H. DOLLE (Of the Cincinnati Bar) 1920 T.THE LAW OF BUSINESS PAPER AND SECURITIES A Treatment of the Uniform Negotiable Instruments Act for the Lawyer. the Student and the Business Man. Warehouse Receipts of Certificates of Stock. FLOOD & COMPANY Publishers Chicago. Illinois . and the Transfer By CHARLES F. With Explanations of the Law and the Citations to Decisions Interpreting Which Its Act and Others Upon Provisions Were Based TOGETHER WITH A Brief Synopsis of the Law Governing Bills of of Collections and of the Acts Lading.

Copyright 1920 By CHARLES F. DOLLE. .

the explanations will be an aid. as far and in finance ma}' find it interesting and useful. 0>> have sought. But he will find in them many cross-references that will help him to visualize at one time all of its provisions (some in widely separated sections). For study use the book will present fcAver difficulties and distractions than are commonly met with when the subjects are pursued by the case method. and even declined altogether. to set out in concise as the nature of the subjects would permit. will find of much benefit the explanations I have offered at each section of the Act. I shall not hope that the specialist. This is a tribute to the authors of the Act which surely justifies the unselfish labor spent by them in reducing to a few pages the law of more than ten thousand cases. or even the mature lawyer. the request of the publishers to address this volume to lawyers as well as to business men and to young men getting a business education and an education in the law. The book is offered to business men and to young men getting an education in business and in the law. if I had not read a statement by the author of a treatise on the law of commercial paper that his three large volumes on this subject might never have been written if the Uniform Negotiable Instruments Law had been enacted before their publication. in the following pages. Perhaps I should have resisted more strongly. upon any question into which he may be inquiring. a non-technical treatment of the Uniform Acts which govern our business instruments.PREFACE. or in a book wholly designed for men already learned in the law. They will help him to better understand the Act. and to lawyers too. and if he will read the book he may not find it uninteresting. although the members of the bar already have at their disposal technical works upon the same subjects written by eminent authors. For the student and the business man without training in the law. although I frankly confess that it has sometimes seemed futile and quite unnecessary to try to explain its already clearly expressed provisions. These may be unnecessary to his understanding of the law. Men occupied in business I form a simple and. iii . He will find these explanations stated in a narrative-expository style that is designed to hold his interest and in language more simple than is customarily used in the treatment of technical subjects.

1920. it is not offered as Charles F. such changes as have been made by any of them being shown by marginal references and given in full in the Appendix. Dolle. is given. The Uniform Negotiable Instruments Law which forms the main subject of the book. A merely synoptical treatment of the other subjects anything more. .iv PREFACE The plan of the book. is now effective in all of the States. its arrangement and its scope are stated in the historical and introductory chapters at the beginning of each of the two main Divisions of the Uniform Negotiable Instruments Law. The book is therefore adaptable to all. April 17. and it will be profitable to read these before engaging upon the study of the sections of the Act which follow them. Cincinnati.



and it is very much worth while to know by what. We are all called upon to si{ni our names to promissory notes. . which we issue or indorse is really a promise to perform an obligation to the person to whom we give it and to all othprs to whom it may be assigned. If there is one branch of the law with which the lawyer and the business man ought to make himself familiar it To know is that upon the subject of commercial paper. but every man ought to be familiar with the rules which govern the use of his business instruments and the rights and duties of the parties upon this kind of paper.HISTORICAL AND INTRODUCTORY. Commercial paper is the medium by which we settle most of our business transactions and the fundamental principles upon which its negotiable character rests are alike all it over the world. bills of exchange and checks. When we know where we stand in regard to the negotiable instruioents which we sign and give out or which we receive in the course of our trade transactions we enjoy a and this sense of security which it is agreeable to feel. Every negotiable promissory note. not even the lawyer. check. laws our rights and our duties in respect to these are fixed. or draft. all the law is not the province of any man. It is by reason of its negotiability that has come to be as the so extensively used in place of actual money means of settling our business obligations. Dook is intended to be an aid to that useful knowledge.

may sue upon it in his own name. branch of the Common Law comprising all those principles and rulefj of mercantile transactions. not alone con- so transferred will take able to the original cerning commercial paper. The unwritten customs Chancellor of merchants Kent s definition of the law merchant. by sanction of the courts. of In- surance. Brokerage and. but consists of certain principles of equity and usages of trade. and that his rights. and the rights and obligations of all parties whose names are upon the instrument. The use of Bills of Exchange. ob- tained the force of law. but it also means that the Meaning of negotiability. transferee who becomes the holder of the instrument it free from defenses availand to prior parties among themselves.2 THE NEGOTIABLE INSTRUMENTS LAW Negotiability note. ^^^^ defined by Chancellor Kent in "Commentaries" on the law." all Writers agree that the earliest history of the customs of merchants is obscure. ^hich had their commercial origin in this branch of the . in part. or bill of means not only that the exchange which we issue may be assigned by one person to another by delivery or indorsement. as *'a system of law j^^^^ -^ his which does not rest essentially on the positive institutions and local customs of any particular country. but the equally well established rules of Factorage. quoting from Lord Mansfield. check. which have been in immemorial use and have thereby become universally established and recognized as binding custom and. which g-eneral convenience established to and a common sense of justice have regulate the dealings of merchants and the commercial countries of the civilized mariners in world. will be determined and enforced according to the well established The Law Merchant is a rules of the Law Merchant.

first came into use as a means of making credits available for the payment of the obliga- tions of merchants and traders residing in different dis- would indeed be interesting to know their very first use. used. tnree hundred years later. . but perhaps ^^. .^ ^j. bills bills drawn by or on foreign merchants. convenience and safety in the transportation and transfer of money inspired their use. Bills later came lo be used in France nnd from thence were introduced tant cities. C. is in one decided in 1603. and all decisions. by domestic merchants and finally. ^ . lirst form of commercial paper to be are oi such antiquity Origin and early history of Bills of Exchange. It England where their earliest recorded use.^^ bills ^j^^^ ^^^j. accordingly. into but their use seems to liave been confined to foreign Later.domestic transactions. but however and whenever that may have been the idea proved too good to be lost and.) who came to Athens with cargoes of corn and gave an order upon a banker in a town upon the Euxine with whom he had a credit. 3 and were the . caunot be traced to its beginning. It is said of Cicero. that he paid the tuition of his son at Athens by an order from a merchant in Rome drawn upon his debtor in the Greek city and perhaps we may believe that in his time ^100 B. Then. still later. at the end of the twelfth century they were well established among the merchants of Italy. so far as may he found in the reports of early cases.) bills of exchange. the earliest form of commercial paper. drav>Ti . as now and always. C.g^ introduced by that merchant said to be mentioned by Isocrates (400 J3.HISTORICAL AND INTRODUCTORY law. bills dra-wn by or upon persons not merchants or traders came to be governed by the already well understood and well established rules of the customs of merchants upon which all negotiable instruments codes. They were not at that time employed in England by merchants in theij.

varying inter- Up to that time there . and recognized as law more than seven centuries ago. in its France. upon the general convenience and a common sense of justice. in 1829. of E. These customs of merchants and mariners based. The French were the first to syste- matically arrange the rules of the Law mere ant. in the 17th Century. with the exception referred to. and in Germany in 1848. you will observe. all Prior to 1882. ** Civil Code" adopted that year. No genIn eral codification took place in England until 1882. have since become the public law of every civilized country in the world. codified them in what was kno^\ai as ''The Commercial Code of formed the basis of all continental codes. Merchant. had not been. in so far as they relate to com- mercial paper and. 1' j-««« 4. with the exception of upon the subject of commercial paper consisted in part of statutory enactment. in a way. in 1705. the United States. any codification of these decisions and established rules into written." This Code. enacted law in either country. it is said. in England and in The need for England and the California. Earliest codifications of the law T. Of course.4 THE NEGOTIABLE INSTRUMENTS LAW subject. act. At an early period it was disputed in England whether or not the rules of the law merchant applied to promissory notes as well as to bills of exchange but the negotiability of the former was afterward. Later they were collected and codified in Spain. settled by statute. the law United States and the British B. until 1872 when California did so. the United States there had been no attempt to codify the laws relating to commercial paper as established by usage. in this state of the law. upon the have since been based. but more largely of judicial decisions interpreting the estab- lished customs of the banking and business communities.

man justifiable occasion for In England the need for codification was met by the enactment by Parliament in 1882 of the "Bills of Ex- change Act" and this became the first general codification of the laws relating to commercial paper in any of It was designed to the English speaking countries. more particularly in the United States. all the existing law upon thoroughly comthe subject in that country. as nearly as possible. as now. and presented to the business dispute and litigation. the laborious examination of a multitude of decisions seldom. Since our system of law is based upon it was. of ^ZJ^e^i^r^^' the jurisprudence of ments law. course. providing a clear and uniform rule for the interpretation of the rights and duties of parties to commercial paper. which had already engaged in 1895. in response to this very general the need and urgent demand. a very logical consequence that upon this important subject the business community of England country looked for guidance to the codification need of the law merchant in Great Britain when the the for revision was proposed at the annual conference of meeting Commissioners on Uniform State Laws at their our 0A\Ti In that year. for the lawyer. codify.HISTORICAL AND IxNTRODUCTORY pretations of 5 many of the important rules of the law merchant confronted the lawyer in England and in our own country. earnest attention of the Uniform Laws Committee of the . where there were then. about resort. even then. fifty courts of final Bewildering complications and contradictions resulted from their conflicting decisions and the solu- tion of the perplexing problems which arose out of con- tradictory interpretation of this branch of business law involved. prehensive and covers the entire field of commercial That Act is paper.

The committee to which this work was intrusted was instructed to prepare a bill to be based upon the had then been in use for nearly fourteen years. which we shall presently see when what seems to be the real business purpose of our new currency legislation is fully taken advantage of by the banks and merchants of this country.6 THE NEGOTIABLE INSTRUMENTS LAW ' American Bankers Association. and while the continental codes other source it were all consulted by its authors. the annual conference of the Commissioners on Uniform State Laws appointed a committee to draft an act which would meet our business needs. Bills are expected then to exercise the same influence upon the movement of trade and the investment of funds in this country as they now do in the countries of Europe where all they are so extensively employed. Therefore. accounts will Discounts will in it is probability greatly increase and since expected that become available discount items by means . to the consideration of that Act alone but it was instructed to prepare and present a report which should have regard also to information to be obtained from whatever British Act which might see fit to consult. never- depart from any prior acts found to be in conflict with the setwere they whenever theless. however. This difference. due very probably to the more common use of bills of exchange in England than in the United States. and amply providing for an equally general use of bills of exchange in our domestic and foreign commerce. is. however. There is a marked difference in the forms of the British Act and our own. while the British Act forms the basis of our Uniform Negotiable Instruments Law. mainly in the structure of the law our own Act being equally as comprehensive as the British Act. did not hesitate to tled law of this country. the committee. This committee was not limited.

N. most of which. were such changes in the existing law as he had not felt at liberty to incorporate in his draft of the proposed bill. held there in 1896. deeming the Act so complete and satisfactory and so much better than any which it could frame. After some amendments had been made by the Conference. and those seeking a business education. At this Conference representatives of fourteen States were present and participated. the Act was agreed upon and prepared for submission to the legislatures of all the States with the recommendation of the Conference for its adoption. Its committee had the assistance of an able expert upon the law of commercial paper and during the year of its preparation the draft of the proposed Act was submitted to many of the most eminent American and English authorities upon the subject for their approval and criticism. a draft of what is now known as the Uni- form Negotiable Instruments Law. or as an addition to the present method of obtaining credit by promissory notes. which prevails in most parts of this country. reported it favorably and recommended to the State Associations that they present the Uniform Act to their respective state legislatures and urge its adoption in all the States.HISTORICAL AND INTRODUCTORY 7 of time acceptances in lieu of. Y. shall make themselves familiar with the law upon the subject of commercial paper and that the lawyer shall have a ready means of reference to the statute when his aid is sought. the author of the Act says.. there seems now to be even greater reason than ever before that men engaged in business. The committee to which the work of drafting a suitable act was intrusted prepared and submitted to the Commission at the next Conference in Saratoga. . It was later submitted to the members of tlie committee on Uniform Laws of the American Bankers' Association who.

the statute has been enacted in every State but Georgia and Texas and Alaska and the Philippine Islands. It is. and in all substantially in the form in which it was recommended by the commission. in most. discrepancies or obscurities as might appear in it can better be cleared away by judicial interpretation.8 THE NEGOTIABLE INSTRUMENTS LAW it is States in which in effect. in some respects. to be regretted the in the District of Columbia. than the British Act. However. up. Such small ambiguities. The Act was intended to be a code of all the laws relating to the use of commercial paper. Its style and language have been said to be better. It is also said to be simpler. the changes will be indicated in this book by marginal notes. none have been adopted by that body. some have seen fit to change any of the provisions of this Act. in order that the . intelligible less technical and more easily and it has been commended by than that Act. in such States as have altered the law in any material respect. perhaps. whatever conflict existed in the law of negotiable instruments in this country to establish certainty and and uniformity in their con- struction and effect in all the States. j^^^ jjg^ The words it of the statute are given con- controlling effect trolling effect flict wherever they are in con- with the law as previously existed either by stat- utory enactment or by judicial interpretation of the common law. The purpose of the Act being purp^s'^roflhe act. after twenty-one years. ^^^ adoption proceeded slowly but now. though many amendments to the Act have been proposed. These will refer the reader to an Appendix where they will be found. without change. and this seems to legislatures of have been the conclusion of all subsequent Conferences of the commissioners for. the courts and by eminent to clear English authority because of these qualities. Hawaii.

the Act will be set forth in this volume with such explanations as might be helpful The arrangement of the book. as has been said. to impair its essential Citations will be used and these will either illustrate the cases upon which is based the provision in the Act to which they refer.HISTORICAL AND INTRODUCTORY business 9 man may more readily understand his rights and his duties in regard to the commercial paper which he issues or accepts or to which he otherwise becomes a party in the course of his business dealings. or they will be of cases in which it has been interpreted. of by the interpretations of other courts own States where they have passed upon the Act. position toward uniformity in interpretation has it made when with- possible for me to use cases in the citations which aptly itself. . Attention will be directed. with the same authority as their This fortunate dis- own. the decisions of the courts of other States interpreting identical provisions of this Act. they are not obviously sustained by the Act tive decisions that are available out cumbering the volume with the multitude of cumula- and may be found in the various digests of the law. to him. well illustrate the conclusions stated in the text. These will be found to be comparatively few and not seriously characteristic of uniformity. be guided of their The courts of all the States will. course. by marginal notes. The arrangement it is of the book ^^'^^^ present each section of the Act in the in form which in effect in those States where no changes have been made. to such States as have made changes in the Act and what they are. but when they have no precedent decision of their own they will freely accept. following these with the explanations which seem necessary to make it intelligible to the man of ordinary comprehension and by ref- erences to related sections.

the definition incorporates all of the requirements of that section in regard to the form which such an instru- ment must have in order that it may be considered a negotiable promissory note. to be The second larly class of negotiable instruments particuis bills embraced within the Act of exchange. it is not complete until indorsed by him. and these are defined as follows: . as it will be seen by reference to Sec. however. a negotiable promissory note is defined as follows * < Definition of A negotiable promissory note with- promissory note. bills of exchange the definition of each of these instruments as it is con- tained in the law. j^^ ^g-^ jy^EANiNG OP this act is an uncon- ditional promise in writing made by one person to another signed by the maker engaging to pay on demand. a sum certain in money to order or to bearer. This sec- tion contains the definition of a ''negotiable promissory note. apply and better understand the provisions of the first title of the Act if he is here made familiar with sory notes. Where a note is drawn to the maker^'s own order. Accordingly. or at a fixed or determinable future time. the Act has particular reference to promis- and checks these being the principal forms of commercial paper and the three with which business men most frequently meet in their daily transactions. Its interpretation. and the interpretation of the rights and liabilities of its parties are not governed by this Act if it is not a negotiable instrument. and a written promise to pay money or other thing of value may be regarded as a promissory note even if it is not negotiable." and. 1 of the Act. and perhaps the reader will be enabled to approach.'' Not all promissory notes are negotiable.: 10 THE NEGOTIABLE INSTRUMENTS LAW Although it is applicable to all forms of negotiable in- struments.

