment of the Sui)reme Court must be reversed and a new trial granted, with costs, to abide the event." '•'Ihis was a casp of " irrcjiiilar indnrspinent." — H. ".Accord: NiieetNcr v. l-'reticli, Kj \h>t. (Mass.) 262; Prenti.i/i v. Danielson, n ( onn. 175; Castle v. Catulee, 10 Conn. 223; Ford v. Milrhrll, 1.') Wis. ;{04. A paypp-indnrs'j'r in blank of a non nopotiahlc nod- lipconics linl)l('. not as iulorspr, \)\\t if at all as f^tiarantor. In sonip states no pipsuniption arises tlint any liability is nndpitakpii. tbo indorspniont bcinfr treated siiiijijy as a t'-an^fpr or assi^nmr-nt of a coninioiilaw contriiet, Slmffslall v. McDanicl, l.';2 Pa. .St. .'MIS; Story v. I.nmh. .Ti Midi. fj'J.'i. I'.iit evidenee ..f the trup con- tract is admissible. Hhiil.) .\n indorsenient nf a non iicfrotiable noto " waivinjj protest " is an indication of an intention to assume tlie liability of guarantor. First \. H. v. Fulkrnhan, !t4 Calif. 141. 'Ilip indorser becomes liable only to his inunediate indorsee, and not to a remote indorsee. KrudaU v. I'nrkir. 10.1 Calif. .11!). Contra: Warcham Bank V. lAnrnln, 3 .Mien (Ma«s. K 102 [urmhlr). An irregnlar indorser of a non nppotiable note is a guarantor, ffinhards' Ex'r V. Warrinfi, 1 Keyes (X. V.). .576; MrMullm v. Ifnffrrty, H!) N. V. 450; Firfit \. B. V. lUihmrk. 04 Calif. IK5; Onirk v. Colston, 7 r;ratt. (Va.) 189. Sep on nonnPL'otiablp notes. Storv on Prom. Notes, §§ 128-120; 2 Randolph on Comm. Paper, §§ 055-061. — H. NEOOT. INSTRUMKNTfl — 46 722 CHECKS. [akt. XVII. II. Checks. 1. Check Distinguished from Bill of Exchange. §321 HARRISON v. NIC'OLCT NAT. BANK. 41 Minnesota, 488. — 1889. Appeal by plaintiff from an ordtM- of the District Court for Hen- nepin county, liea, J., presiding, sustaininnt instance, the check would not lia\c reached Bristol in due course of mail until after the suspension. It is further found that, in collecting this check, the plaintiffs pursued the usual and ordinary course, and that there was not in that course any unusual or unnecessary delay. The plaintiffs claim that the finding of the court below that this check was forwarded for collection in the usual way is conclusive upon the question of diligence. But this cannot be so, unless it be considered that any change of method which grows into a settled practice of itself works a modi/ication of the law. It can hardly be claimed that custom is so exclusively the test of diligence that the adoption of a particular practice by any class of business men leaves nothing for the determination of the court. When the custom of one period bas resulted in the adoption of a definite legal rule, the development of a new custom will not effect a modification of the rule in advance of judicial sanction.^ The case shows tlie manner in which this check was forwarded for presentment, and, when the facts are found, due diligence is a question of law. The rule, in its most general statement, requires the payee of a check to present it for payment with reasonable diligence. But the law goes further than this general statement, and determines what reasonable diligence is under ordinary circumstances. Wlien the case presents only the simple facts of time, location, and stated means of communication, the question of liability is to be determined by an application of the more definite rule. It is only when the case pre- sents special circumstances which are claimed to warrant further delay that the court is left without otlier guidance than the general re- quirement. This case discloses nothing in tlie nature of an excuse for delay. It is well settled that a check must be presented to the bank on which it is drawn if the bank be in the same place with the holder, or forwarded by mail if the bank be in another place, by the next secular day after it is received, and that the depositing of the check in a local bank for collection does not give the holder the benefit of an additional day. So this check was forwarded neither earlier nor 2 But see Plover Havimja Liank v. Muodic, VS^ Iowa, G85, pual, p. 735. — C. II- 2.] PEESENTMENT. 729 later than the law required; and the controversy is confined to the question whether it was forwarded in the proper manner. As presented by the findings, the question is wliether the local bank was justified in forwarding the check through its New York correspondent. The defendant sustained no harm from the course taken by the Xew York bank in sending it to Burlington. It is said in Daniel on Negotiable Instruments (§ 1592) that, wiien the payee receives a check from the drawer in a place distant from the place wliere the bank on which it is drawn is located, it will be sufficient if he forward it by post to some person in the latter place on the next secular day after it is received, and if the person to whom it is thus forwarded present it for payment on the day after it has reached him by due course of mail. If this be accepted as a correct statement of the rule, it would seem not to permit the collection through a correspondent so remote as to delay the presentment a day beyond the time so allowed. It is true that the rule is some- times stated to be that the check should be forwarded for presenta- tion on the day after it is received, and that the agent to whom it is forwarded must in like manner present it, or forward it, on the day after he receives it. This phraseology might seem to contemplate the collection of a check by means of several agents. But statements regarding the forwarding of a check by successive holders will or- dinarily be found to refer to checks drawn for the purpose of being put in circulation, or to questions arising between indorser and in- dorsee where a check given in payment has been diverted from its prnpor use. Statements applicable to such cases must not be taken to indicate that the requirement of diligence, as between payee and drawer, will be satisfied by a regular transmission upon successive days, if an improper number of agents be employed. The rule is ordinarily stated to be that the payee or the local bank receiving it for coller-tion must forward it directly to the place of payment. It is said in Byles on Bills that the bank receiving it for collection cannot postpone the time of presentment by circulating it through agents or branches of the bank. In MnvJp v. Brmrti (4 Hing. N. C. 2Gr,), the right of a branch office of the plaintiff bank to send through the home office, in accordance with the custom of the bank, was considered and denied. We do not find that any modification of tlic mlr ns before stated has beon rerognized in recent cases. In nntik v. Millrr (.T7 \cb. r)00),* the question was as to the liability of the payee on his indorse- ment to the bank. The check was deposited on Saturday, the .Tlst day of May, and was drawn on a bank located at Tourtland. 2? miles distant from the bank of deposit, and nccessil)lc by two dailv mails. » Affirmpfl on rrhparinp, 43 Neb. 791. — H. 730 CHECKS. [AKT. XVII. On receiving tlie cheek, the Bank of Wymore mailed it to a bank in ISt. Joseph, Mo., for eolleition, and this ))aidv mailed it to a bank in Omalia for eolloetion, and tlie latter bank mailed it to the bank on which it was drawn. The court said the evidence did not show that this method of presentment was in accordance v/ith any custom of bankers, but said, furtlier, tliat, if such a custom had been shown, it would not have relieved tlie l)ank from liability. Without under- taking to lay down any general rule, the court said that, in this case, Tuesday, June 3d, would have been a reasonable time within which to make presentment. This was in accordance with the rule as stated by Daniel. ' In Gifford v. Hardell (88 Wis. 538), a check indorsed by the de- fendant was delivered to the plaintitf's agent at Dousman on July 17th, and was at once mailed to the plaintiff at New Richmond, who received it on the 18th, and at once delivered it to a local bank for collection. This bank had no correspondent in Milwaukee, and imme- diately mailed the check to its correspondent in Chicago. From Chicago it was forwarded to Milwaukee, and presented on the 21st. If the check had been sent directly to Milwaukee from New Rich- mond, it would have arrived in time for presentation on the 30th, and would have been paid. The trial court held that sending the check for collection by way of Chicago was not reasonably diligent, and directed a verdict for defendant. On appeal the judgment was sustained, the court saying that, when the defendant delivered the check at Dousman, he had a right to expect that the plaintiiT or his a^ent would present it for payment within a reasonable time, instead of which it was sent to New Richmond, several hundred miles northwest of Milwaukee, and then sent back through Milwaukee to Chicago, and from there returned to Milwaukee. The court then stated how a check should be forwarded and presented in such cases, its rule corresponding to that given by Daniel. The rule is similarly stated in Holmes v. Roe (62 Mich. 10*9). In First National Bank of Grafton v. Buckhannon Bank (80 Md. 475), the plaintiff bank, located at Grafton, W. Va., received on the 12th of January, in payment of a balance due it, a check on J. J. Nicholson & Sons, of Baltimore, and on the same day forwarded it for collection to its correspondent bank in Philadelphia. The Phila- delphia bank received it on the 13th, and at once mailed it to its correspondent bank in Baltimore. This hank received it on the 14th, and presented it to the drawee on the same day. The court sustained this presentment, on the ground that the Grafton hank, having sent out the check one day sooner than was necessary, had it in Baltimore for presentment on the day required, notwithstanding its transmission throu?h Pliilndf'lnhia. We think that if thi« mio of eommercial law, stated in the various text-books, and affirmed by these recent cases, is to be modified in U. 2.] PEESEXTMENT. 731 derogation of the rights of drawers of checks, it should be done by legislative enactment.* Judgment reversed, and judgment for defendant." § 322 WEST BRANCH STATE BANK v. HAINES. 135 Iowa, 313. — 1907. Action at law to recover upon a promissory note. Judgment for defendant, and plaintiff appeals. Weaver, C. J. The making and delivery of the note sued upon is admitted by the defendant, but he denies the plaintiff's right to re- cover thereon on the following grounds: He alleges that said note, with $200 in cash, was delivered by him to the plaintiff in payment or exchange for a draft or check drawn by the plaintiff on Oilman, Son & Co., of New York city, under the following circumstances: Defendant had entered into a contract for the purchase of land in the vicinity of Ortonville, Minn., and to avoid a forfeiture of such contract he was required to be ready to pay the sum of $2,600 thereon upon the 8th day of October, 1902, or as soon thereafter as the seller was able to present an abstract showing good title to the land. On the near approacli of said date there was a prospect that the seller would be delayed for a time in making the proper showing of title, and defendant, as he alleges, was advised by the plaintiff bank and its officers that it was better, for the protection of his own interests, that he avoid any appearance of default on his part and have the amount of the agreed payment forwarded to Ortonville, ready to be delivered to the seller on the day named or as soon thereafter as the abstract of title should be perfected. To that end he snvs the said bank on October 7, 1002, issued to him a check or draft on Oilman, Son & Co., of New York city, for the sum of $2,000, in consideration of which he then and there 'paid said bank $200 in money and executed the note now in suit. Said draft or check, it is clniincd, was issued by the bank with the express knowledge and understanding * Laws of Vt., 18n6. No. .38: " Tn ordnr to hold tho maker, indorsor. piiar- iintor. or surety of any olieck or draft deposited with or forwarded to any individual or hank for eoHention, or owner! hy any inrlividiml or hank, it shall he siifTieient for said individual or hank to forward the same in tlie usual eommereia! way now in iiw, according to the repiilar course of husiness, and the same shall he considered due dilifrence in the collection of 8uch check or draft."— H. 5 There is some authority for the proposition that the usual or ctistomary method of forwarding may he safely used, even though it is rireiiitous. Waliacp V. Aqry, 4 Mason (T\ S.) .130; .'5 Th. llfi; Smith v. .fnnrs. 20 Wend. (N. Y.) 103: Tnulnr v. Sip. 30 N. .T. L. 284. 201.-11. fSee Plover Sav. Bk. r. Hoodie, 135 Iowa, 685, pant, p. 736. — C] 732 CHECKS. [art, XVII. that its presentation for payiueiit was likoly to be delayei.1 a few days becaiit^e of tlie matters abo\e related, and was jjroiiipLly forwarded lo Ortonville, wbere it was received on October !», 1!)0*^. Seven days thereafter, and before tlu- salt' and ti-aiisfcr of the land had been perfected, and before any ])resentation of said check or demand made for its payment, tiilman, Son & Co., being insolvent, made an assign- ment in bankruptcy. It is further alleged that, when tbe insolvency and bankruptcy of said drawee was discovcrec], said check was pre- sented to the plaintiff bank for payment, and payment thereof was refused, thus causing an entire failure of the consideration of tbe note in suit. It is further alleged that at and prior to the issuance of said check or draft the plaintiff bank knew that Gilman, Son & Co., were insolvent and liable to suspend payment at any time, but fraudu- lently concealed such fact and information from the defendant.'* The court having refused to set aside the verdict of the jury in defendant's favor, a reversal of the judgment is sought in this court upon grounds hereinafter considered. * * * According to the general tenor of the testimony a draft purchased and forwarded from West Branch to Ortonville, Minn., on October Tth, and forwarded thence without intermediate negotiation to New York, would ordinarily he presented to the drawee somewhere from October 12th to October 14th. Taking the average of these dates, a delay of about three days had occurred when the correspondent closed its doors. Now, while it is true that the court may sometimes determine the reasonableness or unreasonableness of delay in present- ment of a negotiable instrument as a matter of law, the question is ordinarily one of fact. As between the drawer and payee in this case, the question whether the delay w^as reasonable depends upon circum- stances disclosed in evidence. Tf the bank knew tliat appellee desired to send the draft to Ortonville, to be there held for a few days for the completion of the land purchase, and issued the paper to him for that purpose, then appellant can ^claim no advantage from the fact that it was not forwarded to New York for payment on the same or following day, provided, of course, that such delay was reasonably necessary for the accomplishment of the known purpose for which it was obtained. Obviously this is a question for the jury to consider and pass upon, in view of all the proved facts and the ordinary course and methods of business. Bank drafts or bills of exchange differ from ordinary bank checks, in tliat the latter usually contemplate practically immediate presentation for payment. This is especially true when the check is drawn upon a bank in the town or city where both drawer and payee reside. On tbe other hand, a bank draft, bill, or check upon a distant bank, used as a means of transmission of « For the court's holrlinc on this proposition, see the extract frnm this case printed in note 8, ante, p. 522. — C. XI. 2.] PEESEXTMENT. 733 funds between different sections of the country, is more usually than otherwise negotiated, and passes through various hands, and serves the purpose of perliaps many persons before final presentment. For instance, a resident of Iowa may send a New York draft to a creditor in San Francisco, and the latter may indorse it to his own creditor in Chicago, and the latter in turn indorse it to his creditor in New York, who indorses it to his local bank, which presents it to the flr-^- oe for payment. Sent directly from the place of its issuance, such draft would have been presented within from two to four days of its date; but by the circuitous route we have described its transmission requires ten days or more. Yet no one, we think, would contend for the pro- position that a delay in presentment thus occasioned would work a discharge of the drawer. Of course, if any person to whom the bill is indorsed fails to promptly negotiate and pass it along on its course to final presentation, and loss folloAvs, he alone must bear it, unless the delay has been occasioned with the express or implied consent of the drawer. If a person, being about to set out upon an extended visit to a distant state, and wishing to carry his funds in bank drafts to be negotiated from time to time as he may need the money, applies to his banker, who issues the desired paper, knowing the purpose for and the manner in which it is to be used, we think it unquestionable that the risk of loss by the insolvency of the drawee is not shifted from the drawer to the payee simply because the latter does not put the bills in immediate course of collection. So in the case before us it is claimed by the appellee, and there is evidence tending to uphold his contention, that the appellant issued the draft to be sent by the former to Ortonville, knowing it was expected or liable to be there held temporarily for the completion of the transfer of the land which he was purchasing. The delay was not 80 great that we can say it was manifestly beyond the contempla- tion of the parties. Such being our view of the merits of the case, we have to say ttiat tbf appellant's motions for a directerl verdict were correctly overruled, and the cause was proporly submiftod to the jury. As bearing upon the case presented, see Story on Bills, §§ 478-473; 1 Daniel, Neg. Tnsts. (r,th Ed.) 4r,fi-|f)0; 2 Daniel, Neg. Tnsts. (Mh Ed.) ]r/.)r,n: Mnntrlivs v. Charles, 7fi 111. .305. Most of the aulhoriticR cited to us by the af)pfllant have direct reference to the measures which the payee of a bill must take in order to charge an indorser — rules which are not always equally applicable to the drawer. Other authorities called to our attention are not in- consistent with the conclusion reacbed by us. We do not attempt to determine the weight or preponderance of tlie evidence. That was the province of the jury alone. The finding was adverse to the plaintiff, and we are not at liberty to set it aside. The judgment of the District Court is afTirmed. 734 CHECKS. [ART. XVll. (6) Effect of delay upon indorscr's liability. § 322 START v. TUPPER. 81 Vermont, 19. — 1908. Judgment for plaintiff and defendant appeals. MuNsoN, J. On tlie '-^v^nd of August, 1!)0G, the defendant, the payee of the check in suit, delivered it to the plaintiff, duly indorsed, in payment of a pre-existing indebtedness of less amount and received the difference in cash. The check was dated August twentietli, and was drawn on a bank in Melrose, Mass. The plaintiff held it six days before forwarding it for collection. It was presented and protested for want of funds September fourth. August twenty-fourth was the last day on which payment would have been made. The case states that the defendant is sued as indorser. Most of the facts, including those above recited, were shown by an agreed statement. The evidence before the jury was with reference to what " the usual commercial way now in use " required of the bank through which the check was forwarded, and when the check would have been presented for payment if it had been received by the collecting bank on the twenty-third of August, and been forwarded in the way required. Several exceptions were taken to the admission and rejection of testimony. The defendant rested without offering evidence and moved for a verdict, and his motion was overruled on the ground that the defendant was not damaged by the plaintiff's neglect, inasmuch as the check would not have been paid if forwarded in due course. The plaintiff then moved for a verdict on the ground indicated, and a verdict was ordered accordingly, to which the de- fendant excepted. It is not necessary to consider the exceptions relating to the evi- dence. The agreed statement shows a failure to forward in due course, and this is decisive of the case presented. The considerations on which the holder of a check drawn without funds is permitted to excuse his neglect as against the drawer, are not applicable to an in- dorser. The drawer is presumed to know the insufficiency of the fund, while the indorser is entitled to rely on its sufficiency. The drawer is the one primarily liable, and prompt presentment and notice of non- payment may enable the indorser to secure himself. The indorser's liability is impliedly conditioned on this being done, and a failure therein will discharge him, even though presentment in due course would have been unavailing. In default of presentment and notice, an indorser can be charged only by affirmative proof that he knew when he passed the check that there were or would be no funds in the bank to meet it. Daniel Neg. Inst. 1587, 1596, 1646; Humphries n. 2.] PBESENTMENT. 735 V. BickneU, Litt. 297; Carroll v. Sweet, 128 N. Y. 19; see Nash v. Harrington, 2 Aik. 9.^ Judgment reversed and cause remanded.' § 322 PLOVER SAVIXGS BANK r. MOODIE. 135 Iowa, 685.— 1907. Weaver, J. On March 8, 1003, one C. F. Scholer, who was a de- positor in the Greenville Bank, doing a banking business at Green- ville, Glay county, Iowa, made and delivered to one Claude Heath- man his check on said bank payable to the order of said Heathman for the sum of $50; and thereafter on March 12, 1903, said Scholer made and delivered to said Heathman another siimlar check on the same bank for the further sum of $50. On or about the last-men- tioned date Heathman indorsed and delivered both checks to the appellant. On Friday, March 13, 1903, near the close of business " " The dispute in this case is between the indorsee and the indorsers of a check. The following rules of the law merchant fixing the rights, duties, and liabilities of indorsee and indorser each to the other . are well settled: The undertaking of the indorser of a check is that, if not paid on presentation within a reasonable time, he will pay it. provided he is properly notified. Such reasonable time for presentation and demand for payment is admitted to be within the day following the indorsement. The indorsee, as between himself and the indorser, undertakes to demand payment within the day following the indorsement, and, if payment is not made, to give due notice of dishonor. This is his sole duty, and he does anything else at his peril. 2 Danipl on Negotiable Instruments (5th Ed.), § 1601: People ex rel. Port Chester Saf^ntjs Bank v. CromireU. 102 N. Y. 477. The fact that there are no funds in the account against which the check is drawn does not relieve the holder from presentation and notice of dishonor to the in- dorser, unless it ayipears that the indorser knew it. 2 Daniel on Negotiable Instruments (5th Kd.). § 1596; 1 Morse on Banks and Banking (4th Ed.), § 262, Rubd. 8. Nor are the rights of the indorser changed becaU'^e he siifTered no apparent damage by reason of failure to demand payment and give notice of dishonor to him within the required time. Mnhnirk Hank v. Rroderiek. 1.1 Wend. (N. Y. ) 1.3.3: Tiedeman on f'ommercial Paper, § 442: (louqh v. Stnats. 13 Wend. (N. Y. ) 549: First \ni. Hank of Wymore v. .Ui7/rr. .37 Neb. 500." Mc.Alvay, C. J., in First \at. Bank of Detroit v. Currie, 147 Mich. 72. 77. — C •This case is reported in 15 L. N. R. 21.3. with the followine note: "The general riile that the failure to present a check for payment witliin a reason- nblp time relenses the indorser from liability thereon, even though prosent- ment in due time would havj- been unavailing and he was not preiudiced by the failure to proeent in due time, is discussed in a note to the case of A'trArpafnVJfc v. Puryenr. 22 L. R. A. 785 f03 Tenn. 409]. The only case, besides the Start case, bearing on the preeise question, decidecl since the pjiblication of the note just mentioned, is that of Trnrers v. T. .If. fiinelnir rf Co.. 122 III. .App. 203. in which the same rule is approved. See nl«o 2 Morse, Banks and Banking, 4th ed. 8 422; 2 Dan. Neg. Inst., 5th ed. § 1696." — C. 73ff CHECKS. [AHT. XVII. hourif, the appellant indorsed and delivered the eheeks to the appellee bank wliieh was doing business at IMomt, in I'ocaliontas county, Iowa, and received in exchange therefor a ccrlilicale ol" deposit lor $10(^ which was al'lcruaid jiaid. While the towns of Plover and Greenville are but 15 miles apart thcv arc on ditferent lines of rail- wav, and the course of the mails between thciii is (piite indirect, and had the appellee forwarded the checks bv Icttci- to the Greenville Bank on Saturday th(>y would probably not have icached their destina- tion until after banking liours on Monday, March Kith. Instead of sending them direct to Greenville, the ap])ellee, following its* custo- mary 'methoil in such matters, sent the checks to its (!orrespondent, the Des Moines Savings Baid-c at Des Moines, Iowa, by the fi^st mail in that direction on Saturday, March 14th. On Monday, March 16th, tlie Des ]\Ioines Savings Bank forwarded the checks to their corres- pondent the Citizens' State Bank at Spencer, Clay county, Iowa, where they were received on March 17th. On the same day the Citizens' State Bank turiu'd t1ie checks over to the Citizens' National Bank of Spencer, wliich was the local correspondent of the Green- ville Bank. On the following day, March 18th, the Citizens' National Bank forwarded tliem direct to the Greenville T.ank. The daily mail from Spencer to Greenville does not leave until some time in the after- noon, and if the checks reached Greenville on March 18th, as they doubtless did, it was after hanking hours, and were not received by the bank until the morning of March 10th. Prior to this date, probably about March IGth or 17th, the drawer had stopped payment on the checks claiming that they had been procured from him by fraud, and acting upon this notice the Greenville Bank on March 10th declined to honor them, and caused them to be duly protested. Thereupon, the appellee instituted this action at law to recover upon the appellant's indorsement of the checks. The appellant answered denying liability upon said indorsement because of appellee's alleged negligence in presenting the checks for payment. Other defenses pleaded are not urged in argument, and we need not consider them. In addition to these matters it was also shown in evidence without substantial dispute, that the method adopted by a])pellee a, id by the Beveral correspondents mentioned in forwarding tlic paper for pre- sentation and demand of payment was in accordance with the general custom prevailing among banks in dealing with checks drawn o'^ other banks not doing business in the same city or town, and cashed by the receiving bank. No evidence was offered tending to show that either of the banks, receiving these checks after their indorsement by appellant, failed to forAvard them on their way on the dav of the receipt or on the following day, except possibly in the case of the Des Moines Savings Bank, and the day there intervening, if any, was Sunday. At the close of the testimony offered on the trial, the court 8Ti)«tained a motion to direct a verdict for the plaintiff for the amount II. 2.] PRESEKTMENT. 737 of the checks with interest, and from the judgment entered on such directed verdict the defendant appeals. The single question to be determined is whether this record pre- sents a ease in which a verdict for the defendant, if one had been returned, could properly be permitted to stand. Counsel's contention in support of the appellant's position is based upon two propositions. 1. It is said that in failing to forward the checks by the most direct route from Plover to Ureenville, and by electing to send them by a more circuitous route through the hands of correspondent banks, appellee occasioned an unreasonable delay in tlie presentation of the cheeks to the drawee for payment, and thereby discharged the appel- lant from liability as an indorser thereon. By the terms of the negotiable instrument statute a bank check, in the ordinary form, is classed as a bill of exchange payable on demand. Code Supp. li)0'3, § 3060-al85.^ By the same statute it is provided that to charge the indorser of a bill of exchange payable on demand, presentation to the drawee and demand of payment shall be deemed sufficient if made within a reasonable time after its issue, or after the last negotiation of such bill. Code Supp. 190'^, § 3060-a71.^ It is also further pro- vided that, in determining what is a " reasonable time " within the meaning of this act, regard must be had to the nature of the instru- ment, the usage of the trade or business, if any, with respect to such instruments, and the facts of the particular case. Code Supp. 1902, § 3060-al93.2 Contrary to the rerjuirement for notice to the indorser of the dishonor of a check or bill upon presentation for payment (Code Supp. 1902, § 3000-3103), ^ the holder of the indorsed paper is not held to any fixed or invariable limit of time in which to make such presentment and demand, lie is required to act with reason- able diligence and promptitude taking into consideration the nature of the instrument, the usages of the business world and the peculiar facts, if any, attending the particular transaction in hand. With this rule as our standard, we are clearly of the opinion tiiat the record presents nothing to support a finding that the delay, if any, in presenting tiie checks for payment was chargeable to negli- gence on part of the appellee. It was shown by the evidence with- out controversy — indeed, it is a matter of common knowledge — that, by the system to which the linndling of such business has been reduced, the innumerable checks and bills received by the banks scat- terf'd all over the country flow in concentrating currents to distribut- ing banks, whence they go out to correspondent banks at or near the city or town where the drawee hanks are located, for collection. To • N. Y., S 321. — C. iN. Y., 8 131. — C. «N. Y., <; 4. — C. aN. Y.. 55 174-17.'^. — r. HBOOT. INHTRnMBNTR — 47 ^38 CHECKS. [aUT. \-VII. liokl tliat the time between the iss\ie of a. cheek upon a distant l)ank and its presentation for payment hv Ihis mclliod is unroasonable, and serves to disoliarcje the indorsrr, would not only lend to create disas- trous confusion in this most iin])ortaiit branch of business, but to a disregard of tlie statute which makes the usage in such business one of the standards by wliich the reasonableness of the time of presenta- tion for payment is to be determined. Again, as disclosed by the testimony, the transaction under consideration was not a simple matter of collecting checks deposited with the a])pcllce for that purpose. The checks were negotiated by the appellant to the appellee who paid full. value therefor. The appellee indorsed the checks to the Des Moines Savings Bank, receiving credit upon its deposit account with the latter for the full amount as for a deposit of so much cash. In other words, the checks were negotiated by the a})])ellee to the Des Moines Savings Bank, and under the statute already quoted (Code Supp. 1902, § 3060-a71) reasonable time for presentation and demand is to be reckoned from the last negotiation of the paper. Checks are an almost universal substitute for money. They pass from hand to hand, bank to bank, and city to city, and, within reasonable limits, it may be said that no matter how long they remain outstanding, so long as one negotiation promptly follows another and the checks are in fact in circulation the statute requires us to hold that the indorser is not legally prejudiced by the consequent delay in their presentation for payment. Indeed, while at common law it is generally held that when one receives a check payable at a distant bank reasonable diligence requires him to forward it for presentation not later than the next business day thereafter, yet it is equally well settled that this rule is not always one of imperative obligation, but is at times made to give way by reason of circumstances which sufficiently rebut any pre- sumption or inference of negligence on part of the holder. Coal Co. v. Bowman, 09 Iowa, 152. And, among other circumstances having a bearing upon this question, the general course of business has always been recognized as important. Guelich v. Banli, 56 Iowa, 434; Frei- herg v. Cody, 55 Mich. 108; Bridgeport Bank v. Dyer, 19 Conn. 136. Thus, even without the statute it would be extremely doubtful whether a verdict for tlie appellant upon the ground here contended for could be upheld ; and with it, we think, the correctness of the ruling of the trial court thereon is not open to serious question. * * * 3. Error is assigned upon the ruling of the trial court refusing to permit the appellant to testify to his want of knowledge of the custom of banks with respect to the manner of transmitting checks for pay- ment. To this exception we think it a sufficient answer that want of knowledge by one who negotiates and indorses a check, as to the usage of banks relating to its presentation for payment, cannot prevent the application of the statute which makes such usage a factor in II. 2.] PEESE>fTMENT. 