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 ORDER OR TO BEARER. either immedi- upon presentment of the instrument or at a future time. bill of exchange is more commonly known as a ' A ''draft. the substance of the law must be complied with and is sufficiently so in the forms with which we are all familiar and ately can readily obtain. upon bankers bills. Wlien such an order is to be issued certain requisites of form must be observed. the Act does not designate the exact lang-uage to be used in drawing a bill." ''bill. the provisions of which are applicable to bills of exchange. to some other person whom he names. drawn by one person upon an' ' and "trade acceptance. as in other negotiable instruments. and to establish a rediscount market in this Europe. and this is defined in the Act as follows: . 11 "A bill of exchange is an unconditional order in writing addressed by one PERSON TO another." "acceptance" the designation newly applied to bills by merchants in order to ers Bills which are at present used only in transactions growing out of our foreign trade. SIGNED BY THE PERSON GIVING IT." drawn and accepted Bankdistinguish them from ' ' ' other with him. to a very large extent. These are fixed in this Act and while. the whom he has a credit or who it is is indebted to to It directs the person upon whom drawn pay money due upon the drawer's credit.' HISTORICAL AND INTRODUCTORY Bill of exchange defined. though not necessarily. A bill is usually. I have used the occasion to outline the principal business features of the to new Federal Reserve Bank Act which was designed permit and encourage the acceptance business by country similar to those of the financial centers of ' national banks. The third form of familiar commercial paper to which the law applies is a check. based. In the introduction to the second title.

mand. the check is upon its face a foreign that is to say. At the beginning of Title 3. a short division of the Act. itself it is made applicable to a check unless by the Act otherwise provided. A^iSE provided. mercial paper mentioned and to certifi. I shall very briefly prommention again that their negotiation and interpretation are governed by the Uniform Negotiable Instruments Law and will state a few of the most important provisions of the law by which their use is governed. ^. while they are not specially treated in the Act or in the explanations. provisions in regard to notice of non-paj^ment if and in regard to protest. is. 4? +• 1. which checks and other instruments are handled for collection and some of the duties and responsibilities of banks and collecting agents will be described The manner in and explained. Every provision of this Act which governs the interpretation and enforcement of the liabilities and rights of parties to a bill of exchange payable upon deox A bank payable ox demaxd. • . at the conclusion of the treatment of Title Certificates of deposit Certificates of • and bonds and deposit and ^onds. the Act. ' ' A A check is a bill of exchange dkawn Except as hereix otherthe peovisioxs of this act applicable to A BILL OF EXCHAXGE PAYABLE OX DEMAXD APPLY TO A check/' A check dra^m upon a bank is. by this section. being fully negotiable m- • struments. bill. and in fact but promissory notns.1 v n their coupons. therefore. are wholly governed by its provisions. considered to be and is in fact a bill of exchange payable upon demand. or All of its at sight. In addition to the three forms of comQuasi-negotiable j j instruments. with reference to applicable sections of 3. the provisions of which are applicable to issory notes and checks. being in effect. must be complied with. a bill drawn in one State and payable in another. 12 THE NEGOTIABLE INSTRUMENTS LAW check defined..

Alaska and the Philippine Islands. with the real purpose of the Act. to partially codify are.ents in all of the States. are now governed by the Uniform Act prepared and recommended by the Commissioners for their interpretation. however. The principles the which they are designed ever. interpreted to very all. and these. The Bills of Lading Act has been of the laws enacted in only twenty-one and the Uniform Stock Transfer Act in only twelve States. attempt to state these general principles in relation to each under the title ''Quasi- Negotiable Instruments." Being impressed. namely. the other Uniform Acts have not yet met \vith a generous approval from the legis- latures of the States. with this brief introduction its and and better history. . warehouse receipts and certificates of stock. his rights and his duties upon his ordinary commercial paper. be more interested prepared to proceed with the examination of the Act itself. to make uniform the law of negotiable instrum. which are regulated wholly by the Law Merchant. every- where. the reader will. in forty-one States. others. having some of the features of negotiable instruments and governed in part by the same or similar laws. in order that the business man may readily know and understand what it are. and repeating that was prepared and enacted particularly for the benefit of explanation of men in business. perhaps.HISTORICAL AND INTRODUCTORY cates of deposit 13 and bonds and their coupons. Aside from that Act. how- much same effect in nearly I shall. now. the District of Columbia. that is. are bills of lading. considered as quasi-negotiable. These are made the subject of other Uniform Acts proposed by the Commissioners on Uniformity of State Laws notably warehouse receipts. therefore.

1. authority. '* ' The opening section of the law provides what shall be formal requisites of a negotiable instrument. — Effect of indorsement of infa"t or corporation. Must be pay'able on demand. constitutes. When payable to bearer. If any are lacking-. Certainty 2 3 Interpretation. or at a fixed or determinable FUTURE time. When what promise uncondi. Omissions. 23 Antedated and postdated. the instrument. 17 18 tional. although it may be a valid note . SUBDIVISION I Form and Section 1 Fomi of ments. etc. seal. effect of. promise or order to pay a sum certain in money 3. HE must be XAIMED OR OTHERWISE INDICATED THEREIN WITH reasonable CERTAINTY. : . presumption as to.16 time.13 sum is —what 14 15 AVhen date may be inserted. ''Sec. Must be payable to order or to bearer.. and. 4 4 6 Detenninable future when effectual.instrument to be negotiable ml^st conform to the following requirements It must be in writing and signed 1Form of negotiable instrument. NEGOTIABLE INSTRUMENTS IN GENERAL. 21 When payable to order. An. when may be filled. by procuration. Delivery. Section negotiable as to instru. Liability of persons signing in trade or assumed name. Signature by agent. Signature effect of. how shown. AVhen payable on demand. 14 THE NEGOTIABLE INSTRUMENTS LAW § 1 TITLE I. 5. Incomplete instrument not delivered. Must contain an unconditional 2. 4. Where the instrument is addressed to a drawee. Date. . when presumed. 22 Terms when sufficient. Blanks. maker or drawer the by '^Wisconsin. Liability of persons signing as agent. Ambiguous instrument. 7 8 9 10 11 12 Additional provisions affect19 ing negotiability. particular 20 money. constitutes. Forged signature.

- It may be written or or printed on material other than paper parchment. first of all. meant the person who makes and issues a promissory note. The instrument must be payable in money. 2. 41 Am. 8 Adol & Ellis. is 15 or not negotiable and its interpretation and the rights and liabilities of its parties are not governed by the Act. 329. 23 Am. Dening. and 7 and sections 8 and 9 define the terms Co. 245. be signed. Phvsic. The second requirement of this section is explained in the next two sections of the Act. Closson vs. Windsor Cement Thompson. two or more persons may join in making a promissory note or drawing a bill or a check.) 443. 14 Tex. vs. 5 Barn. Baker vs. 86 Conn.^ Observe that the instrument must. Dec.§ 1 FORM AND INTERPRETATION bill. 6 Hill (N. money are declared to be ne- The third subsection of this section is amplified in sec- tions 4 1. 19. except in those States where by other statutes instruments payis By "maker" able in anything besides gotiable. 191) and the instrument may be written in pencil or in ink and the signature made by mark. (Sec. Biitchcrs & Drovers Bank. Gear\. & Cress. Steams. 94. 4 Vt. By ''drawer" is meant the person who makes and issues bill of exchange or draft. Of course. Dec. 755. but is the person who signs and issues it. or a check and it must. 127. Roark. . Reed vs. though unusual forms of material ought to be avoided as raising a suspicion of irregularity. Dec.vs. Y. He must either himself sign it or his name nmst have been placed upon it by some one whom he has authorized to do it.) Writing includes print (Sec. 11. 65 Am. The drawer of a check is not the person who presents it at the bank upon Avhich it is issued and draws the money upon it. Brown vs. 511. be in writing and signed by the person who issues it. 234. likewise.

Caro^i^^- ^Nebraska N. its acceptance by any one at that place will be deemed to be an acknowledgment that he is the perpresented. at its inception. Lehman. although . 739. Wheeler vs. 547. that is. or 4. firm or cor- ployed. Milner. S. (Sec. or 2. Smith (N. With exchange. Williams. must be named or dethe bill shall scribed with sufficient certainty and clearness to enable know to whom and where be But if the bill. 1 E. in CASE payment shall NOT BE MADE AT MATURITY.^ Certainty as to "Sec. T." If the instrument is neither it expressly payable to "order" or "bearer.'^ THE whole shall become due. 8 Taunt. Gray vs. without the use of these words. Webster.) fifth sub-section requires bill The draft or of exchange.16 ** THE NEGOTIABLE INSTRUMENTS LAW § 2 order" and ''bearer. 3. The sum payable it is is a SUM sum . Carolina. certaiist 2. 63 Ala."^ payable with interest the sum payable is not an uncertain amount for it can be ascertained -with exact certainty what sum is payable up- When an insti*ument is on 3. poration upon the holder to whom it is drawn. D. N. . With interest or By stated installments. 347. Dakota. with ^Wyoming. 10. Walton vs. Iowa." ability is not negotiable unless. its maturity. what within the meaning of this act to be paid : constitutes. whether at a fixed rate or at the current rate or . 1. 44 Ala. son to whom it was intended the bill should be presented and that he was intended as the drawee. Idaho. 5. The word "installments" used in this Blackman vs.) 1. names no drawee but designates a place where it is to be presented for payment. negoti- may clearly be inferred from other words emthat the drawee of a the person. By stated installments. With costs of collection or ax attorney's fee. a provision that upon default in payment OF ANY installment OR OF INTEREST.

A negotiable periods.* upon It may also contain a provision that the person whom a bill is drawn must in addition to the amount named in it pay ''exchange" which is the premium or charge to be collected by reason of the difference in the value of the same amount of money in different countries. 30. School Dist. 81 Wash. 184. and when a able in this or note manner to stallment is drawn or given to become paythe amount and time when each inbe paid must be named. therefore. Whittle vs. instrument which is payable in stated is in- stallments.). 442. 84. A promissory note or bill of exchange may also con- tain a provision that if it is not paid when due the person fees obliged to pay is it shall pay attorney's is and other costs of collection in addition to the sum promised. .. the is word ''stated" is used.§2 FORM AND INTERPRETATION bill 17 section means. partial payments. Bright vs. W. meaning. riagg vs. or the disparity in the value of the use of the same amount of money in different parts of the same country. or in which the interest payable at stated if may contain the provision that if any of these the interest is not paid when due the whole amount of the instrument shall become payable at installments or once. are usually employed. Wallace.'^ Such an instrument usually has written or printed on its face the words "with exchange" and it may fix a definite rate or state that the "exchange" shall be made at the rate prevailing on the date when it is payable and in that event the words "at the current rate. 108 Mich. Casey. mentioned in or determinable from the instrument with certainty as to both time and amount. Hodsre vs." or words of similar import. as in ordinary' usage. 5. D. 1106. as some Markey vs. enforceable unless. (Tex. Offield. 26 S. 4 N.. Such the case in a provision 4. 129 Wise. Fond du Lac Natl Bk.

Wolff. either interest. 67 Minn. 553.'' negoti- If a draft is presented to the drawee which contains any provisions requiring costs or fees of him to pay exchange. pay them. one who takes it afterward with of principal or notice of the default will not be considered to be a holder in all due course but he will take the instrument subject to the rights existing between its original parties. 97 Tenn. 129 Wis.. 103. the insertion of this its provision in the instrument does not destroy ability. 101 Tenn. Bk. vs. of N. When that an instrument is payable in installments. Montgomery vs. A. Fanners & Merch. and it contains a provision upon default in the payment of any all shall become due. vs. 235. 64 Mo. 8. if he is unwilling to to accept it.. 108 Mass. 802. Natl. 19.^ In that event. strictly in ac- cordance with the terms of the unless other laws of is to that State under which such an acceptance be en- forced negative any provision on the instrument requiring him to do so. Walker. Oppenheimer vs. Tyler 7. 142 111. 90 Ala. Kirby.. Forsyth. refuse will be liable to If he does accept it. 84. Crossthwaite. Louisville Bankor. 497. vs. Hodge Vette vs. Wallace.18 THE NEGOTIABLE INSTRUMENTS LAW it is § 2 States. Co. he should. Dorsey vs. payment Miller vs. 85 Ohio St. Stapleton vs. in conflict with the laws of usury. 589. Kyle. any kind. A. made illegal either by express statute or is held to be so by the courts as. 49 la. 306. 257. 95 Ga. 186. Bk. Stoneman vs. he pay a holder for value bill. and one or more of the installments is past due and unpaid.* A holder who takes the instrument after a known or appar- ent default in the any installment is chargeable with notice that the party obliged to pay the instrument may have some good defense available against of 6. Miller vs. Bk. La Barge. Waverly First Natl. vs. however. Gardner. . 35 Ind. 179. Pyle.

354. vs. vs. 11. 64 Mo. vs. 113 U. 53 N. : 2. W.^ "Sec. 338. Uncertainty in the sum payable will not be imputed when there is an obvious omission or the amount is is misspelt. S. 101 N. It is also unconditional if it vs. A. or a particular account to be debited with the amount. Simon. reimburse himself. S. Hill. Morgan vs. 554. 432. a statement of the transaction which gives rise to the instrument.'^ installment of principal or If the instrument all does not contain a provision making ture installments one. 656. La Barge. or if mait is upon default in the payment of any provided that the subsequent installments shall mature what I have just said will not and one taking such an instrument under these circumstances will take it in due course.^McCorkle Vette vp. 61 111.^^ This section means that a promise or an order to pay. otherwise unqualified. Y. 3. and consequently in the hands of any subsequent holder who takes it after any known or apparent default in the payment of an in the interest. although the instrument contains a reference to a particular fund out of which the person who is to pay it shall 9. U. if he takes the at the option of the holder.^ § 3 FORM AND INTERPRETATION 19 it hands of the original payee. 7 Ohio. 476. Beardslev Ohm 12. Yung. '. meets the requirement of subsection 2 of section 1 and is to be considered uncondi- tional. 63 Ind. 64 Mo. Bk. 52. 10. 153.^** otherwise disqualified. 156. 86 Iowa. Gilmore. Also see Sec. 179. apph instrument before the holder exercises his unless he is election. Miller. A. . Dean. An INDICATION OF A PARTICULAR FUND OUT OF WHICH reimbursement is to be made. An unqualified order or promise to pay is unconditional within THE MEANING OF THIS ACT THOUGH COUPLED WITH 1. But an order or promise to pay out of particular FUND is not unconditional. Battle Creek Nat.. 268. McCov vs. Schmittler vs. or Wlien promise unconditional.

not unconditional and therefore its not a negotiable instrument. for payment then de- pends upon the sufficiency of the particular fimd out of which it is to be paid. vs. 17. 128. Cas. 22.^-^ is or note. that is. 406. however. 14. Roads vs. Webb. are therefore not negotiable. 2 Fed. ' ' it a statement. 1137. of a bill or note.'^ But if the instrument is so drawn that directs or promises the payment to be made out of it is a particular fund.) 175. vs. it is not to be considered a conditional promise or order and its negotiability is not affected by such directs the If count. 159. it contains a statement. 16. St. Warren Roads vs. Y. and all usually are. Pegg. 529. Municipal warrants which are so draAvn. Scott.^* An order or promissory note drawn to be so payable would not be governed by the provisions of this Act and the rights and liabilities of parties to such an instrument would not be the same as upon a negotiable bill Negotiability. in the hands of any holder. subject to all of the defenses which the maker or other primary party could interpose to prevent its The pa^Tnent if still in the hands of the original payee. Read vs.) 526. (N. Y. nt 410. 32 Iowa. 172 Mich. S.20 THE NEGOTIABLE INSTRUMENTS LAW payment to be ' ' § 3 charged to a particular acmeaning an indication or description of the nature of the transaction which gives rise to. causes the instrument to be made and issued. not essential to the validity is and while an instrument which non- negotiable may be transferred from one person to an- other by indorsement and delivery^® it is. 91 Maine. vs.) 42. Me All (U. . 1 67 Barb. Buffalo. Ravmond vs. San Francisco. 29 Pa. Schmidt vs. at 411. 406. This is not true of 13. 41 Atl. 39 Barb (N. No. 91 Me. Middleton. Richards Warring. Webb. assignee of such an instrument takes no greater right or ^'^ title than that of his predecessor. Beverqne 15.

"^^ It also embraces one payable on or before a determinable fuknown and determined from the language used in the instrument itself. Dunham. pressed to be payable a fixed period after date or sight which is ex- "An INSTRUMENT PAYABLE UPON A CONTINGENCY IS NOT NEGOTIABLE. 2.§ 4 FORM AND INTERPRETATION 21 negotiable instruments and forms their principal distin- guishing feature. and in this would be included such as may be payable '*on or by" a ing regarded as the equivalent of ture time which can be fixed time. Massie vs. On or at a fixed period after the occurrence op A SPECIFIED event. "Wisconsin. 217. Bolford. WHICH IS CERTAIN TO HAPPEN. 290. such certainty as this is not always required. The most common illustration of an instrument payable after the happening of an event certain to happen is of one payable after the death of a person whom it names but. may be made payable ''upon Preston vs. 52 Ala. THOUGH THE TIME OF HAPPENING IS UNCERTAIN. An instrument is payable ^ determinable future time. months. months or years. for example. or years after date or after sight. . 4. At On the meaning of this . 18. -'^'^ "Sec. within what 1. or at a fixed date) after the happening of a named event which must be certain to happen although the time when it vdW happen may be uncertain." The or bill first sub-section of this section embraces a note payable a certain number of days. A certificate re- of deposit. o?i demand. The third embraces such as are payable at a fixed period (number of days. constitutes. the w^ord *'by" be** before. or 3. The second embraces such as are payable on or before a fixed date. 68 111.\ct. or or before a fixed or determinable future time specified therein. . Determinable future time. AND THE HAPPENING OF THE EVENT DOES NOT CURE THE DEFECT. of course.