739 determining whether due diligence has been sliown. So, also, it may be said that the usage or custom here relied upon is not one of mere private or local character, but one of general observance in the bank- ing business and as such will be presumed to be known by all persons dealing with such institutions. See 12 Cyc. p. 1044. Appellant knew that the checks were negotiable in character and as such were liable to pass from one indorser to another in their transmission to the bank of payment, and when he negotiated them he must be held to have done so with reference to the usual and ordinary manner in which such business is transacted, and to have consented to presentation, demand of payment being made m the manner which generally pre- vails among prudent, well-conducted banks. Had he negotiated them to a merchant or farmer or other individual who in turn negotiated them to the appellee bank, appellant being sued upon his indorsement would not be heard to deny knowledge of the usage of banks with respect to such business, and we cannot see that such want of knowl- edge would be of any more avail in a case like the present one where he indorses the paper direct to the bank. TTis contract, implied from his indorsement, was that if, upon presentation and demand within a reasonable time, the checks were dishonored, and due notice given thereof, he would make them good to his indorsee, and it can make no difference whether he did or did not understand what in law would be held a reasonable time for such presentment. Other ques- tions argued are ruled by those already discussed, and we need not further consider them. Of course, we are not to be understood as holding that banks arc at liberty to adopt any usage or manner of business they see fit, and escape all imputation of negligence for result- ing losses to those with whom they may deal. It is reasonable to hold that checks must go forward for presentation with due regard to the interest of the drawers aiul indorsers, and if banks adopt unreason- ably circuitous routes and methods whereby loss results they should bear the burden, but, ordinarily, the natural caution which is en- gendered liy self-interest will be sufTlciont to insure promptness and dispatch in the discharge of duties of this nature. Where, however, there is reasonable ground upon which 1o base the charge of negli- gence, the case should go to the jury undiT ])r()pcr instructions. In the instant case we find iiothing (o support a finding of this nature, and the judgment of the District T'ourt is alfirmed. Su])/)}ctiinil(il (ijiuti(ni on rrfirnritig. Vku f'niilVM. Ill liis pclilion for rchcaritiLT. jhc nppfdliiiil insists that the opinion banded down upon the original submission of this eauso rrroncnuslv cites Code Supp. 1002, § .'K)(iO-a71, as applicable to the presentation for payment of bank checks, when in fact the rule there prescribed is iiih-ndt'd to apply only to drafts or bills of ex- 740 CHECKS. [art. XVII. change as distinguished from clieeks, and tliat tlie latter are governed solely by the provisions of Code Supp. 190^, § 3060-al86.* The section tirst named provides that presentment of a bill of exchange will be sutVu'ionl if made within a reasonable time after the last nego- tiation thereof, while the section hist named provides that a check must be presented within a reasonable time after its issue. Whether the language of the last cited section of the statute has the etfect to exclude bank checks from the elTect of the former it is not necessary for us to decide at this time, for, if we were to adopt the appellant's view in this respect, it could not work a reversal of the case before us. Both sections allow a reasonable time for the presentation, and, where the check is di'awn upon a bank located at a place distant from the place of its delivery to the payee or indorser, a presentment promptly nuide by mail through other banks in the ordinary and usual course pursued in such business will be held as a matter of law to have been made within a reasonable time. The petition for rehearing is therefore overruled. § 322 CARROLL v. SWEET. 128 New York, 19.— 1891. Andrews, J. The indorsement and transfer by the defendant to the plaintiff of the check of Woodruff operated as provisional pay- ment only of so much of the antecedent debt owing by the defendant to the plaintiff. There was no agreement that it should be taken in absolute satisfaction of the debt, and, in the absence of such an agree- ment, the intendment of law is that it was conditional payment only. Hill V. Beeue. 13 X. Y. 566; Bradford v. Fox, 38 N. Y. 289. The debt remained until discharged by payment of the check, or by such dealing with the check by the plaintiff as would, in judgment of law, convert what w^as originally a provisional payment into an absolute one. The check was dated August 22, 1887, and was drawn on the Asbury Park National Bank, and was on the same day indorsed and delivered by the defendant to the plaintiff at the place where the bank was located. The plaintiff, on accepting the check, assumed, as be- tween himself and the defendant, an obligation to present the same to the bank for payment within the time prescribed by the law mer- chant, — that is to say, not later than the next day after its date, — and, if refused, to protest the same, and give notice of non-payment. Smith V. Janes, 20 Wend. 192. It was not presented until the Slat of August, nine days after it was received by the plaintiff. The de- fendant was by such delay discharged from liability as indorser of *N. Y., § 322. — C. II. 2.] PRESENTMENT. 741 the check, irrespective of any question of loss or injury.* Present- ment in due time, as fixed by the law merchant, was a condition upon performance of which the liability of the defendant as indorser de- pended, and this delay was not excused although the drawer of the check had no funds, or was insolvent, or because presentment would have been unavailing as a means of procuring payment. Bank v. BrodericTc, 10 Wend. 304; Gough v. Staats, 13 Wend. 549. A dif- ferent rule obtains as between the holder and drawer of a check. As between them presentment may be made at any time, and delay in presentment does not discharge the liability of the drawer, unless loss to him has resulted. Little v. Bank, 2 Hill, 425. The action here is not upon the indorsement of the defendant, but upon the original indeljtedness. If the discharge of the defendant's liability as indorser discliarges also his liability as debtor for the original debt, the judg- ment must on that ground be reversed. * * * The court in this case directed a verdict for the plaintiff, and in this we think there was error. It cannot be doubted tliat if there was evi- dence tending to sliow that the delay in presenting the check to the Asbury Park Bank prevented its collection, or from which the jury miirht find that the whole or any part of the debt owing by the drawer of the check to the defendant, for wliich the check was given, was lost by roapon of the delay in the presentment, or by dealings between the plaintiff and the drawer, in respect to the check, without the assent of the defendant, the case should have been submitted to the jury. To the extent of the injury, the law would treat the omission to make duH presentment as tantamount to payment. The facts most favorable to the defendant need to be stated. "Wood- ruff, the maker of the check, was, when the check was given, con- ducting a hotel at Asbury Park, and the parties to the action were guests at his house. The defendant was indebted to the plaintiff for (h'nti.'^try work, and the former, who resided in Xew York, had loaned money to Woodruff for which the check was given, and on the same day the defendant received the check he delivered it to the plaintiff on his debt. Woodruff had an account with the Asbury Park Na- tional Bank. On the day of the date of the check tlie bank charged to his account a demand note lield by the liank against him for $500, but, 90 far as appears, without any notice to Woodruff, and this ren- dered his bank account overdrawn. Woodruff was in embarrassed circumstances, but was in the daily receipt of about $000 from his biisinesp. Tie used part of the receipts for current expen.^es, without •lepoBJfinGr them, and between the 22d and 3lHt of August he de- posited about $f»00 in the bank to the credit of his account, and the inference is that it was applied in part to pay the $500 note, and ii »«*«• Aehi V. rtnnk nf F.vnnsvVle. 124 Wi^. 7.1. nt, pnpp 7fi. and extract fron ftrat \at. Bank v. Currie, 147 Mich. 72, in note 7, ante, p. 735. — C. 742 CHECKS. [AllT. XVII. part to pay ourreut checks draw n liy W Dodiutf. On (ho 22d of August, the day on whifli Woodruir's ilu'ck to the det'eiulant is dated, and uftt-T it luid boon indorsed to the phiintiH" hy the dd'oiuhint, Woodruir, who had been informed of the transfer, re(juested the phiintill to accommodate him by holding the chock a few days, stating as a reason that he was pressed in the payment of his accounts, to which request the phiintifT assented. He asked tlie phiintitf to let him know when he wished to use the check, as he would then provide for it. Woodruff testified that he liad money in his olHce sufficient to pay the check, and would have paid it at any moment, had payment been insisted upon; that he was in the receipt of about $fiOO a day, and that he redeemed a number of other checks which went to protest at this time : that, two or three days after the conversation of the 22d of August, he spoke to the plaintiff again, and the plaintiff infonned him that he had sent the check west. Woodruff said to him that he regretted it very much, as he wished to make provision for the check. The cashier of the bank testified that there were no funds to meet the check, and that it would not have been paid if it had been pre- sented any time after the 22d of August. On August 31st, Woodruff, who was behind in his rent, was dispossessed from the hotel premises, and his business was closed, and he then was and now is insolvent. It may be conceded that the only obligation upon the plaintiff, as between him and the defendant, was to present the check at the bank for payment witliin the time prescribed by law, and, if payment was refused, to have the same protested, and notice of non-payment given to the defendant. Tf he had performed this duty, the defendant vv'ould have been apprised of the default; and he would have had an oppor- tunity to take such measures as he conld to secure payment from Woodruff. One of the objects of requiring prompt notice to be given to indorsers and other parties secondarily liable on commercial paper, in case of default, is that they may have an opportunity to secure themselves. Checks are supposed to be drawn asjainst funds of the drawer, and prima facie, where it is shown that the drawer's account was not good, the inference of injury fnnu non-presentment would be rebutted. But where, as in this case, it is shown that the maker of the check was solicitous that it should be paid ; that he had the means of payment at command, and would have provided for or i>aiil the check if payment had been insisted upon ; that the holder was apprised of the facts, and, for the accommodation of Ihe maker, re- frained from presenting the check, and presentation was delayed until open insolvency of the maker occurred, and he became, by the change of circumstances, unable to provide for the check, — it can- not be said, we think, that there was no legal evidence of injury to be submitted to the jury. The plaintiff, instead of taking the usual ■course, undertook tri d"nl vW\ V'^ ■,^^r>^'or of the ehcelc in di'-rogard of his primary obligation to the defendant. It was for the jury to II, 3.] CERTIFICATION. '?45 pass upon tlie circumstances, and to find whether the conduct of the plaintiff imposed a pecuniary injury upon the defendant. To the extent of such injury the law adjudges that the debt of the plaintiff has been paid. The judgment below sliould be reversed, and a new trial granted, with costs to abide the event. All concur.* 3. Certification of Check. (a) Effect upon Drawer's Liability. § 324 MINOT V. EUSS. HEAD V. horn; BLOWER. 156 Ma.ssachusetts, 458. — 1892. Field, C. J. — The first case is an appeal from a judgment ren- dered by the Superior Court for the defendant, on his demurrer to the declaration. The defendant, on October 29, 1891, drew a check on the Maverick National Bank, payable to the order of the plaintiff, and, being informed by tiie plaintiff that the check must be certified by the bank before it would be received, the defendant on the same day presented the check to the bank for certification, and the bank certified it by writing on the face of the check the following: " Maverick National Bank. Pay only through Clearing-House. J. W. Work, Cashier. A. C. J., Paying Teller." After it was certi- fied, the check was, on Saturday, Oct. '^\, 1891, delivered by defend- ant to the plaintiffs, for a valuable consideration. The declaration alleges that the bank stopped payment on Monday morning, Novem- ber 'I, 1891, "before the commencement of business hours on that day," and that on that day payment was duly demaiuhnl of the bank, and notice of non-payment was duly given lo the defendant. The Becond case is an appeal from a judgment rendered for the defendants by the Superior Court, on an agreed statement of facts. On Saturday, October .'51, 1891, the defendants drew their check on the Maverick National Bank, payable to the order of the plaintiffs, and delivered it to them in payment of stocks bought by the defend- ants of the plaintiffs. The check was received too late to l)e de- posited by the plaintiffs for collection in season to be carried to the clearing-house on that day, but during banking hours on that day the plaintiffs presented the check to the Maverick National Bank • Rf>e hfnnitoba Mnrtqnqr ntid hivxtnunt Compnnj). fAwilril v. Weisn, 18 S. n»k. 450, roportflfl in 5 A. & K. Ann. (nn. 8fi8. wiUi noto entitled. " Dis- ehftrgf of (irbtor by crfditor's neglij^encc in presenting chock of third per- son for payment," — C. 744 rTTf-OKS. |aut. xvil. for certification, and the bank certified it by writing or stamping ou its face the following: "Maverick Mational Bank. I'ertilied. Pay only through Clearing-House. C. C. Domett, A. Cashier. , Paying Teller." At that time the defendants had on deposit suthcient funds to pay the check, and the bank on certification charged to the defendants' account the amount of the ciieck, and credited it to a ledger account called certified checks, in accordance with their uniform custom. After certification, the i)laintitVs, on the same day, deposited the check in the Hamilton National iiank for collection. It is agreed that if the check had been presented for payment on Saturday, in hanking hours, it would have been paid ; but the Maverick National Bank transacted no business after Saturday, and on Sunday the Comp- troller of the Currency placed a national bank examiner in charge, and the bank was put into the hands of a receiver. The clearing- house on November 2 refused to receive checks on the Maverick National Bank, and the check was on that day duly presented for payment, and due notice of non-payment was given to the defendants. Each of the checks was in the ordinary form of check on a bank, and was payable on demand, and no presentment for acceptance or certification was necessary. In a sense, undoubtedly, a check is a species of bill of exchange, and in a sense also it is a distinct com- mercial instrument; but according to the general understanding of merchants, and according to our statutes, these instruments were checks, and not bills of exchange. " A check is an order to pay the holder a sum of money at the bank, on presentment of the check and demand of the money; no previous notice is necessary, no acceptance is required or expected, it has no days of grace. It is pa /able on presentment and not before." (Bullard v. Randall, 1 Gray, 605, 606.) The duty of the bank was to pay these checks when they were presented for payment, if the drawers had sufficient funds on deposit. Tlie bank owed no duty to the drawers to certify the checks, although it could certify them if it saw fit, at the request of either the drawers or the holders, and if it certified tliem it be- came bound directly to the holders, or to the persons who should become the holders. In either case, the bank would charge to the account of the drawer the amount of the check, because by certifi- cation it had become absolutely liable to pay the check when pre- sented. When a check payable to another person than the drawer is presented by the drawer to the bank for certification, the bank knows that it has not been negotiated, and that it is not presented for payment, but that the drawer wishes the obligation of the bank to pay it to the holder when it is negotiated, in addition to his own oblieation. But when the payee or holder of a check presents it for certification, the bank knows that this is done for the convenience or security of the holder. The holder could demand payment if he n. 3.] CERTIFICATION. 74S chose, and it is only because, instead of payment, the holder desires certiiitation, that tlio bank certilies the check instead of paying it. In one case the bank certifies the check for the use or convenience of the drawer, and in the other for the use or convenience of tlio holder. In the present cases tlie checks were seasonably presented to the bank for payment, and on the facts stated the defendants would be liable unless the certification discharged them from liability. It is argued that the certification of a clieck, whereby the bank becomes absolutely liable to pay it at any time on demand, discharges the drawer, because it is said that the check then becomes in eiTect a certificate of deposit ; and it is also argued that the certification is in effect only an acceptance of a bill of exchange, and that if pay- ment is duly demanded of the bank and refused, and notice of non- pavment duly given, the drawer is held. So far as tlie question has been considered, it has been decided that the certification of a bank check is not, in all respects, like the making of a certificate of deposit, or the acceptance of a bill of exchange, but that it is a tiling fsiii generis, and that the effect of it depends upon the person who, in his own behalf, or for his own benefit, induces the bank to certify the check. The weight of autliority is, that if tlie drawer in his own behalf, or for his own benefit, gets his check certified, and then delivers it to the payee, the drawer is not discharged ; but that if the payee or holder, in his own behalf or for his own benefit, gets it certified instead of getting it paid, then the drawer is discharged. {Born V. First Xatiorml BanJr, 123 Ind. 78; Rounds v. Smith, 42 111. 245; Brown v. Led-ie, 43 111. 497; Andrews v. German National BanJr, 9 Ileisk. 211 : First Xntioval Bavl- v. Leach, 52 N". Y. 350; Boyd V. Nasmifh, 17 Ont. 40; Essex County Bank v. Banl- of Mon- treal, 7 Biss. 103; First National Bank v. Whitman. 91 IT. S. 343, 345; Metropolitan National Bank v. Jones, 27 N. E. T?ep. 533; Con- tinental National Bank v. Cornhanser, 37 111. App. 475; National Commrrrial Bonk v. Miller. 77 Ala. IfiS: Larsen v. Breene. 12 Col. 480; Miifiinl Xafinnal Bank v. Rotfje. 28 I^a. An. 933; Morse on Banking, §§ 414, 415.) We are of opinion that this view of the law rppfp on sound reasons. Tf it hn true th.-it the existing methods of doing business make the use of ccrlilii'il ( lircks necessary, the persons who receive them can always rcfpiin' Ihern to ho certified before de- livery. If tliey reeeive them uncertified and then present them to the hank for certification instead of payment, the certificalioii should he considered as discharging the drawer. It may also be said, that in the second case tlie certificMtion amounted to an extension of the time of payment al the re'|iiest of the payees, without the consent of the drawers. IV'fore the certifi- cation the drawers could have requested the payees to present the check for pavment on S:itnrd;iv. or could themselves have drawn out the money and paid the check. After certification the amount 746 niKCKs. [aut. xtii. of the chock no longer stood to the credit of ihc di-awcrs, :md tlic payccei had accepted an obligaliuii of the baid^ Ui pay only tliiuugh the cloari^g-hou:^c, which coukl not happen before tlie following Monday. The result is (]iai in (!:e (irst case the judgment is reversed, and the demurrer o\enuK(l, ard in the second case the judgment is aflinned. So ordered.^ §324 TIMES .StH'A'fK .M'TOMOIMT.E CO. v. KUTHERFORD NATIONAL BANK. 77 Nkw Jkrsey Law (Ct. Ekk. & Ai-p. ) 049. — 1909. GuMMERE, C. J. One Pu rdy, beiny the payee presented for ])ayment to the appellee. Appellee telephoned to appellant asking if the check was good, and was in- formed tliat it was "good," or "all right." This was the extent of the information given, and there was no promise by appellant that it would accept or pay the .check unless the information given is, in law, that promise. Appellee then paid the check upon the strength ot the foregoing reply to its (|uestion, but otherwise would not have cashed it. .\ lew minutes thereafter the drawer appeared before the drawee (apju'llant) and stopped payment, of which appellant imme- diately advised the appellee. Afterwards, and on the same day, when a|>j)ellee presented the check, duly indorsed, to appellant for j)ayment, the latter refused to pay it because it had been directed by its depositor not to do so, although at the time the drawer had and still has with appellant sudicient funds for such ))ayment. Thereu))un this action was brought by appellee against appellant to recover the amount of the check, upon the ground that a|)pellant had promL-ed to pay it. 'IMie trial court submitted the case to the jiiiy ujxm the tlieory that the cause of action stated in the complaint, setting up the foregoing facts, was based upon an implied parol ' Afpord : \orlhirn Trust Co. v. lioifrrft. flO Aliiin. 208; Firnt .V. /?. v. flail:, \A\ N. V. .IfiS; Covrrt v. Khntlrs. 48 Ohio St. CO; Xnrthuinhrrlnnd linnk v. M< Mi, hurl. I0(i I'ii. St. 4r,(l: 5 Am. & Knjj. Encvc. L. (2n(l pH.). p. 1001. (oiitni: Mutiu v. liurrli. 25 III. ;J5 ; Fonnrr v. Smith, .11 Nch. 107: flimvion.i V. Hank, 41 Sn. < ar. 177; (lonlon v. Mtirhlrr, 34 La. Ann. 004; 2 Morse on li!mk«. SS 400-5.1H. Wliijf tlu- pr<'siinii)tion is tliut no nHsipnniont arises from ♦ In- yivinj; of a cinjck, vft this is rontrolii'il liy tlic nctiial inlcntion of tlic fiarties. If it in ajfri-ffl tliat the j)a_Vf'«' Hlial! Iiavc an assiffnmrnt of :i fiimi or any portion of a fund, lie is in th«' ordinary position of an assjffnce and may cnforro liis riirlits hy appropriafo artion in law or crpiity. Fourth Flfrrrt linnk V. Yiirillry, 105 I'. S. 034; liisUy v. I'hnrnix Rank. 83 N. Y. 318: CftntrH V. First \. «.. Ill X. Y. 20; First \. H. v. Clark, 134 N. Y. 308. — H. I .\rrord : l.orr v. Ardnwrr Htork Fxrhanpr, 5 Tnd. Tprr. ( U. S. ft. App. ) 202. rr'portfd with note in 5 A. A E. Ann. C'as. 183; Clark v. Toronto Rank, 72 Knn. 1. npnrt<'ank cf)nld have had no complaint against either party for that cause. A rule which might operate to relieve that bank from the liability it assnmed when it collected an altered check merely because the plaint ifTs failed in their duty, not to it, but to a third party, should not be upheld. Nor would it operate justly in a case in which the bank had paid a single forgery unless by the depositor's default and delay the bank had lost ite opportunity to sjccure restitution. This question is well discussed by the Supreme Court of Alabama in the case of NnUnval Bank v. 7(5 1 CIIKCKS. L-^R'l'- XVII. AlU't}, tiiii>r(i. and we concur in the view expressed by tliat court that the lialiility of the depositor I'or iieijictt of his (hity to I'NiHiiinc and verify his Mnouiit with the hunk is limilcil to thr diimaii;es sustained by the l)aiik in ronseqiience of siu'li neglect. In the present case Davis falsified the additions or totals at the foot of the pa,i,'es of the check hook. Hut with a few exceptions he did 1U1I alter the amounts expressed in the stubs. In no case did ho chanire in the stubs the name of the payee of the check. It is clear, therefore, tluit at all times a comparison of the returned checks with tht> stubs in the check hooks would have exposed the alterations made in the checks. Of course, the knowledge of the forgeries that Davis possessed, from the fact that he himself was the forger, was in no respect to be attributed to the plaintiffs. But we see no reason why they were not chargeable with such information as a conij)arison of the checks with the check book would have imparted to an innocent party previously unaware of the forgeries. The plaintiffs' position may be no worse because they intrusted the examination to Davis instead of to a third person; but they can be no better off on that account. If they would have been (•hargea])le with the negligence or failure of another clerk in the verification of the accounts, they must be equally so for the default of Davis, so far as the examination itself would have disclosed the facts. We think it plain, therefore, that the finding of the referee that tiie plaintiffs were not negligent in the examination of the pass book and vouchers is without evidence to sustain it, unless the plaintiffs discharged their duty to the defendant when they committed the examination to a proper clerk and were not responsible for the manner in which the clerk performed the task. From the language of the report of the learned referee it would seem as if this last were the theory on wliich his decision proceeded. We do not think it can be sustained. If any duty rested on the plaintiffs we do not see why the ordinary rule of principal and agent or master and servant, that the principal or master is liable for the fault of bis servant or agent in the master's business, did not apply. This was so held in the case of Leather Manufacturers' Bank v. Morgan, supra, and nothing to the contrary is to be found in Frank v. Chemical National Bank of New York, supra. There it is said : " The alleged duty, at most, only requires the depositor to use ordinary care; and if this is exercised, whether by himself or his agents, the bank cannot justly complain, although the forgeries are not discovered until it is too late to retrieve its position or make reclamation from the forger." In that case, however, the question of the liability of the principal for the negligence of his clerk did not arise, for the plain- tiff made the examination personally. There are exceptions to the general rule of the liability of the master for his employee. But this casp does not fall within those exceptions nor within the principle on which those exceptions are based. n. 5.] FORGED OR RAISED CHECKS. 765 These views would render it iiecessary to reverse the judgment appealed from except for another fact now to be noted. The referee's report is in the form of a short decision and on appeal it is to be presumed that all facts warranted by the evidence and necessarv to suj)port the judgment have been found. {Amherst College v. EitcJi, 151 X. Y. 282; Bartlett v. (ioodrich, 153 N. Y. 421; Marden \. Dorthij, 160 N. Y. 39.) The sixth in sequence of these forgeries was a check of June 20th, 1898, for $12.49, altered to the sum of $112.49, with the name of the payee erased and " Cash " written in the place thereof. The teller of the defendant, who paid the check and was a witness on its behalf, testified that the check showed on its face that the word " Cash " had been written in the place of the payee's name over an erasure ; that the number of dollars was also written over an erasure: that he did not like the appearance of the check and that it was in such a mutilated condition when it was presented to him that, before paying it, he required Davis to indorse upon the check a receipt for its amount. That the defendant was grossly negligent in paying the check and has only itself to thank for that loss is apparent. Rut the effect of that negligence did not cease with the payment of the check. The referee might well have found that, had payment of the check been refused or had Davis been. required to obtain the indorsement or guaranty of the plaintiffs as to its correct- ness, the forgeries of Davis would have been exposed and their repeti- tion would not have occurred. That Davis was able to successfully continue from this time to his arrest a series of forgeries is as fairly attributable to the folly of the bank in paying to a clerk a check of his employers which had plainly been altered without making inquiry as to the reason or authority for the alteration, as it was to any careless- ness of tbe [ilaintiffs in failing to detect the alteration when the checks were returned to them from the bank. Since we have held that tlic question in the case was not one of ratification or estoppel, but tbnt the liability of the f)laintiffs to tbe bank was solely for the loss caused by tbeir negligence, it is a complete answer to the dcftmdant's claim that its own negligence contributed to the loss. The learned counsel for the appellant contends that the plaintiffs' cause of action is not based on negligence and that the plaintiffs cannot sue on contract and rpcover in tort. This claim is without force. The action un<|uestion- ably was brought on contract, but it remains such. The plaintiffs sue for a debt to which the defendant answers: We have paid the money, true, not according to your directions, but in compliance with what we believed to be your directions, and your negligent conduct in your duty tf)ward8 us led us into that error. To which the plaintiffs re- join : Your own negligence contributed to tbe loss. .Ml this may be true, yet the plaintiffs recover not in tort but on contract, for the allegation of negligence on the jtart of the defendant is used only to defeat its claim for relief on account of the plaintiffs' negligence. 766 CIIKCKK. (aht. xvii. It follows that under the nuthoriiy of IV^us.srr v. Deimon (supra) till' ili'lVmlaiit i8 not oiititK'd to i-ii'dit for (lie two t'liccks paid by it before the aeeount was lialaiu'i'd and \miilnrs id iiiikmI. l^'or the third, fourth antl fifth ehecka, amounting In $:!