532.) 266. 45 0. S. 5. Div. (U. these words being the equivalent of a promise to pay ''on demand." BuT THE NEGOTIABLE CHARAC"^^^ ^^ -^^" instrument otherwise negotiAdditional * ' provisions tiability. Co. (N.22 THE NEGOTIABLE INSTRUMENTS LAW ' ' § 5 turn of this certificate ciently certain to and this this meet has been held to be suffirequirement and not impair its negotiability. But nothing in this section shall validate any provision or stipulation otherwise illegal. vs. "^^ (See Sec. that is. or 3. or £. or 4. Austin.^" Examples are to be found in the cases cited. Y. 153 App. Tisdale Lbr. an instrument which requires the to perform some act in addition to the maker or acceptor payment of money is cannot be negotiated in the sense in which that term used in the Act. Hibemia Bk. is not negotiable.'"^ The first paragraph of this section is readily understood and. Piquet. Dresser. ^ Authorizes the S4LE of collateral securities in case the instrument be not paid at maturity. Sec. . except as it may be otherwise provided in the Act. An instkument which contains an order or PROMISE to do any ACT IN ADDITION TO THE PAYMENT OF MONEY IS NOT NEGOTIABLE. not able is affecting nego- which — not affected by a provision ^N. ^Authorizes a confession of judg„ _ ment" if the instrument be not paid at maturity. & Tr. 132 La. Gives the holder an election to require something to be done in lieu of payment of money. 13 How. further explanation seems necessary. <^Wisconsin. 17. vs. 19. S. Such an instrument would have merely Citizens Bank vs. ^Kentucky. Carolina.) 218. 20. Brown. 39. it does not thereby become This so distinctly states the rule that no negotiable. an uncertainty.) This section also provides that an instrument payable upon a contingency. ^Illinois. 'Waives the benefit of any law intended for the advantage or protection of the obligor. Co. Miller vs. and even though the uncertainty upon which it depends does happen.

81 Wash. Wis. would be interpreted under the rules of law which apply to simple contractual such. Finlev vs. Smedes.but a provision in a mort- ment will not be gage note accellerating its maturity if the mortgagor shall do anything to impair the security of the pledge will destroy its negotiability. Y. Y. St. 470.) 488.. 115 Wise. made upon is which are pledged to secure given pov/er to In the such an instrument the holder security pledged. Offield. 16. Y. vs. etc. 289. .-^ some confess judgand one to admit the maker's indebtedness ment upon the obligation if it is not paid at maturity. Kennedy Broderiok. 417. 8 N. 24. Gross vs. 124 Tenn. Elgin. and would be assignable as There are.5 Kv. Smith. 618. such as it. Babler. Emerson. however. 381. 216 Fed.^. sell The negotiability of such an instru- impaired by a provision requiring additional collateral or authorizing the surrender of the whole or part of the pledge upon the complete or partial performance of the promise. 23 N.§ 5 FORM AND INTERPRETATION 23 the force and legal effect of a simple contract. however. contain a provision authorizing the confession of judgment before maturity for such a provision would destroy its negotiability. collateral.^-* A promissory note of this kind usually contains a waiver of notice and of other benefits which the maker would The second is of instruments Avhich authorize otherwise be entitled to enjoy and the third sub-section 21. 15 Dalv (N. 23.^^ relations. Reed vs. Murphy. 166 C. vs. The first is usually found in that form of promissory is note used when a loan stocks. 137. A. 236. Baptists vs. Yearlv Meetff. First Nat'l" Bank. 442. Il?ley vs. 22. Bright vs. Rasscll. The instrument may not. four exceptions given to this rule which are declared not to affect the negotiability of the instrument and either or all of these may appear in it without destroying its negotiable character. 29 N. of F. 38. 445. bonds. 1 Ga. H. Suppl. C.

to it to make payment in money perform some act instead. as. Y. 28 Fed.24 THE NEGOTIABLE INSTRUMENTS LAW § 5 provides that this waiver. notwithstanding this provision. 132) provides that the acceptance of a bill of exchange may not express that the drawee will perform his promise by any other means than the payment of money. of requiring the person obliged to pay or. What vs. Yet. such a provision or stipulation is There are in all States laws which define what are illegal acts and this section is not intended to make legal any which would otherwise not made be unlawful.^^ The fourth means. the instrument contains any lawful by this section. Hostetter vs. 26. that direction to if the instrument obliged to itself it contains a the person pay or contains his promise to do any act in it is addition to the pajniient of money. however. not negotiable. require something to be done instead. that in his possession. are unlawful provisions differ in the Hughitt Johnson. 865.) 307. Another section of the Act (Sec. the negotiability of the instrument would not be affected by an acceptance which agrees to pay the instrument in money but provides also that the holder may. If. or perform certain services. . as well as a waiver of any and benefits by the person obliged to pay the instrument. for example. 36 Barb. it who is the person lawfully having the election. at his election. or stipulation. observe. be payable in as it says. that the instrument may money and provide is. the instrument will continue to be negotiable. illegal pro- vision. (N. which must be set forth in the instrument. may have the choice. ^^ilson. in lieu thereof to deliver certain property or securities. ^^ But. in the alternative. secured to him by laws intended for of his other rights his protection. 25. as well that the holder. may be contained in the instrument and.

The validity and negotiable money. seal. of an instrument. Nor is a note or a bill An bearing a seal thereby rendered the less negotiable. the laws of religion or morality or such as are distinctly opposed to public policy. 6. character of an instrument are not affected by the fact that^ — the value given.) negotiable. Such an instrument is deemed to have been drawn at the place where it is issued and if no place of payment is named. it is payable at the given address of the person who is to pay it. know them the statutes of each Very generally stated they are such as violate positive law. is IN THIS SECTION SHALL ALTER OR REPEAL STATUTE REQUIRING IN CERTAIN CASES THE NATURE OF '' CONSIDERATION TO BE STATED IN THE INSTBUMENT. or in which payment is to be made.§ 6 FORM AND INTERPRETATION 25 several States and to State must be examined. bill of exchange. or that any 2. But NOTHING ANY THE The negotiable character negotiable. investment bond of a municipal or other corporation is bearing a seal (See Sec. 184. Omissions. value has been given therefor. "Illinois. or 5. particular ''Sec. or other nego- tiable instrument may designate payment to be made . The instrument is negotiable if it does not appear to have been drawn or made payable at any specified place.) A promissory note. otherwise is its not destroyed nor it is negotiabilitj^ af- fected by the fact that not dated or that the words "value" or "value received" are omitted or it does not specify what value was given for it. or 3. and if this has also l)een omitted then at his residence or place of business. 73. Does not specify the place where it is drawn or the place where it is payable or 4. "Designates a particular kind of current money . j^ Does not specify "1^^ jg -^Q^ dated. (Sec. Bears a seal. as are its interest coupons.





in a particular kind of

common and


use at the place where

it is

payable, and receivable and

passing by law as money, without destroying or affecting
its negotiability.^'^

In some of the States there are laws

requiring that in certain cases the nature of the consideration must be expressed in the instrument, as, in certain States, that a note given for

some kinds of cropping

seeds must so state, and this section
alter or rejDeal such laws.

not intended to


it is

provided gen-

erally that
it is


the nature of the consideration

upon which



expressed in the instrument




not affected by such a provision.


payable on demand.






payable on


1. Where it is expressed to be payable on demand, or at sight, or on presentation or 2. In which no time for payment is expressed. Where an instrument is issued, accepted, or indorsed when overdue, it is, as regards the person so issuing, '^ accepting or indorsing it, payable on demand. A promissory note Avhich by its terms is payable upon

demand, or a draft or bill of exchange payable at sight or upon presentation, or a note or other negotiable instrument in which no time for payment is fixed, must be paid by the person who is obliged to pay it, whenever the holder presents it to him and demands its payment.


it is

so payable even

if it is

payable with interest
shall be pay-

and contains a provision that the interest
Such a provision
the holder

able annually or at other fixed periods after its date.^^

not regarded as an indication that

not expected to present the instrument



until the time at

which the interest


Rep. 401.

27. 28.

Hatch vs. First Nat'l Bank, 94 Me. 348, SO Am. Header vs. Dollar Savg. Bk., 56 Ga. 605.


Johnson, 146 Mass. 20, 14 N. E. 925.
70 N. C. 709.



Shaw, 43 N. H. 170.


vs. Braswell,

§ 7

all to


and not at

be understood to require liim to withissued, accepted, or


until that time.

which is transferred from one person to another by indorsement after it is past due, is, as to the person so issuing, acceptinstrument which
ing or indorsing


and, of course, as to


prior parties,

payable at once.

In order to hold the indorser indorsing such an instrument after maturity the holder must present it for payment within a reasonable time after its

negotiation to him, although

has previously been dis-

honored, and

if it is

dishonor to his

not then paid must give notice of transferers^ if his liability had not

already been fixed by notice upon

previous dishonor.^^*

The holder of an instrument payable on demand has the right to demand payment immediately after its issue or negotiation to him.^*^ He may, if he desires, wait a reasonable time before doing so, but what is a reasonable

a question w^hich will permit of varying con-

struction (see sees. 53, 71, 144


193) and

it is


if the instrument bears indorsements, to make demand at once unless a delay has been agreed upon, and then proceed as required under Sees. 89 to 118 inclusive. Of


unusual to do this when the instrument is a promissory note but not at all unusual in this country in the case of bills of exchange payable on demand. Init is



the instrument


a check,


detention for a

very few days without presenting


payment has
It is not rec-

been held to be an unreasonable delay.^^
vs. Caro & Baum, 9 Oregon, 278. Colt vs. Barnard, 18 Pick. 260. Libbey vs. Pierce, 47 N. H. 309, 314. Beer vs. Clifton, 98 Cal. 323.


29a. Libbey vs. Pierce, 47 N.

H. 309, 314.

Merritt vs. Todd, 23 N. Y. 28.
Nat'l State Bk. vs. Weil, 141 Pa. St. 457; 21 A. 667.





ommended, however, that immediate demand be made for the payment of a bill or note which has been issued or drawn to be used as a credit instrument.^^ After demand and notice to the indorsers, the holder may sue upon the instrument at his pleasure and he is
limited as to the length of time he


wait before doing

only by the statute of limitations governing such

instruments in the State in which they are to be enforced.


upon this subject under the sections above referred to. The maker of a demand note has, of course, the right to pay it at any time after its issue
will be said

unless a delay has been agreed upon.^^


payable to



The instrument





payee who is not maker, drawer, or drawee; or The drawer or maker or 3. The drawee; or 4. Two or more PAYEES JOINTLY; OR 5. One or some of several payees or 6. The holder of an office for the time being." Where the instrument is payable to order the payee





must be named or otherwise indicated therein with reasonable certainty,'' An instrument payable to order requires indorsement
to pass the title or ownership.

To be payable



the payee


either be


or described

ciently so that his identity can be easily ascertained,^*
(Sec. 1)

and the instrument must

state that

it is


able to the order of the person


or described as

the payee.

these words are not used and negotiability

Columbian Banking- Co. vs. Bowen, 134 Wise. 218. Nutting vs. Burked, 48 Mich. 241, 12 N. W. 184.

33. 34.

Hamilton, 21 Gratt (Va.) 273.

United States

White, 2 Hill,




Lehman, 63 Ala.






cannot clearly be inferred from other language employed
in the instrument

will not be negotiable.^''

payable to order and must be transferred by indorsement, when it is payable to one's own self or order
or, if



of exchange,
it is


it is

payable to the person
It is also



drawn or

to his order.


able to order

if it is

payable to the order of a person


not the maker, drawer or drawee.

then called the ''payee."

That person The instrument may be


drawn payable

to several persons jointly,

a person and a corporation jointly, a corporation being, by a fiction of the law, an artificial person having a distinct existence as such.

made or drawn more of several perpayable in the alternative to one or sons whose names may be mentioned or who may be


also be

described in the instrument.

need not be designated by name.36 An instrument payable to the holder of an office whose name it does not mention may be presented for payment when due by or to whatever person holds the office designated, and such a presentment is good and the

The holder






be negotiated by the indorsement of the

person holding the
urer of Blank


(See Sec. 42.)



scription of the officer, as for example,


the Treas-


would designate the payee with

the certainty required

by Section






payment made

to the holder of the office


in the
if it

instrument or indorsement as the payee good, even And if a person is not made at the office named.
as the holder of an


and he has relinquished his office, presentment or payment to, or suit to enforce the instrument by his successor is

named and described



vs. Cryines, 1 vs. Treas.


(S. C.) 9,



Dec. 250.




Co., 31 Ind.






proper,^" unless the instrument


own property and

the designation of the


he holds

used only for

However, care must be exercised to see that the proper person accepts the instrument or that pajTiient is made to the proper person when the drawee or payee is the holder of an office and is not mentioned by name, or if he is mentioned by name together with a description of the office he holds, and payment should
never be made unless the instrument is at once surrendered. (Sees. 88, 119.) Even if the instrument is surrendered,
will not always disExceeding great care must be exercised when there is any uncertainty in this regard. Reasonable certainty in describing the drawee or payee is
to the


wrong person

charge the obligation.





not designated by


for the reason,

as has already been stated, that

must appear to whom and Avhere the instrument is to be presented, and in order that it shall indicate clearly by whose indorsement it may be negotiated and to whom payment is to be made. (Sec. It has been held that an instrument payable to a 1.) '* Trustee" is not commercial paper and there are difficulties in the way of the transfer of such paper by indorsement which very well deserve careful inquiry.^^
(See Sec. 42.)
If an instrument
to his order,

payable to a named person but not
not payable to bearer as
it is


if it is



vided in the next section,

not negotiable, unless from
is is

the use of other words negotiability

clearly to be in-

But an instrument which

negotiable at


origin continues to be so until

has been restrictively





McLaudilin, 74 Me. 480. Winter, 53 Me. 348. Gore, 6 N. Y. 124.

National Citv Bk. vs. Bankers Trust Co., 37 App. (D. C), 533. Third Nat '1 Bk. vs. Lana:e, 51 Md. 138, 34 Am. R. 304. Sturtevant vs. Jacques, 14 Allen (Mass.) 523.





indorsed or

discharged by payment

(sec. 47)





negotiation, the instrument obtains an in-

dorsement from which words are absent wliich imply the power to further negotiate it, that is, which merely omits
such words,

continues to be negotiable notwithstand(Sec. 36.)

ing their omission.




The instrument
it is



to bearer.



expressed to be so pay-

able; OR


it is

payable to a person named therein or

bearer; or
3. "^When it is payable to the order of a fictitious OR non-existing person, and such fact was known to the person making it so payable; or 4. When the name of the payee does not purport TO BE the name OF ANY PERSON; OR 5. "When the only or last indorsement is an in-

dorsement IN blank."




payable to and negotiable by the

person who has

in his possession

*'pay to bearer," these w^ords

when it is written meaning that the person
and presents

who has

the instrument in his possession

for payment,

the proper person to receive the


due upon

(Sec. 51. )•


of similar import


be employed.

to the bearer at the maturity of good even though the person receiving payment does so without authority of the owner of the instrument, provided the person paying had at the time of payment no knowledge, or was not charged with any duty to know that the holder acted fraudulently in presenting the instrument and receiving the payment. (Sec. 88.) An instrument which is made payable to a named person whose name is followed by the words *'or bearer" is payable to any one who has it in his possession and can be negotiated by him even if it does not bear the indorsement of the payee whose name appears


the instrument






face as the person to


it is

payable, for

the obvious reason that such an instrument
either to the person

to be paid


or to






an instrument

payable to a

fictitious person,




not real, but a pretended person, or

one who has no interest in the



tion, ^^^

whose name is used merely for the purpose of decepand the person making the instrument knows at the time of issuing it that the payee is fictitious, it is payable to bearer. The obvious intention of this subsection is that such an instrument shall not require indorsement since no person capable of or interested in indorsing it exists. Quite obviously also, an instrument payable to the assumed, trade name under which one may be doing business would not become payable to bearer because the instrument was not made payable to the fic(See Sec. titious name for the purpose of deception.^^ used words written that the is instrument so If the 18.) to indicate to whom it is to he paid do not appear to be the name of any person, for example, a check payable to ^'Cash," or if it does not describe any one with the
certainty required, (See Sec. 1) it
also payable to bearer.

then, in either case,

But the instrument is probably not payable to bearer if the person making it knowingly makes it payable to a person who is dead. Such an instrument would recjuire the indorsement of the representatives of the decedent's estate. ^^



Corn Exchange Natl. Bk., 221 Pa. 599, 12S Am.