()ii, it is ciditlcd to credit, unless it was guilty of noffJif^ence in llu'ii' i»ayiiH'nt, a fact whieh is neither found by the referee nor estal)lislied by the evidence. For the sixth check and the subsequent ones it is not entitled to credit because of its neps in the same transaction. It cannot be held that what Davis wouM have discovered if he had not been the forger but somebody else, is im- putable to the plaintiffs without also imputing to them knowledge of the space lef*- to punch out another figure, as well as of the false footings, for these arts were within the scope of his employment as mufh as the examination of the vouchers. In every case of successful fraud by an agent, it is the nature of the duties intrusted to hint tliat enables him to perpetrate the fraud, and it is erroneous reasoning to say that if a part of those duties had been intrusted to another clerk, as he wf)uld have found f)ut the facts, they must he imputed to the principal, because the latter in good faith assigned such duties to the criminal. TTnder the circumstanj-es. it cannot he presumed that Davis dis- closed facts which an honest agent might have discovered in looking over the checks, but which the former knew l)efore the checks came to his hands for examination, without subverting the reason ujion which the rule of imputed knowledge is founded. Entertaining these views, I nm cfinipelled to dissent from those expressed in the prevailing 7()S CHECKS. I AHT. XVII. opiiuDii, so far as (lu'v are inconsistent with this memorandum, and to vote in fiivor of allinnanco. l*.\i{KKH, C\\. .1., 1Iaii;iii' and W'eknku, JJ., concur with ('ullkn, ,1 ; M.MiTiN, J., conciiis with \ ANN, J.; Baktlett, ,J., takes no part. Judgment accordingly.^ 'See long note to tliis case in 2 Col. Law Rev. 400 (November, 1902). See First A'o/iono/ Unnk- of Richmond v. Richmond Electric Co., 106 Va. 347. This case is reported in 7 L. N. S. 744, with case note entitled, " Depositor's right to recover amount of forged or raised checks paid by bank as alTeotod by tlie fact that lie intrusted the examination of vouchers to the employee who was guilty of the original fraud." This note contains the following careful and instructive analysis of tlie authorities: " Assuming that the depositor owes to the bank, and not merely to him- self, the duty of verifying the account, and examining the vouchers returned by the bank, tliere are a number of different views . . . affecting the ultimate question whether the depositor is estojtped as against the bank by intrusting that duty to the dishonest employee. These views may be formu- lated as follows: " (1) That, while the depositor is not in the first instance chargeable with the dishonest employee's knowledge of his own fraud in raising or forging the check, yet, by intrusting the verification of the account and the examina- tion of the vouchers to that employee, he becomes chargeable with the latter's antecedent knowledge. . . . [Citing, as in general support of this view. First Nat. Bank v. Richmond El. Co., 106 Va. 347, and First Nat. Bank v. Allen, 100 Ala. 476; as repudiating it, Kenneth Invest. Co. v. National Bank. 103 Mo. App. 613.] " (2) That the effect of intrusting the verification of the account and the examination of the vouchers to the dishonest employee is the same as if no verification or examination had been made at all. . . . [Citing August V. Fourth Nat. Bank, 15 N. Y. Supp. 139; and see view presented by the counsel for the bank in the case of Kenneth Invest. Co. v. Nat. Bank, supra, in his request to charge.] " (3) That the duty resting upon the depositor to verify the account and examine the vouchers is not a personal one, but may be delegated to a competent employee; and that the fraud, negligence or omission of such em- ployee is not imputable to the depositor. In this view, the depositor is exonerated, if he has good reason to believe, and did believe, that the em- ployee in question was honest and competent. . . . [Citing as sustaining this view, Kenneth Invest. Co. v. Nat. Bank, supra; Wachsmann v. Columbia Bank, 8 Misc. (N. Y.) 280; and Clark V. Nat. Shoe & Leather Bank. 23 App. Div. 310 (obiter), aff'd in 164 N. Y. 504; and as at least impliedly sup- porting it, Frank v. Chem. Nat. Bank, 84 N. Y. 209.] " (4) That the depositor who intrusts the verification of the account and the examination of the vouchers to the fraudulent employee, if in no worse, is at least in no better, position than if such duty had been intrusted to an honest and comf)etent employee. This view assumes that the negligence or omission of such an employee would be imputable to the depositor; In this view, it is apparent that the rights of the parties are made to turn upon the question whether an honest and competent employee, not having previous knowledge of the forgeries or other fraud, would, by the exercise of reasonable care, have discovered the same by his examination of the vouchers. , . . [Citing, as sustaining this view, Critten v. Chemical Nat. Bank, 171 II- 5.] FORGED OR RAISED CHECKS. 769 § 326 McNEELY COMPANY v. BANK OF NORTH AMERICA. 221 Pennsylvania, 588. — 1908. Action by plaintiff against defendant bank to recover the amount of checks alleged to have been uronglully paid by the bank. From an order dismissing e.vceptions to the report of the referee in favor of the defendant, plaintiff appeals. Bnowy, J. McXeely Company, a corporation, was a depositor with the appellee, the Bank of North America, and had in its employ one Charles 8. Reber, who between April 20, lSf)7, and February 24, *1903, forged the names of payees on 90 checks issued by it. * * * The fact that Reber had forged some of the indorsements was, as stated,, discovered about January 1, 1901, and within two or three weeks thereafter it was known to the appellant that a very large number of the 90 forgeries had been committed; but no notice of this was given to the bank until nearly three months afterwards. The duty of a depositor in a bank, upon discovering that it has paid and charged to his account either a check bearing his forged signa- ture as drawer or his check on the forged indorsement of the payee,, is to promptly notify it of the forgery. This notification is not only a duty, but it is what a depositor will instinctively do on discovering,, upon the return of his bank book with canceled checks charged to- his account, that there are among them some which he never signed or which were not j^aid to the payees named in them. This duty is not (questioned by the learned counsel for the appellant. Their con- ti'ntion is that, for the disregard of it, a depositor is not to be barred from recovering from the bank what it may have paid on his forged signatures or on the forged indorsements of payees named in checks drawn by him, unless, by his failure to promptly notify it of the forgeries, it has lost rights over against other parties, and the burden is upon it to prove such loss. Authorities are not wanting to support N. Y. 21», (th*- casf tf> which this is a noti- ) ; linun v. \atii)H(il Hank. \'.V1 MasH. 150; ilyrrs v. SouHiirrslcrn Xat. Hank, VJ'A I'li. l.| " {5) Tlic fifth view viu iis hut islij,'litly from thi' fourth, and in pnu-tic-iil caws it 18 wifJi rliirKMiKy (o he tlinf iiiL'iiishcd thcrcfifnu. It, however. niakeH the rights of (he renjieefive [tarties turn, not. as in the fourth view, u|)on tho question wlietfier an exaniination of the vouehers hy an honest and com- petent enijdoyee would have diseh)Med the fraud, hut u|)on tlie <|UeHtion whetlier a reai^onahle supervision liy tiie (h-positor over t hi- fraudulent em- ployee in the diH0S).-^ ( •. NEOOT. INSTRUMENTS — 49 '^70 CHECKS. [art. XVir. this, but tlie rofoivo niid court bolow did not follow them. Relying upon others, thov liflil Ihal the plaintiff, by reason of its failure to promptly notify tlu' iiank of its discovery of the forgeries, could not recover, even though the bank had offered no evidence that it could have protected itself and the plaintiff had not shown that it could not if prompt notice had been given. The relation between a bank and its depositor is a contractual one. Its undertaking with its depositor is to pay his checks, if he has sulfi- cient funds with it for that purpose, and it assumes all the risk as against him of a niispayment in paying and charging to his account a check which he has not signed or one which he has signed bearing a forged indorsement of the payee. To his account it nuiy not charge such a check. If it does, the depositor can recover from it the amount 80 charged. No payment by a bank on a forged signature of a de- positor as drawer of a check or on a forged indorsement of his payee can affect him. His right is to get back from the bank whatever he lias deposited with it, less what has been properly paid out on his orders. The responsibility of the bank to the depositor is absolute, and it can retain no money deposited with it by him to reimburse it for any mispayment it has made out of such deposit; but it can recover from a forger responsible for the mispayment, or from those who, by their indorsement of a check, have vouched for previous in- dorsements or the genuineness of the signature of the alleged drawer. The right of a bank to recover from a forger, or from those to whom it may have paid a check bearing the forged signature of one of its depositors, or a forged indorsement, is its only remedy for the fraud practiced upon it by the forgery. The depositor's money is not affected by it, and, when he is the first to discover it, it is not reasonable that he should not be required to give prompt notice of it to the bank, if he intends to hold his depository liable for the mis- payment, and this without regard to wliat may or may not result from a prompt effort to recover from the party or parties who may be liable to the bank for the mispayment. The depositor can gain nothing by withholding knowledge of the forgery, but the bank, if kept in ignorance of it after his discovery of it, may lose everything. As soon as a bank learns that it has paid a check on a forged signa- ture of a depositor, or on a forged indorsement on his check, it is its duty to promptly restore to the depositor's account what was im- properly taken from it, and its right at the same time is to proceed against those who wrongfully got the money. This right is to pro- ceed immediately, and to the promptness with which a bank is able to exercise it recovery is often due. When a depositor withholds from his bank his knowledge of the forgery, he withholds from it this right to proceed promptly for its own protection. It may or may not be able to recover from the forger by promptly proceeding against ri. 5.] FORGED OR RAISED CHECKS. 771 liini, but its right is to try by so proceeding; and, when one of its depositors discovers that it has innocently sustained a loss, he ought, not only in all good conscience, but as a legal duty, to notify it at once of its mistake ; for by withholding from it what he has dis- covered he can, as just stated, gain nothing, but it may lose all. A forger may be insolvent or beyond the reach of civil or criminal pro- cess, but, by prompt proceedings against him, others may become in- terested in him and come to his assistance, who after delay may not do so. This incident to a bank's right to promptly proceed against a forger is not to be overlooked. Whenever a depositor knowingly withholds from it knowledge without which it cannot so proceed in an effort to protect itself, he ought to be regarded, when he comes to enforce alleged rights against it, as having withheld from it a sub- stantial right, without regard to what might or might not have re- sulted from a prompt exercise of that right. * * * » Other questions raised by the appellant need not be considered in view of tlie correct conclusion of the court below that its delay in giving the appellee notice of the forgeries bars its right to recover. The assignments of error are all overruled and the judgment is affirmed.^ 8 In support of this position tlio court cites and discusses the following authorities: Rick v. h'rlly and Rick v. Fischer, 30 Pa. 527; Myers v. South- ucHtern 'Sat. Hank. 19.3 V&. 1; United Hec. Life Ins. cf Trust Co. of Pa. v. Central Aat. Hank, 185 Pa. 58G; and Leather Manuf. Nat. Bank v. Morgan, 117 u. R. no. — C. » Thi.s case is reported in 20 L. N. S. 70, with case note entitled, " Loss or jirejudice to bank resultinfr from ne4 (approved April 20, 1897); Rev. Stat. 1908, pp. 1104-1126, Sees. 44(54-4059. Connecticut. — Laws 1897, Chap. 74 (approved Apr. 5, 1897); Genl. Stat. Rev. 1902, p. 1028. District of Columbia. — Laws U. S. 1S99 (in efTect Apr. 3, 1899); Laws U. S. 1901; Laws U. S. 1902, Sees. 1304-1493. Florida. — Laws 1897, Chap. 4524 (approved June 1, 1897); Genl. Stat. 1900, p. 1147; Sees. 2394-3099. Hawah. — Laws 1907, Act 89, p. 118 (approved Apr. 20, 1907). Idaho. — Laws 1903, p. 3S0 (in effect Mar. 10, 1903). Illinois. — Laws 1907, p. 403 (approved June 5, 1907). Iowa. — Laws 1902, Chap. 130 (approved Apr. 12, 1902) ; Laws 1906, Chap. 149: Code Supp. 1902, p. 352, Chap. 3-A, Sees. 3060-al-3060^al98. Kansas. — Laws 1905, Chap. 310 (in effect June 8, 1905); Genl. Stat. 1905, p. 967, Chap. 70, Sees. 4533-4732. Kentucky. — Laws 1904, Chap. 102 (approved March 24, 1904). Louisiana. — Laws 1904, Chap. 64 (approved June 29, 1904). Maryland. — Laws 1898, Chap. 119 (approved March 29. 1898). Massachusetts. — Laws 1898, Chap. 533 (in effect January 1, 1899); Laws 1899, Chap. 130; Rev. Laws 1902, p. 628, Chap. 73, Sees. 18-212; Laws 1910, Chap. 417. Michioan. — Laws 1905, Chap. 205 (approved Jiine 10, 1905). MissotTRi. — Laws 1905, p. 243 (approved Apr. 10, 1905) ; Laws 1907, p. 306. Montana. — Laws 1903, Chap. 121 (in effect March 7, 1903). Nebraska. — Laws 1905, Chap. 83 (in effect August 1, 1905); Comp. Stat. 1907, Chap. 41, Sees. 3558-al-3558-al98. Nevada.— Laws 1907, Chap. 62 (in effect May 1, 1907). New Hampshire. — Laws 1909, Chap. 123 (in effect January 1, 1910). New Jersey. — Laws 1902, Chap. 184 (approved April 4, 1902) ; Laws 1908, chap. 215. New Mexico. — Laws 1907, Chap. 83 (approved March 21, 1907). New York. — Laws 1897, Chap. 612; (in effect October 1, 1897); Laws 1898, Chap. 336; Laws 1904, Chap. 287; Cons. Laws, 1909, Chap. 43. North Carolina. — Laws 1899. (hup. 733 (in effect March 8. 1899); Laws 1905, Chap. 327; Laws 1907, Chap. 807; Revisal, 1905, p. 655, Chap. 54, Sees. 2151-2346. North Dakota. — Laws 1899, Chap. 113 (approved March 7, 1899); Civil Code, 1005, p. 1002, Chap. 90, S.cs. 6303-6498. [776] THE NEGOTIABLE INSTRUMENTS LAW. 777 Ohio. — Laws 1902, p. 162 (in effect January 1, 1903) ; Bates' Annot. Stat. (5th cd.). pp. lSOOa-1807, Sees. 3171-3178e. Okl.mioma.— Laws 1909, Chap. 24 (approved March 20, 1909); Comp. Laws. 1909. Chap. 69, p. 1044, Sees. 4435-4624. Orfx.on. — Laws 1899, p. 18 (approved February 16. 1899); Ballinger & Cotton's Annot. Codes & Stat., p. 1440, Sees. 4403-4594. Pennsylvania. — Laws 1901, No. 162 (in effect September 2, 1901); Laws 1909, No. 169, p. 260. Rhode Isl.vnd. — Laws 1899, Chap. 674 (in effect July 1, 1899) ; Gen. Laws 1909, p. 648, Chap. 200. Tenne-ssee. — Laws 1899, Chap. 94 (in effect May 16. 1899). Utah. — Laws 1809, Chap. 83 (in effect July 1. 1800). Virginia. — Laws 1898, Chap. 866 (approved March 3, 1898); Laws 1906; Chap. 219: Code, 1904, Chap. 133a, Sec. 2841a. Washington. — Laws 1899, Chap. 149 (in effect March 22. 1899); Rem- ington & Ballinger's Annot. Codes and Stat., Vol. 2, p. 120, Sees. 3392-3586. West Virginia. — Laws 1907, Chap. 81 (in effect January 1. 1908) Wisconsin. — Laws 1899, Chap. 356 (in effect May 15, 1899); Laws 1901, Chap. 41; Laws 1905, Chap. 262; Laws 1907, Clia])." 361. Wyoming. — Laws 1905, (hap. 43 (approved February 15, 1905); Comp. Stat. 1910, Chap. 210, Sees. 3159-3354. EXPLANATORY NOTE. The text is that of the New York Negotiable Instruments Law. The material in the notes in brackets is taken from the notes of the draftsman of the act (J. J. Crawford, Esq.), as they appeared in the draft printed by the Commissioners on Uniformity of Laws. The reference, " Pages x-x " is to the " Cases and Authorities " con- tained in Part I of this volume. The reference " Chalmers " is to Chalmers' Bills of Exchange Act (5th ed.), London, 1896. The reference to " Daniel '' is to Daniel on Negotiable Instruments. [7781 THE NEGOTIABLE INSTRUMENTS LAW. Laws or Xew York, 1909, Chapter 43. * AN ACT in relation to negotiable instruments, constituting chapter thirty-eight of the consolidated laws. IJecariie a law February 17, 1909, with the approval of the Governor. Passed, three-fifths being present. The People of the State of New York, represented in Senate and Assembly, do enact as folloivs: CHAPTER 38 OF THE CONSOLIDATED LAWS. Negotiable Instruments Law. Abticle I. Short title; definitions. (§§ 1, 2.) IL General provisions. (§§ 3-7.) III. Form and interpretation. (§§ 20-42.) IV. Consideration. (§§ 50-55.) V. Negotiation. (§§ 60-80.) VI. Rights of hold™. (§§ 90-98.) VII. Liabilities of parties. (§§ 110-119.) VIII. Tresentment for payment. (§§ 130-148.) IX. Notice of dishonor. (§§ 160-189.) X. Dl.SCHARGE. (§§ 200-201).) XI. Hills of ExciiANroiMiration ; offoot of. 41. KtTei't of indorseiiioiit by infant or corporation. 42. Forpfd .signatiiro; olTi-ct of. § 20. Form of negotiable instrument. An iiistiuinont to he iu';^'otial)lo must conform to the following requirements : 1. It must be in writing ^ and signed by the maker or drawer; * 2. Must contain an unconditional ^ promise * or order ■* to pay a sum certain " in money ; ^ 3. Must be payable on demand * or at a fixed or determinable future time ; * 4. Must be payable to order '" or to bearer; *^ and 5. Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable cer- tainty.'^ fNoTE. — See Bills of Exchange Act, sections 3, 4, 5, 6.] For definition of bill, note, check, see §§ 210, 320, 321. § 21. Certainty as to sum; what constitutes. The sum jtayable is a sum certain ^^ within the meaning of this chapter, although it is to be paid : 1. With interest; ^* or 2. By stated installments;'^ or 3. By stated installments, with a provision that upon default in payment of any installment or of interest, the whole shall become due ; '^ or 4. With exchange, whether at a fixed rate or at the current rate ; '^ or 5. With costs of collection or an attorney's fee, in case pay- ment shall not be made at maturity.'* fNoTE. — See Bills of Exchange Act, section 9.1 § 22. When promise is unconditional. An unqualified order or promise to pay is unconditional within the meaning of this chapter, though coupled with : 1 See § 2. Pages 34-35. 2 Pages 35-37. 3 See § 22. Pages 4&-61. • Pages 37-44. 5 Pages 44-45. • See 5 21. Pages 61-80. T Pages 81-89. 8 See 8 26. Pages 96-97. • See § 23. Pages 97-106. ioSee § 27. Pages 107-122. 11 See § 2S. Pages 122-148. 12 See § 210. Pages 148-150. IS Pages 01-64. 14 Pages 64-67. IB Pages 67-72. i« Pages 72-74. • 17 Pages 74-78. 18 Pages 78-80, FORM AND INTERPRETATION. 783 1. An indication of a particular fund out of which reim- bursement 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 a particular fund is not unconditional.-' [Note. — See Bills of Exchange Act, section .3, subdivision 3.) § 23. Determinable future time; what constitutes. An instrument is payable at a determinable future time, within the meaning of this chapter, which is e.xpressed to be payable: 1. At a fi.xed 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 of a specified event, which is certain to happen, though the time of happening be uncertain.-* An instrument payable upon a contingency is not negotiable, and the happening of the event does not cure the defect. ^"^ [Note. — See Bills of Exchange Act. section 11.] § 24. Additional provisions not affecting negotiability. An instrument wiiich contains an order or promise to do any act in addition to the payment of money is not negotiable.' But the negotiable character of an instrument otherwise negotiable- is not affected by a provision which : 1. Authorizes the sale of collateral securities in case the in- strument be not paid at maturity;- or 2. Autborizcs a confession of judgment 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. fiives the holder an election to require something to be done in lieu of payment of money.'' But nothing in this section shall validate any provision or stipula- tion otherwise illegal. i» Pagfs .'■>f>-.')4. iM'ag.H 4G-50, 10.3-106. 20 I'ag«-s .'i.'j-fil. ' PagoH 5tO-fll. n Page 40. 2 Pages fll-fl2. " Page 97. » Page 9.3. »» PagPH 97-102. * Page 94. 2« Pages 102-103. (Byles on Bills, f- Pages 94-96, 06.1 784 THE NEGOTIABLE INSTIIUMENTS LAW. § 25. Omissions; seal; particular money. Tlic valitlily Mini iu\i,a)t iiihU' clianutiM- oT iiii iiisf riimont are not alToi'ted hv (lie fart that : 1. It is not dated ; " or 2. Docs not specify tlie 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 payahle ; " 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 re- tjuiring in certain cases the nature of the consideration to be stated in the instrument." IXoTE. — See Bills of Exchange Act, section 3, subdivision (4).] § 26. When payable on demand. An instrument is payable on 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 over- due, it is, as regards the person so issuing, accepting or indorsing it, payable on demand." [Note. — See Bills of Exchange Act, section lO.J § 27. When payable to order. The instrument is payable to order where it is drawn payable to the order of a specified person or to him or his order.*^ It may be drawn payable to the order of: « Pages 158-159. See § 32. " Un- « See New York Neg. Inst. L., der most of the continental Codes it §§ 330-331. i.s essential that a bill should be i" Page 96. rtated." Chalmers, p. 13. And state n Page 97. a consideration. lb., p. 14. And in '2 [The Bills of Exchange Act pro- some it is necessary that a bill should vides that "a bill is payable to order be payable in a place different to that which is expressed to be so payable or in which it is made. " No distance which is expressed to be payable to a is fixed bv the codes, "but it has been particular person and does not contain decided that the place of payment words prohibiting transfer or indicat- must be so far distant from the place ing an intention that it should not be of issue that there may be a possible transferable." But this changes the rate of exchange between the two." law ( Byles, 83 ; Hmith v. Kendall, lb., p. 15. fi I'- K- 123; Maule v. Crawford, T Pages 150-100. [This is the rule 14 ITun, 193; Daniel cm Neg. Inst., in many states by statute. See Daniel, section 105), and the change is not § 33. See also Weeks v. Esler, 143 deemed advantageous. Frrdrrick v. N. Y. 374.1 Cotton, 2 Shower, 8; i^mith v. « Pages 81-89. [Daniel, § 56 e( sc^., McClure, fi East, 476; Howard v. and cases cited. 1 Pnlmrr, 04 Me. 86; Daniel, § 106.1 FUUM AND INTEUPRETATION. 785 1. A payee wlio 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. Tlie 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.^* [XoTi;. — S.'e Bills of Exehaiifrf Act, sections 5, 7, 8.) § 28. When payable to bearer. The instrument is payable to bearer: 1. When it is expressed to be so payable;"* or 2. When it is payable to a person named therein or bearer; *^ or 3. When it is payable to the order of a fictitious or non-exist- ing person, and sucii fact was known to the person making it 80 payable; -° or 4. When the name of the payee does not purport to be the name of any person ; -' or 5. Wlien the only or last indorsement is an indorsement in blank.-- [NoTK. — S( e iJillrt of Kxfliange Act, sections 7, 8.] § 29. Terms when sufficient. The iiistrument need not foHow the language of this chapter, but 'U)y terms are sMlhcicut which clearly indicate an intention to conform 'o the ref|uirenieiitR hereof. •; 30. Date, presumption as to. Wiicre the iristnniiciit or an acceptance or any indorsement tliereon 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.'^^ (NoTK. Sec Bills of Kxrlianir'- Act. section 13.1 § 31. Ante-dated and post-dated. The instrument is not invalid for the reason only that it is ante- dated or |)ost-dated, provided this is not done for an illegal or fraudu- lent purpose. The j)erson to whom an instrument so dated is de- livered a(<|uii('s the title thereto as of the date of delivery.^* ( .NO'IK. -- Sec Hillfl of Kxdi.in^je .Xct, section 13. See I'asniore v. S'orlli. l.'i Kast. .'■)I7. Hirwater v. McVordle, 8 Wend. 478; Bayley v. Taber, 5 Maaa. 286.] l3Pn^'(^ li:;-114. 20 Pafres 123-144. KPajfen 114-115. 21 Page 144. 16 Papes 11.5-118. 22 Pages 144-148, 21)1-297. See §§ 18 Pajfis 11 HI 20. 64, 70. IT Pages 121-122. 23 Pages ir.l-iri3. i» Pages 107-113. 2« Pages I0l-l(i3. i» Page 122. NKOOT. INSTlUIMKNTtt — 50 786 TlIK NEOOTIAIU.K INSTIJUMKNTS LAW. § 32. When date may be inserted. WluTO iin instrumiMit oxpivssod to be payablo at a fixed period after date is issued undated, or wliere the ac'(e})taiu'e of an instru- ment payable at a fixed period after siglit is undated, any holder may insert therein the true date of issue or aeeeptanee, and the instrument shall be payable aeeordingly.^-'' The insertion of a wrong date does not avoid the instrument in the hands of a siibsetjuent holder in due eourse; but as to him, the date so inserted is to be regarded as the true date.' I NoTK. — See Bills of Exchanjj;o Act, section 12. See note, section 7. J § 33. Blanks; when may be filled. Where the instrument is wanting in any material particular, the person in possession thereof has a prima facie autliority to complete it by filling up the blanks therein.^ And a signature on a Ijlank paper delivered by the person making tlie signature in order tiiat the paper may be converted 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, wlien completed, may be enforced against any person who became a party thereto prior to its com- pletion, it must be filled up strictly in accordance with the authority given and within a reasonable time. But if any such instrument, after completion, is negotiated to a holder in due course, it is valid and effectual for all purposes in his hands, and he may enforce it a8 if it had been filled up strictly in accordance with the authority given and within a reasonable time.* [Note. — See Bills of Exchange, section 20.] See § 206. § 34. Incomplete instrument not delivered. Where an incom])k'te instrument lias not been delivered it will not, if completed and negotiated, without authority, be a valid con- tract in the liands of any holder, as against any person whose signa- ture was placed thereon before delivery. [XoiE. — -See Dai-is Machine Co. v. Best, 105 N. Y. 59, 67; Nedgwick v. McKim, 5.3 N. Y. 307, 313; Baxendale v. Bennett, L. R. 3 Q. B. 525; Daniel, §§ 841, 842a.] § 35 Delivery; when effectual; when presumed. Every contract on a negotiable instrument is incomplete and re- vocable until delivery of the instrument for the purpose of giving effect thereto. As between immediate parties, and as regards a remote parrty 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 25 See § 33. 3 Pages 168-174. I Pages 163-168. * Pages 174-192. t Pages 163-1G8. FOBM AND INTERPRETATION. 787 making, drawing, accepting or indorsing, 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 pre- sumed. * And where the instrument is no longer in the possession of a party whose signature appears thereon, a valid and intentional delivery by him is presumed until the contrary is proved.* [Note. — See Bills of Exchange Act, section 21.) § 36. Construction where instrument is ambiguous. Where the language of the instrument is ambiguous, or there are omissions therein, the following rules of construction apply : 1. Where the sum payable is expressed in words and also in figures and there is a discrepancy between the two, the sum denoted by the words is the sum payable ; but if the words are ambiguous or uncertain, references may be had to the figures to fix the amount ; ^ 2. Where the instrument provides for the payment of in- terest, 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 instrument that it is not clear in what capacity tiie person making the same in- tended to sign, he is to be deemed an indorser; '- 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 thereon. '^ (NoTK. — S«'e HIIIh of Exolianpe .Act, section 0.1 § 37. Liability of person signing in trade or assumed name. No jMTsoM is liable on the iiistruriicnt whose signature does not appear thereon, except as herein otherwise ex})res8ly provided.'* But » Pajjen 161-152. n Pajre 196. • F'apes I.52-1S8. See g 34. izSce §§ 11.3. 114. T PapcH 192-104. t^VafTi-H ]W}-]97. [See Rills of Ex- • Papes 104-19.5. changR Act, section S.'i.l » PaK<' 105. §§ 25, 30-32. k Pages 197-199. See § 72. >o Pages 195-196. tSS TIIK NEGOTIAHl.K INS TltrM lON'I'S LAW. one wlu) signs in :\ (railc or assuniod nana' will he liable to the same extent as if he had sigiieil in ins own name. [NoTK. — Sw Kills of Kxoliaiige -Vet, swtion '2:{.] § 38. Signature by agent; authority; how shown. The signature of any party may lu' made by a duly authorized agent. No partieular form of appointment is necessary for this pur- pose; and the authority of the agent may be established as in other cases of agency. § 39. Liability of person signing as agent. Where the instrument contains or a person adds to his signature words indicating that he signs for or on behalf of a principal, or in a representative capacity, he is not liat)le on tlie instrument if he was duly authorized ; '''' l)ut the mere addition of words describing him as an agent, or as filling a representative character, without dis- closing his principal, does not exempt him from personal liability. ^^ [Note. — See Bills of Exchange Act, section 26; Bjies on Bills, 3G; Daniel, §§ 298-302.] § 40. Signature by procuration; effect of. A signature by " procuration " operates as notice that the agent has but a limited authority to sign, and the principal is bound only in case the agent in so signing acted within the actual limits pf his autliority.^' [Note. — See Bills of Exchange Act, section 25; Byles on Bills, 33; Daniel, § 280.] § 41. Effect of indorsement by infant or corporation. The indorsement or assignment of the instrument by a corporation or by an infant passes the property therein, notwithstanding that from want of capacity the corporation or infant may incur no lia- bility thereon.'^ [Note. —See Bills of Exchange Act, section 22.] 15 Pages 216-219. it also involves a contingent liability 16 Pages 199-216. on the part of the indorser." (lb.) 17 Pages 219-220. "I'.v this section, when a bill is payable 18 Pages 22f>-221. This section " is to the order of an infant, his indorse- probably declaratory, but the law was ment tranfors the property therein, not very clear." Chalmers, p. 60. * • • In America it is not uncommon "Capacity to incur liability must be to get a bill made payable to the or- distinguished from capacity to trans- der of an infant clerk. His indorse- fpr • • • An indorsement usually ment then operates as an indorsement consists of two distinct contracts, one .san.s recoxtrn, though withoiit discred- executed, the other executory, ft iting the bill." (76., p. 63.) transfers the property in the bill, and CONSIDERATION. 789 § 42. Forged signature; effect of. Where a signature is forged or made without authority of the person whose signature it puiports to be, it is wholly inoperative, and no right to retain the instrument, or to give a discharge there- for, or to enforce 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.-" [Note. — See Bills of Exchange Act. section 24.] ARTICLE IV. C0NSIDER.4TI0N. Section 50. Presumption of consideration. 51. What constitutes consideration. 52. What constitutes holder for value. 53. When lien on instrument constitutes holder for value. 54. Effect of want of consideration. 55. I>iability of accommodation party. § 50. Presumption of consideration. Every negotiable instrument is deemed prima facie to liave been issued for a valuable consideration ; and every person whose signa- ture appears thereon to have become a party thereto for value.^' [Note. — See Bills of Exchange Act, section 30.] § 51. What constitutes consideration. Value *^ is any consideration sufficient to support a simple con- tract. An antecedent or pre-existing debt constitutes value; and is deemed such whether the^nstrument is payable on demand or at a fiihirc time.-' § 52. What constitutes holder for value. Where value has at any time licen given for tlie instrument, the holder is deemed a liohh-r for value in respect to all parties who became such prior to that time." [ N'OTK. S(H' Bills (if Kxcli:iri(.'f .Act. section 27. snlxlivisjoii (2)]. § 53. When lien on instrument constitutes holder for value. Where the holder has a lien on the instrument, arising either from >» Pages 221-225. 21 Pages 234-238. 2" Pages 225-233. " The word ' pre- 22 See (j 2. cludfffl ' was insiTted in cominittrc in 2'' Pages 230-249. lieu of tliP word 'estopped,' an Eng- 24 pagen 240-251. A holder for lish technical term, unknown to the value may or may not he a holder in Scotch law." Chalmers, p. 74. due course. St-e § 01. 790 THE NKUOTlAHLli INSTlSf.MKN IS LAW. eontnu't or by implication of law, ho is doeined a holder for vaUie to the extent of his lien.-'^ (NoTi':. — See Bills of ExcIuvii^m' Act, set-tion 27.] § 54. Effect of want of consideration. Absence or faihire of consideration is matter of defense as aj^ain^t any person not a bolder in dne course;' and partial failure of con- sideration is a defense pro tanto whether the failure is an ascertained and li(]ui(lalod amount or otherwise.' § 55. Liability of accommodation party. An accommodation party is one who has signed the instrument as maker, drawer, acceptor or indorser, without receiving value there- for,' and for the purpose of lending his name to some other person. Such a person is liable on the instrument to a holder for value, not- withstanding such holder at the time of taking the instrument knew him to be only an accommodation party.* [Note. — See Bills of Exchange Act, section 28.] ARTICLE V. NEGOTIATION. Section 60. What constitutes negotiation. 61. Indorsement; how made. 62. Indorsement must be of entire instrument. 63. Kinds of indorsement. 64. Special indorsement; indorsement in blank. 65. Blank indorsement; how changed to special indorsement. 66. When indorsement restrictive. 67. EflFect of restrictive indorsement; rights of indorsee. 68. Qualified indorsement. 69. Conditional indorsement. 70. Indorsement of instrument payable to bearer. 71. Indorsement where payable to two or more persons. 72. Effect of instrument drawn or indorsed to a person as cashier. 73. Indorsement where name is wrongly designated or misspelled. 74. Indorsement in representative capacity. 75. Time of indorsement; presumption. 70. Place of indorsement; presumption. 25 Pages 252-253. Discount must be otherwise he can recover only the distinguished from pledge or deposit amount of the lien. Chalmers, p. 86. for security. A discounter or pur- i See § 91. chaser of the bill is a holder for full 2 Pages 253-254. An immediate value. A pledgee is a trustee of the party stands in the same relation as pledgor. If the pledgor could have one who is not a holder in due course, sued on the instrument the pledgee See Chalmers, p. 95. may recover the whole amount, ac- ' Pages 257-258. counting to the pledgor for any sur- ♦ Pages 254-258. plus above the amount of the lien; ni':gotiation. 791 Section 77. Continuation of negotiable character. 7.S. .Striking out indorsement. 79. 'J'ransfer without indorsement ; effect of. 80. When prior party may negotiate instrument. § 60. What constitutes negotiation. An instrument is negotiated when it is transferred from one per- son to another in such manner as to constitute the transferee the holder thereof.'^ If payahle to bearer^ it is negotiated by delivery;* if payable to order it is negotiated by the indorsement of the holder completed by delivery.^ [Note. — See Bills of Exchange Act, sections 31, subdivisions (1), (2) and (3).] § 61. Indorsement; how made. The indorsement must be written on the instrument itself or upon a paper attached thereto.^ The signature of the indorser, without additional words, is a sufficient indorsement." § 62. Indorsement must be of entire instrument. The iiidorsciiient iiiusl be an indorsement of the entire instru- 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 l)een paid in part, it may be indorsed as to the residue.*^ fNoTE. — See Bills of Exchange Act, section 32, subdivision (2); Daniel, $ 6H8.] § 63. Kinds of indorsement. An indorsement may be either special or in blank; and it may also be eitlier restrictive or qualified, or conditional. s Page 259. See " holder " defiiied, of the rule would give rise to a (|uea- § 2. lion of fact whieh might be determined 8 Pages 2(in-2r>l. variously.] See Bills of Kxeiiange 7 F'ages 2(il-2«6 ( iiiclii' " C, the holder of a bill for 100 i., the indorsement on the instrument it- indorses it. ' Pav I), or order, 30 /.' self; it may !>« on an allonge when- ThiH is invalid, unless C also acknowl- ever the necessity or convenience of the edge the rceeijit of 70 /. ( Uniikinif v. parties recpiire it. (See cases above Cnnly, 1 I^. Kayni. 300.)" ('halmers, cited.) Besides, any such statement p. 107. 71>0 TlIK NlXiDTlAISl.K I NSTWr M I'.XIS LAW. § 64. Special indorsement; indorsement in blank. A t'poiial imlorst'iiu'iit spciilics tlii' jhtsoii to whom, or to wlioae order the iustrunient is to he payahle ; ami Ihi' imlorsemeiit of such indorsee is necessary to tlie t'urtht'r iiejfotiatioii of the instrument. '- An indorsement in hhmk specilies no indorsee, anil an instrument so indorsed is payahle to l)earer, and may he negotiated hy delivery.'-^ [Note. — See Bills of Kxihaiige Act, section ;?4.1 § 65. Blank indorsement; how changed to special indorsement. The holder may convert a hlank indorsement into a special indorse- ment by writing over the signature of the indorser in blank any con- tract consistent with the eharaeter of the indorsement.'* [Note. — See Bills of Exchange Act, section 34; Daniel, § G94, and cases cited.] § 66. When indorsement restrictive. An indorsement is restrictive, which either: 1. Prohibits the further negotiation of the instrument;'-"' or 2. Constitutes the indorsee the agent of the indorser;'" 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.'^ [Note. — Illustrations: (1) Pay Bank of A. only. For deposit in Bank of A. only. (2) Pay A. Cashier, or order, for collection. (3) Pay A. for account of C. The language of the Bills of Exchange Act, (§ 35), is: "It is a mere authority to deal with the hill as thereby directed, and not a transfer of the ownership thereof." But this cannot apply to the indorsement men- tioned in subdivision (3); for in such a case the indorser means that the title shall pass. Thus, if the indorsement is " Pay A for use of B "' the title passes to A; but the indorsement is restrictive to the extent that it gives notice that the instrument cannot be negotiated by A for his own debt or for his own benefit. Hook v. rrntt, 78 N. Y. 371. 375.1 > 2 Page 208. See §§ 28. 70. h Pages 268-271. "The holder of 13 Pages 268-271. See § 28. "Bill a bill, indorsed by (' in blank, writes payable to tlie order of .John Smith, over C's signature the words. ' Pay to He signs on the back 'John Smith.' tlic order of D.' The holder who does This act is interpreted by the law mer- tliis is not liable as an indorser, but chant as an indorsement in blank by the transaction operates as a special .John Smith, and operates as if he had indorsement from C to D. ( Vincent written: 1. I hereby assign this bill v. Horlock, 1 ("amp. 442.)" ("halmera, to bearer. 2. I hereby undertake that p. 112. if this bill \}e dishonored, I. on receiv- ''• Pages 271-274. ing due notice thereof, will indemnify '« Pages 274-277. the tjearer." fhalmers. p. 110. See 'T Pages 277-280. § 116. '"* I'iiges 272-274. NEGOTIATION. 793 § 67. Effect of restricting indorsement; rights of indorsee. A restrictive indorsement confers upon tlic indorsee tlie right: 1. To receive payment of the instrument; 2. To bring any action thereon tliat the indorser 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 in- dorsee under the restrictive indorsement. (NoTt. — Sw Bills of Exchange Act, section 35.] Pages 28U-284 See § 77. § 68. Qualified indorsement. Qualified ijidorseinent constitutes the indorser a mere assignor of the title to the instrument.'" It may be made by adding to the indorser'p signature the words " without recourse " or any words of similar import Such an indorsement does not impair the negotiable character of the instrument.^" fNoTF. — See Daniel. ^ TOO.] See Bills of Exchange Act. section 10. § 69. Conditional indorsement. Where an infior.^etiu'nt is conditional, a party required to pay the instrument may disregard the condition, and make payment to the indorsee or liis transferee, whether the condition has been fulfilled or not. But any person to whom an instrument so indorsed is negotiated, will hold the same, or the proceeds thereof, subject to the rights of the person indorsing conditionally. [NoTK. — The first sentence is the .same as section 33 of tlic Bills of Exchatige Act with a slight nuKlification. In his note to that .'section Judge Clialriiers says: "This section alters the law. It was formerly held that if a hill was indorsed conditionally, the acceptor paid it at his peril if the condition was not fiillillcd. 'i his was hard on him. If he dishonored the hill he might be liable to damages, and yet it might be inijiossiblo for him to find out if the condition had bfi'n fulfilled." See Daniel, §§ f)!)7, fiHSn. There appear to Ik- no American cases upon the subject; and the only English case is that of Rnhrrtsnn v. hrnftitu/ton, 4 Taiint. 30.) I'age 287. § 70. Indorsement of instrument payable to bearer. Where ;iri Inst rnriierit, p;iy;il)le to b.-arer, is indorsed specially, it may nevertheless be further negotiated by delivery; but the person indorsing specially is lial)le as indorser to only such holders as make title through bis indorsement.^' § 71. Indorsement where payable to two or more persons. Wliere an insi ruiiient is payable to the order of two or more payees ••See 8 115. 2 > Pages 288-298. i'* Pages 284-287. 794 THE NKCOTIAMl.K I NsTlil' M KNTS LAW. or indorsees who are iu)t [)ar(iiers, all must indorse, unless the one indorsing lias authorily to indorse for the others. ^- I NoTF. — Soo Rills of Kxcliangf Act, section 32, subdivision (3). DniiicI, § 701(1.1 § 72. Effect of instrument drawn or indorsed to a person as cashier. Where an instrument is ilrawii or indorsed to a person as " cashier" or other fiscal otlicer oi' a hank or corporation, it is deemed prima facie to he payahle to the hank or corporation of which he is such ofTicer; and may In- ne^rotialed hy either the indorsement of the bank or corporation, or the indorsement of the officer.-^ § 73. Indorsement where name is wrongly designated or misspelled. Where the name of a payee or indorsee is wrongly designated or misspelled, he may indorse the instrument as therein described, add- ing, if he thinks fit, his proper signature.^* [Note. — See Bills of Exchange Act, section 32, subdivision (4).] § 74. Indorsement in representative capacity. Where any person is under obligation to indorse in a representa- tive capacity, he may indorse in such terms as to negative personal liability. [XoTi;. — Same as Bills of Exchange Act, section 31, subdivision (5).] § 68; also § 39. § 75. Time of indorsement; presumption. Except where an indorsement bears date after the maturity of the instrument, every negotiation is deemed prima facie to have been effected before the instrument was overdue.^* [Note. — See Bills of Exchange Act, section 36, .subdivision (4) New Orleans, etc. v. Montgomery, 95 U. S. 1 ; Collins v. Gilbert, 94 U. S. 753. See also numerous cases cited in Daniel, § 728. 1 § 76. Place of indorsement; presumption. Except wliere the contrary appears every indorsement is presumed prima facie to have been made at the place where the instrument is dated. ^ [For summary of rules governing conflict of laws, see Bills of Exchange Act, § 72.1 22 Page 298. The form sometimes adopted, viz., 23 Pages 299-300. See § 37. ' Mrs. John Jones,' is clearly irregular, 2« Pages 301-302. "A question some- though its invalidity has never been times arises as to how a bill payable decided." ('halmers, p. 109. (say) to ' Mrs. .John .Jones ' shouhi be '-•'> I'age 302. See }; 91. indorsed. The proper form appears i Pages 302-305. to be ' Ellen Jones, wife of John Jones,' UIGHTS OF HOLDER. 795 § 77. Continuation of negotiable character. An instrument negotiable in its origin continues to be negotiable until it has heen restrictively indorsed" or discharged by payment' or otherwise.* (Note.— See Bills of l-ixchange Act, section 36.1 § 78. striking out indorsement. The holder may at any time strike out any indorsement which is not necessary to his title ^ The indorser whose indorsement is struck cat and all indorsers subsequent to him, are thereby relieved from liability on the instrument.* § 79. Transfer without indorsement; effect of. Where the holder of an instrument payable to his order transfers it for value witliout indorsing it, the transfer vests in the transferee such title as the transferer had therein, and the transferee acquires, in addition, the right to have the indorsement of the transferer. 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.'' § 80. When prior party may negotiate instrument. Where an instrument is negotiated back to a prior party,* such party may, subject to the provisions of this chapter," reissue and further negotiate the same."' But he is not entitled to enforce pay- ment thereof against any intervening party to whom he was per- Bonally liable.'^ [Note. — See Bills of Exchange Act, section 37.] ARTICLE VI. RIGHTS OF HOLDER. Section nO. Right of holder to sue-, payment. 91. What constitnte.s a holder in dwe course. 92. When person not deemed holder in due course. 93. Notice Ix-fore full amount paid. 94. When title defective. 95. What eouHtitiiteH notice of defect. 96. Rights of holder in due course. 97. When subject to original defenses. 98. Who deemed hf)lder in duf cfiurse. a See S8 fl«-67. able rtiles as the rule at law. Daniel, • See § 200. § 741.] « Page 30fi. ft See § 202. » Pages 300-307. » See §§ 200-206. as to discharges. •Se«- § lir,. in Pages 310-313. T Pages 307 310. [This is the same n Pages 310-313. This is a rule as Hills of Kxchange Act, sec. 31, sub- against circuity of action, dirision (4). It establishss the equit- 79fi THE NKr.OTlAni.K INSTRUMENTS LAW. § 90. Right of holder to sue; payment. The lutldiT '- of a ncijjoliiililc iiist niiiuMit may sue tliereon in his own name;" and payment In liim in due eourse discharges the instrnment.'* INoTK. — Sre T?ills of Exolian^o Act, soction .18, subdivisions (1) .ind (.H).| § 91. What constitutes a holder in due course. A holder in due eourse is a liolder who lias taken the instrument under the following conditions: 1. That it is complete and regular uj)on its face;''* 2. That he became the holder of it l)efore it was overdue, and without notice that it had been previously 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 tlie instrument or defect in the title of the person negotiating it.'*" [Note. — See Bills of Exchange Act, section 29, subdivions (a) and (b).\ " The act has substituted tlie term ' holder in due eourse ' for the cumbrous equivalent bona fide holder for value without notice." Chalmers, p. 90. § 92. When person not deemed holder in due course. Where an instrument payable on demand is negotiated an un- reasonable length of time after its issue, the holder is not deemed a holder in due course. ^° [Note. — See Bills of Exchange Act, section 36, subdivision (3). Crim v. atockucather, 88 N. Y. 339; Herrick v. Woolvcrtoti, 41 N. Y. 581] § 93. Notice before full amount paid. Where the transferee receives notice of any infirmity in the in- strument or defect in the title of the person negotiating the same before he has paid tlie full amount agreed to be paid therefor, he will be deemed a holder in due course only to the extent of the amount theretofore paid by him.^" § 94. When title defective. The title of a person who negotiates an instrument is defective within the meaning of this chapter when he obtained the instrument, or 12 See § 2. "The Act deals only is Pages 314-318. with transfer by negotiation, that ^ See §§ 148, 200. is, transfer according to the law i'- Pages 319-320. See §§ 32-33. merchant. It leaves untouched the ib Pages 320-337. rules of general law which regulate it Pages 337-340. See § 51. the transmission of bills by act of law, '« Pages 340-357. See § 95. and their transfer as choses in action '9 Page 323. or chattels according to the general zo Pages 357-360. law," (e. g., by marriage, death, bankruptcy, sale on execution, etc.) Chalmers, p. 125. EIGHTS OF HOLDER. 797 any signature thereto, by fraud, duress, or force and fear, or other unhiwful means, or for an illegal consideration, or when he nego- tiates it in breach of faith, or under such circumstances as amount to a fraud. -^ [Note. — See Bills of Exchange Act, section 29, subdivision (2).] "This list of defects in title may not be exhaustive. A person whose title is defective must be distinguished from a person who has no title at all, and who can give none; as for instance, a person making title through a forged indor.sement. The words ' force and foar ' were inserted in committee as tlie equivalent of the English technical term duress, which is unknown to Scotch law. (See Bell's Principles, 9th ed., § 12.) " Chalmers, p. 92. § 95. What constitutes notice of defect. To constitute notice of an infirmity in the instrument or 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. ^^ § 96. Rights of holder in due course. A holder in due course holds the instrument free from any defect of title of prior parties and free from defenses available to prior parties among themselves, and may enforce payment of the instru- ment for the full amount thereof against all parties liable thereon.^' [Note. — See Bills of Excliange Act, section 38, subdivision (2).] § 97. When subject to original defenses. In the hands of any holder other than a holder in due course, a negotiable instrument is subject to the same defenses as if it were non-negotiable. Rut a holder ^* who derives his title through a holder in duo 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 f);irti('s prior to the latter.^" § 98. Who deemed holder in due course. Every holder is (h.'enicfl priiiia facie to be a holder in due course; but when it is shown that the title of any person who has negotiated the instrument was defective, 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 mentioned rule does not apply 2" PagPH 370-31)9. 21 Prrps 3R0-3rtl. 22 Pftgrt 33R-3r)7. Sec BIIIh of Ex i Pages 305-370. See Tatnm v. change Act. § 90. floylnr. 1,. H. 23 (,». H. 1). .'Mr., con- 23 Pages .1f)l-3r)5. {Crnmirrll v. struing Bills of Exchange .Act, § 30, County nf Snr. 90, II. S. 51, 00.) subsec. (2). 24 " Wbctlur for value or not." Bills of Exchange Act, § 29, subsec. (3). 708 THE NEGOTIAniK INSTHITMFNTS LAW. in favor of a party who became bound on ibc instrument prior to the acquisition of such defective title. I NoTK. — This is similar to Bills of Exchange Act, section .30, subdivision (2) : but the plirasoology has been ohan<;od so as to better harmonize with the language of section 55, ( N. Y. § 94), which is the sanu^ as Bills of Exchange Act, section l2H, subdivision (2). The language of the Hills of Exchange Act is " subscijuent to the alleged fraud or illegality." But this is not quite cor- rect ; for the holder may be a holder in due course, though the fraud or ille- gality was in the transfer to him. The last sentence has no equivalent in the Bills of Exchange Act; but it is necessary to qualify the general statement. If A issues his note to B, and C gets possession of it and fraudulently negotiates it to I), the fraud of C in nowise affects A, and is no defense to him when sued on the instrument by D.] ARTICLE VII. LIABILITIES OF PARTIES. Section 110. Liability of maker. 111. Liability of drawer. 112. Liability of acceptor. 113. When person deemed indorser. 114. Liability of irregular indorser. 115. Warranty; where negotiation by delivery or by a qualified indorsement. 116. Liability of general indorser. 117. Liability of indorser where paper negotiable by delivery. 118. Order in which indorsers are liable. 119. Liability of agent or broker. § 110. Liability of maker. The maker of a negotiable 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. ^ [\mi:. —See Bills of Exchange Act, section 88.1 § 111. Liability of drawer. The drawer by drawing the instrument admits the existence of the payee and his then capacity to indorse ; and engages that on due pre- sentment the instrument will be accepted and paid, or both, according to its tenor, and that if it be dishonored, and the necessary proceed- ings 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.* 2 Page 400. " The maker of a note corresponds with the acceptor of promissory note is the principal debtor a bill of exchange, and the same rules on the instrument. The maker is apply to both." Chalmers, p. 270. sometimes called the drawer, but the See § 130. primary and absolute liability of the 3 Pages 401-403. maker of a note must be distinguished ♦ Pages 418-419. Bills of Exchange from the secondary and conditional lia- Act, § 55. subsec. (I). The dravrer's bilitv of the drawer of a bill of ex- liability is similar to that of the u|- change. In general the maker of a dorser's. See § 116, LIABILITIES OF PAIJTIKS. 799 But the drawer may insert in the instrument an express stipulation negativing or limiting his own liability to the holder. ^ § 112. Liability of acceptor. The acceptor by accepting " the instrument engages that he will pay it according to the tenor of his acceptance ' and admits : 1. The existence of the drawer, the genuineness of his signa- ture, and his capacity and authority to draw the instrument;' and 2. The existence of the payee and his then capacity to indorse. ° [Note. — See Bills of Exchange Act, section 54. Tlie Bills of Exchange Act contains the words. " but not the genuineness or validity of liis indorsement." But as the section purports to specify what the acceptance admits, all other matters are necessarily excluded by implication. To specify in some instances and not in others what is excluded destroys the symmetry of the Act, and, besides, might give rise to doubts as to its construction.] § 113. When person deemed indorser. A person placing his signature upon an instrument otherwise than as maker, drawer or acceptor is deemed to be an indorser, unless he clearly indicates by appropriate words his intention to be bound in some other capacity.^" [Note. — Section 56 of the Bills of Exchange Act provides: "Where a per- .^on signs a bill otherwise than as drawer or acceptor, he thereupon incurs the liabilities of an indorser to a holder in due course." But this language is too broad. There is no reason why one should not bind himself as guarantor or surety to a holder in due course if he clearly indicates such an intent. The language " otherwise than as maker," etc., would not meet the case of a signa- ture HO placed that there would be a question whether the person signing meant to bine! himself as joint maker or otiierwise. ]^\\t the point is corrected in section 17 (N. Y. § 30), by the provision "that where a signature is so f>laced upon the instr\iP"'nt that it is not clear in what capacity the person making the same intended to sign, he will be deemed an indorser."] § 114. Liability of irregular indorser. WhfTc a person, uoi otherwise a pnrty to an instrument, places thereon his .signature in blank before delivery, .^'e is liable as indorser " in accordance with the following rules: 1. If the instrument is payable to the order of » third perp-2.30. (See § 42. ante.) If the amount of 7 '1 he arreptor is a primary party the bill be altered, or if any other and absolutely liable. Sr-e § .1. No material alteration be made in it, the demand on him is necessary to fix his acceptor is not precluded by this sec- liability. See § I. 30. fion from setting it up." Chalmers, • F'ages 4fl3-418. p. IR.'j. • Same as in 5 110. "This section "» F'ages t.'»S-4.')!t. deals only with estoppels arising on 'i F'.-iges 440-458. 800 TIIK NK(";0TTAH1,K ] NSIIU' M i;\l'S I, AW. 2. If tlio iiiPtruiiiont is payable to the ordcM- of the maker or (Irawi'i, or is payable to l)eaier, he is liable to all parties sub- soqueiit to the maker or drawer. ;?. If be sigMS for the aecommodation of the payee, he is liable to all parties subsequent to the payee. [NOTK. — Tliis section is intonded to cover irregular iiidorst'nu'nts. On this ^nbjeot tlie decisions are very conllicting. In some jurisdictions a person plac- in3 Pages 439-440. 'r. Pages 442-446. NBOOT. IN8TROMKNTB — 51 802 TiiK NKiioriAiti.i'; in.stkl'mkn ris law. ia uniformly, " is lufcludcil from (iciiyiiij,'. cti'." lUit lliis is stilting the effect of the priiK'ipio iiiui not tiic princi|)li' itself. Upon such a stalonH-nt the ques- tion arises: Why is he preeliuledV 'I he reason is that he has given implied warranties ami admissions. The more scientific metlioil is te Daniel, § Gli'Sa, and cases there cited.] § 118. Order in which indorsers are liable. As respects one another, indorsers are liable prima facie in the order in which they indorse; but evidence is admissible to show tliat as between or among themselves they have agreed otherwise.'^ Joint payees or joint indorsers who indorse are deemed to indorse jointly and severally.'* [XoTF. — Evidence to show an agreement for a joint liability: See Easterly V. Barber, 66 N. Y. 4.33; I'hillips v. Preston, 5 How. (Tl. S.)'278; Kdelen v. White, 6 Bush, 408. Contra: Johnson v. Ramsay, 43 N. J. L. 279; Daniel, § 703. Evidence to show contract that one was to be prior in- dorser: See i^lack v. Kirk, 77 Pa. St. 380; Reinhart v. Schall, 69 Md. 352; Slagcl V. Rust, 4 Gratt. 274; Daniel, § 704. As to joint payees indorsing: See Lane v. Stacy, 8 Allen, 41; Daniel, § 704.] § 119. Liability of an agent or broker. Where a broker or other agent negotiates an instrument without indorsement, he incurs all the liabilities prescribed by section one hundred and fifteen of tliis chapter, unless he discloses the name of his principal, and the fact that he is actmg only as agent.''* [Note. — See Meridan Nat. Bank v. Gallaudct, 120 N. Y. 298; Cabot Bank V. Morton, 4 Gray, 156; Worthington v. Coxcles, 112 Mass. 30.] ARTICLE VIII. PRESENTMENT FOPv PAYMENT. Section 130. Effect of want of demand on principal debtor. 131. Presentment wliere instrument is not payable on demand. 132. What constitutes a sufTicient presentment. 133. Place of presentment. 134. Instrument must be exhibited. 135. Presentment where instrument payable at bank. •The following provision in the original draft was omitted in the final revis- ion: fBut the provisions of this section do not apply to an indorser to whom the instrument has been indorsed restrictively as agent only. National Park Bank v. Seaboard National Bank, 114 N. Y. 28; United States v. American Exrhnnqr Not. Bank, 70 Fed. Rep. 232.] See pages 439-440. isPflrrf. 443. 18 Page 466. 17 Pages 459-465. i» Pages 441-442. PRESENTMENT FOR PAYMENT, 803 Section 13f». Presentment where principal debtor is dead. 137. Presentment to persons liable as partners. 138. Presentment to joint debtors. 139. W hen presentment not required to charge the drawer. 140. When presentment not required to charge the indorser. 141. When delay in making presentment is excused. 14-2. When presentment may be dispensed with. 143. When instrument dishonored by nonpayment. 144. Liability of person secondarily liable, when instrument dis- honored. 145. Time of maturity. 146. Time; how computed. 147. Rule where instrument payable at bank. 148. What constitutes payment in due course. § 130. Effect of want of demand on principal debtor. Presentmeot for payment is not necessary in order to charge the person primarily liable on the instrument ; ^'^ but if the instrument IS, by its terms, payable at a special place, and he is able and willing to pay it there at maturity and has funds there available for that purpose, such ability and willingness are equivalent to a tender of payment upon his part. But except as herein otherwise provided, presentment for payment is necessary in order to charge the drawer and indorsers.^* [Note. — See Bills of Exchange Act, section 52; Hills v. Place, 48 N Y 620, 523; Parker v. Stroud, 98 N. Y. 379, 384; Cox v. \ational' Bank, 100 U. S. 713; Wallace v. McConnell, 13 Peters, 136; Lozier v. lloran, 55 Iowa, 77; Insurance Company v. Wilson, 29 W. \'a. 543.] § 131. Presentment where instrument is not payable on demand [and where payable on demand]. Where the instrument is not payable on demand, presentment must be made on the day it falls due.- Where it is payable on demand, presentment must be made within a reasonable time '^ after its is8ue,='* except that in the case of a bill of exchange, presentment for payment will be sufficient if made within a reasonable time after the last negotiation thereof." fNoTK. — Kw Hills of Kxchange Act, section 45, subdivision (2). All the authorities agree that checks and bills of exchange payable on demand must be preH«.nted promptly; but as to promissory notes .irawn so payable there is much conflict. In Mcrritt v. Todd (23 N. Y. 28) the rule was 'laid down by the (ourt of Appeals of New York that "a promissory note payable on demand, with interest, is a continuing security; that an indorser remains liable until an actual demand, and that the IioM.t is not chargrable with neglect for omitting to make such demand within any particular time." The doctrine of this case has been much criticised. (The rule of this case wag " Papes 477-480. „ Sp^ § 4 „„,^ 2' Page 4H0. See §§111. 116. 2* Pages 483-490. "Page 483. zs pages 400-494. See §§ 241, 322. 804 Tin; NixitrriAiu.K in'stkimknts law. lii'Ki to 1)0 i'liaiii,'od by thia section of (Iw Ncf;. lust. I.uw in Cowl. \'at. Bk. V. y.iminrrmau, 1S3 N. Y. 210, reported herein at p. 48;i.| in some States the time witliin wliicli promissory notes, payahle on demand, must be preaented, is fixed by statute. California t ivil Code, section ^'248; Connecticut Gen'i Statutes, p. 405. section 1S51); Minnesota Statutes (1891), section 2104.] § 132. What constitutes a sufficient presentment. Present iiu'iit tor payiiu'iit, to be suificient, must be made: 1. By the liolder, or by some person autliorized 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 instrument, or if he is absent or inaccessible, to any person found at the place where tiie presentment is made.* § 133. Place of presentment. Presentment for payment is made at the proper place: 1. Where a place of payment is specified in the instrument and it is there presented ; '" 2. Where no place of payment is specified, but the address of the person to make payment is given in the instrument and it is there presented ; ® 3. Where no place of payment is specified and no addresb is given and the instrument is presented at the usual place of business or residence of the person to make payment ; "^ 4. In any other case if presented to tlie person to make pay- ' ment wherever he can be found, or if presented at liis last known place of business or residence.* [Note. — See Bills of Exchange Act, section 45, subdivision (4).] § 134. Instrument must be exhibited. The instrument must be exhibited to the person from whom pay- 1 Pages 480-482. [See Bills of Ex- diligence such person cannot be change Act. section 45, subdivision found." But this rule appears to be (2) Daniel. §5i 571-587.] more stringent than that of the law 2 Pages 494-495. [l^alt Springs Nat. merchant. See Crumwell v. Hynson, Bank v. Burton, 58 N. Y. 430, 432; 2 Camp. 590; Daniel, § 590.] Farnsworth v. Allen, 4 Gray, 453; 'Pages 508-512. "The place of Barclay v. Bailey. 2 Camp. 527; Wil- payment may be specified either by the kins V. Jadis, 2 B. & Aid. 188.] drawer, or by the acceptor [or 3 See § 133. maker]." Chalmers, p. 145. See § 228. « Pages 515-517. See §§ 130-138. « Pages 508-509. [The language of the Bills of Exchange ^ Pages 512-515. [Gates v. Beecher, Act is "or to some person authorized 60 N. Y. 518, 522; Daniel, §§ 635, to pay or refuse payment on his be- 636.] half if with the exercise of reasonable 8 Pages 512-515. riJKSRNTAlEN'T FOR PAYMENT. 805 mcnt is demanded, and when it is paid must be delivered up to the party paying it." (Note. — See Musson v. Lake, 4 How. 262; Freeman v. Boynton, 7 Mass. 483; Draper v. Clemens, 7 Mo. 52; Daniel, § 654.] § 135. Presentment where instrument payable at bank. Wiiere the instrument is payable at a bank, presentment for pay- ment must be made during banking liours, unless the person to make payment has no funds there to meet it at any time during the day, in whieli case presentment at any hour before the bank is closed on that day is sufficient.