R. 780.
vs. vs.





Y., 126 N. Y. .318.

Edgerton Jones vs.
S. 71.

Preston, 15

A. 23.




App. Div.

103, 41 N. Y.



Eastman, 7 Cnsh. (Mass.) 111.



The Kent & Stanley

Co., 87





negotiable instrument

to order, as


made payable

mider Sec. 8, becomes payable to bearer and can be passed by mere delivery when the only or the last indorsement upon it is in blank. An indorsement in blank is made by writing one's name upon the back of the instrument without any words indicating another to whom
it is

to be paid.

(Sec. 34.)

An instrument which is made payable to bearer or becomes so may be transferred by mere delivery. (Sec. It does not require indorsement by the holder to 30.) transfer the title. However, no person is liable upon
the instrument, except as

otherwise provided in this

act (Sees. 18, 19, 20), unless he has placed his signature

and an instrument negotiated by mere delivery does not accumulate the security which added indorsements give to one negotiated by indorsement.



The instrument need not language of this act, but the follow "Wisconsin. ^^^ tebms aee sufficient which clearly indicate an intention to conform to the requirements
Terms when
*'Sec. 10.




The Negotiable Instruments Act was not intended



invalid instruments which are not written in the

language of this law.
eign,^ ^ jjiay be


language, English or forbill,

used in drawing a

note or check which

show clearly that the parties to the instrument intended to make such an instrument as will substantially conform to the provisions of the Act. Doubt and uncertainty, confusion and delay, expensive litigation and diswill

pute will be avoided, however,
or promising the payment of


instruments ordering
are in-

money and which

tended for negotiation, that is, for transfer by delivery or indorsement from one person to another in the regular course of trade, are so writte n that there can be no


vs. Gala,

64 Md. 262, 265.

drawing. Gilley vs. Harrell. in effect. Co.** ^^^ "Sec. are readily obtainable. presumption as to. Smith. 115. will be interpreted according to to its special significance unless do so would ])e clearly inconsistent with the purpose of the instrument. ment of the commercial relationships between business instrument executed in conformity with this Act will have the same interpretation in every State in men and an which it has been adopted. Blackburn. 118 Tenn.*^ fix The provisions of this Act definitely the rights. 16 Iowa. 321.) 827. Y. Kerr vs.. Where the instrument or acceptance or any indorsement thereon is dated. Y. (N. such date is deemed prima facie to be the true date of the making." This section means that when an instrument or an Date. (N. and are. 161 App. negotiable instruments. Div. 156 App. Pilmer vs. an impossible one. the or given. acceptance upon a draft or date given is bill of exchange is dated. then the nearest or probBranch of State Bank. Div. 589. differing not very materially in their language from those employed since the fourteenth century. 11. 44 Owen vs. and wherever practicable they should be used. But is the date 43. Informal instruments which clearly indicate by the terms used that they are intended to be negotiable and which are not lacking in any of the essential requirements of this Act will be construed to be. liabilities and duties of all the parties to Its provisions cover every require- commercial paper. if presumed to be the date when it was made Likewise when an indorsement is dated. If language is used in an instrument which by long es- tablished custom has obtained a special nificance different meaning or it sig- from its ordinary meaning. 117 Wise.) 807. Westberg vs. Chicago Lbr. acceptance or indorsement as the case may be.34 THE NEGOTIABLE INSTRUMENTS LAW Forms § 11 doubt of their character. .

14 111. .^' An instrument so dated. 2 Rob. or indorsement will be taken to be date. The instrument is not in- valid for the reason only that it is anprovided this is not done for an postdated. the person to whom an instrument so dated is delivered acquires the titlk thereto as of the date of delivery. delivered or transferred acquires title its owner. Kenncr. 478." If an instrument is dated before (antedated) or later issue (postdated) or an indorseit is than the real date of its ment or acceptance valid. if payable at a given he becomes time after its date. the presumption in its favor mil prevail and the date upon the instrument. 104 Reprint. 517. vs. A postdated instrument is regarded very much the same as a bill payable so many days to it. upon the day when it is delivered or transferred to him and he may negoIt is not necessary that he hold tiate it immediately. tedated or illegal or fraudulent purpose. and the person to is whom an instru- ment so dated that is. 471. Brewster Passmore vs. North. 47. Of course. 13 East. (La. Ryan. it until the day it is dated before transferring it to another. the person disputing it will be permitted to show that it is not the true date and if the question arises in an action upon the instrument he must offer some evidence to support his contention.§ 12 FOKM AND INTERPRETATION (April 31st latter. not thereby is made in- antedating or postdating done for an unlawful or a fraudulent purpose.)"*^ 35 able one will be adopted. If he does not. 51. The fact that it is postdated is Wa^er Mobley vs.''^ its true Antedated and postdated. "Sec.) 120. if the date given is not really the date upon which the act was done. issued before its not sufficient to put the indorsee upon notice of irregu45. McArdle. 12. 8 Wend. may be April 30th. after sight. unless the is so dated. vs. does not become due earlier because date. or 1st. May probably the acceptance. 46.

When date may '*Sec. this will not render the instrument invalid and will not.. 13 East. if it is issued or nego- tiated after its maturity by the provisions of 7. but the effect of this would be merely to pre- vent its pajTiient would not release when presented. delivered later than date and it is. 64 Misc.^^ (Sec. be inserted. 20 Cal. as he can of one not postdated. 471. ^-^ Even if the death of one of the parties to a postdated instrument occurs before the day of its date. 105 N. He can. His countermand him from his obligation to the holder. 104 Reprint. Perkins. 603. it is true. S. countermand payment of such an instrument. 12 Mass. 13. in all cases. Usher Cutts vs.. Passmore vs. 49. in the absence of any agreement to the contrary. maker at any time after If it is payable at a given time the it time of maturity is not postponed by the fact that its was Sec. 206. 87. ThE INSERTION OF A WRONG DATE DOES NOT AVOID THE INSTRUMENT IN THE HANDS OF A SUBSEQUENT HOLDER IN DUE COURSE BUT AS TO HIM. 56) and the person who executes and delivers a postdated instrument cannot. Tuolumne County Nat. Nassano vs. THE DATE SO INSERTED IS TO BE REGARDED AS THE TRUE DATE.) A. Where a^ instrument ex- pressed to be payable at a fixed period AFTER DATE IS ISSUED UNDATED. of course. Bk. E 360 vs. Albers vs. amount to a revocation. be put in issue its date. an instrument or an acceptance is payable at a fixed period after date or sight and it is issued or delivered If 48. 50. North.36 THE NEGOTIABLE INSTRUMENTS LAW § 13 larity or fraud. Tucker Co. A. Y. recall the instrument by reason of the fact that it is dated later than the date of its issue. ANY HOLDER MAY INSERT THEREIN THE TRUE DATE OF ISSUE OR ACCEPTANCE AND THE INSTRUMENT SHALL BE PAYABLE ACCORDINGLY. . (N." . 217 Mass. OR WHERE THE ACCEPTANCE OF AN INSTRUMENT PAYABLE AT A FIXED PERIOD AFTER SIGHT IS UNDATED. Hoffman. 130 P.'^" An by antedated instruits ment can. 29. 441. 517. payable upon demand.

the ment or acceptance and the holder maker of the instruwho has knowingly it inserted a wrong and any holder taking with notice of the insertion of the the instrument able. considered to true date. the date inserted. as to this holder in due course. And a signature ON a blank PAPER DELIVERED BY THE PERSON :MAKING THE SIGNATURE IN ORDER THAT THE PAPER MAY BE CONVERTED INTO A NEGOTIABLE INSTRUMENT OPERATES AS A PRIMA FACIE" AUTHORITY TO FILL IT UP AS SUCH FOR ANY AMOUNT. "Wisconsin. It follows. Houston Bank vs. "Where the instrument is wanting in any material. As between date.p ^^j. has been held that is thereby avoided and not enforce- And. even though wrong. therefore. Day. BUT IF ANY >^rCU 51.§14 FORM AND INTERPRETATION may issue or acceptance for a date is 37 without bearing a date. '^So. 145 Mo. whom he looks for payment. Blanks. 122 S. CAME A PARTY THERETO PRIOR TO ITS COMPLETION. . wnen may be filed. passes into fix its maturity. . IT MUST BE FILLED UP STRICTLY IN ACCORDANCE WITH THE AUTHORITY GIVEN AND WITHIN A REASONABLE TIME. 14. 410. A. . HOWEVER. meaning. the holder date of its insert the true then neces- sary to he inserts a wrong date and the instrument in due course. this might be true even though it he has made the insertion in good faith believing to- be the true date.^^ is wrong date. the person in possession thereof has a prima FACIE AUTHORITY TO COMPLETE IT^ BY FILIr- ^^^ ^. W. blajtks therein. Section 6 provides that if the date is omitted alto- gether the instrument is not thereby invalidated and this section gives the holder the right to insert the true date. THAT ANY SUCH INSTRUMENT WHEN COMPLETED MAY BE ENFORCED AGAINST ANY PERSON WHO BE-. particular. by a regular transaction and for value before maturity. 756. In ORDER. it seems. "Sec. Dakota. that if the holder of an undated instrument or acceptance does not know its true date he ought not to insert any without the consent of the parties to -. ''Illinois. If the hands of another. be its is..

Observe he is pre- that this right prima facie. at 251. Weyerhauser vs. and the time when is payable. A. 68 Ind. . E. 64 X. IT IS VALID AND EEFECTUAL FOR ALL PURPOSES IN HIS HANDS. Drescher. must have been so intended. the one whom given has the right to supply the omissions or to write over the blank signature words which will convert the blank paper into a negotiable instrument for any amount. and it is important that it is. IS NEGOTIATED TO A HOLDER IN DUE COURSE. 359. or if he had. ^^ is filled signed in blank. 150. Y. Baker. 54. AND HE MAY ENFORCE IT AS IF IT HAD BEEN FILLED UP STRICTLY IN ACCORDANCE WITH THE AUTHORITY GIVEN AND WITHIN A REASONABLE TIME/' This section grants to the person in possession of the instrument the right to sujjply any material thing which may have sumed to been omitted when is it was executed. without having been out as it is amount. 53. the right to make them will have been properly exercised. 183. that to the date. If the omissions are to the correctly supplied and not made contrary terms of the transaction out of which the instrument arose. Iowa St. Younc: vs. or even if a blank piece of paper signed by any person and it delivered to another in order that into it is may be converted to and used as a negotiable instrument. that has not been properly exercised. 137 N. 29 Ind. Y. AFTER COMPLETION. Marshall vs. have authority to do so and this presumption continues until the person who is affected by what he does disputes it and is able to show by some evidence that he either it had not this authority. Claypool.38 THE NEGOTIABLE INSTRUMENTS LAW § 14 INSTRUMENT. 100 N. 130. The person who thus supplies omissions or fills up such a paper cannot himself enforce its payment 52. Richards vs. or in one or some of these particulars. Dunn. 91 Kas. that is to say.'^ This section also provides that when a paper which is intended to be used as a negotiable instrument. to whom. Bank vs. Day.

is doubt about the authority of the person who vs. and not Avho strict afterward completed in in blank. and unless he has done delivery to him. The particular circumstances of each case in which the fill question of the proper exercise of authority to in if blank instruments arises will be inquired into and there 54. Stanley. even if it has not been filled up and issued in accordance with the authority under which it was given. Steuer. 220 Mass. and within a reasonable time after in it was so signed. one who it is not a holder in due course enforce unless was so done.§14 FORM AND INTERPRETATION 39 by the one who signed it in blank. 445. Boston Steel & Iron Co. his transferee will not be deemed a holder in due course and cannot recover upon it. did not do so in strict accordance with his authority. 140. it within a reasonable time after its Nor can any it. fills Sargent. Rreslin. Stone Tower .^^ But if after completion by any one the instrument is. 183 Mass. such a holder accordance with the au- thority given within a reasonable time after being signed and subsequent holders for value if can enforce person who tiable it against the signers in blank even the filled up the blanks or converted into a nego- instrument the signed blank piece of paper. And if one transfers such an instrument to another without first completing it in accordance with his authority. 429. 220 Mass. vs. Signers blank cannot resist payment of an instrument in the hands of a holder in due course. that transferred before its maturity in a regular transaction for a valuable consideration to some other person and is not in that it know had no knowledge law chargeable with notice or any duty to was incomplete when delivered. Hartington Bk. 47. unless he has filled it up strictly in accordance with the authority which the signer gave him to do so. 88 Neb. vs. vs. is negotiated in due course.

its face. 31.) 529 and Note . R. vs. who filled it is up exceeded fill his authority in doing Notice defined in Sec. A. (N. on to so 55. the one to whom such paper may be put upon inquiry if any suspicious . 124 P. 704. These cases have nearly always grown out of instruments upon which blank spaces have not been filled up by lining them fill and does not grant the right in the instrument which are not occupied out when the Avords or figures written in the instrument do not fully occupy the spaces intended for their inser- Because of the opportunity thus given to alter the instrument. an obli- gation rests upon every signer of a negotiable instru- ment to so prepare that it. it it But he is not bound it. it is tending persons into any different contract from that which.''^ prepare that impossible to change Otis El. First Nat.40 it THE NEGOTIABLE INSTRUMENTS LAW up. fraudulent change has been effected. S. 56. 41 L. or to see that at the time he atit is taches his signature to the instrument made out in in- such a way it cannot readily be changed by fraud purports to be. but the section to not intended any spaces upon by written or printed words. Bk. the courts expressing widely diverging views. The authority given by sion the right to fill this section to up blank and spaces in the instrument extends to the person in posses- up such blanks to as are obviously is intentionally left unfilled.. Of course. he cannot recover upon the instrument if the person so. 163 Cal. dishonest persons have been enabled to change its amount without in any way indicating that a tion. either of his right to do it § 14 or his right to fix the is amount offered of the instrument. Co. Numerous decisions are to be found in the reports of all of the States upon this subject. by writing additional words or figures upon it when the instrument is not signed in blank and is otherwise complete. cir- cumstances appear from the instrument itself and if he is chargeable with notice.

) be liable to a holder in due course for the full amount of the altered sum as damages.. figure 1 before 75. First Natl. 124 S. Lester. 22 Mich. O'Connell. 21 L. 194 N. Y. (N. S. of itself. is not sufficient make liable for the altered it is.§14 FOKM AND INTERPRETATION 41 The strong presumption exists that all men are honest. if their carelessness was responsible for the fraud and his injury. R. Greenfield Savgs. Gray.^^ (Sec. Nat. . vs. S. vs. if a promissory note writ- ten for seventy-five dollars and these words and figures are written into left but in such a manner that a space is and such an instrument is afterward fraudulently raised by adding the words ''one hundred" before "seventy-five" and the before the first word and figure. 114 Ky. 196. Yocum vs. fill the blank spaces. parties. except those tion. 63 111. 56. R. 165. St. 163 Cal. (N. Otis El. Aside from the instrument. A.) 529. 321."'^ Butthis is a different subject and it is only referred to in order to illustrate the importance of properly making out a negotiable instrument. Co. Tnimper.. 57. Scotland Co. even though its it is so filled out that it is possi))le to change figures amount by inserting additional words and it. Bk. it. in to and it is so altered. 123 Mass. and if an instrument which is complete when delivered. 461. the alteration will considered material alteration and the instrument unenforceable in the raised amount. Hacket vs. 704. sum the person whose obis ligation For example. 771. When the written words and figures do not completely Garrard vs. First Nat. they might 125. thereby changing it to a note for one be hundred and seventy-five dollars. On such a note the who became parties after the altera- would be liable only in the original amount. however. and they would be if their negligence amounted to an estoppel. Nat. 82. this. Bk.) 402. E. 23 Mo. vs. draw Hadden. A. Bk. vs. App. 31. 87 N. 427. 67 Pa. Holmes vs. Bk. 193. Exchange Bk. Smith. where cases are reviewed. of Louisville. 41 L.

55. ''Sec.'"" An initial delivery is essential to the validity of an Incomplete instrument not ' incomjDlete negotiable instrument. Nance Hodge vs. 2G5. it apparently complete but is not so because it it lacks the signature of additional parties who are to sign it is has been delivered under an agreement that until not to take effect the additional signatures are obtained. Consult section 6 for the right to supply omissions. or is signed in blank. 140 App. be a valid contract in THE hands of any HOLDER. section 23 for constitutes a forgery and sections 124 and 125 for what what are material alterations and their effect upon the instru- ment.42 THE NEGOTIABLE INSTRUMENTS LAW § 15 a line through the unoccupied parts. 12. :soT. theirs Linick vs. 93.5 N. Laiy. such an is instrument Sec. 5 Ala. 326. Smith. . Where an incomplete instrument has not been delivered it will delivered. ^^ And when an instrument which is initial delivery. but not voluntarily delivered by the person whose obligation to become after it has been lawfully completed and and such an instrument does not bind any one whose signature was placed upon it before its unlawful negotiation. ^^ (See But persons who become parties undelivered instrument after it to an incomplete it has been wrongfully com- pleted and negotiated will be liable upon to a subseis quent holder in due course. Div. because the contract 58. OUT authority. AS AGAINST ANY PERSON WHOSE signature WAS PLACED THEREON BEFORE DELIVERY. 370. Nuttino:. if completed and negotiated. with"Wisconsin. if a bill. is has had a valid negotiated without authority. 130 Wis. or other negotiable instruits face.) not a valid instrument between the original parties or a subsequent holder taking with notice. S. Y. even if it is presented in the hands of a holder in due course. vs. 15. 59. Now. note. 267. ment is incomplete on it is check.