^" § 136. Presentment where principal debtor is dead. Where the person primarily liable on the instrument is dead, and no place of payment is specified, presentment for payment must be made to his personal representative, if such there be, and if with the exercise of reasonable diligence, he can be found. ^* [Note. — See Bills of Exchange Act, section 45, subdivision (7); Daniel, § 501.] This is declaratory. (Williams on Executors, 7th ed., p. 2003.) See § 242 (2) and 245 (1), for rule governing presentment for acceptance. § 137. Presentment to persons liable as partners. Where the persons primarily liable ^^ on the instrument are liable 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.*^ (Note. — See Hubbard v. Matthevs, 54 N. Y. 43, 50; Fourth Nat. Bank v. Ileuschuk, 52 Mo. 207; Crowley v. Barry, 4 Gill. 194; Cayuga Co. Bank v. Hunt, 2 Hill, 635; Daniel on Neg. Inst., sections 592-593.] § 138. Presentment to joint debtors. Where there are several persons not partners, primarily liable on the instrument, and no place of payment is specified, presentment must be made to them all.'* [Note. — See Bills of Exchange .Act, section 45, subdivision (6). Gates v. Itrecher, 60 N. Y. 51K. 523; Union Bank v. Willis, 8 Mete. 504; .Arnold v. nrrs- srr, 8 Allen, 435; Willis v. iJreen, 5 Hill, 232. In some cases this might be impracticable, but such cases arc covered by section H2. (N. Y., § 142.) "This i-« probably declaratory {Tfninn Bank v. Willis, 4fl Mass. 504), but the point was not clear. f)f course, if one pays, or in refusing payment, acts as the agent of the others, that is enough." Chalmers, p. 146. » Page 518. " In England, it is con- '"' Pages 495-504. ceived that possession is prima facie " Pages 51(i-517. evidence of identity, and that if the '- Sei' t; 2. payer doubts the irlcntity of the per- '» Page 517. son presenting, he must pay or refuse '« Pages 517-518. payment at his own risk." (Jhalmera, p. 203. 806 TllK NIXIOTIAHl.i: IXsTIIU.M ICN'TS LAW. § 139. When presentment not required to charge the drawer. rrosontnuMit for jiayiuont is not required in order to charge the drawer where he has no riglit to expect or require that tlie drawee or acceptor will pay the instrument.'^ [XoTK. — Spe Bills of Excliaiige Act, section 46, subdivision (2) (c). lAfe Insurance Company v. Pendleton, 112 U. S. 696; Daniel, §§ 1074-1076.] St>e §§ 185-186. § 140. When presentment not required to charge the indorser. Presentment for payment is not required in order to charge an indorser where tlie instrument was made or accepted for his accommo- dation, and he has no reason to e.xpect that the instrument will be paid if presented.** [Note. — See Bills of Exchange Act, section 46, subdivision (2) (d).] See § 186. § 141. When delay in making presentment is excused. Delay in making presentment for payment is excused when the delay is caused hy circumstances beyond the control of the holder and not imputable to his fault, misconduct or negligence. When the cause of delay ceases to operate, presentment must be made with reasonable diligence.*^ [Note. — See Bills of Exchang;e Act, section 46, subdivision (1).] "The cases do not clearly distinguish between excuses for non-presentment and excuses for delay in presentment, but when the question is one of reasonable diligence the distinction is an important one. (cf. Allen v. Edmumhon, 2 Exch., at p. 724, notice of dishonor.) If presentment is delayed at the request of the drawer or indorser sought to be charged, the delay is pre- sumably excused. (Lord Mard v. Oxford R'y Co., 2 DeG. M. & G. 750.) " Chalmers, p. 149. " Bill drawn in England, payable in Leghorn. At the tinrie th« bill matures Leghorn is besieged. The holder is not in Leghorn. This excuses delay. (Patience v. Townley, 2 Smith, 223.) " lb., p. 148. § 142. When presentment may be dispensed with. Presentment for payment is dispensed with : 1. Where after the exercise of reasonable diligence presentment as required by this chapter cannot be made ; *^ 2. Where the drawee is a fictitious person ; '^ 3. By waiver of presentment express or implied.^" [Note. — See Bills of Exchange Act, section 46, .subdivision (2).] 15 Pages 520-522. with the attempt to make presentment 18 Page 523. when such attempt would be futile. 17 Pages 518-520. (Fo.iter v. Julien, 24 N. Y. 28.) This 18 Pages 524-527. The Bills of Ex- tendency is of doubtful expediency and change Act adds: "The fact that the finds no favor in England." holder has reason to believe that the lo Page 575, note. This is declara- bill will, on presentment, be dishon- tory. (ffwith v. Bellamy, 2 Stark, ored, does not dispense with the neces- 223.) Chalmers, p. 150. See § 185 aity for presentment." Chalmers (2). (p. 150), says: "In some American 20 On waiver, see §§ 180-182. Pages States there is a tendency to dispense 627-629. PRESENTMENT FOR PAYMENT. 807 § 143. When instrument dishonored by non-payment. The instrument is dishonored by non-payment when: 1. It is duly presented for payment and payment is refused or cannot be obtained; or 2. Presentment is excused and the instrument is overdue and unpaid. [Note. — See Bills of Exchange Act, section 47, subdivision (l).l § 144. Liability of person secondarily liable, when instrument dis- honored. Subject to the provisions of this chapter,-' when the instrument is dishonored by non-payment, an immediate right of recourse to all parties secondarily liable -- thereon, accrues to the holder." INoTE. — See Bills of Exchange Act, section 47, subdivision (2).] § 145. Time of maturity. Every negotiable instrument is payable at the time fi.xed therein without grace.* When the day of maturity falls upon Sunday, or a holiday, the instrument is payable on the next succeeding business day.-* Instruments falling due on Saturday are to be presented for payment on the next succeeding business day, except that instruments payable on demand may, at the option of the holder, be presented for payment before twelve o'clock noon on Saturday when that entire day is not a holiday.^' § 146. Time; how computed. Where the instrument is payable at a fixed period after date, after sight, or after the happenning 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 including the date of payment. (Note. — See Bills of Exchange Act, .section 14.] See New York General C'onatruction Law, §§ 20, 30. Ca.se.s, p. 504, note. 21 See §§ 280-289. • Days of grnoo are preserved by 22 See § 3. the Bills of Kxclianpe Act. ij 14: 23 Pages 442-445. " As a gene'-al " Three days, called days of grace, are, rule the holder's right of action in every caw where the bill itself does against a firawer or indorser dates not otherwise pr. 152. SOS THE NKCOrF.UU.I': iN'STIttLMKM'l'S I. AW, § 147. Rule where instrument payable at bank. WIr'iv till' instruiiu'iit is mack' payalile at a bank it is equivalent to azi ordt'i- to tlie bank to pay the same for tlie account of the principal debtor thereon. (NoTK. — .4frna \at. Bank v. Fourth Nat. Rank. 40 N. Y. 82; Commercial Bank v. Hu^jhct, 17 Wend. 94; Vommt'rcial Yh/. Hank v. Hcnninger, 105 I'a. St. 4«ta: Bedford Bank v. Acoarn, 125 Ind. 582; Home Nat. Bank v. Ncwtott, 8 Bnidwell, 503; Contra: Grissom v. Commercial Bank, 87 Tenn. 350.] § 148. What constitutes payment in due course. Payment is made in due course when it is made at or after the maturity of tiie instrument to the hokler thereof in good faitli and witliout notice that his title is defective.' [Note. — See Bills of Exchange Act, section 59.] See § 200. ARTICLE IX. NOTICE OF DISHONOR. Section 160. To whom notice of dishonor must be given. 161. By whom given. 102. Notice given by agent. 103. Effect of notice given on behalf of holder. 104. Effect where notice is given by party entitled thereto. 105. When agent may give notice. 100. When notice sufficient. 167. Form of notice. 108. To whom notice may be given. 109. Notice where party is dead. 170. Notice to partners. 171. Notice to persons jointly liable. 172. Notice to bankrupt. 173. Time within which notice must be given. 174. W'here parties reside in same place. 175. Where parties reside in different places. 170. When sender deemed to have given due notice. 177. Deposit in post office, what constitutes. 178. Notice to antecedent party; time of. 179. Where notice must be sent. 180. Waiver of notice. 181. Whom affected by waiver. 182. Waiver of protest. 183. When notice dispensed with. 184. Delay in giving notice; how excused. 185. When notice need not be given to drawer. 180. When notice need not be given to indor.ser. 187. Notice of non-payment where acceptance refused. 188. Effect of omission to give notice of non-acceptance. 189. When protest need not be made; when must be made. 1 Cases, pp. 591-598. See § 2, as to " holder; " § 95, as to " good faith; " § 94, as to (lefective title. NOTICE OF DISHONOR. 809 § 160. To whom notice of dishonor must be given. Except as liL'ioiii otlicrwist' provided,-' when a negotiable instru- ment has been dishonored by non-acceptance ^ or non-payment/ notice of dishonor must be given to the drawer and to eacii indorser, and any drawer or indorser to wliom such notice is not given is dis- charged.* ( NoTK. — See Bills of Exchange Act, section 48.] Note. — A maker or acceptor is not entitled to presentment (§ 130, ante) or notice. Want of notice of dishonor is no defense to a guarantor, unless he is actually injured for want of such notice. Brown v. Curtis, 2 N. Y. 225. I ases, p. 467. § 161. By whom given. 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 given." [Note. — See Bills of Exchange Act, section 4f), subdivision (1); Daniel, §§ 087-990. The Bills of Exchange Act uses only the words "holder" and " indorser." But the right extends to any person liable only as a surety, whether he is technically an indorser or not.] § 162. Notice given by agent. Notice of dishonor may be 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.^ [Note. — See Bills of Exchange Act, section 49, subdivision (2); Daniel, §§ 991, 992. and cases cited.) § 163. Effect of notice given on behalf of holder. Where notice is given by or on helialf of the holder, it enures for the benefit of all subsequent holders and all prior parties who have a right of recourse against the party to whom it is given.** [Note. — See Bills of Exchange Act, section 40, subdivision (.T); Daniel, 5 BOO.] 2 See §8 lRO-180. dor.sed by C is held by D. D's at- 3 See § 246. torney gives notice of dishonor to the * See 8 14.3. drawer, but by mistake gives it in C's ft Case-M, p. 5.30. "Where the drawer name instead of D's. The notice is or indorser of a bill is discharged from sufficienl, provided ('. is liable to D. his liability thf^reon by the ornission to and has a right of recourse against the give him due notice of dishonor, he is ages 546-547. " It is the duty of the drawer or indorser of a bill, if he l)e absent from his place of busines.s or residence, to see that there is some person there to receive notice on his behalf." Chalmers, p. 160, citing Allen v. Edmunilson, 2 Exch., at p. 723. '« Pages 546-547. [Sr-e Bills of Ex- change Act, .section 49, subdivision (9). The statement is based upon the American ish. 557; Mrr rhnntn' Bank v. Birch. 17 .lohns. 24. See also Smallri/ v. Wrii/ht, 40 N. .F. I.;iw, 471; Uoodnow v. Warren, 122 Mass. 82: Bralh v. Perk, 12 Barb. 245: f'nifufia Co. Hank v. Itmnrtt. 5 Mill, 236: Maspero v. I'edcsnlauw, 22 La. Ann. 227.) Sr^ THK Ni:(a)riAm,K INSriil'MKNTS LAW. bo no personal roprosonlativo, notice may be sent to the last residence or last phuc of business of Ihc dccoased.'" § 170. Notice to partners. Where the pMitics to bo Tiotitied arc partners notice to any on(> partner is notice to the firm even thouL^h there has been a dissolution.^" § 171. Notice to persons jointly liable. Nolue to joint parlies who are not partners must be given to each of tiiem, unless one of them has authority to receive such notice for the others.-' [Note. — See Bills of Excliiuigo Act, section 4!), subdivision (11). 'I'lie nih- is liascd upon tlie American decisions. Willis v. (Ireen, 5 Hill, 232. See nVo Daniel, § !)!>0a, and cases cited.] § 172. Notice to bankrupt. Where a party has been 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." [Note. — See Bills of E.\cliange Act, section 4!t, subdivision (10). Daniel, § 1002; Callahan v. Kentucky Hank, 82 Ky. 231; Contra: House v. Vinton Rank. 43 Ohio St. 340.1 " All that had been decided before the Act was that notice given to the bankrupt in ignorance that a trustee had been appointed was sufficient." t lialniers, p. 160. § 173. Time within which notice must be given. Notice may be given as soon as the instrument is dishonored ; ^^ and unless delay is excused as hereinafter provided, must be given within the times fixed by this chapter.^* § 174. Where parties reside in same place. Wtiere the person giving and the person to receive notice reside in tlie same place, notice must be given within the following times: 1. If given at the place of business of the person to receive notice, it must be given before the close of business hours on the day following ; ^•' m Pages ^4C,-^\7. IGoodnoK? v. 10 Ves. 216 ; Daniel, § 103fi.] Bills of Warren, 122 :^Ta-s. 82; Merchant!^ Exchange Act, section 49, subdivision Bank v. Birch, 17 Johns. 25.] (12). 20 Pages 547-548. [See Coster v. 2^ [Bills of Exchange Act, section Thomason, 19 Ala. 717: f^loromh v. 49. subdivision (12). The phrase JAzanli. 21 Ea. Ann. 3.^5; Tlvhhnrd v. "must be given within a reasonable MntthcxiK, 54 N. Y. 43. .50; Fourth time thereafter." used in the Bills of hat. Bank v. Hensrhuh, 52 Mo. 207.] Exchange Act, is oniitt«d ; for the time 21 Pages 547-548. is definitely fixed and this language 22 Pages 696-698. has no force.] 23 Page 544. \nnnk nf Aleranrfria 2' Pages 548-554. [See Danjel, T. Hinan, 9 Peters, 33: henox v. Rob- § 1038.] erta, 2 Wheat. 373; Ex parte Moline, NOTICE OF DISHONOR. 813 2. If given at his residence, it must be given before the usual bouT-s of rest on tlie day following; ' 3 If sent by mail, it must be deposited in the post-ofEce in time to reach him in usual course on the day following.^ § 175. Where parties reside in different places. Where the person giving and the person to receive notice reside in different places, the notice must be given within the following 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 tliereafter.* 2. If given otherwise than through the post-office, then within the time that notice would have been received in due course of mail, if it had been deposited in the post-office within the time specified in the last subdivision.* § 176. When sender deemed to have given due notice. Where notice of dislionor is duly addressed and deposited in the post-office, the sender is deemed to have given due notice, notwith- standing any miscarriage in the mails.* [NoTK. — See Bills of Exchange Act, section 49, subdivision (15) ; Byles on Bills. 277.] § 177. Deposit in post-office; what constitutes. Notice is deemed to have been deposited in the post-office when deposited in any branch post-office or in any letter box under the control of the post-office department.^ « Pages .548-5.'j4. [See Phelps v. taining the notice was duly addressed fftockinci, 21 Nel). 444; Darbishire v. and posted. ( ffaickes v. Salter, 4 Parker, 6 East, 8.] Bing. 71.5; cf. Nkilberk v. Garbett, 7 Q. 2 Cases, p. .55fi. [This rule is that B. 84fi. ) The sufTiciency of the direc- of the Bills of Exchange Act (§ 4fl, tion on the letter is a question of rea- Bubsec. 12), and is in accordance with .sonahle diligence. If the drawer or in- tlie |>raelice in New ^'o^k• City. Some df)rser has a |)lace of business, the of the decisions deem service through notice should be addressed to him the post-oflice insiifTicient, unless there there; if he has not, then it should be is proof that the notice was actually addressed to him at his residence, and received in due time. (See Daniel, the party giving notice is bound to use § 1005, anri cases cited. ) But thi« rule rensoruible diligence to di.scovcr such would Ix' extremely inconvenient in placo of business or residence. Firr- large plncps.j See next section. riilqr v. Fitznrmld, !>. B. 4 Q. B. fi39.) • F'ages .554-500. (This is substan- When, how«'ver, the bill contains an tially the same as the Bill of Exchange address it seems that such address is Act, Hccfidii 40, subdivision (12) (b). in any case sufTicient to charge the It is iMipported by numerous American party giving that address. { HurmrKter decisions. See Daniel, §§ 10.19-1041.] v. linrrnn. 17 Q. B. K28; cf. Kx parte a Pages 5r,0-.56l. linkrr, L. H. 4 Ch. D. at p. 799.)" ♦ Pages 545-540. "It lies f)n the Chalmers, pp. 15.5-6. Bender to prove that the letter con- ■'• Pages 545-546. 814 THE NKGOTIAUI,!-; INSTRU M KNTS LAW. § 178. Notice to antecedent party; time of. WlitMT ;i piirtv rccrivis imlirc of dislionor, lie has, after the receipt of such notice, the same time for giving notice to antecedent parties that the I'lolder has after the dishonor." [NoTK. — See Bills of Exchange Act, section 40, subdivision (14); Daniel, ,§ 1044; Byles on Bills, 2S.S.1 § 179. Where notice must be sent. \\ hciv a parly lias adtlinl an address to his signature, notice of dishonor must be sent to that address;^ but if he hai3 not given such address, then the notice must be sent as follows: 1. Either to the post-office nearest to his place of residence, or to the post-office where he is accustomed to receive his letters; ' or 2. If he live in one place and have his place of business in another, notice may be sent to either place ; ° or 3. If he is sojourning 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 chapter, it will be sufficient, though not sent in accordance with the requirements of this section. § 180. Waiver of notice. Notice of dislionor may be waived, either before the time of giving notice has arrived, or after the omission to give due notice and the waiver may be express or implied." [Note. — See Bills of Exchange Act, section 50, subdivision (2); Daniel, §§ 1147-1168; Byles on Bills, 293.] 6 Pages 561-565. See § 165, note. T Pages 56.5-566. Note to § 176. 8 Pages 566-571. [See Bank of Co- lumbia V. Lnurencr, 1 Peters, 578; K!a- tional Bank v. Cade, 73 Mich. 449; Northxcestern Coal Co. v. Bowman, 69 Iowa. 103.] 8 Pages 566-571. [Bank of U. S. v. Cnrnrnl, 2 Peters, 549; Williams v. Bank of U. F>., 2 Peters, 96; Montgom- ery Co. Bank v. Marsh, 7 N. Y. 481.] 10 Pages 571-573. 11 Pages 580-584. For waiver of presentment see § 142. "Waiver of notice of dishonor in favor of the holder enures for the benefits of parties prior to such holder as well as subse- quent holders. I Rabey v. Gilbprt, 30 L. .1. Ex. 170.) Waiver of notice of dishonor by an indorser does not affect parties prior to such indorser. ( Turner V. Leech, 4 B. & Aid. 451.) An ac- knowledgment of liability must be made with full knowledge of the facts in order to operate as a waiver of notice of dishonor. ( Ooodall v. Dolley, 1 T. R. 712; cf. I'ickin v. Graham, 1 Cr. & M., at p. 729.) Many of the cases fail to distinguish between ad- missions of liability, which are evi- dence of due notice having been re- ceived, and admissions of liability when due notice has not been given, and which therefore are evidence of waiver. The distinction is important. ( As to what is evidence of due notice, see Taylor v. Jones, 2 Camp. 105; Hicks V. Beaufort, 4 Bing. N. C. 229; Brownell v. Bonney, 1 Q. B. 39; Curlewis v. Corfield, 1 Q. B. 814; Campbell v. Webster, 15 L. J. C. P. 4; Mills V. Gibson, 16 L. J. C. P. 249; NOTICE OF DISHONOR. S16 § 181. Whom affected by waiver. Where the waiver is embodied in the instrument itself, it is binding upon all parties;'- but where it is written above the signature of an indorser, it binds him only.'^ § 182. Waiver of protest. A waiver of protest, whether in the case of a foreign bill of ex- change or other negotial)ie instrument, is deemed to be a waiver not only of a formal protest, but also of presentment and notice of dishonor." § 183. When notice is dispensed with. Notice of dishonor is dispensed with when, after the exercise of reasonable diligence, it cannot be given to or does not reach the parties sought to be charged.'^ [Note. — See Bills of Exeliange Act, section 50. subdivision (2).l § 184. Delay in giving notice ; how excused. Delay m giving notice of dishonor is excused when the delay is caused by circumstances beyond the control 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 diligence.'* [XOTE. — See Bills of Exchanjrr Act, section .50; Daniel, §§ in.^D-INf). A more specific statement of wliat will excuse delay is deemed imi)ractical)le. Any attempt to enumeiate particular instances would lead to confusion.] Jackson v. Collin.i, 17 L. .T. Q. B. 142; the payment of tlie bill is doubtful, liartholomdc v. flill, .5 L. T. N. S. 756. anil tbe drawer or indorser wislies to As to what is not. Horrndaile v. hnirr, save expense in case of its return. In 4 Taunt. 93; Urnithiniitr v. CoU-mnn, the United States it has been held 4 N. & M. 054; Brll v. Franlcis, 4 M. & that an indorsement in the above form O. 440; Holmcfi v. Staines, .T ('. & K. dispenses with the necessity of notice in.) In .America it has been held that to all subsequent indorsera (Daniel, .1 Vf-rbal waiver of notice may be re- § 1090; I'nrshlry v. Ihnth, 00 Me. voked iK'fore the time for ]i\\'\n]i notice 00) ; and in France a similar construc- lias expired. ( Srtimil Sat. linnk v. lion has been put on the phrases ' Up- Mcftuirc, .3.3 Oh. St. 205.) " Clialmers, lour sons frais,' ' Ifrtour saus protrt' pp. 100-7. and 'sans romptr dr rrtour.' (Nou- • 2 f'ape 5HIrt. fSee I'ool v. An'Irr- ptiier, § 259; German Kxchange Law, son, llfi Ind. 04; liryant v. Merchants' art. 42. .seems nmbi<,Mioiis) . It is Rank, H Htish. 4.3.1 doubtful whether the Knf,'Iish Act 's ( Hoof/mrtH V. Thurston, H (ii«h. would bear such an interpretation." 157; Farmers' Hank v. Eu-{n<}, 7K Ky. ( halmers. p. If). 204.1 " Sunh nn indorsement Ib some- The above section (i\es tlie law con- times spoken of ns a fnrultative in- trary to I'arslihy v. Uratli, supra. dornement. It relates only to the in '< I'apes 5S4-.')H0. dorser's liability. an« Pages 573-574. Such stipulations are resorted to wbcu 816 THE NEOOTIABLE INSTRUMENTS LAW. § 185. When notice need not be given to drawer. Notiio of dishonor is not ivtiuircd to lu' given to the drawer in either of the following cases : 1. Where the drawer and drawee are the same person;" •>.'. Where the drawee is a fictitious person or a person not having capacity to contract; '" :i. Where the drawer is the person to whom the instrument is presented for payment ; '^ 4. Where the drawer has no right to expect or require that the drawee or acceptor will honor the instrument; '^ 5. Where the drawer has countermanded payment.^" § 186. When notice need not be given to indorser. Notice of dishonor is not required to he given to an indorser in either of the following eases: 1. Where the drawee is a fictitions person or a person not having capacity to contract, and the indorser was aware of the fact at the time he indorsed the instrument;^" 2. Where the indorser is the person to whom the instrument is presented for payment ; -^ 3. Where the instrument was made or accepted for his accom- modation. -- [Note. — See Bills of Exchange Act, section 50, subdivision (2) (d).] § 187. Notice of non-payment where acceptance refused. Where due notice of dishonor hy non-acceptance has been given, notice of a subsequent dishonor by non-payment is not necessary, unless'in the meantime the instrument has been accepted." [XoTE. — See Bills of Exchange Act, section 48, subdivision (2); Daniel, § 932.] § 188. Effect of omission to give notice of non-acceptance. An omission to give notice of dishonor by non-acceptance does not prejudice the rights of a holder in due course subsequent to the omission.^* [XoTE. See Bills of Exchange Act. section 48, subdivision (I).l 17 Pages .575-576n. [See Bills of Ex- that there should be any obligation to change Act. section .-50. subdivision (2) accept. See Adams v. Dftrbi/, 2.S Mo. (c)- Daniel §§ 128-129, 1088a.] See 162; Dickens v. Beal, 10 Peters, 572.] "person" defined, § 2. '» ['"^ulrliffc v. McDoicell, 2 Nott. & IS Pages 5-ry-^n. [Life Insurance M'C. 251; Daniel, § 1081.] Company v. PmdlHon, 112 U. S. 708; 2" See preceding section, note 17. Daniel. §§ 1074, 1076. The language 21 Pages 577-579. See preceding sec- of the Bills of Exchange Act is " where tion, note 17. the drawee or acceptor is as between •- Page 579. himself and the drawer under no obli- 23 Page 586. gatinn to accept or pay the bill." But 2« Pages 587-589. this is too narrow. It is not required DISCHARGE. 817 § 189. When protest need not be made ; when must be made. Where any negotiable instrument lias been dishonored it may be protested for non-acceptance or non-payment, as the case may be; but protest is not required, except in the case of foreign bills of exchange.^' (Note. — See Bills of Exchange Act, section 51, subdivision (1); Daniel, §§ 926, 928; Byles on Bills, 260. For the other provisions relative to pro- teats see sections 152 and 160. (N. Y., §§ 260 and 268.)] Pages 589-590. ARTICLE X. DISCHARGE. Section 200. Instrument; how discharged. 201. When persons secondarily liable on, discharged. 202. Right of party who discharges instrument. 203. Renunciation by holder. 204. Cancellation; unintentional; burden of proof. 205. Alteration of instrument; effect of. 206. What con'-titutcs a material alteration. § 200. Instrument; how discharged. A negotiable instrunieiit is discharged: 1. By payment in due course by or on behalf of the principal debtor ; ' 2. By payment in due course by the party accommodated, 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 ; * 5. When the principal debtor becomes tlic liolder of the in- strument at or after maturity in his own right.'' [NoTK. — Sec Bills of Kxchangc Act, section-* .'>!•, (11 , (■>:]. 1 § 201. When persons secondarily liable on. discharged. A person sicondarily liable on the instrument is discharged: 1. By ^iny act which discharges the instrument;" 2. By the intentional canccdiation of his signature by the holder ; ^ 3. By the discharge of a prior party ; " 4. By a valid tender of ))ayment made by a prior party ; " »» PagPH 589-590. « Sop proceding section. 1 Pag«H .591-597. Spp 8 148. ^ F'agfs 02ti-(127. See § 78. fSee 2 F'agfs 597-.598. Sep § 55. BIIIh r.f Kxrhangc Act, wption 63.1 « Pngfs rtW-f\()H. Soe § 204. « I'ngrs <;27-62H. [Daniel. § 1307.] « Pagpt «i08-62fi. 037. » Page 629. • Pages 597-59H. See § 80. HBOOT. INBTRflllKNTll— 52 818 TiiK xN'ixjoriAiti.i: insti;i!Mi;n'1's I-aW. T). By a ivlcaso of llic priniip;)! (K'l'lor, unless the liolder's ri-];lit of reoourse a>;aiiisl tlu' jtarty sei'oiularily liable is expressly reserved ; '" I). Hy any agreement biiKliiig ii|t()n llu' holder to extend the time of payment or to post])one the holder's right to enforce the instrument, unless the right of recourse against such party is expressly reserved." § 202. Eight of party who discharges instrument. Whenever the instrument is jtaid by a party secondarily liable thereon, it is not discharged; but the party so paying Tt is 'remitted to his former rights as regards all prior jtarties, and he may strike out his own and all subsequent indorsements, and again negotiate the instrument, except: 1. Where it is payable to the order of a third person, and has been paid by the drawer ; ^- and 2. Where it was made or accepted for accommodation, and has been paid by the party accommodated.'^ [Note. — See Bills of Exchange Act, section oO; Daniel, §S 1235(1-1241.) This section is, perhaps, not altogether clear. Exception (1) qualifies the last clause beginning "and he may strike out," etc., while exception (2) qualifies the whole of the preceding statement. If the instrument is paid by the party accommodated, it is discharged under the provisions of § 200 (1). If paid by a drawer of a bill payable to the order of a third person, the drawer (not being an accommodated party), may enforce payment against the acceptor but may not re-issue the bill. If paid by an indorser, or by a drawer of a bill payable to drawer's order, the party paying (not being an accommodated party), may enforce payment against prior parties or may strike out his own and subsequent indorsements, and re-issue the instrument. § 203. Renunciation by holder. The holder may expressly renounce his riglits 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 instrument. But a renunciation does not affect the rights of a holder in duo course without notice. A renunciation must be in writing, unless the instrument is delivered up to the person primarily liable thereon.'* [XoTE. — See Bills of Exchange Act, section 02; Byles on Bills, 190, 191; Daniel, §§ 541-545. The Bills of Exchange Act requires the renunciation to be " in writing, unless the bill is delivered to the acceptor." But this effected a change in the law.] "The words requiring the renunciation to be in writing were added in committee. They alter the English law, but bring it into accordance with the Scotch law. At common law a contract cannot 10 Pages 629-6.31. [Daniel, § 1310.] 12 Pages 039-640. 11 Pages 631-638. [Daniel, §§ 1326- 13 Pages 640-641. See §65. 13880.] " Pages 599-604. DISCHARGE. 8iy be discharged by accord without satisfaction. The special rule as to bills and notes jiartially reproduced in this section seems to have been consciously imported into the law merchant from French law. (See Parke, B., in Foster V. DawUer, G £.\ch., at p. 852.) Ihis mode of discharge is known in France as ■ remise voluntaire,' and is recognized in countries where the civil law is followed. (See Nouguier, §§ 1043-1052.) " Chalmers, p. 212. § 204. Cancellation; unintentional; burden of proof. A cancellation made unintentionally, or under a mistake, or with- out the autliority of the holder, is inoperative; but where an instru- ment or any signature thereon appears to have been canceled the burden of proof lies on the party who alleges that the cancellation was made unintentionally, or under a mistake or without authority.^' (Note. — See Bills of Exchange Act, section 63, subdivision (3).] Chalmers cites: Kaper v. liirkbeck, 15 East, 17; Wilkinson v. Johnson, 3 B. & C. 428; JfovtlU v. Jiossi, 2 B. & Ad. 757 ; Castrique v. Imrie, L. R. 4 H. L. 435 ; War- wick v. Rogers, 5 M. & Gr. 340 and 373; Prince v. Oriental Bank, L. R. 3 App. Cas. 325; Dominion Bank v. Anderson, 15 Sess. Cas. 408. § 205. Alteration of instrument; effect of. Where a negotiable instrument is materially altered without the assent of all parties liable thereon, it is avoided, e.xcept as against a party who has himself made, authorized or assented to the altera- tion and subse(iuent indorsers.'® But when an instrument has been materially altered and 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.'^ (NoTK. — See Bills of Exchange Act, section (54, subdivision (1); Daniel, IS 1 303-1 42 la. The Bills of Exchange .Act contains a provision that " wliere a hill has Ix^en materially altered, but the alteration is not ap[)arent. and the bill is in the hands of a holder in due course, such holder may avail himself of the bill as I-' Pages 005-OOH, 62(5-627. a holder in due course, it was laid • « Pages C0H-C20. down that the hohler could not sue >7 Page's 157, ()25, 726. "The pro- the indorscr on the bill, for the instru- viso was introiliind in committee to ment was discharged. (Burchficid v. mitigate the rigor of the common- Moore, 23 L. J. Q. B. 201.) He could law rule in favor of a holder in due only sue on the consideration. In course. • • • \i common law a .America the rule is not quite so severe, material alteration, by whomsoever and it is held that an alteration by a made ( hnridyitn v. Cooprr. 11 M. & stranger, or. as it is called, 'an act of W. at p. TMi: alT'd 13 M. & W. 343), si»oliation.' does not avoid a bill. (Par- avoided and di-charged the bill, except sons on Bills, vol. II., p. 574; cf. U. S. as agairiit a [tarty who made or as- v. Npaldinp, 2 Mason, 4H2; Dinsmore M>nte Pages 642-04.3. "Though a bill to the recourse if the bill was dishon- may not Ix- addressed to two draw»*es ored. The diHiculty risc(jueiit ly the may namp a drawee in rase of need makers of a n<>t«' may be liable jointly, [S 2I.')1; but his <8, section 9.] The English Act requires that the acceptance be written on the bill; the American Act leaves it optional with the holder to require it, or to waive it. This permits acceptances by telegraph. (Jarretson v. North Aichinson Hank, 39 Fed. Rep. 113. 47 Fed. Rep. 867, 51 Fed. Kep. 168. § 222. Acceptance by separate instrument. Where an acceptance is written on a paper other than the bill it.^elf, it does not bind the acceptor except in favor of a person to whom it is shown and who, on the faith thereof, receives the bill for value.* I NoTK. — 1 N. V. Rev. Stat. 768, section 7.1 § 223. Promise to accept; when equivalent to acceptance. An unconditional promise in writin^,' to accept a bill before it is drawn is deemed an actual acceptance in favor of every person who, upon the faith thereof, receives the bill for value.* INoTK. — 1. N. Y. Rev. Stat. 708, section 8.] § 224. Time allowed drawee to accept. The drawee is allowed twenty-four hours after presentment in which to decide whether or not he will accept the bill;'" but the acceptance if <(iven dates as of the day ' [There doe.s not appear to be any Anwrican stattites do not [reneraliv re direct authority on this point; the quire this.l See next two sections, rub' Htafcd ronforms to what is the 1 [See Bills of Exchange Act, Mfc- coniinon practice.) .^vt THE NEQOTIAHLK IN'sTltU.Ml'MTS LAW. or within such olhiT perioil a^ thi' holck'r may allow, to return the bill accepted or non-accepted to the iiolder, he will be deemed to have accepted the sanie.'- [NoTE. — 1 N. Y. Rev. Stat. 7G9, section 11; see Daniel, § 500.] § 226. Acceptance of incomplete bill. A bill may be accepted before it has been signed by the drawer, or while otherwise incomj)lete,'^ 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 absence of any ditferent agreement, is entitled to have the bill accepted as of the date of the first presentment.'^ [Note. — See Bills of Exchange Act, section 18; Daniel, §§ 490-495. J § 227. Kinds of acceptances. An acceptance is either general or qualified. A general acceptance assents without qualification to the order of the drawer.'" A quali- fied acceptance in express terms varies the effect of the bill as drawn. '^ [Note. — See Bills of Exchange Act, section 19; Byles on Bills, 193; Daniel, § 509 et seq.] § 228. What constitutes a general acceptance. An acceptance to pay at a particular place is a general acceptance unless it expressly states that the bill is to be paid there only and not elsewhere.'* [Note. — See Bills of Exchange Act, section 19, subdivision (2) ; Wallace v. McConnell, 13 Peters, 136; Daniel, §§ 519-520, 641-643.] 12 Pages 658-665. is, whenever possible, to be construed 13 Pages 666-667. See § 33. as general, not qualified; and a mere ' 1* Pages 667-668. Chalmers cites memorandum, such as a wrong due Mutford V. Walcot, 1 Ld. Raym. 574; date, inconsistent with such construc- Wynne v. Raikes, 5 East, 514. tion. has U'en rejected as being no part 15 "This subsection was added in of the acceptance. {Fanshawe \. I'eet, committee. It accords with mercan- 26 L. J. Ex. 314; cf. Stone v. Metcalfe, tile practice, and was intended to se- 4 Camp. 217; Fitch v. Jones, 5 E. & cure that, apart from special agre<'- B., at p. 246; Decroix v. Meyer, 25 Q. ment. the holder should be put, as far B. D. 343.) " Chalmers, p. 46. as possible, in the same position as if i^ See § 229. the bill had not been dishonored. Un- is Pages 672-673. " This subsection less the contrary appear by its terms, reproduces the eflTect of the repealed a bill of exchange is prima facie 1 & 2 Geo. 4, c. 78, which was passed deemed to have been accepted before to override the case of Roice v. Young, maturity and within a reasonable time 2 Brod. & Bing. 165; s. c. 2 Bligh. H. after its issue, but there is no pre- L. 391, where it was held that an ordi- sumption as to the exact time of ac- nary acceptance payable at a banker's ceptance. (Robert.t v. Rethell, 12 C. was a qualified acceptance." Chal- B. 778.) " Chalmers, p. 45. mers, p. 48. 18 Pages 668-672. " An acceptance ACCEPTANCE. 825 § 229. Qualified acceptance. An acceptance is qualified, wliich 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 par- ticular place ; -' 4. Qualified as to time; ^^ 5. The acceptance of some one or more of the drawees, but not of all." [Note. — See Bills of Exchange Act, section 19, subdivision (2); Bylea on Bills, 193-194; Daniel, §§ 508-520.] § 230. Rights of parties as to qualified acceptance. The holder may refuse to take a qualified acceptance, and if he does not obtain an unqualified acceptance, he may treat the bill as dishonored by non-acceptance.^* Where a qualified acceptance is taken, the drawer and indorsers are discharged from liability on the bill, unless they have expressly or impliedly autliorized the holder to take a qualified acceptance, or subsequently assent thereto."'' When the drawer or an indorscr receives notice of a qualified accep- tance, he must within a reasonable time express his dissent to the holder, or he will be deemed to have assented thereto.* [NoTK. — Sop Bills of Exchange Act, section 44; Byles on Bills, 192-193; Daniel, §§ 508. 510. The Bills of F'xchange Act provides that the provisions relative to the assent of the drawer and indorser do not apply " to partial acceptance whereof due notice has been given," and that " where a foreign bill has been accepted as to part, it must be protested as to the balance." But there appears to be some doubt whether this correctly states the rule of the law merchant. See Daniel, § 511; Story on Bills, section 272.) i» Pages 673-674. continental codes, it seems that the M Page 675. holder cannot refu.se a partial accept- 21 Pag«'s 675-676. See § 228. ance. He can only protest as to the 22 Page 676. balance. (French Code, arts. 119- 2» Pngp 676. "Bill drawn on B, X 120; Oerman Exchange T>aw, arts. 25- and Y. B accepts. X and Y refuse 28.) " Chalmprs, p. 140. to accept. This is a cpialified accept- •■' Pages 677-678. ance." Chalmers (p. 48), citing Ma- '"This subsection .^etth's a doubt- rius. No. 16, New York Draft ('i)dc. ful point in favor of the holder. See 5 1784; Nougtiier. 8 451. subject discusser] in Itoxrr v. Young, 2 J* Page 677. "According to the Bligh. 391," Chalmers, p. 141. 826 'IHE NEGOTIARLE INSTItUMKN'l'S LAW. ARTICLE XIU. PRERENTIMKNT FOR ACCEPTANCK. Section 240. WIumi present iiu-iit f',)r acceptance must be made. 241. Wlu'ii failure to present releases drawer and indorser. 242. Presentment ; how made. 243. On what days presentment may be made. 244. Presentment; where time is insuHieient. 245. When presentment is excused. 246. When dishonored by non-acceptance. 247. Duty of holder where bill not accepted. 248. Rights of holder where bill not accepted. § 240. When presentment for acceptance must be made. Presentment for acceptanee must be made : 1. Wliere the bill is payable after sight, or in any other case where presentment for acceptance is necessary in onlcr to fix the maturity of the instrument;" or 2. Where the bill expressly stipulates that it shall be prc'cntcd 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 necessary in order to render any party to the bill liable.* § 241. When failure to present releases drawer and indorser. P^xcept as herein otherwise provided, the holder of a hill which is required by the next preceding section to be presented for acceptance must either present it for acceptance or negotiate it within a reason- able time." If he fails to do so, the drawer and all indorsers are discharged.'' [Note. — See Bills of Exchange Act, section 40, subdivision (1) ; WMace v. Agry, 4 Mason, 333; Daniel, §§ 469-472.1 2 Pages 679-680. fSee Bills of Ex- ceptance. An agent is bound to use change Act, section 39, subdivision due diligence in presenting for accept (1); Daniel. § 454.] ance, even when presentment is op 3 fSee Bills of Exchange Act, sec- tional for the purposes of the Act, and tion 39. subdivision (2).] he is liable to his principal for dam- * f/d.] See § 244. ages resulting from his negligence. 5 Pages 680-684. "Where present- (Pothier, No. 128; Nouguier, § 462; ment is optional, the object of pre- Allen v. Suydam, 20 Wend. 321; Bank senting is (1), to obtain the accept- of Van Diemcn's Land v. Victoria ance of the drawee, and thereby secure Bank, L. R. 3 P. C. at p. 542.) " Chal- his liability as a party to the bill; mers, p. 132. (2). to obtain an immediate right of fl See § 4. recourse against antecedent parties in t Pages 681-684. case the bill is dishonored by non-ac- PRESENTMENT FOR ACCEPTANCE. 8211 § 242. Presentment; how made. Presentment for acceptance 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 person authorized to accept or re- fuse acceptance on his behalf ; '" and 1. Where a bill is addressed to two or more drawees wbo 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 in- solvent, or has made an assignment for the l)enetit of creditors, presentment may be made to him or to his trustee or assignee.'' [Note. — See Bills of Exchange Act, section 41, subdivi.sion (l).l § 243. On what days presentment may be made. A bill may be presented for acceptance on any day on which nego- tiable instruments may be presented for payment under tlie pro- visions of sections one hundred and thirty-two and one hundred and forty-five of this chapter. When Saturday is not otherwise a holiday, presentment for acceptance may be made before twelve o'clock noon on that day. § 244. Presentment where time is insufficient. Where the holder of a bill drawn pnyablc elsewhere than at the place of business or the residence of the drawee has not time with the exercise of reasonable 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 hill for iuceptaiice before presenting it for payment is excu.sed and does not discharge the drawers and indorsers. [NoTK. — Seo Hills of Kxolianpe Act, section .3J), .siilidivision (4).) This Hection is rcndcn-il rH'ccssary by § 24(i, siili-src. .1, nitlr. " It settles a moot pfiint, and [n'rhnps alters the law. Sii[)j)ose a liill, i)ayal)Io one month after date, is drawn in New York on a Liverpool firm, hnt payable at a l,on Pages 6H.'>-(]88. f Hyles on Hills, nirreement or nsape a presentment 182; Daniel, (j 4K7.| tlironfrh the po.st ofTiee is siidicient." " (Daniel, § 488.] Antr. (j 220 (T)). ]\\\{ probably no sneb practice prevails " [Daniel, § .5ftl.] " Hefr)re this en in this rountry. nor does it appear to aetment the Inw on \h'"> pninf ^v^« \rr\- be :i [)riietire that should be encoiir- doubtful. Hmith v. New fiouth Waleit aitred.] Bank, H Moore, 1'. ('. N. S., at |)p. 4t;i, 828 THE NhOUTIAHLK INSTKUMENTS LAW. bunk. It only renchps the Enplisli liohlor, or his agent, on the day that it ma- tures. He must, nevertlieh^ss, present it for aceeptanee to the ilrawees in LiverpiH>l. Tlie Ait provides that lie sluill not l)e prejudiced by so (ioing. Be- fore the act tile usual practice was to protest tiie bill in London without any presentment to the drawees — an obviously iiunnveiiient mode of pro- ceeding, for the holder's object is to get the bill paid, and not to run up expenses against the drawer and indorsers." Chalmers, p. 133. sj 245. When presentment is excused. I'resentinont for arci'ptancf is excused and a bill may be treated as dishonored by non-acceptance in either of the following cases: 1. Where the drawee is dead,'* or has absconded," or is a fictitious person or a person not having capacity to contract by bill ; '« 2. Where after the exercise of reasonable diligence, present- ment cannot be made ; *^ 8. Where although presentment has been irregular, acceptance has been refused on some other ground. ^^ § 246. When dishonored by non-acceptance. A bill is dishonored by non-acceptance: 1. When it is duly presented for acceptance, and such an ac- ceptance as is prescribed by this cliaptcr is refused or cannot be obtained ; or 2. When presentment for acceptance is excused and the bill is not accepted. fNoTE. — See Bills of Exchange Act, section 43, subdivision (1).] § 247. Duty of holder where bill not accepted. Where a bill is duly presented for acceptance and is not accepted 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." [Note. — See Bills of Exchange .Act, section 42. The language of the Rilla of Exchange Act is, " within the customary time." but the time herein is fixed by section 136. (N. Y., § 224.)] That is, due notice must be given to parties secondarily liable. See, however, § 188. 1* [See Bills of Exchange Act, sec- is important, having regard to the next tion 41, .subdivision (2); Daniel, subsection." Chalmers, p. 137m. The § 1178.] Compare § 242. subsec 2. stibsection referred to reads: "The 15 [Daniel, § 1144. By the Bills of fact that the holder has reason to be- Exchange Act the bankruptcy of the lieve that tlie bill, on presentment, will drawee will excuse presentment for ae- bo dishonored, does not excuse pre- ceptance. But this is not the rule of sentment." This provision does not the Commercial Law. Daniel, §§ 1I7I- appear in the American Act. But if ]172.1 the drawer has no right to expect ac- ifl [See Daniel, § 1111.] ceptance, presentment for payment is IT [Daniel, § 1059. et seq.'\ See excused. § 139. § 142, subsec. 1; also § 183. 1 9 Page 689. 1' " This J8, perhaps, new law, and PROTEST. 829 § 248. Bights of holder where bill not accepted. When a bill is dishonored by non-acceptance, an immediate right of recourse against the drawers and indorsers accrues to the holder, and no presentment for payment is necessary.-** [Note. — See Bills of Exchange Act, section 43, subdivision (2).] ARTICLE XIV. PROTEST. Section 260. In what cases protest necessary. 261. Protest; how made. 262. Protest; by whom made. 263. Protest; when to be made. 264. Protest ; where made. 205. Protest both for non-acceptance and non-payment. 266. Protest b<'forc maturity where acceptor insolvent. 267. When protest dispensed with. 268. Protest where bill is lost or destroyed or wronply detained. § 260. In what cases protest necessary. Where a foreign hill,-' appearing t)ii its face to be such is dishonored by non-acceptance, it must he 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 protested, the drawer and indorsers are discharged." Where a bill does not appear on its face to be a foreign bill, protest thereof in case of dishonor is unnecessary." [ NoTK. — Sc«'* Mills (if Kxcliange Act, section 51, subdivision (2).] § 261. Protest; how made. The protest must he annexed to the hill, or must contain a copy thereof,^' and must l)e unrler the hand and seal " of the notary mak- ing it, and must specify: »o Pages 689-690. "The immediate have In-en judicially considered." right of recdur.se arising on non iir Clialniers. p. 140. ceptance is an exceptional right, and 2' 8ee § 213. ifcms peculiar to Kiiglish law and 2= Page Oill. " Tho notioo nf dis .-Xmeriwin law. ( Whit' hi%i(l v. Walter, honor is not |)ad bccaiisH it otiiits to 9 M. i. W., Kt p. 616; Watson v. Tar state that tho bill has been jirotested. fley, 20 How. (V. K.), at p. 51!); cf. { IJx parte howmthal, I.. K. ( h. fiunn v. O'Krrfr, 5 M. 4, S., at p. 289.) 591.) " Chalmers, p. 172. Under the rontinental eodes the holder 23 Page 000. can only protest the bill for non ac- 2« fSpc Fiiils of Kxehange Art, ser- cyptance. and (h-mand security from tion 51. subdivision (7); Daniel, the drawer and iiidtirsers. ( Freneli § 944. | (ode. arts. 1 HI. 120; fJerman Exehange z"- CaseH. pp. 4H2. 590. fin some of F.aw. arts. 25 2S. ) The efTert of this the States, as in New York, the use of contlirt of laws does not appear to ,1 nenl \h not neressarv where thr rer- 830 THE NEOOTIAHLK I NSTKl' M KN'IS LAW. 1. The time and plair of presentment; 2. The faet that preseutment was made and the manner thereof ; 3. The eause or reason for protesting tlie hill; 4. The demand made and the answer given, if any, or the faet that tlu> drawee or aeeeptor eould not be found.' § 262. Protest; by whom made. Protest may be made by : 1. A notary pul)lie;" or 2. Hy any respectable resident of the plaee where the hill is dishonored, in the presem-e of two or more credible witnesses.^ [Note. — See Todd v. Neal's Adnrinistrntnr, 4!> Ala. '273; Daniel. SS '"3)- 934-a; Civil Code of California, 322«>. | § 263. Protest; when to be made. When a bill is protested, surb protest must be niade on the day of its dishonor,* unless delay is excused as herein provided.' \\'heii a bill has been duly noted.^ the protest may be subsequently extended as of the date of the noting.^ See pages 696-(>!t8. § 264. Protest; where made. A bill must l)e protested at the place where it is dishonored,* except that when a bill drawn payable at tlie plaee of business or residence tificate is to be used in the State; but not clear that a bill eould not be law- a seal is probably desirable where the fully noted for protect on tl;e day certificate is to be used in other juris- after its dishonor; but the business dictions. I members of the Select Committee were 1 Pages 691-695. [See Daniel, §§ unanimous in thinking that noting on 950_958. The Bills of Exchange Act the day of dishonor should be made provides that protest must specify the obligatory." Chalmers, p. 173. person at whose request the bill is ■> See § 267. protested, but this makes a change in '5" By 'noting' is meant the min- the law. Daniel, § 956.1 "**' made by a notary public on a dis- 2 Paces 69S-700. " Tn England the honored bill at the time of its dis- notarial presentment of the bill to honor. The formal notarial certificate, the drawee or acceptor is almost al- or protest, attesting the dishonor of ways made by the notary's clerk, the bill, is based upon the noting. The (Brooks' Notary, 4th ed., pp. 78 and 'noting.' consists of the notary'; ini- 138.) In America the validity of a tials, the date, the noting charges, and protest founded on such presentment a mark referring to the. notary's regis- has been doubted. (See Par.sons on ter written on the bill itself." Chal- Bills, p. 641.) " Chalmers, p. 175. mers, p. 171. 3 See Bills of Exchange Act, section 7 Pages 694-695. [Bailey v. Dnzicr, g4 6 TIow. 23; Cayuga Co. Bank v. Hunt, ♦ [See Bills of Exchange Act, sec- 2 Hill, 635; Daniel, § 940; Byles on tion 51, subdivision (4); Drnnistoun Bills. 257.1 V. fitevart, 19 How. 606; Byles on » [See Daniel, § 935; Byle.s on Bills, Bills, 257.] "Before the act it was 217.] PROTEST. 831 of some person other than the drawee, lias been dishonored by non- aeceptanee, 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 drawee is necessary." § 265. Protest both for non-acceptance and non-payment. A bill which has been protested for non-acceptance may be subse- 'luently protested for non-payment. rXoTE. — See Bills of Exchange Act, section 51, subdivision (3).] "Protest ill such case might be necessary for the purpose of charging a foreign drawer or indorser ir his own country. An English act can only lay down the law for the United Kingdom, though by the comity of nations the duties of the holder would generally lie regarded as regulated by the law of the place where they are to be performed . . . Under some continental codes no right of action arises on non-acceptance; the holder can demand security from ante- cedent parties, but he is bound to re-present the bill at maturity." Chalmers, I. 172. § 266. Protest before maturity where acceptor insolvent. \\ here the acceptor has been adjudged a bankrupt or an insolvent or has made an assignment for the benefit of creditors, before the hill matures, the holder may cause the bill to be protested for better security against the drawer and indorsers. [Note. — See Bills of Exchange Act, section 51, subdivision (5); Daniel, § 530.] " Under some continental codes, when the acceptor fails during the currency of a bill, .security can be demanded from the drawer and indorsers. (German Exchange Law, art. 20; Netherlands Code. arts. 177, 178.) English law provides no such remedy, and the only effect f)f such a protest in England is that the bill may be accepted for honor. In France, if the acceptor fails, the bill may at once be treated as dishonored and protested for non-payment. (French Code, art. lf)3; Nougiii<-r. ^ 1277.) " Chalmers, p. 173. § 267. When protest dispensed with. I'rotesi is (Iis|»ens('(l willi by any chiy in noting or protesting is excused when delay is caused by circumstances beyond tlic control of the holder and not imputable to his default, misconduct, or negligence." When the cause ); 2 and 3 U'illiam l\'., \>. \~4. ch. 98; Daniel, S "35; Byle.n on Bills. i" Page 578. See §§ 180-18(5. Does 268.1 "Suppose a bill i« drawn on (his incorporate § 1H8? Sec CIkiI B in Liverpool, 'payable at the X mers, p. 17(1. Bunk in Itor for lioiioi- oc ii'trn'c iivr at a (iislatu'c, to forward for present- ment, till the ila_\ tollowia^ that mi wiiiih the hill hecomes due." Byles on r>ills. -Jti;!.! sj 288. When delay in making presentment is excused. Tin." provi.-^iDiis of section one liiiiidivd and i'oi'ty-oiie apply where there is dehiy in niakino; j)resentinent to the acceptor for lionor or relVice in i-ase of need. § 289. Dishonor of bill by acceptor for honor. W'lien the bill is dishonoied by the acceptor for honor it must be protested for non-payment by him. INoTE. — Bills of Exchange Act, section (57, subdivision (4).] ARTICLE XVI. PAYMENT FOR HONOR, Section 300. Who may make payment for honor. 301. Payment for honor; how made. 302. Declaration before payment for honor. 303. Preference of parties offering to pay for honor. 304. Effect on subsequent parties where bill is paid for honor. 305. Where holder refuses to receive payment supra protest. 306. Rights of payer for honor. Note. — See pp. 707-708. § 300. Who may make payment for honor. Where a bill has l)een protested for non-payiricnt, any person may 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. fNoTE. — See Bills of Exchange Act, section 68, subdivision (1); Byles on Bills, 267-269; Daniel, § 1254.] § 301. Payment for honor; how made. The payment f(jr honor supra jirtttest in ofder to o))erate as such and not as a mere voluntary payment must be attested by a notarial act of honor which may be appended to the protest or form an extension to it. [Note. — See Bills of Exchange Act, .section 08, subdivision (3); Bj'les on Bills, 267; Daniel, 5; 1258.] § 302. Declaration before payment for honor. The notarial act of honor must be founded on a declaration made by the payer for the honor or by his agent in that behalf declaring his intention to pay the bill for honor and for whose honor he ]3ays. (Note. — See Bills of Exchange Act, section 68, subdivision (4).] BILLS IN SETS. 835 § 303. Preferepce of parties offering to pay for honor. Where Iwu OJ more peisous oiler to pay a bill for the honor of .liUerent parties, tlie person whose payment will discharge most parties tc the bill is to be given the preference. [Note. — See Bills of Exchange Act, section 68, subdivision (2).] § 304 Effect on subsequent parties where bill is paid for honor. Where a bill has been paid for honor all parties subsequent to the party for whose honor it is paid are discharged, but the payer for honor is 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. [Note. — See Bills of Exchange Act, section 68, subdivision (5); Daniel, § 1255.] § 305. Where holder refuses to receive payment supra protest. Wliere the holder of a bill refu.ses to receive payment supra protest, he loses his right of recourse against any party who would have been discharged by such payment. I ^'oT^:. — See Bills of Exchange Act, section *8, subdivision (7).] § 306. Rights of payer for honor. The payer for honor on paying to the holder the amount of the bill and the notaiial expen.ses incidental to its dishonor, is entitled to receive both the bill itself and the pi'otcst. [Note. — See Bills of Exchange Act, section 68, subdivision (6).] ARTICLE XVIL MILLS IN SETS. s Section 310. Bill in sets constitutes one bill. 311. KightH of hr)Mi'r.4 whfie difrcront parts are negotiated. 312. Liahility of holder who indorses two or more parts of a set to different persons. 313. .Acceptance of bills drawn in .sets. 314. Payment by acceptor of bills drawn in seta. 316. Effect of discharging one of a set. Note. — S<-e pp. 70!>-71.'L § 310. Bill in sets constitutes one bill. Where a bill i.s drawn in a set, eacii part of the set being num- bered and containing a reference to the other parts, the whole of the parts consfilntfs one bill. [Note. — See Hillt nf Kxchange -Act, Meclinn 71. siilxiiviMion (I); Hvles on Bills, 387; Daniel. 5 IH.) " If one part omit reference to the rest, it heconies a separate bill in the hand** of a hmtn fulr holder. It has been held that an agreement to deliver up mi iinucccpted bill drawn in a set is an agre4*ment 836 THK N'KOOl'lAliM'l ISS'I'UUMKNT8 LAW, to lifliver up nil tli>' piiiiH in cxistfiico {Kvanufi v. West Orttnaila Co., 26 L. J. Kx. 1ft) ; ami also lliat a porsou who in"j,M)tiaU's a hill of exchange drawn in a set. is bound to deliver up all the parts in his possession, but by nego- tiating one part he does not warrant that he has the rest. (I'inard v. Klockman, '32 L. J. Q. B. 82.) In KiigUuul the obligation to give a set is prcsiunialily a matter of bargain." C'halnicrs, p. 235. § 311. Rights of holders where different parts are negotiated. Where two or more parts of a set are negotiated to dili'erent holders in due course, the holder whose 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. [Note. — See Bills of Exchange Act, section 71, subdivision (3) ; Byles on Bills. 389.] § 312. Liability of holder who indorses two or more parts of a set to different persons. Where the holder of a set indorses two or more parts to different persons he is liable on every such part, and every indorser subsequent tc him is liable on the part he has himself indorsed, as if such parts were separate bills. [Note. — See Bills of Exchange Act, section 71, subdivision (2); flohla worth V. Hunter, 10 B. & C. 449; Byles on Bills, 389.] § 313. Acceptance of bills drawn in sets. The acceptance may be written on any part, and it must be written on one part only. If the drawee accepts mere 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. [Note. — See Bills of Exchange Act, section 71, subdivision (4); Holds- worth V. Hunter, 10 B. & C. 449; Byles on Bills. 389.] § 314. Payment by acceptor of bills drawn in sets. When the acceptor of a bill drawn in a set pays it witliout requiring 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. [j^oTE. — See Bills of Exchange Act, section 71, subdivision (5); Byles on Bills, 389.] § 315. Effect of discharging one of a set. Except as herein otherwise provided, where any one part of a bill drawn in a set is discharged by payment or otherwise the whole bill is discharged. f\oTE. — See Bills of Exchange Act, section 71, subdivision (6) ; Byles on BUls, 388.] PROMISSORY XOTES AXD CHECKS. d37 ARTICLE XVIII. PROMISSORY NOTES AND CHECKS. Section 320. Promissory note defined. 321. Check defined. 322. Within what time a check must be presented. 323. Certification of check; effect of. 324. Effect where holder of check procures it to be certified. 325. W hen check operates as an assignment. 326. Recovery of forged check. § 320. Promissory note defined. A negotiable promissory note within the meaning of this chapter is an unconditional promise in writing made by one person to another signed by the maker engaging to pay on demand 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.'^ [NoTK. — See Bills of Excliange Act, section 83.] "A bank note may be defined as a promissory note issued by a banker payable to bearer on demand. But a bank note differs from an ordinary note in various important respects. Among others it may be reissued after payment. See further distinctions pointed out by Bramwell, B. (Lichfield Union v. Greene, 26 L. J. Ex., at p. 142.)" Chalmers, p. 263. § 321. Check defined. A check is a bill of e.vchange drawn on a bank,** payable on de- mand." Except as herein otherwise provided, the provisions of this chapter applicable to a bill of exchange payable on demand applv to a check.'" i: Page.4 714-721. See § 20, and ca.ses under that section. See j,'cn- erally on form and interpretation, §S 20-42. The Engliah Act includes noti*8 pay- able " To, or to the order of, a speci- fied person or to bearer." that is, it inrlufles nonnegot iabli' notes. So also was the former New NOrk statute. {Carnicriiiht v. dray, 127 N. V. It2.) This sectifin clianges the New York law and confines thi» operation of the Act to negotiable notes. •a See § 27, subspe. 2, and § 2H. subsec. 5. Page 71.'). i« Page<» 722-724. [.See Rills of Ex- change Art, "ertinn 73; Hull v. Knit- aon, 123 H. S. in.'i; llnplcinfinn v. fo.«- trr. L. R. 18 Kq. 74.) See S 2, defin- ing " bank." IS [Daniel, § 1574.] '8 " The Act is declaratory in so far as it defines a check as a bill of ex- ehangi'. ( M'Lcan v. Clydrsdale Hank, L. R. 9 App. ("as. 95.) It is no part of the definition that a cheek should be an inland bill, or that it shoiihi l>e drawn by a rustomrr upon his banker. • • * See checks compared with and distinguished from ordinary bills by Parke, H. (9 .Moore P. C., at p. 69), Erie, .T.. and Byles. J. (R (\ B. N. S., nt pp. 3R0, 3SI, as modified by L. R. 19 Eq., at p. 70, .lessel. M. R.), Palles, ('. B. (10 Ir. R. ('. L., at p. 490), and the Supremo Toiirt of the United States. MO Wallace, at p. 647.) All eherks are bills of exchange, but all bills of exehanije ar<' not checks; tliereffire, an authoritv to draw checks H38 TIIK NKIJOTIAULK INSTULM KNTS LAW. § 322. Within what time a check must be presented. A olieek must be pivsonteil for payment within a reasonable time after its issue or tlie drawer will be discharged from liability thereon to the extent of the loss caused by the delay. '^ [Note. — Soe Stnith v. Jones, 2 Bush. 103; Cork v. Bacon, 45 Wis. li)2 , Bull V. Kasson, 123 U. !S. 105; Daniel, §§ 158(5-1000.] See Hills of Exchange Act, section 74. For effect of K in'stri'mknts law. It i< a niisdiMiioniior to take, soil or triuisft>r siuli an iiistniinont, knowing till' I'oiisiiioratioii to he iis above described, unless the words " j^iven for a speculative consideration," or other words clearly showing the nature of tiie eon^iderution, ajipear on the instrument above the signature. N. Y. Penal Law, § 1521 (originally Laws of N. Y. 1807, eh. (illJ.) See also Arnd v. Sjvblvm, I'M Wis. tl4-2, (int<\ \). '.Wi, and note 1, ante, pp. :]84-385. § 332. How negotiable bonds are made non-negotiable. The owner or IioKKt of any corporate or municipal bond or obliga- tion (except such as nw tlesi<2[nated to circulate as money, payable to bearer), heretofore or hereafter issued in and payable in this state, but not registered in pursuance of any state law, nuiy make such bond or obligation, or the interest coupon accompanying the same, non-negotiable, by subscribing his name to a statement indorsed thereon, that such bond, obligation or coupon is his property; and thereon the principal sum therein mentioned is payable only to such owner or holder, or his legal representatives or assigns, unless such bond, obligation or coupon be transferred by indorsement in blank, or payable to bearer, or to order, with tiie addition of the assignor's place of residence. ARTICLE XX.=^ LAWS REPEALED; WHEN TO TAKE EFFECT. Section 340. Laws repealed. 341. When to take effect. § 340. Laws repealed. Of the laws enumerated in the schedule hereto annexed, that por- tion specified in the last column is hereby repealed. § 341. When to take effect. This chapter shall take effect immediately.'* Schedule of Laws Repealed. Revised Statutes. Sections. Subject matter. R. S., pt. II, ch. 4, tit. II All Bills and notes. Laws of Chapter. Sections. Subject matter. 1788. ... 33. . . . All. . . . Promissory notes to be negotiable. 1794.... 48.... All.... Promissory notes to be negotiable same as bills of exchange. 2s This particular schedule of re- was originally enacted in New York peals applies, of course, only to New by Laws of 1897, ch. 612, which took York state. effect October 1, 1897. 2* The Negotiable Instruments Law SCHEDULE OF LAWS REPEALED. M Laws of IbUl... 1819... 1823... 1826... 1828... 1828... 1835. 1857. 1865. 1870. 1871. 1873. 1877. 1887. 1888. 1891. 1894. 1897, 1897. 1898, 1 90 1 . Chapter. 44.. 34.. 216.. 17.. 20.. 21.. 141. 416. 309 . 438. 84.. 595. 65. 461, 229 262. 607 , 612, 613. 336, 2H7, Sections. All .... AIL... All.... AH.... 15, para. 30 (2nd meet. ) . 1, paras. 