. As between immediate parties. Huntincrton. . 55 and 184. 431. Burr vs. ^j^^le instrument is incomplete and RI^vocable until delivery of the instruSorth^^c'arolina. MUST BE MADE EITHER BY OR UNDER THE AUTHORITY OF THE PARTY MAKING. or drawer for the purpose of giving effect to contract of indorsement The is incomplete until the indorser to his transferee for the purinstrument delivers the pose of giving effect to his indorsement. 21 Mich. 410.§16 in the will FORM AND INTERPRETATION 43 rorm in which they signed it. The next section inform you when and under what circumstances an is instrument deemed to be incomplete. AnD WHERE THE INSTRUMENT IS NO LONGER IN THE POSSESSION OF A PARTY WHOSE SIGNATURE APPEARS THEREON. THE DELIVERY.'' BuT WHERE THE INSTRUMENT IS IN THE HANDS OF A HOLDER IN DUE COURSE. AND AS REGARDS A REMOTE PARTY OTHER THAN A HOLDER IN DUE COURSE. when when IS PROVED.) Every conieact on a nego''Sec. A VALID AND INTENTIONAL DELIVERY BY HIM IS PRESUMED UNTIL THE CONTRARY Delivery. S. (Also see Sees. thereto. OR FOR A SPECIAL PURPOSE ONLY. (Sec. Beckler. AS THE CASE MAY BE AND IN SUCH CASE THE DELIVERY MAY BE SHOWN TO HAVE BEEN CONDITIONAL. A VALID DELIVERY THEREOF BY ALL PARTIES PRIOR TO HIM SO AS TO MAKE THEM LIABLE TO HIM IS CONCLUSIVELY PRESUMED. it . 191. and the contract of the acceptor is incomplete until he returns the accepted instrument to the holder for the purpose of giving effect to his acceptance or notifies him of the accept- ance. a negotiable instrument has no valid inception until it has been delivered by the maker it. Dakota. IN ORDER TO BE EFFECTUAL. ment for the purpose of giving effect ftKansas. ACCEPTING" OR ENDORSING. effectual.'' Like other contracts.) it is In every case the contract is revocable until effect to 60. DRAWING. 264 111. 230. 1(3. AND NOT FOR THE PURPOSE OF TRANSFERRING THE PROPERTY IN THE INSTRUMENT. * ."« delivered for the purpose of giving to all parties except a holder in and as due Burson vs. .

390. be shown. or any other prior party. that is completed issues. Smith. that is to say. 63. Sprague. comes into the hands of a holder in due course. signature appears anywhere upon a nego'tiable instrument and the instrument is no longer in his possession an intentional and valid delivery by him to any one who holds it will be presumed until he is able to show that he if But did not deliver or intend to deliver the instrument to the holder. 253. 200 N. vs.^^ But now observe that when an instrument which is complete in every other respect except delivery. for the purpose of transferring the ownership of the instrument.44 THE NEGOTIABLE INSTRUMENTS LAW is § 16 course. (see sec. 326. when the instrument it is in the hands of a holder in due course. Buzell vs. Hodge 62. 53 for definition) a valid delivery by all persons whose signatures appear upon it when it reaches him is conclusively presumed. after completion. Tobin. Niblock vs. the delivery not effectual. was lost by Hill vs. the contrary cannot true. 201 Mass. and all parties are liable thereon to him 61. if it is a fact one's was not intended. Schaefifer vs. 130 Wise. (N.) 307.*^^ By reason of this section a holder in due course of a its negotiable instrument which at inception was com- plete in every other respect except delivery*^^ can enforce it against all parties. Marsh. 90 Misc. if the instrument. Y. 1. the delivery can in every case be shown that the purpose of giving effect to its was not for instrument or transferring that its effective delivery ownership. 191 Mass. Y. except it is made by the party who accepts or indorses the instrument or by his authority. Hall. . as to him. even if it is All parties upon the instrument are liable to this holder in due course not- withstanding any rights or defenses they may have among themselves. and binding unless x\nd.

179. Kidder. at his election. 65. the interest runs from the date of the instrument. and _. vs. 415. Where the sum payable IS is ex- pressed IN WORDS and also IN FIGURES AND THERE A DIScrepancy between the two. the necessary qualifications. vs.the issue thereof 3. 131 Mass. 180 IMich. the written provisions prevail Where the instrument . Merch. Hinkley vs. . from . Whitney Center Nat. Carolina. When „ language of instrument is ambiguous.) . or its issue was obtained by fraud. the following rules of construction apply: ^ «N. . vs. Bank. 147. 187 Mass. 160. or any of them. reference may be had to the figures to fix the amount 2. . Bk. Massachusetts Natl. the holder may treat it as either. But not a party to this is sufficiently established if he shows that he derives his title self from a holder in due course when he does not him(Sees. or from some one it. "Where the instrument provides for the payment OF interest. ''Wisconsin. Snow. " Sec. 106 N. 57 ))ossess 58. without specifying the date from which interest is to run.^^. Where the language of the instrument is ambiguous or there are omissions therein..§17 FORM AND INTERPRETATION 45 or stolen from them. 6. vs. Jefferson Bk.. 1 7. is not dated. Where the instrument IS 64. Where there is a conflict between the written and printed provisions of the instrument. ^___ 5. Bk. ."^ However. Where a signature is so placed upon the instrument THAT it is not CLEAR IN WHAT CAPACITY THE PERSON MAKING THE SAME INTENDED TO SIGN. the hohler of a stok'ii instrument has the burden of proving that he is a holder in due course. City of Adrian 171. is so ambiguous that there doubt whether it is a bill or note. HE IS TO BE DEEMED AN indorser. Cliainnan. Y. 122 Tenn. Nortliamiitoti Natl. Bk. and if the instrument is undated. the sum denoted by the words is the sum payable: but if the words are ambiguous or uncertain. 221. it will be considered to be dated as of the time it was issued 4.

that the holder may with impunity change the marginal figures to make them agree with the body of the instrument. Nonv'ich Bk. Hyde. as he has a right to do under Sees. vs. 652. 53 Am. at the legal rate in effect at its maturity. 398. If the instrument does not expressly declare that it bears interest. I. its not dated and true date is not supplied and inserted by the holder. 1 R. 22 Ohio St. .46 THE NEGOTIABLE INSTRUMENTS LAW § 17 Where an instrument containing the words ''I 7. 281. but such the universal law and in this case interest 66. with interest bears interest from it unless it clearly does not begin to run until a later time. 308. Shreyer vs. 13 and 14. PROMISE TO PAY'^ IS SIGNED BY TWO OR MORE PERSONS. is is considered Smith vs. They cover the ambiguities most frequently met with in negotiable instruments. then interest commences from the date of the delivery of the instrument to the first person who received it from the maker or drawer. THEY are deemed to be jointly and severally liable thereon/'* When the meaning of the instrument or of any words or terms used in this section it is not clear the seven rules given in its govern in construction. Hawkes. D. an effort must be made to reconcile the words and figures and they ought to be consid- The first fixes the written ered together but. words which express the sum payable as determining the amount to be paid upon the instrument. strictly speaking. the words control. and unless it expressly provides that it shall not.^^ The second specified that If it is establishes that an instrument payable its date. The Act does not itself contain a provision to this effect. 13 Conn. Smith. Of course. the marginal figures form no part of the instrument. it will draw interest from the date of its maturity until paid. To such an extent is this true.

R. he cannot later change his mind and treat it as a bill of exchange. 70. Mariner. if it as either. the instrument ought have been paid. 47 N. bound by he is considered an indorser. Germania Natl. E. Miller vs. 95 N. . The fourth establishes in respect to the whole instrument that when there is a difference or conflict between its Avritten and printed parts the written parts prevail. 68. Bk. 574. Munger. Young. Hannibal. whichever he may choose. Terr>. W. it is established that if one places his signature anywhere upon the instrument in such a it is way not clear in what capacity he intended to be it..^^ The third supposes that the date omitted has not been supplied by any holder and in that event the instrument is considered to bear the date of the day when it was issued by the maker or drawer. Louis. that is. Co. if the two cannot be reconciled/"- The tilth permits the holder of an instrument which. St. vs. by to terms. 468. Arch. Y. 121 N. Codman. 67. 467. or just the other way. W. entitled to an indorser's rights and liable only as such. vs. 69. R.vs. 161.. 131. regardless of any contradiction which may appear in its printed portions. and treats it accordingly. to consider ever. How- he once elects to consider the instrument a note. Etc. Y. Dennett vs. 608.^* By that the sixth. 428. 90 N. 39 S. 138 Mo. Y. may be either a promissory note or a draft. they are considered to express the true meaning of the instrument. 544.) If its (See sections two or more persons sign a promissory note upon face and it contains a promise in the singular numO'Brien vs. 129 Wis. 100 N.'^" 63 and 64. 16S Mass.§ 17 FORM AND INTERPRETATION 47 to be in the nature of damages for the failure to pay the its debt on the date when. 169. 430. by reason of ambiguity in the words employed in drawing it. Stone Co.

48 ber. 584. Collner. parties jointly liable suit. 133 N. except as herein otherliability of per„ -r. and all are as well jointly liable. 40 Ind. separate actions may be maintained against each or they Only persons sigmng liab e-— may be joined in one. Hodgens vs. S. he is liable in the same manner and to the same extent as he would be if he had signed his o^^m. it and all notices required by other may be given to him in either his Foster vs. instrument signed in this manner may present it to the person thus signing sections of this Act 71. 879. ^^ ^jg own name/' While this section provides that no person whose sig' nature does not appear upon the instrument is liable upon it. or for a particular transaction as a substi- and places his trade name. pear in There is an exception the next two sections. it when of course.'^^ ''Sec. THE NEGOTIABLE INSTRUMENTS LAAY "I. and then. liable to the holder for the full sum promised. liable together. Jennings. is. . for the The importance of the distinction between the joint or several liability of the parties is a matter more particularly for consideration sary to becomes necesbring an action upon the instrument. 18. 305. 389. or any one assumes a name not his own for business purposes. that debt. ^^^^^ expressly'' provided. to this rule as will ap- When any person conducts his business under a trade name. But one who sons signing in trade or assumed signs in a trade or assumed name will be name. that is. it is not to be inferred that he must himself have signed it. Div. The holder of an tute for his own. 148 App. Erwin vs. or the name Avhich he has assumed upon a negotiable instrument. 107 Pa.'^^ If the liability of must be joined in the the parties upon the instrument is joint and several. Scotten. liable to the same extent as if he signed -Wyoming." then each is §18 each is severally liable. Y. No person is liable on the instrument whose signature does not ap-p^j^^ thereon. 72.

212. 143 N. '3 but it is It is not necessary that they be given in both. Bk. 103. R. the name of a "The signature of any party made by a duly authorized agent. FoUett. or does not repudiate it when notice of the fact is given him in such a stances as require the 73. Sub-section 3. Snyder. . vs. Y. CASES OF agency.' or if he has stood by without objection. A. 41 N. 74. 67 L. Y. 476. 329. Home Furn. I. 78. 75. vs. or in his real name. Cowell. 76. Jones vs. may be ^o particular form of appointment is xecessary for this purpose and the authority OF the agent may be established as in other Signature by agent. 260. 571. vs.§19 FORM AND INTERPRETATION if it 49 is trade or assumed name. 28 Pa. by the effect of Section 9. 5 Ind. St. authority. 256. how shown. 812. vs. 46 N.'^^ If this can be shown person whose name is signed upon the instrument and under such circumUnion Brewing Co. Cohvell. 77. 9 N. State Bank.*^^ ' is. S.. 19. vs. implied mitted another to when one person has knowingly perdo this for him a sufiScient number of practice'^*' and it has become generally knoAvn. 219. although that name fictitious person. manner him to speak. "Kentucky. Co. Rliodes. W. The one signing for him called his agent. Co. become payable to bearer. 71. does not. ' Sec. & Meroh. in apparent acquiescence. 739. 3S4. Crocker DeWitt vs. when it was done in his prestimes to amount to a ' ence. Div. strictly speaking. Y. 35 Ala. known. his name it to the instru- He may authorize another to do is for him.'^* An instrument which is made payable to a person under his assumed. 92. He may be sued in his trade name or his real name. Alabama Coal Min. Walton. to good practice do so. Cornerstone Bk. T. 82 S. 240 HI. . it and his authority may be either oral or in writing. R. R. business name. 454. Brainard. Bresee vs. 11 R. W. Mfrs. Co. or It is may even be im- plied." One need not himself sign ment. 9 App. 94 Nebr. vs.

Valequette vs. the transaction of which the instrument forms a part must be of the same general character as others in which the principal has permitted the agent to act. Liability of Where the instrument persons signing as agent. in the absence of express authority. WITHOUT DISCLOSING HIS PRINCIPAL. S3 Vt. 20. contains Or a person adds to his sicnature words indicating that he signs for ^^ ^^^ behalf of a principal.' 50 THE NEGOTIABLE INSTRUMENTS LAW § 20 by another is liable upon it. the one to whom it such an instrument first is oft'ered ought not to accept without satisfying himself by the authority of the person for whom he claims to act. OR AS FILLING A REPRESENTATIVE CHARACTER. DOES NOT EXEMPT HIM FROM PERSONAL LIABILITY". 53S.. . or that the agent has acted the lack of it. and within the limits of the authority which he appears to have. Co. etc. "Virginia. cussed under Section 21. Coal Min. ' 79. resentative CAPACITY. When the signature is made by a person who appears to be acting in the capacity of a kno\Mi agent and assumes to sign another's name to an instrument.'* HE IS NOT LIABLE ON THE INSTRUMENT IF HE WAS DULY AUTHORIZED BUT THE MERE ADDITION OF WORDS DESCRIBING HIM AS AN AGENT. or in a rep. implies the authority to borrow money power of in his name for the needs of the business and the to execute or indorse commercial paper for that purpose. may be established as in other cases of agency and it is a familiar doctrine of the law of agency that general authority given by one person to another to conduct his business. Clark Bros. either in the character of the transaction or the amount involved as would place an ordinarily prudent man upon his guard and make him suspicious of the agent's right to sign his principal's name. The authority. ^'' The duty to inquire into the actual authority an agent who signs by virtue of written power is dis'*Sec. and if there is such a substantial difference.

act whom. Tuttle vs. 98. W. contains words which it name in making. 416. vs. 104 U. 61 Minn. Loonev.^<> He must. Foster. 563. 34 N. Casco Natl Bk. 19. 95 N. 20 L. 36 705. indorsing or accepting he is act- ing in behalf of another and for upon it of course. 139 N. Germania Natl Bk. 314. will be bound upon it. vs. Chipman 81. E. Supp. vs. 710. 533. S. Smith. 106 Mass. Williams. 901. Y. 129 Wis. 86 Fed. R. 491. the latter. and not the agent. 408. S. R. 36 (Aff. R. St. Famsworth. vs. Carpenter 561. E. Buchannan.^^ 80. R. Keidan 705. (Sec. 910. vs. W. . Y. 430. S. S. Bk. 95 Mich. S. 26 L. 544. Merch. Heilman. Am. Clark. Winegar. R. he will not be relieved of personal liability to the holder unless the latter knows the nature and the object of the instrument and takes it with knowledge that the agent is authorized and acting in a representative capacity and knows the name of the person foi whom he is acting and that he does not intend to be individually bound upon it. Y.^^ him by and by his principal and the instrument discloses the name of his principal. A Ne\Ai)ort vs. 307. mthin his authority otherwise he is liable If he has acted as though he were acting for himself. 277. 360. Bk. 82. Bank Metcalf vs. 119 Mass. 34 N. Mariner. 105 Am. Div. is not himself and cannot be held to pay it. vs. vs. 1078. 574. Hitchcock 514). vs. 139 N. 546. 54 N. Ed. Ruej^amer. upon show that liable to an instrument in such shows or the instrument itor anywhere. 910. 278. 93. 8 Am. Natl. 107 App. 105 U. 99 Tenn.. and the instrument contains words which within the limits of the authority granted to show that he the is acting for another without disclosing name is or identity of the person or persons for whom he acting. Am. Kirbv vs.) But if he merely describes himself as an agent. 100 N. Bk.§20 FORM AND INTERPRETATION agent 51 An self who signs his a manner that his signature its face. 36 vs. 189. 187 Mass. Greenfield First Nat. Continental Natl. 81 Fed. Clark.

Howard. he Kavton vs. 44 X. 21 Sec. See. 1397. Lovell vs. to be upon the instrument. Harper 86. vs. and there have been decisions on both sides of this question here and in England. Noyes Sec. Tiffin L.) If the agent signs the instrument without authority is personally liable whether discloses the pretended principal or does not. he may recover from him upon the original consideration for the instrument but not upon the in- strument itself. elect.^*^ Now.) 1051. upon he the instrument whose names appear upon it (Sec. 1398. E. 58 Am. Loring. Ogden 88. he will hold and will be bound by his election. 625.^^ for only those persons are liable it. (N. Sec. is for the reason that the contract therefore. City Bank. 24. held liable. 54 Oh. Meehem Agency. Bamett. Gove. St. 87. the agent or the principal. Y. Nat. 385. 1374. Meehem Agency. Bk. choose which one. 21 L.^^ unlawful or unauthorized In others. in not his. A. that is. 84.*^ principal's He must. 130 Ga. 1395. 89. R. 55 Me. 196. vs. See. vs. vs. 130 Ga. (N.^'^ He was. 425. 116 N. 44 N.^*' name of his Whatever conflict of authority has heretofore existed as to the agent's liability upon the instrument.^' If he chooses to hold the principal. Dec. Raymond. Meehem Agencv. . 807. within a reasonable time after the name becomes known. 40 N. E. E. 379. 807. S. 408. 429. 125 Mass. 439. 18. 156 III. Meehem Agencv. 22 Conn. A.) 1051. however. Weare vs. 23 N. 97. Meehem Agency. Williams. H. his liability was held 83. vs. not on the strument itself. Chemical Natl. vs. 149. in- some jurisdictions. Coaling Co. but for the damage resulting from his act.. Bk. 328. 173 and Notes. 85. In some jurisdictions it has been held that an agent signing without authority or failing to disclose his principal. Howard.52 THE NEGOTIABLE INSTRUMENTS LAW § 20 The holder of such an instrument may recover from the agent or from his principal when he learns for whom he aeted. R. is settled by this section. is not liable upon the instrument. S. Coalino' Co.

acting under his written authority. This Where it is found it is usually abbreviated thus is fol- "per. "Sec. and though theory this may writer upon the subject has said. proc. but in behalf of some other named person from authority to do of attorne}^ it. p. to be considered." or the signature lowed by the words "attorney in fact. A signature by "procura- tion'' operates as notice that the agent effect of. the rule ''will" as a and in addition to that has the excellent advan- tage of settling all conflict of authority ject. not be correct. is acting for an individual. and the principal is bound only in case the AGENT IN SO signing acted within the actual limits of his au- thority. and it has of course. More definitely. Whenever a name so signed all persons taking the in- strument are by that fact alone notified to be on their guard. ''tend to increase negotiability. ^^g g^^ ^ LIMITED authority to sign. however." upon the sub- Section 69 provides the manner in which and to what extent an agent or broker is liable who negotiates an instrument by delivery without indorsement. 21." when the agent The section would. whom way he has express usually in the of written power and as whose act it is form of signature is uncommon here and very infrequently employed upon negotiable instruments of the kind which are used in ordinary commercial transactions. ' In this section the technical legal term "by procura- tion" means. the term means one person's signature attached to an instrument. to do with the doctrine of agency. Signature by procuration." or merely "p. not i]i his own behalf. seem to be equally applicable to corporation officers or representatives signing is in a representative capacity. and as his own act. and to satisfy themselves positively that the per- .' §21 is FORM AND INTERPRETATION liable 53 in everywhere upon the instrument. in or on behalf of another.

. They must be regarded as dealing with him with that grant before them." to be acting or made by someone known under formal au- thorization carries with it a more solemn warning to the person to whom it is offered and puts upon him a graver burden uses it to inquire into the authority of the person who acting under than does the signature by one who is some general authority from ized course of dealing. 169 Mass. whether the author- general or special. and not only that. Davis.54 THE NEGOTIABLE INSTRUMENTS LAW is § 21 son who so signs the instrument satisfy themselves that he acting by proper authorization of his principal. 169 Mass. Mechem Agency. When be the instrument discloses that the agent signed it per power of attorney or formal appointment cannot shown that dealing his ostensible authority was greater Parto than that granted in the written authorization. Mt. 707. vs. 118 N. and are bound. ties with an agent known by them be acting under an ity ])e express grant. to notice the limitations thereto prescribed either by its own terms. are bound to take notice of the extent of the authority conferred. Mt. C 946. Morris Bk. vs. Morris Bk. Sec. derived from written or oral authorization. 519. or by construction of the law. if the agent signing by procuration exceeds the actual limits of his authority. but to is acting within the actual limits of the authority given him to execute or indorse the instrument. Gorham. at their peril. his principal.''^ 90. vs.^^ Thus a signature "per. Fereuson 91. proc. 519. or implied from an author- One who does not make this inquiry when chargeable with the duty to do so must bear any loss he may suffer. Gorham.

that is. or accept or indorse a bill dur- ing minority which they could not repudiate after coming of age. unless bill it is one for necessaries. Oarolina. disability.:kxy therein. are not considered in the law to have full capacity to enter into business obligations. never to have been specifically decided that he has this right. all The time at which they attain not age is not alike in the States. as though the infant were under no parties. like an infant. Effect of indorsement by infant or corporation. Any business act which they perform while under legal age. It cannot be held for its officers which are not properly within the scope of 92. vs. voidable by them is when they reach full full age. and may be enforced against all The section does not deprive an infant of his right to repudiate acts performed during his disability by minority. he is not deprived of it by this section. —when a note or title to passes through the hands of an infant. including the act of passing his title to a It seems negotiable instrument by his indorsement. his indorseof his signature ment upon it transfers the it the in- strument to the next holder and may be negotiated by other him. But. 22. 55 jios or by an infant" passes the prop]. except one by which they provide themselves with their necessaries. indorsement Roach Woodhall. The indorsement or assign- ment of the instrument by a corpora- persons who have not yet attained le- gal ago." Infants. 91 Tenn. in regard to negotiable instruments. and by subsequent holders. notwithstanding that FROM want of capacity THE CORPORATION OR INFANT" :MAY incur no liability THEREON. but if he has. while they can- make or indorse a note.^- A to it corporation has only such powers as are granted in its charter or are incident or necessary to the it is business in which acts of its engaged. 206. but. its powers. .§22 FORM AND INTERPRETATION "Sec.

52 Mich.) 1234 and Note. Neal. Farrell. R. ^^ If the person whose signature is forged pays the instrument. 14 Am. W. Hefner vs. 403. W. (N. 443. 63 111. 111. Co. or not incident or necessary to the conduct of theless. 143 la. effect of. 94 Me. 178.. SON whose signature it purports TO BE. A. Cobum vs. its business. CAN BE ACQUIRED THROUGH OR UNDER SUCH SIGNATURE. OR TO ENFORCE PAYMENT THEREOF AGAINST ANY PARTY THERETO. knowing its character. 759. 375. even though made in a transaction not authorized by its charter. 677. UNLESS THE PARTY AGAINST WHOM IT IS SOUGHT TO ENFORCE SUCH RIGHT IS PRECLUDED FROM SETTING UP THE FORGERY OR WANT OF AUTHORITY. St. Dawson. has no right to retain the instrument.) 850. One who holds an instrument upon which any signature has been forged and who has obtained title by or through the forged signature or indorsement. (^amp vs. Coi-\vith First St. 23. 541. 108 Empire Trust 94. 136 Am. 148 App. vs. 128 S. Miners Bk. R. A. Stein vs." v^^^^A Forged r. 702. IT IS WHOLLY INOPERATIVE. 115 Ky. 23 L. Where a signature is forged MADE WITHOUT AUTHORITY" OF THE PER^^ ture. 144 Mo. A. will. (N. 428. Jones vs. 177. 121 N. 409.. to receive payment upon it or enforce it against any party. Caii^cnter. Y. he can recover the is money he pays upon it. 135 la. ''Sec. even if the holder is an innocent holder for value. OR TO GIVE A DISCHARGE THEREFOR. Williams. Div.^^ although this right times denied him when innocent persons have loss 93. 129. Beem vs. 48 A. «Illinois. R. AND NO RIGHT TO RETAIN THE INSTRUMENT. some- suffered by reason of his mistake. 670. Meyer Rosenheim. Hovorka vs. 123. never- though it may impose no liability upon the cor- poration. unless he does so voluntarily.56 THE NEGOTIABLE INSTRUMENTS LAW § 23 upon a negotiable instrument. . vs. S. operate to pass the title to the next holder who may continue the negotiation. Hemma.i signa- A any forged signature or indorsement does not create liability on the part of the person whose signature it appears to be. Bk.

101 Va. 92 Pa. however. Mfrs. be prevented by some act of his own from avoiding the instrument. circumstances are not alike and are not interpreted alike and they must be examined in each par- ticular transaction of this character in the State where the forged instrument or signature has been executed. 587. 447. Assn. Bowlinir Green 1st Nat. Teny 97. Natl. ^^ One of the principal applications of this section is to the payment by a bank of checks or other instruments upon which a signature has been forged or fraudulently made. Bk. is based upon such conduct as would preclude the person asserting it from setting up the forgery or want of authority. Van Dyke. Crafts. 201. or where it is sought to be enforced. Y. & 96. Tmst Co. (N. Hamilton Bk. AVhen a bank has certified a check to which the drawer's name has been forged.. When the doctrine of estoppel has been recognized in regard to forged or it fraudulent instruments. or after certification. A. . 1912 C.) 1006 and Note. Pettyjohn vs. S. Walton. or recovering a payment made by mistake if his signature is forged or made without authority. L. vs. 517. vs. B.^^ And. payment. Bissell. Such laws as apply to these in all States. 595). Assn. in the hands of a its holder in due course he can compel 95. 26 Conn.) 447. Cases. Exchsr. vs. and must be a conduct from which an admission would be implied that he intended to be bound l)y the alleged fraudulent misuse of his name. S. 4 Allen (Mass. Bk. vs. 404 (116 N. vs. & L. Walton. St. Nat. (U. 18 Wall.. or which has been raised. vs. 521.. 84 Ohio St. (N. vs. 181 Pa. 15. Y. Y. 181 Pa. 63 Misc. R. Espv Adani Bank of Cinti. S.^^ or the person to be charged may be estopped by an express ratification of his signature. Ann.) 403. 98.) 604. 201.. Philips.§23 FORM AND INTERPRETATION the fraud affects only individual interests crime"-'' 57 When is and not a he may.. 41. Greenfield Bk. St. 127 App. (N. Div. vs. Sliisler vs. 497. vs. of Am. St. Bk.) 515. 111. 36 L. and it is at. Owsley Shinew 78 Ky.

First Nat. his condition has so changed that to require him to do so would be unjust. 337. E. Bk.^ however. 93 N. Brooklyn Sav. vs. Bk. Yatesville Banking Co. 72 S. 528. A. 112 N. Prior parties are not affected by the forgery. First Natl. Bk. . 351 First Nat. The drawee presumed to know the drawer's signature (Sec. vs. 490.. E. wdll be obliged to refund the pa^^ment to the drawee^ unless. 3. Bk. Fourth Natl. E. Farrell. or deception by a greater degree of negligence than that of the paying bank. Div. 119 N. vs. Beem vs. is applied to the signature of the indorser. 4. presenter who receives payment of The an instrument upon which an indorsement has been forged or made without authority. vs. 306. 93 N. 222.. S7 Nebr. State Bk of Chicago vs. 296. 127 App. he Should he be required to refund. Bartlett vs. Bk. Bk. 114 Ga. 10 Ga. 670. Western Nat. Gallo vs. 92 N.^^ The rule by which it must be determined whether or not recovery may be had when an indorsement is forged to is. 152 111. 84. 135 Iowa.. 247 111. E. 247 111. 1. First Natl.. 11. Bk. 1... Ti-ust Co. Colonv Bk. and each of these may in turn recover of his immediate in- dorser. 515. 683.^ 99. by which I mean that his own negligence must have been responsible for the loss. of Amer. Woods vs. 490. Nat. back to the time when the forgery occurred.. 30 Md. Y. 337.58 THE NEGOTIABLE INSTRUMENTS LAW if § 23 again. First Nat. Bk.^Nor. a bank pays to a holder in due course a check it drawn upon forged it to which the drawer's name has been cannot recover from him unless he has con- tributed to the forgery. by reason of culpable delay in the discovery and giving notice of the fraud.. Comml. 65 and 66. 62). may then recover from prior indorsers who indorsed the instrument subsequent to the forgery and who will be held to their warranties as is provided in Sees. fraud.. 633. Bartlett vs. upon an otherwise regular instrument not payable bearer or made in fact to the person entitled thereto^ is however.. Bk. Hamilton Bk. S. 2. quite different. Y. but no such pre- sumption.

101 Va. 28 N. Westoott. Springs vs.. Natl. Bk. . 203 Pa. Seaboard Bk. to his prin- and he has actually paid over the amount cipal before notice. 74.. which will preclude this defense. 900. 468. 771. S. not en- forceable against the person whose fraudulent signature by some one who pretends to act as his Such a signature or indorsement does not convey to the transferee the title of the instrument or the right to receive payment. 167 Mass. Standafer. Natl. vs. 117 U. 114 N.^ Still bank to lose an opportunity the loss upon the instrument will indem- fall upon another distinction exists. Div. 118 N. Y. unless the instrument discloses the name of his principal. 315. Bk. 20 N.) vs. Y." R. 143 Ky. 28. 6. the signature is made without authority the instrument placed upon is. likewise. 9(3. 16 Leather IVHis. or omitted to perform some duty in respect to the instrument. 787. Bk. Ko-ers. 19. E. 7. and his negligence or undue delay in giving notice cause the nify itself him.§23 FORM AND INTERPRETATION 59 certified One for whose account a bank has paid or bank to notify if it a forged or fraudulent instrument owes a duty to the of the fraud immediately upon to its dis- covery." If instead of being a forgery. But in this case also the person whose name is so used may become liable and be held to pay the instrument if he has done is it agent but acts without his authority.'^ 5. Natl. When the presenter receives ])ayment as the agent of another for collection. Bk. thus carrying on its is face notice that the presenter acting merely as agent. 69. (N. Park Bk.. E. some act. Pettvjohn vs. Am. and does not create any obligations on the part of the person whose signature it purports to be. Jett vs.) 188. 111. vs.. 26 Conn. E. Morc:aii. 612. Terrv vs. Hanover Natl. Traders Natl. he will be required to refund. Blssell. him from making (See Sec. 145 App. States vs. 23. City Bk. S. Bk. vs. Y. First Nat.

usually a him by is the drawer who acts in the honest belief that he tirely different to be dealing.. Bk. issuing the instrument to an en- person with whom he supposes himself is When the instrument which so pro- cured has been paid by the bank upon which it is drawn or has been negotiated to a holder in due course. notwithstanding that its issue was ob- tained by fraud or misrepresentation. Bank. 395. R. Exchg. 20 Ohio St.^^ it The decisions establishing the rule as I have stated above are usually based upon the theory that the per- son who issued the instrument intended that it should and when that has been accomplished. 10.^ it thought the law ought to is. Y. be rather than what This criticism unmerited. his decision would be regarded as in accord -wdth those Court. Am. Armstrong vs. Natl. McHenn^ vs.. . 480. they hold that the paying bank be paid to the one to whom he delivered it 8.60 THE NEGOTIABLE INSTRUMENTS LAW § 23 There are certain other circumstances out of which a puzzling difficulty has sometimes arisen which is to be determined by the application of this section.. Anderson vs. 22 R 462. 9. 97 N. Pomeroy Bk. (N. 38 L. 46 Ohio State 512. 11.) 613. 234. Dodge vs. the courts have usually held that the drawer must bear the loss -occasioned. E. for example.^^ although in that State a in of its Supreme more recent decision is conformity with the rather generally accepted view stated above. Nat'l Bk.^ Indeed.) 1111 and Note. a deci- sion to the contrary. S. learned judge who rendered it is. 85 Ohio State 203. to be issued to fide instrument. Bk. rendered since the passage of the Act.. A. I. I refer to that situation in which one fraudulently impersonating another has procured a bona check. has been very severely criticised as holding what the however. Tolman vs. for in Ohio. 48 Atl. Dundee St. 66 Hun (N.