51, 272, 393, 460 AH.. All.. All.. All.. All.. All.. All.. All.. All.. All.. All.. All.. 2. 3. AIL. Subject matter. rroiiussoiy notes to be negotiable same as bills oi' exchange. Regulating recovery of damages upon certain bills of exchange. Notice of protest in New York city regulated in certain cases. Notice of protest in New York city farther regulated. Adding § 22 to R. S., pt. 2, ch. 4, title 2. Repealing Laws 1801, 1819, 1823, 1826, above. Notice of protest ; how given. ComTnercial paper. Protest of foreign bills, etc. Negotiability of corporate bonds; how limited. Negotiable bonds; how made non- negotiable. Negotiable bonds; how made nego- tiable. Negotiable instruments given for patent rights. Efl'cct of holidays upon payment of commercial paper. One hundredtli anniversary of the in- auguration of CIcorge Wasliington. Ncgoti;'bk' ins^t run!(>nts given for a speculative purpose. Days of grace abolisliod. The NV'gotiabIc Insjrumonts Tjnw as originally riuictcd in Now York.''* CorrcftinL: nianifc^t errors in Nego- tiable lnstr\imcnls Law as origin- ally enacted.''' Adding § 326. Sec note 6, ante, p. 758." J» S«e not*" L nntr, p. 779. ENGLISH BILLS OF EXCHANGE ACT. 1882 45 AND 46 Vict. Ch. 61. As Amended by 6 Edw. 7, Ch. j-j, ipod. rR43I BILLS OF EXCHANGE ACT, 1882. 45 AND 46 Vict., Ch. 6i, An act to codify the law relating to bills of exchange, cheques, and promissory notes. [18th August, 1882.] Be it enacted by the Queen's Most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows: PART I. Preliminary. 1. Short title. This act may be cited as the Bills of Exchange Act. 1882. 2. Interpretation of terms. In this act, unless the context otherwise requires — " Acceptance " means an acceptance completed by delivery or notification. "Action" includes counter-claim and set-off. " Banker" includes a l>ody of persoihs, whether incorporated or not, who carry on the buKiness of banking. "Bankrupt" includes any person whose estate is vested in a trustee or assignee, under the law for the time being in force relating to bank- ruptcy. " Bearer" means the person in possession of a bill or note which is payable to bearer. " Bill " means bill of exchange, and " note " means promissory note. " Delivery " means transfer of possession, actual or constructive, from one [lerson to another. " Iloldrr" meanH tlie payee or endorsee of a bill or note who is in posses* sion of it, f»r thf Itoart-r tlu'reof. "Indorsement" means an indorsement completed bv delivery. " Issue " means the first «lelivery of a hill or not^, completed in form, to a person who takes it as a holder. "Person " inclurles a body of jjorsons. whether incorporated or not. "Value" means valuable consificr.-ition. "Written" includes printed, and " writing" includes print. (845J ^46 BILLS OF EXCHANGE ACT. PART IL Bills of Exchanqe. Form and Interpretation. 3. Bill of exchange defined. (1) A bill of oxchiiiige is lui unconditional order in writing, addressed by one person to anollier. signod by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time, a sum certain in money to or to tlie order of a specilied person, or to bearer. (2) An instrument which does not comply with these oonditions, or which orders any act to be done in addition to the payment of money, is not a bill of exchange. (3) An order to pay out of a particular fund is not unconditional within the meaning of this section ; but an unqualified order to pay, coupled with (a) an indication of a particular fund out of which the drawee is to reimburse him- self or a particular account to be debited with the amount, or (6) a statement of the transaction which gives rise to the bill, is unconditional. (4) A bill is not invalid by reason — (a) That it is not dated; (b) Tliat it does not specify the value given, or that any value has been given therefor; (c) That it does not specify the place where it is drawn or the place where it is payable. 4. Inland and foreign bills. (1) An inland bill is a bill which is, or on the face of it purports to be — (a) both drawn and payable within the British Islands, or (5) drawn within the British Islands upon some person resident therein. Any other bill is a foreign bill. . For the purposes of this act " British Islands" mean any part of the United Kingdom of Great Britain and Ireland, the Islands of Man, Guernsey, Jersey, Alderney, and Sark, and the islands adjacent to any of them being part of the dominions of Her Majesty. {2) Unless the contrary appear on the face of the bill the holder may treat it as an inland bill. 6. Effect where different parties to bill are the same person. (1) A bill may be drawn payable to, or to the order of, the drawer; or it may be drawn payable to, or to the order of, the drawee. (2) Where in a bill drawer and drawee are the same person, or where the drawee is a fictitious person or a person not having capacity to contract, the holder may treat the instrument, at his option, either as a bill of exchange or as a promissory note. 6. Address to drawee. (1) The drawee must be named or otherwise indicated in a bill vdth reason- able certainty. (2) A bill may be addressed to two or more drawees whether they are partners or not, but an order addressed to two drawees in the alternative, or two or more drawees in succession, is not a bill of exchange. FORM AND INTERPRETATION. 847 7. Certainty required as to payee. (1) Where a bill is not payable to bearer, the payee must be named or otherwi.se indicated therein with reasonable certainty. (2) A bill may be made payable to two or more payees jointly, or it may be made payable in the alternative to one of two, or one or some of several payees. A bill may also be made payable to the holder of an office for the time being. (3) Where the payee is a fictitious or non-existing person, the bill may be treated as payable to bearer. 8. What bills are negotiable. (1) When a bill contains words prohibiting transfer, or indicating an inten- tion that it should not be transferable, it is valid as between the parties thereto, but is not negotiable. (2) A negotiable bill may be payable either to order or to bearer. (3) A bill is payable to bearer which is expressed to be so payable, or on which the only or last indorsement is an indorsement in blank. (4) A bill is payable to order which is expressed to be so payable, or which is expressed to bo payable to a particular person, and does not contain words prohibiting transfer or indicating an intention that it should not be transferable. (5) Where a bill, either originally or by indorsement, is expressed to be pay- able to the order of a specified person, and not to him or his order, it is never- theless payable to him or his order at his option. 9. Sum payable. (1) The sum payable by a bill is a sum certain within the meaning of this act, although it is required to be paid — (a) With interest. (6) By stated installments. (r) By stated installments, with a provision that upon default in pay- ment of any installment the whole shall become due. (d) According to an indicated rate of exchange, or according to a rate of exchange to be ascertained as directed by the bill. (3) Wliere the sum payable is expressed in words and also in figures, and there is a discrepancy between the two, the sum denoted by the words is the amount payable. (3) VVIhto a bill is ox[»rpsH(;d to b(> p.iyable with interest, unless the instru- ment othiTwJHo j)n)vidr's, interest runs from the date of the bill, and if tlie bill is undat«*«l from the issut! thereof. 10. Bill payable on demand. (1) A bill is p.iy.ihlc on demand — (a) Whieh is expressed to bo payable on demand, or at sight, or on presentation ; or {b) In wliifh no time for jiayment is oxpressermiriable future time within the meaning of this act which is expressed to be payable — §4.8 BILLS OF EXCHANGE ACT. (1) At ft fixed porioii after date or Bif;ht. (2) On or at a fixed perioii after the oeeurrence of a specified event which is certain to happen, tliough tlie time of happening may be nncertain. An instruuieut expressetl to be j)ayable on a contingency is not a bill, and the happening of tiie event does not cure the defect. 12. Omission of date in bill payable after date. Wliere a bill expresseil to be payable at a fixed period after date is issued undated, or where the acceptance of a bill payable at a fixed period after sight is undated, any holder may insert therein the true date of issue or acceptance, and the bill shall be payable accordingly. Provided that (1) where the holder in good faith and by mistake inserts a wrong date, and (2) in every case where a wrong date is inserted, if the bill subsequently comes into the hands of a holder in due course, tlie bill shall not be avoided thereby, but shall operate and be payable as if the date so inserted had been the true date. 13. Ante-dating and post-dating. (1) Where a bill or an acceptance or any indorsement on a bill is dated, the date shall, unless the contrary be proved, be deemed to be the true date of the drawing, acceptance or indorsement, as the case may be. (2) A bill is not invalid by reason only that it is ante-dated or post-dated, or that it bears date on a Sunday. 14. Computation of time of payment. Where a bill is not payable on demand, the day on which it falls due is determined as follows : (1) Three days, called days of grace, are, in every case where the bill itself does not otherwise provide, added to the time of payment as fixed by the bill, and the bill is due and payable on the last day of grace : Provided that — (a) When the last day of grace falls on Sunday, Christmas Day, Good Friday, or a day appointed by Royal proclamation as a public fast or thanksgiving day, the bill is, except in the case herein- after provided for, due and payable on the preceding business day; (6) When the last day of grace is a bank holiday (other than Christmas day or Good Friday) under the Bank Holidays Act, 1871,* and acts amending or extending it, or when the last day of grace is a Sunday and the second day of grace is a bank holiday, the bill is due and payable on the succeeding business day. (2) Where a bill is 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 including the day of payment. (3) Where a bill is payable at a fixed period after sight, the time begins to run from the date of the acceptance if the bill be accepted, and from the date of noting or protest if the bill be noted or protested for non-acceptance or for non-delivery. (4) The term " month " in a bill means calendar month. • 34 and 35 Vict. ch. 17. FORM AND INTERPRETATION. 849 15. Case of need. Tlie liruwc'i- ul a bill and any indorser may insert tlierein the name or a per- son to whom the holder may resort in case of need, that is to say, in case the bill is dishonored b}'' non-acceptance or non-payment. Such person is called the referee in case of need. It is in the option of the holder to resort to the referee in case of need or not as he may think fit. 16. Optional stipulations by drawer or indorser. The drawer of a bill, and any indorser, umy insert therein an expreaa stipulation — * (1) Negativing or limiting his own liability to the holder ; (2) Waiving as regards himself some or all of the holder's duties. 17. Definition and requisites of acceptance. (1) The* acceptance' of a bill is the signification by the drawee of his assent to the order of the drawer. (2) An acceptance is invalid unless it complies with t|ie following condi- tions, namely : (a) It must be written on the hill and be signed by the drawee. The mere signature of the drawee without additional words is sufficient. (b) It must not express that the drawee will perform his promise by any other means than the payment of money. 18. Time for acceptance. A bill may be accepted — (1) Before it has l>een signed by the drawer, or while otherwise incomplete: (2) When it is overdue, or after it has been dishonored by a previous refusal to accept, or by non-payment : (u) When a bill payable after sight is dishonored by non-acceptance, and the drawee suljsequently accepts it, the holder, in the ab.sence of any ditferent .,greemr»nt, is entitled to have the bill accepted as of the date of first present- mrnt to the drawee for ajccptance. 19. General and qualified acceptances. (1) An acceptance is eitiu'r (a) general or (6) qualified. (2) A general acceptance assents without qualification to the order of the drawer. A qualified acceptance in express terms varies the effect of the bill as drawn. In particular an acceptance is ({ualified which is — (a) ('(Mulitionui, that is to say, wbicb makes payment by the acceptor de|M-ndeiit on the ftilfilhnerit of a condition therein stated : (b) Partial, that is to sjiy. an acce|)tanco to pay part oidy of tlie amount for which the bill is drawn: (c) I>j<-al. that is to say, an acceptance to pay only at a particular sjK'cified place : An acceptance to pay at a particular place is a general acceptance, unless it exi)reHHly states that the bill is to Ik* paid then> ordy and not elHcwhere : (e filled up within a reasonable time, and strictly in accordance with the authority given. Reasonable time for this purpose is a question of fact. Provided that if any such instrument after completion is negotiated to a holder in due course, it shall be valid and effectual for all purposes in his hands, and he may enforce it as if it had been filled up within a reasonable time and strictly in accordance with the authority given. 21. Delivery. (1) Every contract on a bill, whether it be the drawer's, the acceptor's, or an indorser's, is incomplete and revocable, until delivery of the instrument in order to give effect thereto. Provided that where an acceptance is written on a bill, and the drawee gives notice to or according to the directions of the person entitled to the bill that he has accepted it, the acceptance then becomes complete and irrevocable. (2) As between immediate parties, and as regards a remote party other than a holder in due course, the delivery — (a) In order to be effectual must be made either by or under the authority of the party drawing, accepting, or indorsing, as the case may be : (6) May be shown to have been conditional or for a special purpose only, and not for the purpose of transferring the property in the bill. But if the bill be in the hands of a holder in due course a valid delivery of the bill by all parties prior to him so as to make them liable to him is con- clusively presumed. (3) Where a bill is no longer in the possession of a party who lias signed it as drawer, acceptor, or indorser, a valid and unconditional delivery by him is presumed until the contrary is proved. Capacity and Authority of Parties. 22. Capacity of parties. (1) Capacity to incur liability as a party to a bill is co-extensive with capacity to contract. Provided that nothing in this section shall enable a corporation to make itself liable as drawer, acceptor, or indorser of a bill unless it is competent to it so to do under the law for the time being in force relating to corporations. (2) Where a bill is drawn or inflorsed by an infant, minor, or corporation having no capacity or power to incur liability on a bill, the drawing or indorse- THE CONSIDERATION FOR A BILL. 85X ment entitles the holder to receive payment of the bill, and to enforce it against any other party thereto. 23. Signature essential to liability. No person is liable as drawer, indorser, or acceptor of a bill who has not signed it as such : Provided that — (1) Where a person signs a bill in a trade or assumed name, he is liable thereon as if he had signed it in his own name: (2) The signature of the name of a firm is equivalent to the signature by the person so signing of the names of all persons liable as partners in that firm. 24. Forged or unauthorized signature. Subject to the provisions of this Act, where a signature on a bill is forged or placed thereon without the authority of the person whose signature it purports to be, the forged or unauthorized signature is wholly inoperative, and no right to retain the bill, or to give a discharge therefor, or to enforce payment thereof against any party thereto, can be acquired through or under that signature, unless the party against whom it is sought to retain or enforce payment of the bill is precluded from setting up the forgery or want of authority. Provided that nothing in this section shall effect the ratification of an unauthorized signature not amounting to a forgery. 25. Procuration signatures. A signature by procuration operates as notice that the agent has but a limited authority to sign, and the principal is only bound by such signature if the agent in so signing was acting witliin the actual limits of his autliority. 26. Person signing as agent or in representative capacity. (1) Where a person signs a bill as drawer, indorser, or acceptor, and adds words to his signature indicating that lie signs for or on belialf of a principal, or in a representative character, he is not personally liable thereon ; but the mere addition to his signature of words describing him as an agent, or as fill- ing a representative character, does not exempt him from personal liability. (2) In determining whether a signature on a bill is that of the principal or that of the agent by whose hand it is written, the construction most favorable to the validity of the instrument shall be adopted. 77if' rcmsideration for a Bill. 27. Value and holder for value. (1) Valuable consideration for a hill may ho constituted by, — (n) Any consideration HufTuiciit to support a sitiiph' contract; (b) An antfc.'df nt ayable. (:{) The jirovisions of this Act relating to a payee apply with the necessary Uifxlifications to an indorsee under a special indorsement. (4) When a bill has Ijeen indorsed in blank, any holder may convert the blank indorsi'tnent into a spcH-ial indorsement by writing above the indorser'a signature a direction to pay the bill to or to the order of himself or some t)ther IMT8 dt-al wilh (he bill ua th»Tt'by dirtTfcd, and not a transfer of the ownership thcn'of, as, for cxariipie, if n bill 1k« in(lor8<'d "Pay I), only," or " Pay I), for tin- aicount of X.," or " Pay D. or order for collection." (2) A restrictive indorsement gives the indorsee the riglit to receive pay- ment of the bill and to sue any party thereto that his indorser could have 854 BILLS OF EXCHANGE ACT. Bueil, but gives him no power to transfer his rights as indorsee unless it expressly authorize hitu to do so. (3) Where a restrictive indorsement authorizes further transfer, all subse- quent inilorsees take the bill with the same riglits and subject to the same liabilities as the tirst indorsee under the restrictive indorsement. 36. Negotiation of overdue or dishonoured biU. (1) Where a bill is negotiable in its origin it continues to be negotiable until it has l)een (a) restrictively indorsed or (6) discharged by payment or otherwise. (2) Where an overdue bill is negotiated, it can only be negotiated subject to any defect of title affecting it at its maturity, and thenceforward no person who takes it can acquire or give a better title than that which the person from whom he took it had. (3) A bill payable on demand is deemed to be overdue within the meaning and for the purposes of this section, when it appears on the face of it to have been in circulation for an unreasonable length of time. What is an unreason- able length of time for this purpose is a question of fact. (4) Except where an indorsement bears date after the maturity of the bill, every negotiation is prima facie deemed to have been effected before the bill was overdue. (5) Where a bill which is not overdue has been dishonoured any person who takes it with notice of the dishonour takes it subject to any defect of title attaching thereto at the time of dishonour, but nothing in this sub-section shall affect the rights of a holder iu due course. 87. Negotiation of bill to party already liable thereon. Where a bill is negotiated back to the drawer, or to a prior indorser, or to the acceptor, such party may, subject to the provisions of this Act, re-issue and further negotiate the bill, but he is not entitled to enforce payment of the bill against any intervening party to whom he was previously liable. 38. Rights of the holder. The rights and powers of the holder of a bill are as follows: (1) He may sue on the bill in his own name : (2) Where he is a holder in due course, he holds the bill free from any defect of title of prior parties, as well as from mere personal defences available to prior parties among themselves, and may enforce payment against all parties liable on the bill: (3) Where his title is defective (a) if he negotiates the bill to a holder in due course, that holder obtains a good and complete title to the bill, and (b) if he obtains payment of the bill the person who pays him in due course gets a valid discharge for the bill. General Duties of the Holder. 39. When presentment for acceptance is necessary. (1) Where a bill is payable after sight, presentment for acceptance is neces- sary in order to fix the maturity of the instrument. (2) Wliere a bill expressly stipulates that it shall be presented for accept- ance, or where a bill is drawn payable elsewhere than at the residence or place of business of the drawee, it must be presented for acceptance before it can be presented for payment. GENERAL DUTIES OF THE HOLDER. g55 (8) In no other case is presentment for acceptance necessary in order to render liable any party to the bill. (4) Where the holder of a bill, drawn payable elsewhere than at the place of business or residence of the drawee, has not time, with the exercise of reasonable 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 dis- charge the drawer and indorsers. 40. Time for presenting bill payable after sight. (1) Subject to tlie provisions of this Act, when a bill payable after sight la negotiated, the holder must either present it for acceptance or negotiate it within a reasonable time. (2) If he do not do so, the drawer and all indorsers prior to that holder are discharged. (3) In determining what is a reasonable time within the meaning of this section, regard shall be had to the nature of the bill, the usage of ti-ade with respect to similar bills, and the facts of the particular case. 41. Rules as to presentment for acceptance, and excuses for non-pre- sentment. (1) A l)ill is duly presented for acceptance which is presented in accordance with the following rules: (a) The presentment must be made by or on behalf of the holder to the drawee, or to some person authorized to accept or refuse acceptance on his behalf, at a reasonable hour on a business day and before the bill is overdue : (b) 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 for all, then presentment may be made to him only : (c) Where the drawee is dead, presentment may be made to his personal representative : (d) Where the drawee is bankrupt, presentment may he made to him or his trustee : («) Where authorized by agreement or usage, a presentment through the post office is sufficient. (2) Presentment in accordance with these rules is excused, and a bill may be treated as dishonoured by non-acceptance — (a) Where tiie drawee is dead or bankrupt, or is a fictitious person or a p<;rson not having capacity to contract by bill : (b) Where, after thf exercise of reawonalile diligence, such presentment cannot \m: efTccted : (c) Where, althoii^,'li the preHentiiifrit has been irregular, aci('pt:inoe lias Im'^ti Fffiiscd on Home other grounil. (3) The f.irt that tlie holder has reason to believe that the bill, on present- ment, will 1k> dishonoured does not excuse presentment. 42. Non-acceptance. (1) When a bill is duly presented for acceptance and is not accepted within 856 BILLS OF EXCHANGE ACT. the customary time, the person presenting it must treat it as dishonoured by non-acceptance. If he do not, the holder shall lose his right of recourse against tlie drawer and indorsera, 43. Dishonour by non-acceptance and its consequences. (1) A bill is dishonoured by non-acceptance — (a) When it is duly presented for acceptance, and such an acceptance as is prescribed by this act is refused or cannot be obtained ; or (6) When presentment for acceptance is excused and the bill is not accepted. (2) Subject to the provisions of this Act. when a bill is dishonoured by non acceptance, an immediate right of recourse against the drawer and indorsera accrues to the holder, and no presentment for payment is necessary. 44. Duties as to qualified acceptances. (1) The holder of a bill may refuse to take a qualified acceptance, and if he does not obtain an unqualified acceptance may treat the bill as dishonoured by non-acceptance. (2) Where a qualified acceptance is taken, and the drawer or an indorser has not expressly or impliedly authorized the holder to take a qualified acceptance, or does not subsequently assent thereto, such drawer or indorser is discharged from his liability on the bill. Tbe provisions of this sub-section do not apply to a partial acceptance, whereof due notice has been given. Where a foreign bill has been accepted as to part, it must be protested as to the balance. (3) "When the drawer or indorser of a bill receives notice of a qualified acceptance, and does not within a reasonable time express his dissent to the holder, he shall be deemed to have assented thereto. 45. Rules as to presentment for payment. Subject to the provisions of this Act, a bill must be duly presented for payment. If it be not so presented the drawer and endorsers shall be discharged. A bill is duly presented for payment which is presented in accordance with the following rules: — (1) Where the bill is not payable on demand, presentment must be made on the day it falls due. (2) Where the bill is payable on demand, then, subject to the provisions of this Act, presentment must be made within a reasonable time after its issue in order to render the drawer liable, and within a reasonable time after its indorsement, in order to render the indorser liable. In determining what is a reasonable time, regard shall be had to the nature of the bill, the usage of trade with regard to similar bills, and the facts of the particular case. (3) Presentment must be made by the holder or by some person authorized to receive payment on his behalf at a reasonable hour on a business day, at the proper place as hereinafter defined, either to the person designated by the bill as payer, or to some person authorized to pay or refuse payment on his behalf if with the exercise of rejisonable diligence such person can there be found. GENERAL DUTIES OF THE HOLDER 857 (4) A bill is presented at the proper place : — (a) Where a place of payment is specified in the bill and the bill is there presented. (6) Where no place of payment is specified, but the address of the drawee or acceptor is given in the bill, and the bill is tliere pre- sented. (c) Where no place of payment is specified and no address given, and the bill is presented at the drawee's or acceptor's place of busi- ness if known, and if not. at his ordinary residence if known. (d) In any other case if presented to the drawee or acceptor wherever he can be found, or if presented at his last known place of busi- ness or residence. (5) Where a bill is presented at the proper place, and after the exercise of reasonable diligence no person authorized to pay or refuse payment can be found there, no further presentment to the drawee or acceptor is required. (6) Where a bill is drawn upon, or accepted by, two or more persons who are not partners, and no place of payment is specified, presentment must be made to them all. (7) Where the drawee or acceptor of a bill is dead, and no place of payment is specified, presentment must be made to a personal representative, if such there be, and with the exercise of reasonable diligence he can be found. (8) Where authorized by agreement or usage a presentment through the post-office is sufficient. 46. Excuses for delay or non-presentment for payment. (1) Delay in making presentment for payment is excused when the delay is caused by circumstances beyond the control of the holder, and not imputable to his flefault, misconduct, or negligence. When the cause of delay ceases to operate presentment must be made with reasonable diligence. (2) Presentment for payment is dispensed with, — (a) Where, after the exercise of reasonable diligence, presentments as required by this Act, cannot be effected. The fart that the holder has reason to believe that the l)ill will, on pre- sentment, ]h; dishonoured, does not dispense with the necessity for presentment. (b) Where the drawee is a fictitious person. (c) As regards the drawer whcro the drawee or acceptor is not bound, as between himself and the drawer, to accept or pay the bill, and the drawer lias no reason to believe that the bill would be paid if pre«ent<,'d. (d) As regards an indorser, where the l)ill was accepted or made for the aceomniodation f)f that indorser, and ho has no reason to expect that thfi bill would be pais to the holder. 48. Notice of dishonour and effect of non-notice. SuhjtK"c to the })rovisions of this Act, when a hill has been dishonoured by non-acceptance or by non-payment notice of dishonour must he given to the drawer and each indorser, and any drawer or indoi'ser to whom such notice is not given is discharged ; Provided that — (1) Where a bill is dishonoured by non-acceptance, and notice of dishonour is not given, the rights of a holder in due course subsequent to the omission, shall not be prejuiliced by the omission. (2) Where a bill is dishonoured by non-acceptance, and due notice of dis- honor is given, it shall not be necessary to give notice of a subsequent dis- honour by non-payment unless the bill shall in the meantime have been accepted. 49. Rules as to notice of dishonour. Notice of dishonour in order to be valid and effectual must be given in accordance with the following rules : — (1) The notice must be given by or on behalf of the holder, or by or on be- half of an indorser who, at the time of giving it, is himself liable on the bill. (2) Notice of dishonour may be 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. (3) Where the notice is given by or on behalf of the holder, it enures for the benefit of all subsequent holders and all prior indorsers who have a right of recourse against the party to whom it is given. (4) Where notice is given by or on behalf of an indorser entitled to give notice as hereinbefore provided, it enures for the benefit of the holder and all indorsers subsequent to the party to whom notice is given. (5) The notice may be given in writing or by personal communication, and may be given in any terms which sufficiently identify the bill, and intimate that tlie bill has been dishonoured by non-acceptance or non-payment. (6) The return of a dishonoured bill to the drawer or an indorser is, in point of form, deemed a sufficient notice of dishonour. (7) A written notice need not be signed, and an insufficient written notice may be supplemented and validated by verbal communication. A mis- description of the bill shall not vitiate the notice unless the party to whom the notice is given is in fact misled thereby. (8) Where notice of dishonour is required to be given to any person, it may be given either to the party himself, or to his agent in that behalf. (9) Where the drawer or indorser is dead, and the party giving notice knows it, the notice must be given to a personal representative, if such there be, and with the exercLse of reasonable diligence he can be found. (10) Where the drawer or indorser is bankrupt, notice may be given either to the party himself or to the trustee. (11) Where there are two or more drawers or indorsers who are not partners notice must be given to each of them, unless one of them has authority to receive such notice for the others. GENERAL DUTIES OF THE HOLDER. 