Miners. State vs. S. 115 and cases. A. Super. 2. But where it appears that one of two innosenter^^ by the fraud or misconduct of a third. the loss must be borne by that one of them who first reposes confidence in the Avrongdoer and commits cent persons must suffer loss the first oversight. (Mo. to arrive at such a con- chision. Bk. paid to one who fraudulently impersonates another. 14 Morse. Title & Trust Co. Etc. .§23 FORM AND INTERPKETATJON carried is 61 has that out the drawer's intention. Although the jjreponderance of opinion is as I have it ought not. vs. yet. to be regarded as a settled doctrine that when a check is delivered and stated. 211.). vs. St. Louis Smeltiner Co. 178 W. these courts must disregard the fact the imper- sonator was not actually the person the drawer had in mind and with whom he supposed himself to be dealing when he delivered the instrument. by its terms. 17 Pa. the loss. at its peril. drawer must invariably bear the that a situation is But it is settled then presented which requires the of the court to determine by w4iose" direct negligence the loss was occasioned. Vol. Land 230. 474. 13.^* 12. by any means. Bk. of Montrose. p. 69.. AfE. for that it drawer by his failure to dis- cover the fraudulent impersonation. To be re- from this responsibility. Banks & Banking. it is payable. that ing bank. 196 Pa. 256. See. First Natl. Bk. Xoi-tlnvostern Nat.. 203 Pa. or that of the payits duty requires it to see to it.^ ^ And yet not altogether correct for. pays the check according to the drawer 's order to the party to lieved whom. 212. the bank must have made the usual inquiries respecting the identity of the pre- and have used that degree of care and prudence which its relation to its depositor demands. a conclusion which is clearly indicated in all of the cases cited under this section.

27 When lien on instrument tion. including a promise. ment is : The consideration for the instrument. Every negotiable instrudeemed. is the thing of value which is given It does not necessarily mean money or goods. The provisions in the Act upon the subject are as follows Presumption of consideration. This is because negotiable instruments are so important as a medium for car- rying on business. a negotiable instrument implies a consideration.: 62 THE NEGOTIABLE INSTRUMENTS LAW § 24 SUBDIVISION II. . value. 29 Liability of accommodation party. 28 Effect of want of consideraWhat constitutes holder for tion." ''Sec. prima facie. 24. Consideration. Therefore. tutes. constitutes holder for Consideration. of 25 26 Unlike any other simple contract. They take the place of actual money. what constivalue. and tling bills. to have been issued for a valuable consideration AND every person whose signature appears thereon to have become A PARTY thereto FOR VALUE. Having many of the attributes of money they are safe- guarded in every way consistent with their character and purpose in order that they may readily pass from hand to hand. It may in addition to these be anything of value. checks and notes are used as a means of set- commercial transactions between men much more frequently and to a greater extent than is actual money. they are deemed to have been issued for a valuable consideration and this presumption continues until the contrary is made to appear. although these are most frequently the consideration for such instruments. Section 24 Presumption Section considera.

who is aided by this presumption ^ in his favor. 2. Dulan. S. Sluite. or instead of a ''thing" there Sec. or that all signatures were placed The production of the instrument upon it for value. 377. 194. K. presumed have been issued or First Natl.^ If the testimony is evenly balanced. 02 N. 371. 236. S. that taken for granted without proof. to the instrument will be 1. 123 Mo. Hudson Dawson vs. 81 Oli. 238. 370. 180 Mass. 201. prima it facie. (N. 121. Y. vs.) 702. 140 A. E. and the instrument who has signed any capacity is deemed. 194 Mass.^ presumption In the hands of any holder. Ginn vs.§24 Consideration ise given for is CONSIDERATION 6:j usually stated to be either a thing given for a thing. 4. Byrne. R. Bk. Lombard vs. 380. R. 91 Am. (Also see always presumed. that is supposed and • believed to be true without requiring proof. S(. Any party it is to the instrument will be permitis ted to show that this presumption til not correct but unis. the will prevail. Stallo. deemed. 309. 380. Moon. 130 S. 774. he does. to have done so for value. S. 160 App. 130 P. sufficiently supports that presumption in its favor. that likewise every person in has been so issued. 3. until the contrary is shown. Womblos. . that a negotiable instrument has been issued for a valuable consideration. The person denying consideration must set up this plea in his answer to the suit and must prove it or at least offer evidence which tends to prove it. Bailcv. Star Mills vs. W. vs.on vs. E. 91 Am. 309. 25. 42 Utah.^ w^hereupon his proof must be met and overcome by the person seeking to enforce the instrument. 140 Kv. a prom- a thing or a promise given for a promise.) It is may be an act. 1077. App. 340. Div. In an action upon the instrument it is not necessary that the person seeking to enforce it shall allege and prove that it is supported by a valuable consideration. <)0 N. Huntinui. a thing given for a promise.

189. 50 N. 191 declared to mean "valuable consideration" and this is understood in the law to be any benefit to the promisor of direct or indirect advantage gained by him. E. The amount and kind of consideration which must be given to support a promise upon a negotiable instrument is neither defined nor restricted by the Act. AND IS '"^ ' deemed SUCH WHETHER THE INSTRUMENT IS PAYABI. 214 N. 636. 54 X. 351. Proctor vs. pears upon Where the term "value" the next section. Cole. 332. 280. Supp. or any loss. 108 N. 60 Ohio State. Value" it being quite sufficient if it is passes to another in whom the promisor beneficially interested. Sullivan. 214 N. Foutham. 106. An antecedent or pre-existING DEBT CONSTITUTES VALUE. 17 . and what constitutes a valuable consideration is defined in it. Fink vs. 104 Ind. Wvker. 178 Pa. 3 N. Heron. 53 N. 184. Any consideration which will support a simple contract will be *' sufficient is to support a negotiable instrument. vs. Y. 28 S. Cobb vs. 25.64 THE NEGOTIABLE INSTRUMENTS LAW name § 25 negotiated for value by every person whose ap- is used in the Act it means a valuable consideration (Sec. 373. Brooklyn Union Bk. 35 A. . 49.^ is. E. 125 Ala. 33 Ind. Thurman. 112. what constitutes. 332.-^ It is not necessary that the consideration should pass from the person to whom the promise is given to the person who makes the promise.E ON DEMAND OR AT A FUTURE TIME. 558. usually insufficient to sup- port the 5. Hogg vs. 74. detriment or inconvenience Buffered by promisee. 154. contract. E. ''Sec. 303. vs. Dalrymple vs. 383 and note. Am. W.\nn. 180 111. 108 N. A merely nom- inal consideration however. 117 S. by Sec. Y. Bingham 6. "Wisconsin. 93. 558. 7. 108. 90 Ark. Fanners Bank. Kimball. 1070. vs. E. Carter vs. 191). Consideration. Y. Lons:. niinois. 713. E. vs. Value is any consideration sufficient to support a simple contract. Sullivan. 4 N. E.''^ Brooklyn Union Bk. Cas. Boiler Co.

City Trust Co. if there is something yet to it is be given or done by the person to is whom delivered or payable. from one contracted immediately at the time of the issue or transfer of the instrument. one otherwise unenforceable. Dunn Oil Mills. or does not wish by his endorsement ditional that to make himself liable for the unconpayment of the instrument. in a trade transaction.§ 25 CONSIDERATION 65 Although insufficiency or failure of consideration raay avoid a contract and may be a defense between imme- it will never avoid the instrument in the hands of a holder for value. 28. sometimes a very old acit ^v\\\ count. in the sense used in the Act. even if it does not grow out of same transaction. an indorser places his name upon the instrument for any special purpose. 174 U. it is it is intended to distinguish a debt which had been created before the time at which the instrument or indorsement of which it forms the consideration the is made. full consideration. Harriman. Mehlinger vs. Israel vs. 718. is (Sec. 185 Mass. 117 App. that this fact be clearly stated (See Sec. 391. or if it is not to be fully paid at maturity. he must indicate fact by appropriate words.^ Thus happens frequently that a bank will take a promissory'' note in settlement of an overdraft or. vs. . so that all subsequent holders may be notified of his intention.. 38. if a note or bill is given out by the maker or acceptor which is not given for a diate parties to a negotiable instrument. S. It is therefore most important. be settled or ex- tinguished by the giving or transfer of a promissory 8. Y. Bk. 245. that an account.) 130. Div^ (N. Ward vs.) An when which antecedent debt declared by this section to conis stitute value. Gale. 150 N. C. that is. Murchison Nat. Such a debt one which exists at the time is the negotiable instrument or indorsement it made.) And if upon the instrument. in of which forms the consideration and.

the holder is deemed a holder for value in respect to all parties who become such prior to that time. 148 P. W. vs. D. 58. 11. 412. 164 S." The holder of an instrument is a "holder for value" if constitutes **Sec. An instrument given in renewal of another which remains unpaid at maturity may be said to be based upon such a consideration and that it is good. 26. App. vs. means if an instrument was issued without consideration Hix (Tex. r^j^^ he gives value or if value has been given for the instruto the time he ment by any party prior became its holder. Bk. 10. Scheucrman. ^"^ And when checks or other instruments eration for the other.) This section. § 2G note or In such a transaction the pre-existing debt upon b}' the overdraft or the account will form the valid consideration for the instrument issued or transferred the debtor to his creditor and it is good. . as against persons whose names were placed upon the instrument before value was given for that 9. Rice vs. 24 Me. prodebt'' it is vided the third person actually owes the ficially interested in its and the is person making or transferring the instrument bene- payment or settlement. 168 N. Grander. 131 N. First Nat. 385.^^ are exchanged with- out other consideration the one forms a valid consid- What Where value has at any been given for the instrument.). 417. Marks (Utah). any one claiming through him like^\ise all becomes a holder for value. Miller vs. 49. 41 Am. 51 Or. Matlock vs. (Sec. Civ. 1035. Of course. 473. 374. it. If an given in payment of or to secure the debt supported by a valid consideration. Franklvn Bk. is too obvious to require further instrument of another. therefore. persons who became parties to He is such as against the instrument before the negotiation at which value was given. Roberts. Y. 149. Robinson. vs. C. Ajrricultural Bk.66 THE NEGOTIABLE INSTRUMENTS LAW bill. holder for value. is comment or citation to authority.

) 480. He can enforce the instrument for the payment to each other. Brewster vs. may en- against every person who became a party at to the instrument before given. .) The lien arising by contract needs no explanation. while not be- ing its o\\Tier. has a claim against the instrument and is considered to be a holder for value to the amount of his claim. his lien constitutes value. transfer which value was has a When lien on *'Sec. Its effect will be as expressed in the contract by which it is of his claim regardless of rights ties among themselves and In the absence of an express contract a lien by implication of law out of those principles of right and justice w^hich lie at the bottom of equitable created. in law. property and one who holds it as collateral se- curity for a debt or liability owing to him. A lien. 27. arises jurisprudence as applied to the relations of the parties and the circumstances surrounding their dealings. while it is not enforceable in the hands of any holder if value has never been given. It will arise from any just inference that by reason of advances or services. HE is deemed a holder FOR VALUE TO THE ' extent of his lien. Wheke the holder instrument constitutes holder for value. and duties of the parand even if value had not previously been given by any party. whether for value or the not.^^ (Sec.' § 2Z CONSIDERATION 67 and passed through several hands without value having been given for it. or any one taking it after or through the one who gave value for force it it. is a legal claim or hold on property as security for a debt. A negotiable instrument is. Y. one giving value. and this is so even if the instrument was pledged for an antecedent debt. or other benefit rendered by one person to 12. Schrader. (N. arising either FROM contract or by implication of law. 26 Misc. 25. lien on the instrument. of course.

573.. LIQUIDATED strument. vs. may set vs. 8 N. the person aifected bj^ the failure of consideration may set this up as a matter of its defense against any party not a holder in due course in an action upon the instrument and avoid pajnnent. ^^. Shoe. Fumiss. up and be relieved ''pro ianto. Absence or failure of cona matter of defense as AGAINST ANY PERSON NOT A HOLDER IN DUE COURSE: AND ''Sec. 272. Walden. 28. 104 S. Y.^^ or for any other reason there is a total absence or failure of consideration. Bk. 502. 4 S. (N. Ferguson vs. 42 N. 563. Knapp Morse Banks & Banking. Bk. Brenneman 16. Div. 173 Ala. vs. And if there is a partial absence or failure of considerait tion he 13. and upon any general balance in its possession which may belong to him when these are not held or deposited for some distinct other purpose. 126 Ky. 324. St. 364." mean- W. 186. or affected by some particular agreement inconsistent with this right.68 THE NEGOTIABLE INSTRUMENTS LAW it § 28 another. sideration is PARTIAL FAILURE OF CONSIDERATION IS WHETHER THE FAILURE IS AN ASCERTAINED AND AMOUNT OR OTHERWISE. 528. Agnew vs. or if the consideration given was given for the inwas represented to be valuable at the time the instrument Avas made or transferred. 1011. Effect of want of consideration. 77 Iowa. Natl. Wood. Cowell. . 90 Pa. vs.^^ or if it should appear that an agreement upon which the instrument was based was not carried out. Sec. Commonwealth vs.'' If no consideration whatever A DEFENSE PRO TANTO. Wathen. but afterward proved to be substantially and of less value than represented. 14. 15.^^ or if the consideration for which the instrument was issued was not different given. 672. W. 141 App. 434. 55 So. 84 Ala. was intended that a lien upon the instrument or its proceeds in his possession should be created. Talapoosa Co. A bank advancing money to any one dealing with it is entitled to a lien upon all of his securities which it holds. Wynn. E. Etc. Netter.) 274. 753. 142 Mass.

An accommodation ^'i^y^y*. NOTWITHSTANDING SUCH HOLDER AT THE TIME OF TAKING THE INSTRUMENT KNEW HIM TO BE ONLY AN ACCOMMODATION PARTY.§ 29 CONSIDERATION much 69 ing.^^ Such a person will be deemed an accommodation party even if he is paid for the use of his to aid name. . 550. Morris County Brick Co. " Bk. it must be determinable.^' It must be paid to such a holder re- gardless of the total or partial absence or failure of the consideration. but. ac17. Liability of "8ec. Neither of these defenses can.^"-' He has loaned his name and is. be used to defeat the instrument if it is in the hands of a holder in due course. drawer. 153 W. for as failed. credit to the instrument to accom- modate. Dingman vs. is 29.) some other persons and he may do (See so either as maker. One who. 75 A. SuCH A PERSON IS LIABLE ON THE INSTRUMENT TO A HOLDER FOR VALUE. Grcenwav vs. 536. nor do they affect the negotiability of the instrument. drawer. Orthwein Grain Yoiuiu' vs. ACCEPTOR. D. Austin. for the benefit of another. Exchi-. becomes an accommodation party. which means known and positively determined.'"* DOBSEB. 77 Pa. 114. 79 N. Ky. DRAWKR.. 148. of course. 152 1915. that also Sec. however. Cas. IS. 273. Amsink. Wm. OR IN- «Illinois. 293. and who receives nothing of value for or from the instrument.*' FOR. Co. 19. In whatever capacity he may have become an accommodation party he is liable to any holder who has given value for the instrument even if that holder knew at the time of taking it that the maker. J. Ann. signs his name to a negotiable instrument in any capacity mentioned in this section. ONE « WHO HAS accommodatiox party SIGNED THE IxVSTRU- MKXT AS MAKER. of the consideration as is absent or has The partial absence or failure of consideration need not be ascertained and liquidated. St. vs. B. acceptor or indorser.. 85 S. L. WITHOUT EECEIVING VALUE THEREAND FOR THE PURPOSE OF LENDING HIS NAME TO SOME OTHER PERSON. 64. 444. Fed.