859 (12) The notice may be given as soon as the bill is dishonoured, and must be given within a reasonable time thereafter. In the absence of special circumstances notice is not deemed to have been given within a reasonable time, unless — (a) Where the person giving and the person to receive notice reside in the same place, the notice is given or sent off in time to reach the latter on the day after the dishonour of the bill. (6) "Where the person giving and the person to receive notice reside in different places, the notice is sent off on the day after the dis- honour of the bill, if there be a post at a convenient hour on that day, and if there be no such post on that day then by the next post thereafter. (13) Where a bill when dishonoured is in the hands of an agent, he may either himself give notice to the parties liable on the bill, or he may give notice to his principal. If he give notice to his principal, he must do so within the same time as if he were the holder, and the principal upon receipt of such notice has himself the same time for giving notice as if the agent had been an independent holder. (14) Where a party to a bill receives due notice of dishonour, he has after the receipt of such notice the same period of time for giving notice to antecedent parties that the holder lias after the dishonour. (l.T) Where a notice of dishonour is duly addressed and posted, the sender is deemed to have given due notice of dishonour, notwithstanding any miscar- riage by the post-office. 60. Excuses for non-notice and delay. (1) Delay in giving notice of dishonour is excused where the delay is caused by circumstances beyond the control of the party giving notice, and not imputable to his default, misconduct, or negligence. When the cause of delay roases to operate the notice must be given with reasonable diligence. (2) Notice of dishonotir is dispensed with — (a) When, after the exercise of reasonable diligence, notice as required by this act cannot be given to or does not reach the drawer or iiidijrser sought to be cliarged : (b) By waiver, exi»res8 or implied. Notice of dishonour may be waived before tlie time of giving notice has arrived, or after the Omission to give due notice : (c) As regards the drawer in the following cases, namely, (1) where drawer and drawee are the same person, (2) where the drawee is a fictitious p«'rH<)n or a person not having capacity to contract, (3) where Uh; drawer is the imtsoij to whom tlic l)ill is presented for payiin'iit, (4) where tlu'drawc'e or acceptor is as between him- self any iiuhirsing it — (ft) Engages that on due presentment it shall bo accepted and paid according to its tenor, and that if it bo dishonoured he* will com- pensate' the liolder or a stibsequent inf customer's death. Crossed Clirqiiet. 76. General and special crossings defined. (1) Where uf)ic(|Uf bears across its f. ice ;m addition of — (a) the words "and company" or any abbreviation tliereof between two parallel traiisverKe lines, either with or witlmtit the wonls " not negotial)le ; " or (/») two i)arallel tnins- verw; lines simply, eitlier with or witlioiit the wf>rd;i " not negotiable, — " that addition (-onstitutes a crossing, and the clieque is crosser acts amending it, or any act relating to joint st{ the Hank of Knghind tir the Bank of Irehuid respectively : (d) The validity of any usage relating to dividend warrants, or the indorsenientB thereof. 98. Saving of summary diligence In Scotland. Nothing in this Act or in any repeal effected thereby shall extend or restrict, or in any way alter or affect the law and practice in Scotland in regard to summary diligence. 99. Construction with other acts, etc. Where any act or document refers to any enactment repealed by this Act, the act or document shall be construed, and shall operate, as if it referred to the corresponding provisions of this Act. 100. Parol evidence in judicial proceedings in Scotland. In any judicial proceeding in Scotland, any fact relating to a bill of exchange, bank cheque, or promissory note, which is relevant to any question of liability thereon, may be proved by parol evidence: Provided that this enactment shall not in any way affect the existing law and practice whereby the party who is, according to the tenor of any bill of exchange, bank cheque, or promissory note, debtor to the holder in the amount thereof, may be required, as a condition of obtaining a sist of diligence, or suspension of a charge, or threatened charge, to make such consignation, or to find such caution as the court or judge before whom the cause is depending may require. This section shall not apply to any case where the bill of exchange, bank cheque, or promissory note has undergone the sesennial prescription. First Schedule.* (Sec. 94.) Form of protest which may be used when the services of a notary cannot be obtained. Know all men that I, A. B. (householder), of in the county of , in the United Kingdom, at the request of C. D., there being no notary public available, did on the day of 188 at demand payment (or acceptance) of the bill of exchange here- under written, from E. F., to which demand he made answer (state answer, if any). Wherefore, I now in the presence of G. H. and J. K. do protest the said bill of exchange. (Signed) A. B. J K \ Witnesses. N. B. — The bill itself should be annexed, or a copy of the bill and all that is written thereon should be underwritten. •The other schedalea are purely local In Interest, and are therefore omitted.— Ed. BILLS OF EXCHANGE ACT. 873 BILLS OF EXCHANGE (CROSSED CHEQUES) ACT, 1906. » 6 Edw. 7, c. 17. AN ACT to amend section eighty-two of the Bills of Exchange Act, 1882. 4th August, 1906. Sec. 1. A banker receives payment of a crossed cheque for a cus- tomer within the meaning of section eighty-two of the Bills of Ex- change Act, 1882, notwitlistanding that he credits his customer's account with the amount of tiie ciieque before receiving payment thereof. Sec. 2. This act may be cited as the Bills of Exchange (Crossed Cheques) Act, 1906, and this act and the Bills of Exchange Act, 1882, may be cited together as the Bills of Exchange Acts, 1882 and 1906. I " Note. — This act was passed to get rid of the decision in Capital and Counties Bank v. Gordon. A. C. (1893), 240, H. L., where it was held that if a bank received a crossed cheque from a customer, and at once credited his ac- count with the amount, the bank became holders for value of the cheque, and in receivinp payment thereof, received it on their own account, and not merely as agents for collection on behalf of their customer. They therefore did not come within the protection given by section 82 of the act of 1882 to collecting bankers. . . ." Chalmers, A Digest of the Law of Bills of E.xchauge, etc., 7th ed., p. 400. — C. INDEX [The "§ " references are to the sections of the New York Negotiable Instrument Law ; other references are to pages.] Acceptance: (See NON-acceptaxce.) definiti..n and effect, 403-418, § 2, § 112. form and effect, 648-6«)8, §§ 220-225. writinK and signature, G4S— 649, § 220. parol, 64i»n, 6ti8. only ljy drawee, 649-650, § 220. delivery necessary, ft50. pruniise to accept, 654—657, § 223. by refusal to return bill, 646, 658-665, § i;25. of incomplete or dishonored bill, 666-668, $ 22.;. time .illowpd for, 660-665, 5 29.4. kimU of, W;ii-(i78, S§ 227-2211. general acceptance, WK-HTS. § 228. qualilied acceptance, (i7:}-678, § 229. cnditional, 67.3-674, § 229. partial. 675, $ 229. local, 675-676, $ 229. qualified as to time, 676, § 229. by part of drawees, 676, § 229. effect of qualified acceptance, 677-678, $ 230. of bills "in a get, 709-710, $ 313. Arrpptanco for honor: wlien allowed, 7id, § 280. partioH to, 7ii|. g ?S(i, fur what amount, § 280. f< rnial ref|iiigiti s, 7''1, J 281. proleat fi.r non-acceptance, 701, $ 280. writintr and siKnatiire, § 2SI. interpretation, f r whose lioniT, J 282. pflect on maturity ..f hill, J 285. Cf'ntr.iet of iooairv If. eh.irsre, 477- 4WI. Acceptor for lioiuir: Habilitv of, r,49. 70.-;. -.or,. ■dmisnions of, 704. who m.iv hn. H 280. i 283. Aoc-onimodation Paper: .uiunimodalion part}', corporation as, 256. defined, 255, 257-258, § 55. liability to holder, 254-258, $ 55. notice when maker is, 2,^>, 579, § 186. order of liability of, 459-465. accommodated party, not entitled to presentment, $ 140. not entitled to notice, 579, § 186. payment by, .597-598, 640-641, §§ 200-202. transfer by, after maturity, 328-335. release of, 631 n. consideration for, 243-244. aniiinnt recoverahlo on, .361-.362. payment of supia protest, 708n. Action on Negotiable Paper: ilefinrd, § 2. transfer for purpose of, 316n. brinpinf:, is a driiMnd, 477. by restrictive indorsee, 280-284, $ 67. between indorsers, 4.')9-46(i. iip'in instrument payable to bearer, 260. after dislionor fy. 480. ( 1.32. pri-si'nimeni In, 516. aiceptance bv, fi50n. n..lice nf dlsh.mor bv, .'i.33 .V39, 88 162, Ifi.l, notice of dlshnnor !.■, 8 168. ln
  • rHemenl fi r rnlje.linn to, 274-277, 280- 284. 439-440. 88 "*'. ""• dr:nving 'n principal, 6.''>4 657. Allonec: nature and use of, 266-267, 808, I 61. [875] 87 J> INDEX. Alteration: .-n.-it c.f. STSn, tW-»VJi!, B "<^'. 2I16- iciMMT» I'll iiislriimfiil as lii'fuii' alteration, 157, 610, t)L'5, 7l'6, S v;or>. thnniKli lu'Kligi'iuc of inakor, ()'24-C20. o( inili^rscr, (ilii— (i'J4. in.ilfii.il, liUlii, S ~M- livinloii of proof, (llOn. innocent, t>ll-^ Bank Notes: history of, '.'9. whether current money, 84-85. whether demand neces-sary, 478n. Bankrupt: notice ..f dishonor to, 548n. 579, 696-698, presentment for acceptance to, I 242. pr'.tcon20, 221, § 11. admissions of. 401-418, §« 110-112. wrirr.inty of, 4.34. §§ 115 n6. incapacity as a defense, 372, 47S. drawee, 57.5, §§ 214, 24*. INDEX. 877 Cashier: indorsement, when payable to, 216n, "IM— 90O, { 72. Certainty: of sum payable, 61-«0, i| 20, 21. of promise, 46-61, ff 20, 22. of time, 96-106, | 23 of parties, drawee, 148-150, f 20. payee, 107-113, { 27. Certificate of Deposit: negotiability of, 43-44n. demand necessary, 477n. distinguiihed from deposit slip, 43n— 44n. distinguished from savings bank order, 46- 48. Certificate of Protest: form and contents, 691-698, i 261. correction of, 508-509. as to presentment (or acceptance, 685, 694- 695. as evidence of notice of dishonor, 589-590. Certification of Check: effect upon drawer's liability, 743-748, { 324. effect upon indorser's liability, 748-751, { 324. Checlis: defined, | 321. distinguished from bills, 722-725. presentment for payment, effect of delay upon drawer's liability, 725- 734. I 322. upon indorser's liability, 734—743. Certiflcation: (See CERTIFICATION OF CHECK.) liability of drawee, to holder, 752-758, { 325. to drawer for wrongful dishonor, 772—774. Codes: American, 9-13, 779-841. Continental, 13-15. English, 3-9, 845-873. construction of, 5. 12, 396, 451. Collateral Srcurlty: authorizing sale of, does not render instru- ment non-negotiable, 91-92, { 24. instrument issued aj«, is contingent, 105-100. instrument transferred, as for antecoflrnt deht. 239-'J4'l, { 51. failure to sell, 63.3-634. Collection : bill or n. I l.Ti. of drawer or indomrr. ,'i46 ,'i4R. || 160-170. of drawee before acceptance. | 74.'i. instrument pnvable at or after, 102-IOt, 2.34-^.^5. 716-720 srs INDEX. Default : in pa.vinent of installment, 72-74, § 21. I>cfcnsrs: absoluto. 372n, 372-.S74. conditional or |>vrsonal, 373n, 373-374, S5 i^*. !13-!>4. 97. burden of proof, se*- Bl'RDKN OF PROOF. (lefonsoR to neRofi.ihle instruments, alteration, 373n. (H\S-()2G, § 205. cancellation, 373n. Smt-COS, §§ 200, 204. dischnrKe in bankruptcy, 373. diversion by .iKent, 23!)-243, 34B-352. duress. 370^375. failure of oonsider.ition, 253-254, 268, 419. forgerv, 168, 221-233, 403-418, 441, i§ 33, 42. fr.iud. 373n, 357-359, 360-361. 476. fraud as to nature of contract, 387-399. carnishment, 373. infancy, 220. illepality, 36.S-370, 371, 373n, 432. non-demand or notice, 477-480. parol apreement, 270—271. payment, 373n, 591-592, 639-641, §§ 77, 200. set-off, 373n, .S20-324, 475. want of consideration, 373n, 337-338. want of delivery, 373n, 152-153. want of delivery as a negotiable instru- ment, 387-399. want of title in holder, 314-318. defenses to guaranty, 474—476. Delay: (See diligence.) in making presentment, 97, 518-520, 725- 743, $ 322. in giving notice, 573-574, § 184. in proceeding against principal, 633-634. in making presentment for acceptance, 681- 685, S 241. in making protest, § 267. Delivery: defined, § 2. when presumed, 1.54-158, 5 35. of incomplete instrument, 386-387, § 34. essential, 151-152, 265n, § 35. conditional, 151-152. want of. as defense, 1,52-158, .387-399. negotiation by, 342, § 60. warranty in negotiation by, 419-437, § 11.) after acceptance, 650. indorsement of paper negotiable by, 443. 5 "V- upon payment. §§ 134, 306. of notice of dishonor, 542-.546, § 167. obtained by trick. 387-399. Demand: fSee PRESENTMENT FOR PAY MENT.) Demand Bill or Note: when pavable on demand, 96-97, |5 20, 26. when overdue, 323-324, | 92. when presentment for payment must be made, 483-494, { 131. Deposit: indorsement for, 282-284. Deposit Slip: distinguished from certificate of deposit, 4.3n-44n. DlHgence: (See DELAY.) in making presentment, 483—504, 704—706, I 142. in giving notice, .54S-.565. .580, {$ 183, 184. in presenting check, 72.5-743, S 322, in making protest, § 267. Dlsrhnrpp of Instrument: paynicnt and rclransfer, 091-699, {( 80, 200. payn\rnt it) due cmuw. 591-592, | 200. what 18 payincut, M[>. payment by indorser, 594-,597. payment l)y party accommodated, 640— C41, ■ J 202. payment or purchase, 597-598. cancellation or renunciation, see CANCEL- LATION. RFNUNCI.VnON. alteration, see ALTERATION, by operation of law, 628n. of bills in a set, $ 315. Discliarao of Surety: what cfTccts, 474-476, 605-608, 629-638, § 201. extension of time, does it discharge?, 631- 633. 634-6;58, §§ 200-201. reservation of rights against. 629-633, § 201. by qualified acceptance, 677-678, § 230. by payment for honor, 707, § .304. bv non-presentment fur acceptance, 681, § 241. by failure of holder to take necessary steps, § 247. by non protest, § 260. bv payment for honor, § .304. by non-presentment of check, 748-752, S 322. Dishonor: (S<^e PRESENTMENT; NOTICE; PROTEST.) by non-payment, §§ 143, 289. by non-acceptance, §§ 221, 246. notice after, § 160. protest after, §§ 189, 260. 'j acceptance after, 667-668, § 226. | action for wrongful dishonor, 772—774. Drawee: (See acceptance.) must be certain, 148-151, § 20. in case of need, 643—644, § 215. liability of, 644-646, 7.52-758, 772-774, §§ 211, 325. joint drawees, 642-643, § 212. alternative or successive, 642—643, § 212. only drawee can accept, 649—650, § 220. fictitious, excuse of steps, 575n, §§ 142, 185, 186. may be also payee, 114—115, § 27. may be also drawer, 113-114, § 27. Drawee in Case of Need: (See REFEREE IN CASE OF NEED.) Drawer: (Sfe FORM; PRESENTMENT; NOTICE; PROTEST.) contract of, 418, § 111. admissions of, 418-419, § 111. when not entitled to presentment, 520-.522, $ 139. when not entitled to notice, 575-577, 580- 585, S 185. discharge of drawer, §| 160, 230, 241, 260, 322. payment by, 639-640, J 202. may be payee, § 27. may be drawee, 150. Due Bill: whether a negotiable instrument, 37-40, 42. Duress: as a defense, 370-375, § 94. Election: of holder to require something in lieu of money, 94-96, J 24. Escrow : delivery in, 151n. INDEX. 879 Estate: (See executor.) instrument payable to an, 111-113. Kxchange: provision for, does n«t render sum uncer- Uin, 74-77, f 21. note payable in, not negotiable, 81—82. recovery of re-excbange, 3&85, 691n, {{ 189, 260. Foreign Money: wlirther treated as money, 88-89. Forgery: of signatures generally, 221-2.^3, { 42. "f dr^iwer's signature, 413-41S. by tilling blanks. ]rJi-\90, 616-fi24. of indorscmenl, 4.TJ-434, 438. of renewal nofp, fi05-608. ratification of, 222-223. as a defense, 168", 221-23.1, 4f>3-418, 441, li 33, 42. warranty against, 438, { 116. Form of Negotlablo Instruments: writing and SKniaturp, 34-37, | 20. promise or ofler, 37-fil, | 20. unoinditional, 46-61, | 22. certainty, of sum. 61-80, f 21. of time. 9«-l(A II 23. 26. of psyer. 107-113. | 27. of drawro, 148-160, | 20. payabte in money, 81-90, ( 20. no additional ant. 90-96. | 24. payable to ordrr or l>p»rrr, Ki6-147, || 20, 27. 28, delirerr, 15I-1W, | 36 non •<««< Fund: particular fund designated for reimburse- ment, oo-.'iS, § 22. bill not an assignment of, 644-646, { 211. check not an assignment of, 752—758, j 325. current funds, wliether money, 82-84, | 25. acceptance " when in funds," 674n. want of funds in hands of drawee, effect, 520-522, 570-577, |$ 139, 185. General Acceptant-e: form and effect of, 668-673, 5§ 227, 228. tu pay at a particular place, 072-673, { 228. Gift: of donee's obligation, 599-604, J 203. Good Faith: (See NOTICE; HOLDER IN DIE COURSE.) Grace, Days of: abolished, § 145. when last day of, a holiday, 483. non-negotiable bills have, 715-716. sight bill entitled to, 679-680. Guaranty: (See W.\RR.\NTY.) transfer by indorsing, 203-265. writing above blank indorsement, 269-270. c<_>ntract of guarantor, 467—471. whether transferable, 471—474. defenses to, 474—170. indorser of non-negotiable note undertakes, 720-721. whether accommodation contract is a con- tinuing, 328-336. whether irregular indorsement a, 447n, 721n. whether acceptance by a stranger a, 650n. Holder: defined, § 2. when deemed holder for value, 249-253, 319- 360, §1 62, 91. may convert bliink indorsement into special, 268-209, S 65. under special indorsement of instrument pay- able to bearer, 288-297, $ 70. of instrument transferred without indorse- ment, 307-310. { 79. may strike out indorsement, 306-307, || 78, 202. may sue in his own name, 314-318, { 90. title of. in action, 314-318. entitled to l)enclit of warranty, | 115. I>rincipal debtor as. 5!t7-5!i8, $ 2(K». • lisch.irKe of instrument by, 591-692, | 200. ■lischarge of party by. 626-(>.'?9. { 201. rrocuring certiflcation of check, 743-761. I 324. dutiJi of, 0H9, I 247. See I'HKSKNTMKNT FOR TAYMENT. NOTICK OK DISHONOR. I'UKSK.VT.VJENT FOR ACCEPTANCE. PROTf:ST. rights of, upon dishonor. 690, | 248. duty to rereivr payment for honor. | 306. no action against bank on check, 762-768, I Kf,. Holder In Due Course: (««* DR. FKN.SE.S.) rrqiilsilpii to constitute. instrument complete and regular, 3IB, I 91 5^80 INDEX. liolilor In Duo Course - Continur.l mslruiiuiU imt overdue, SJD-ivii, $ iM. taken in pooil fiiitli ami for value, ;f;f7-.140, i ill. taken without notice of iiitirniity, 34()-;J.'>(, holder (ierivinp title from, 3t>0, $ 97. may recover full amount, ;U>l-364, J 96. burden of proof, Stifr-.^Ttt, $ 98. notice to, before consideration paid, 357- 3tH), $ !I3. of instrument wronpfuUy filled up, 163-191. of instrument tr.insferred without indorse- ment, 307-310. I 7!). of altered instrument, t>ll, § 205. of instrument transferred after dishonor for nonaoceptance, 5S7-5>-M«. I 95. in signing instrument. 991-300. in leaving spacrs. 616-624. Negotlablp Inntruments: history of, 74-31 Cf.dlflralit.n of. 3 15 kinds of. ?A-Xt S*e Bir.US OF FXCHANQB. PROMISSORY NOTES CHr.CKH. BONDS HEOOT. fHHTRnH EIfT4 — M Negotiable Instruments — Continued. form of (see FORM OF NEGOTIABLE IN- STRUMENTS). continuation of negotiable character, 272— 274. i 77. defenses to (see DEFENSES). paper payable in trust is, 354-357. Negotiable Instruments Law: history of, 9-13. list of states which have enacted, 776. text of, 779-841. Negotiation: (See INDORSEMENT; DE- UVERY.) defined, 25. 259. { 60. by delivery, 260, { 60. by indorsement and delivery, 261-266, f 60. may delay presentment, 490-494, 735, 740. { 131. of overdue instrument, 272-274, 320-337. of guaranties, 471-474. Non- Acceptance: (See acceptance.) effect of, 689, 690, { 248. notice of, necessary, 530-533, { 160. effect of subsequent presentment for pay- ment, 530n, 587-589, $ 247. Non-Negotiable Notes: what are, 145-148, 715-721, fS 20, 320. have grace, 715-716. as to presumptive consideration. 716-720. liability of indorser of, 265n, 530n, 720-721. any instrument in hands of holder not in due course is like, { 97. Non-Payment: notice of, when necessary, 530. f 160. Notarial Act of Honor: necessary to payment for honor, 707. ii 301- 302. Notary: (See PROTEST.) when presentment by, necessary, 482 686 691n, SS 189. 260. protest by. 691-700, {$ 260-263, 267-268. whether he must act in person, 481, 698-700. signature and seal, 481-482, | 261 fees of, 363, 589n. Notice: (See HOLDER IN DITE COURSE.) of defect or defense, 340-.357. | 95. from face of paper, 345-357. before full amount paid, 357-380, | 93. not from indorsement without recourse. 286- 287. I 68. overdue paper, .120-337. overdue interest as, S.^S-.IS?. not because payable in trust. 354-357. Notico of Di.shonor: necesHary to chargo drawer or indorser, 630- 5.13. I 160. what constitutes nufflnient notice. by whom given, S.IS-.'i.TS. f 161. form of. 5.'i'l-54'.', I 1*17 mode of service, 642-.')46, I 167. to whom given, ftin-MH, f{ 168-172. within what lime. 54H r^r>. If 17.V17S. at what place, r)6.%-,'i7.1. | 179. when delay rxruned. 573-.'i7fi. | 184. when notice dispensed with, as to drawir, fi7.V-577, | 186. as to Indomer. 577 WO. | 186. due diligence, .V*), | ltd wslver. 580-686, || IHO-lRl. notice of non pavment when sercptWBOa refuned, ftfiK. § 187. proof of notice, 589-.W0, | IR9. successive notices, 661-666. | 178. B82 INl)E>i. Noting: il<'la.v exou»ed, | 267. siilwiquiiit t'Xtrlisiiiii nf protest, t)llO-('>!)S. f -Xi. OIliiH': hoKlcr of, as pa.vei-, I'-M, $ "J". Order: bill must cvntain, ■44—45, § 20. uncoiiditioiiul, 4(>-lil, §£ 20. 22. no aiitiilional act, 90, i 24. bill must be payable to, or bearer, 145-148, ii 20. 27-28. " Order or Bearer ": not neoess.irv bv law merchant, 158-159. not neces*i"rv by billa o( exchange act S 27 (.note), 6t>9n. necessary bv negotiable instruments law, 145-148, S§ 20, 27-28. Overdue Bill or Note: is payable on demand, 97, 272-274, § 26. continues negotiable, 272—274, § 77. indorsement of, 97, 272-274. transferee not holder in due course, 320-337, § 91. overdue interest, 335-337. when demand note is overdue, 322-324, 483- 494. acceptance of, § 226. presentment for acceptance before, 680, § 242. accommodation paper, 328-335. Parol: (See WRITINO.) acceptance by, r.4!)n. varying indorsement by, 271n. Particular Fund: indication of. 50-54, § 22. order or promise to pay out of, 49, S 22. Parties: primarily liable, defined, iS 3. maker, 40(1, S 110. acceptor, 403, 8 112. discharge of, 591-626, § 200. secondarily liable, defined, § 3. drawer, 418, § 111. indorser, 442, $ 116. irregular indorser, 446, $ 114. discharge of, 626, § 201. guarantor. 466. acceptor for honor, 701-706, §S 280-289. drawee, 148, 8 20. pavee, 106-148. S§ 20, 27-28. joint and several (see JOINT PARTIES), accommodation (see ACCOMMODATION PARTY), alteration in, 608-610, § 206. to action must appear on bill, 197-199, 8 37. Partners: signaturf-s by. 650n. accommodation paper by, 34.S-346. presentment for payment to, 694-695, 8 137. notice of dishonr.r to, 547-.'>48, 575, 8 170- authority to make alterations, 60&-610. authority to accept, 687-688. form of acceptance, 6.5')n. indorsement by, 298, 8 "1- Patent RlRhts: negotiable instrument given for, 384, 385n, J 330. Payee : who may be, 113-121, 8 27. must be certain, 107-113, { 27. I'ayee — Continued. li.'liii.iiis, I'.'S 144. § 28. I two or niMii'. 115 118, § 27. one or some of several, 118-121, j 27. liisliiiT as, 2119, 8 "'-■ name misspelled, 301, 8 73. admissions as to, 401, 403, 419, 88 110-112. whether holder in due course, 174-190, 390. Payment: lo cniiditional indorsee, 287, 8 *"*• disclKirgis iiislniiiient. .5IH-599, §8 77. 200. holder may eiilorce, 314-319, § 90. negotiable in.slrunient as, 741. of forged bill, 403-418. in due course, 591-592, 8 '48. by indorser does not discharge maker, 694- 51)7. by party secondarily liable, 639-641, 8 202. by acc'ommodated party. 640-641. § 202. of bills in a set. § 314. after notice of defect. 357-360, 8 93. of bills under forged indorsement, 433, 441, 403-418, 221-2.33. renewal note as, 593 Payment for Honor: when proper, 707, § 3U0. by whom, 707, § 300. for whom, 707, § 300. formal requisites. prior dishonor and protest, 707, § 300. notarial act of honor, 707, §8 301-302. declaration of intention, 8 302. effect of, discharge of parties subsequent, 708n, § .S04. liability of prior parties, 707, 8 304. effect of refusal to receive, 8 305. does not apply to notes, 708. Payment .Supra I»rote.st: (See PAV- MKNT FOR HONOR.) Pencil: necessary writing may be in, 34—35, 37. Personal Representative: (See EX- FXUTOR.) Place: of drawing or payment need not be speci- fied, 158-159, § 25. of indorsement, presumption, 302-306, $ 76. of presentment, for payment, 508-516, 8 133. for acceptance, (J85n. to acceptor for honor, 8 287. of acceptance, 478n, (i7.5--684, 8 241. what is sufficient, 685-688, 8 242. when delay excused, 8 244. when presentment excused, 688-689, 8 245. duty of hohler where bill not accepted, 689, 8 247. effect of dishonor, 689-600, 8 248. IxVDEX. Presentment for Payment: necessity of, not to L-liart'e auoeptor or maker, 477-480. not after dishonor (or non-acceptance, $ -lib. to charge drawer or indorser, 480. to charge acceptor for honor, 703, 705, $ 248. what consliluteij sutticient, by wlii.ni. 4S40-48;5, § 1^2. at what time, 4»;{-j(.»S, $ 132. at what place, 5 »-31t;. $ ia3. to whom, 516-518, § 132. when maker de.iJ. ;jli -517, § 13G. when makers joint, al 7-518, $ 138. by ('.xhihiling ins.ruin^^nt, all, 524—527, i 134. to acceptor for honor, | iST. when delay excused, 518-5lO, § 141. when presentment excused, no right to expect it, 520-524, §§ l.'',9, 14l). when imp.^ssible, 524-527, jj 14_. when waived, 527-529, § 142. of checks, 725-743, § 322. Presunipti<>n.s: (See BURDEN OF PKOOP. ) of consideration in negotiable instrument, •234-i?,0, S 50. of consideration in non-negotiable instru- ment, 710-720. of value for every signature, § 50. of place of indorsement, 302—300, § 76. of time of indursernent, 302, jj 75. that holder is Imlili r in due course, 365- 375. 691-592, S 98. of order of indorser'.^ liability. 450-46C, § 118. that parties indorse jointly and severally, 466, I 118. from deposit of notice of dishonor in mail, 544-545, S 176. iMiniary Part.v: (See P.\RTIES.) i'rincipal: (See .\GENT.) rrooiiratlon : i k'liature by, 219-220, 40. I mnlKO: (See FORM.) M'.te must contain a, 37-44, § 20. iiiiist be unconditional, 4G-<;i, §§ 20, 22. must not be of act a>lditional to payment of money, 90-90, jj 24. I > pay out of particular fimd, 49-54, II 22. to accept, when an acceptance, 654—057, « 223. rronilHHory Note: • •rit'iri and hintorv. 27-28, 714. deflnitlon of, I 320. f nil (we KtUM OK NEGOTI.MU.K IN.STKl' MKNT). nterprelation (see INTF.RPHKTATION). n.iM nrgritiable (gee \ON NKfiOTIABLE NOTES), pr trirt of, 4W>-482. | 54. (riven for patent riithl, .'>14, .IHftn, | .lid. given for RiM'riil.'ilive loriKirlrralion, i .331. umbipioua intilniment may be treated as, 113. 150, I .30. Protest ; when proper, f IW) noten mid inl.ind bilU, | 189. for better nenirlty. | 266. when necMMJirv. | JW*. foreign biiu] cm. I 2nn. bills accepted for honor, 701, || 2H4, 280, 2JW. refrreni e in caw of need. | TW,. before p-iyment for honor, 7.17, | .300. Protest — Continued, what constitutes sufficient, form and contents, 091-693, I 241. by whom. 098-700, ( 262. on what day, jj -Joa. at what place, { 264. mode of making, noting, 696-098. § 263. certicale of, 0'Jl-4, | 208. Restrictive Indorsement : definition ami effect, 271 284, {{ 00-07. itetransfcr : to prior party, effect of, 276-277, 3I(V-31S, .lOHn. 6f»-fl01, 006-006. 628n, 6:i»-640. I 80. Sale of NeKotinhle Instrument: (See NEGOTIATION; TRANSFER; WARRANTY.) Snturda.v: riiijtiiritv of inRtriiment on. 604-fin8. f 146. prfwnlment tor ncceptnnrp on, | 24S. Seal: ■ (Te, I ii,,,n iML' liability, 16)^-100, | 2fi. of notary. | 261. 884 INDEX, Secondary Party: (See PAKTIES; DI3 CHAKOK OK Sl'RKTY.) Security: (.*'«■♦' COLLATERAL SECDKl Tits.) protist for bettiT, i '-'(Ui. Seller of Negotiable Instrument: Uitrruiities l>y. 4iS»— 142, { 116. •gents liability as. 441 -44:{, f 119. p«)'iiient distinguished Ironi sale, 097-598. Set. Bills in a: C^^h; BILLS IN A SET.) Set-Oflf: us a defense, 373n, 320-324, 475. Sight Bills: presentment for acceptance, 67&-680, {{ 23, 240. have grace, 679-680. Signature: only those liable whose signatures appear, 197-201, 205-207, f 37. by maker or drawer, 35-30, { 20. by acceptor, ti48-649, { 220. by indorser, 37, 206, { 61. by agent. 197-220. {$ 37-40. fictitious. § 37. irregular. 446-458. S| 15, 113, 114. ambiguous. 197-22t>. §§ 36-39. forged. 221-233, § 42. presumption as to value for, { 50. joint, 196, S 36. distinguished from subscription, 36n. on blank paper. 168-169. § 33. on incomplete instrument, 163—192. lacking on instrument, 319. obtained by tricit, 387-399. Spaces: unauthorized filling in, 616-624. distinguished from blanks, 616-624. Special Indorsement: definition and effect, 268, § 64. written above blank indorsement, 268-271, { 65. of instrument payable to bearer, 288-297, § 70 Statement of Transaction: does not render bill or note conditional, 55- 61. f 22. Statute of Frauds: irregular indorsement. 447n. guaranties, 469—470. defense to instrument, 628n. Stolen In.'^trument: (See LOST IN STRUMENT.) Sum Certain: (See CERTAINTY.) Sunday: fs«^ HOLIDAY.) Surety: (See DISCHARGE OF SURETY; GUARANTOR.) contribution among sureties, 461—462. right to securities. 46C. defenses available to. 474-476. 629-638. reservation of righu against, 629-631, { 201. Tender of I'ayment: bv principal discharges surety, 629, { 201. What amounts to, 478-480, { 130. Time: how computed. 483n, | J 5. 146. reasonable, how determined, 483—494, 684n, 735-740, I 4. c«rtaii>tr of. 96-106, | 23. Time - Continued. of iitdoi'iieriient. presumption, f 902. | 76. for making presentiiu-nl. 483-6U8, if 131. 13& of maturity. 9t>-102. 4«3n, { 146. forgiving notice of dishonor. 648—665. {( 173-175. allowed drawee to accept, 06U-666. | 224. acceptance qualified as to, 676, { 229. for presentment for acceptance, 680-t}84. f>>r making protest, $ 263. for presenting check, 725—743. J 322. given to principal, is surety discharged— ti31-633. ti:U-6;«, $$ 200-201. given to principal discharges guarantor, 6S8n. when indorsement substniuent to transfer takes effect, 307-310, § 79. presentment, when time insufficient for, { 244. Title: (See HOLDER IN DUE COURSE.) when defective, $ 94. warranty, 433, § 115. of indorsee under restrictive indorsement, 274-276. 280-284, § 67. of indorsee under infant's indorsement. 220, S 41. of transferee without indorsement, 307-310, S 79. of holder of instrument payable to bearer and restrictively indorsed, 288—291. of holder in action, 314-318. of holder to guarnty, 471—474. Transfer: (See NEGOTIATION; HOLDER IN DUE COURSE.) what constitutes, 259. by delivery, 260, § 60. by indorsement, 261, J 60. without indorsement, 307-310. | 79. retransfer. 310-313, 5 80. for purpose of suit, 316n. in trust. 277-280, § 66. warranties, 419—442, § 115. when overdue, 320-3'?7, $ 91. of overdue accommodation paper, 328-335, Trust: indorsement in, 277-280, J 66. under conditional indorsement, 287, § 69. instrument payable in, 354-357. holder may recover in trust for indorser, 594-597. Incertalnty: (See CERTAINTY.) rncondltional Promise or Order: (See FORM.) necessary to negotiability, 4G, §§20, 22. when order or promise is unconditonal, 46-61, §§ 20, 22. Usury: purchase of business paper is not. 361n. taking interest in advance is not, 567. as a defense. 372. 378-383. warranty against. 427-431, 437-439. Value: (See HOLDER FOR VALUE.) defined, §§ 2, 51. need not be specified, 158-159, § 25. holder for, 249-253. 3.37-340, §§ 52, 91. antecedent debt as, 239-249, { 51. Virtual Acceptance: form of, fi.';4-657, { 223. effect, 657n. Waiver: of benefit of law. 94, § 24. of presentment for payment. 527-529, | 14S. of notice of dishonor, 580-586. { 180. of protest, 684-585, i( 182, 267. INDEX. 885 Warranty of Seller: where transfer by delivery, 419—442, { 115. where transfers by indorsement, 437—440, f 116. by agent who transfers, 441—442, f 119. by a^ent who signs for principal, 216-217. Without Recourse: indorsement qualified by, 272-274, 284-287 I 68. wtrrantie* where so transferred, 41»-442. i 115. Writing: defined, | 2. necessity of, in negotiable instrument. 34-35. { 20. necessity of, in case of renunciation, 601-604 I 203. holder may require acceptance in. 648-649. f 220. acceptance by separate, 651-654. | 222. necessity of, in acceptance for honor. ) 281. promise to accept must he in, 654-657, { 283. conflict with print, 195-196, | 36. LAW LIBRARY UNiVERsn V or californm LOS ANGELES ^/^ J^Kn^' . c^. ,T4^q»; qfcioKiBL iJBBARY FACILITY |i||l1llP>lrl'lliiiiili'illiillii'ilM'M''iiii AA 000 770 791 2