& Co. 126 S. it is pertinent to say something. 178. Cas. 26 and 27 for what constitutes holder for value. at this place. each is who signed after him and the first is liable to them all. vs. which.^^ The power to exeupon the import and export of goods. Owen & Co. vs. 78 N.) 1039. (N. 8130. 15 Fed. or indorser placed his the instrument as an accommodation party. Youno-. 72. 211 N.. L. about the liability of accom- modation parties liable in the to each other. R. 75. 22. party is liable But an accommodation upon the accommodation instrument to no person or party other than a holder for value. (C. cute acceptances based will be explained in the introduction to Title II. 45 Mo. (N. 174. 1069. (See Sees. in the absence of an express agreement to the contrary. S. 29 Ohio St. Hnic. vs. . Beeman S. J. Jamestown Mantel Co. 335. Storms. 333.. R.70 THE NEGOTIABLE INSTRUMENTS LAW name upon § 29 ceptor. Noble 21. No. (See Sec. or have among If the themselves an understanding amounting to an agree- accommodation parties are indorsers their liability. 68. Jacobus vs. 65 Oregon 93 131 Pac. have not the to execute power accommodation paper. and unless they are joint indorsers. 3 Cranch. Stewart. In every case they are selves to manner in which they agreed among thembe bound upon the instrument. Barnet vs.) While this section fixes the liability of accommodation parties to the holder of the instrument. Y. 174 Fed.^" strument. newly created by the Federal Reserve Bank Act. 04 Ark. 7. as a rule.-^ liable to those Thus all are liable to the last. MeCune W. is in the order in which their names appear upon the inment. Law vs. . 46 L. 20. A.) 162. Porter vs. 1006 . 154. 28 L.) 411. They are liable in the successive order in which they indorsed and the doctrine of contribution does not apply. C. A. 154. Belt. S. In re MeCord.) The section is not applic- able to corporations.

ated when Ax instrument is negoti- To negotiate fer it the instrument means to issue it or transit after it has been issued." it is What constitutes negotiation. 187. drawn or indorsed to a i)er32 Indorsement must be of enson as cashier. Transfer without indorse- ment. rights of indorsee. tire instrument. etc. 43 Indorsement where name is 33 Kinds of indorsement. sumption as to.44 dorsement in blank.§ 30 NEGOTIATION 71 SUBDIVISION III Negotiation. Farmers & Merch. Bk. 843. IF PAYABLE TO ORDER IT IS NEGOTIATED BY THE INDORSEMENT OF THE HOLDER COMPLETED BY DELIVERY. 42 Effect of an instrument 31 Indorsement how made. of negotiable character. Hohn. effect of. "Sec. . 841. When prior party may ncgo- tiate instioiment. vs. Bk.^ One becomes the holder of an instrument by the fact alone it has been given into his possession by indorseBk. Scotland Co. If PAYABLE TO BEARER. 47 48 Conditional indorsement. 30. the issue or transfer must have been made in such a manner as to make that the transferee the holder of the instrument. 49 Indorsement of instrument payable to bearer.. iudoi-sement restric- 46 pre- Effect of resti-icting indorsement. Eames El. Aurora St. 88 699. and by this section is provided that to constitute a negotiation. Bank of Commerce vp. . transferred from one PERSON to another IN SUCH MANNER AS TO CONSTITUTE THE TRANSFEREE THE HOLDER THEREOF. sumption as to. etc. 146 Mo. Qualified indorsement. 50 Indorsement where payable to two or more persons. — Indorsement in five capacity. Section Section 30 What constitutes negotiation. Place of indorsement. Striking out indorsement. Co. representai)re- Time of indorsement. IT IS NEGOTIATED BY DELIVERY. Continuation When tive. App. 34 35 36 37 38 39 40 41 Special indorsement in. Hayes. misspelled. 87 Nebr.. Nebr. Blank indorsement changed 45 to special indorsement. vs.

"'' 2. 51 111. . and does not constitute the person who the has taken the instrument without these qualifications a holder within is meaning of this Act. UPON a paper attached thereto. he may erase his name and if an instrument is found . together with incidents into the right- ful possession of the transferee (Sec. Indorsement. written on the instrument itsei^f. Richards vs. The indorsement must be *'Sec. would have amounted to a negotiation. it. The of giving the in- strument. 191). and Sec. Eckland. or delivery alone at its incep- or delivery when indorsement is not must be made for the purpose all its required. 15 either as its owTier. or "Illinois. Darst.72 THE NEGOTIABLE INSTRUMENTS LAW delivery. 11 Ind. McCormick vs. He meet has an interest in the instru- ment a to the amount not of his lien (see Sec. § 31 ment and tion. does not pass to instrument. and he must complete the negotiation by deHow the indorsement must be made is preinstrument has in- scribed by the next section. 31. A transfer is which does these requirements the title not the negotiation. it vnll be presumed that the nein the gotiation was never completed. 27). owner or as the authorized representative of or in order to secure a debt or liability is omng to him. the mere delivery by one holder to another without indorsement constitutes If it is payable to order the holder must its negotiation. without additional words. If the instrument payable to bearer. hands of one who had made an indorsement upon it which. write his name upon the back of instrument thereby in- dorsing livery. If a holder in possession of the dorsed it but does not complete the negotiation by delivery. 293. if accompanied by delivery. 140. IS A sufficient indorsement. In the latter case he more than the represen- tative of its o^vner.^ how made. The signature of the indorser.

does not the where But instrument. upon the instruments they and too great care cannot be exercised to distinguish plainly the manner in which one who signs the instrument elsewhere than upon its back or an attached piece of paper. j^-^ instrument has been paid in part. which purports amount to transfer to the indorsee a part only of the instrument the transfer payable. AS TO THE residue. The rights of the primary parties. ment.' : §32 NEGOTIATION 78 The place for an indorser's signature is upon the back of the instrument. as the maker of a promissory note. Farmers Trust Co. Schenuit. Biitterick. Com. Bray. An indorsement. . A. the contract of indorsement being as fully expressed by the signature alone as it would be if it had been written out in full upon the instrument. This is called an "allonge. Walton vs.'" It may be made upon the face of the instrument. vs. One who intends to assume no greater liability than as indorser or does not intend to limit his liability as such. 100 Mass. need only write or stamp his name upon the back of the instrument or an attached paper to become an indorser within the meaning of this Act.'' otherwise he msLj be mistaken for and hold to be liable upon the instrument as a primary party. 347 Perry vs. and an indorser are very his signature different. Williams. If there is no room there a piece of paper may be securely attached to it and the indorsement made upon that. 293. as a The indorsement must be indorsement of the entire instruinstrument. ' it may be indorsed 267. intends to be bound by his signature. 12. but if a signature is placed there the indorser must use words at which clearly manifest his intention to transfer the instrument. 68 Ga. or which purports to operate TO two or more indorsees severally. vs. 3. as is their liability sign. 32. 83 111. 44 Ala. the negotiation of Indorsement must be of entire ''Sec.

in order that each may own and have a right to receive a separate part of the amount due. 16 Oh.-^ But if negotiation Kinds of indorsement. 34. vs. 620. 34. 381. The indorsement. which is defined in Sec. 34 The holder of a negotiable instrument cannot transfer a part only of it by indorsement. or to the instrument is to be" the indorsement of such Goldman Lind-av Barkley Blum. 282.^ only operate to enable the persons to so transfers the instrument to hold it whom the indorser as security for the amounts they are to receive out of its payment but to it does not constitute either of them a ''holder" within the meaning of this Act.a nd vs. there has been partial must be of the entire payment made. Price. 38. These indorsements may be either restrictive. the instrument may be indorsed as to the balance remaining due and this would be an entire and complete indorsement and negotiation. as explained in Sec. this will not operate as a negotiation and has been held to destroy the negotiSuch an indorsement will ability of the instrument. 33 Tex. partic> ular purpose. amount to a instrument. 5.74 THE NEGOTIABLE INSTRUMENTS LAW § 33. If he attempts to do so. S. 164 App. Erwin vs. special person to A indorsement whom. . qualified. 39. as defined in Sec. 149 N. 539. if followed by delivery. indorse- ment in blank. St. Div. as is explained in Sees. 36 and 37. Lynn. either special or in blank. 4. vs. An indoksbment may be "Sec. Special indorse- ment. or conditional.'' Two kinds of indorsement are named in this Act. payable. 630. Y. and it may also be either restrictive or qualified. specifies the whose order. 280. a special indorsement. Muller. Each has its distinct effect upon the instrument and serves a "Sec. 34 and 35. 33. or if he attempts to transfer the whole instrument by making part payable to one person and part to another. and an indorsement in blank which is defined in Sees. 58 Tex. "Wyoming. or conditional..

Hinton. . 35 Me. unless the instrument bearer (Sec. upon its face. 428. Smith. 56 Ore. If he desires the instrument to be paid to another he must himself indorse it or authorize some one to do so for him. R. An INDORSEMENT IN BLANK SPECIFIES NO INDORSEE. 7. 46 Am. This indorsement is made by the holder by merely writing his name upon the instrument mthout designating anyone to An whom he desires it to be paid. State vs. 40). to the to the instrument in the capacity of indorser. or to his order. 97 111. Adams. Adams vs. Hodj^es vs. indorsement in blank differs from this. Natl." The special indorsement. designated. AND AN INSTRUMENT SO INDORSED IS PAYABLE TO BEARER. although may have been written thus: "^ is "Pay to the order of the instrument When a special indorsement is used payable to the person named in the indorsement or some one to be named by him.§34 INDORSEE NEGOTIATION 75 IS NECESSARY TO THE FURTHER NEGOTIATION OF THE INSTRUMENT. ' ' It is not neces- sary that the words stitute the or order in ' ' be used in order to con- a special indorsement a ''full indorsee. the indorsement not special. 324. 181. By that act he assumes the same liability as by special indorsement (See Sec. Co. Ins. L. 66). AND MAY BE NEGOTIATED BY DELIVERY. written on the instrument over his signature by the indorser. 74. 37 Am. payable whereupon he becomes a party is." qnd unless words are used prohibiting further negotiation he will take the instrument with all its inci- person named dents including full negotiability and to another may transfer it by indorsement. sometimes called a ''full indorsement" is an order. 11. 109 Pac.. directing it to be paid to a person whom he names. Fawcott vs. but if the instrument is one originally payable to 6. 19 Vt. 95.^ But it is necessary that be transferred If he is not it the person to whom the instrument shall be is to by the indorsement named is in it. D. 24.

whoever has it as holder. 35. followed by transferred the instrument to the person he has delivery. S. it is desirable. (U. or to whose order. gj^jj^ indorsement changed to special indorsement. Section 49 of the Act gives to the holder the right to require the indorsement of his transferrer if the instrument is one payable to order. 34) upon the instrument. '^Sec. require the person who is transferring to him to indorse the instrument. Evans vs. 65 are implied from a negotiation by delivery. Gee. He him- self but by this act." an indorser has made a blank indorsement (Sec.) In accomplishing this the holder may write over the 8. he will have named without making himself a party to the transfer^ and. he desires the then need not indorse it instrument to be paid.76 THE NEGOTIABLE INSTRUMENTS LAW it § 35 then becomes payable to bearer and may be negotiated by delivery from one subsequent holder to order another wdthout indorsement. S3. that is the person who it is taking it. . One who transfers an instrument by mere delivery incurs no liability except to the extent of the war- ranties which by Sec. it again becomes Since only those persons whose names appear upon the instrument are liable upon it (Sec. by reason of the additional security which will be given to the instrument. unless the instrument was originally payable to bearer. 31 Pot. until specially indorsed. (See Sec. 40. that the transferee. he thereby changes its character from one payable to bearer to an instrument payable to order.) 78. may write over the signature of the indorser in blank the name of If any person to whom. 18). The holder may convert a blank indorsement into a special indorsement by writing over the signature of the indorser in blank any contract consistent with the character of THE indorsement.

that if the words written over the blank indorsement are made to express a contract different from that which was in- tended. A. or Constitutes the indorsee the agent of the in2. 484. bobbins. One form of this indorsement is accomplished by the indorser by Avriting over his signature words which direct pajTnent to a person named and The person named has then no right to negotiate the instrument further and no other person will be entitled to receive pa^Tnent upon it. 414. Sylvester vs. OR Vests the title in the indorsee in trust for or 3. Such an indorsement implies a promise by the indorser that he will pay the instrument if the maker or acceptor does not and to him only. But the mere absence of words implying power to negotiate does not make an indorsement restrictive. Lonsr. Downer. . but that he w^ill be liable and will pay it only to the person named in his indorse- ment. 447. OS Ala." A restrictive indorsement is one which forbids the further negotiation of the instrument or restricts the manner of its tranfer. 55 111. Newton vs.^ has also been held. but he may not write any words that will change the character of the indorser 's ter of the liability or impair or take It away any of his legal rights or defenses. 574. vs. it may be reformed. Bramlett.^" ' When indorsement restrictive. 786. D. 661. dorser. 355. vs. 13 S. 140 Fed. 85. 100 Ala. Jordan vs. Hood 10. 20 Yt. 9. 49 Am. 19 S. ' Sec.§ 36 NEGOTIATION / 1 blank indorsement any words consistent with the charac- indorsement and which express the real agreement of the blank indorser. if he is called upon to do so. An indoksement -j^e -^ which either — is restrict- Prohibits the further negotiation or the instrument. roltimhia Finnnoe Co. 36. however. TO the use of some other person. Pnrcell.

187 N...^^ Under this form of indorsement the o"svner of the instrument will be able to control it or its pro- ceeds until it is returned to him or paid and may inter- cept the proceeds in the hands of an intermediate agent. Manufacturers Natl.^^ This form of restrictive indorsement does not entirely destro}' the negotiable character of the instrument. for he names as his agent example. Freeman's Bk. and the one chiefly contemplated by the convention which framed the Act. 12. 384. 148 Mass. 553. Bank ment of America vs. 561. In each form proper language must be used to show that the indorsement is restrictive. if he indorses the instrument to a bank for collection and credit to his account. 151 Mass. 76 Ind.78 THE NEGOTIABLE INSTRUMENTS LAW § 36 The most common use of the restrictive indorsement however. Natl. likewise restrictive and likewise. 257. Bk. Thus. Bk. does not entirely destroy the further transferability of the instrument. & Drovers Bk. Where indorsein blank accompanied by letter stating draft had been vs. An indorsement which names one person it in the to take the title is in trust for another or for another's use or benefit. 115. make it so. for the fact alone that an indorser omits words which give to or imply in the indorsee the power to negotiate the instrument further. 117 N. 37. Tube Wks. . Y.. Y. First Natl. it. sent for collection. vs. vs. vs. Hubbell. an order to an indorser writes over his signature pay the instrument to some person whom If as. First Natl. such an indorsement indicates that the person or bank taking the instrument through name of and acting on behalf of the ser it does so in the restrictive indor- who does not intend to part with his title to the instrument. 3 Fed. 413. vs. Continental Bk. does not 11. if the indorsement is special Butchers Chicago First Nat. Bk. is that which makes impossible the further negotiation of instruments indorsed for collection. Waydell. but affects manner described in Sec. Reno County Bk. Bk..

" 3. To Receive payment of the instrument. 37. 143. ^ „^ Effect of restricting "Sec. 160. Craig vs. Bayer. 4(5 Ore.§37 NEGOTIATION 79 aud the words "or order" are omitted the indorsee may nevertheless negotiate the instrument. 172 Midi. rights of indorsee. To bring any action thereon that ^jjj. 2.) . 701."* The indorsee who holds under a restrictive indorsement has the right to receive payment of the instrument and consequently has the right to compel its paj'"ment. One who receives an in- strument indorsed to him 13. for collection has therefore no Smith vs. He has the right to bring any action upon the instrument which the indorser w^ho made the restrictive indorsement might bring and he can transfer his rights as such indorsee unless the form of the instrument or the reBut. . all indorsees coming after him take from and through him only such title in the instrument and its protransfer such rights as are given ceeds as he acquired under the restrictive indorsement and the form of the indorsement by which the instrument was transferred to him is notice to all subsequent indorsees of the limited right of the restrictive indorsee to negotiate the instrument. A restrictive indorsement confers upon the indorsee the right 1- — indorsement. To transfer HIS RIGHTS AS SUCH INDORSEE/ WHERE THE form OF THE INDORSEMENT AUTHORIZES HIM TO DO SO. and a discharge given by him for payment will be good. But all subsequent indorsees acquire only the title of the first indorsee under the restrictive indorseMENT. 10 Idaho. 34 and 47. Schmidt vs. Thayer. while he can strictive indorsement prohibits it. 248. jjjDORSER COULD BRING. Palo Alto Stock Farm. Gleason vs. 87 Conn. "Illinois.^^ him by the indorsement. Fcgg. (See Sees.

374. it has been said. 59 N. writes over or under. S. St. since by no other form of indorsement can he make himself a mere assignor of the be seen from the following section. before or after his signature the words ''\sithout recourse" or "without recourse on me" he makes what is called a qualified indorsement. and his liability to subsequent holders will be no greater or less than that which he ass umes or to which any qualification or limitation that he may 14 Peoples & Drovers Bk. he must be regarded as having thereby included himself as one against the holder whom by restrictive indorsement may bring an ac- tion to enforce the instrument if he fails to qualify his indorsement. A. since his inall dorser had the right to bring an action against sons per- who preceded him upon the instrument and trans- ferred this right to his transferee. SuCH AN INDORSEMENT DOES NOT IMPAIR THE NEGOTIABLE CHABACTER OF THE INSTRUMENT. vs.80 THE NEGOTIABLE INSTRUMENTS LAW to sell it § 38 power does. However. if he chooses. 52 L. write over his signature words of wish to impose." When a person indorses a negotiable instrument and Qualified indorsement. 81 Am.^* and cannot convey a good title if he Sub-section 2. E. It MAY BE MADE BY ADDING TO THE INDORSER 's SIGNATURE THE WORDS '' WITHOUT recourse/' or any WORDS OF SIMIL. Kep. 63 Oh. it he does not secure the right to bring an action upon against his immediate indorser. He is not required to use these words but may use others which mean the same thing or have the same effect. is unjust in that if a person talking the instrument in trust for another under that form of restrictive indorsement does so for value. A qualified indorsement constitutes the indorsee a mere assignob OF THE TITLE TO THE INSTRUMENT. R. Or he may. 872. as ^^dll "Sec. .AR IMPORT. Crais:. 102. 639. title. 38.

§ 39 NEGOTIATION 81 he limits himself by his words of qualification. He may also qualify his liability by enlarging when he adds a waiver of the usual requirements of demand and notice of non(See Sees. L. a party required to pay the INSTRUMENT MAY DISREGARD THE CONDITION AND MAKE PAYMENT TO THE INDORSEE OR HIS TRA NSFEREE. E. D. 109. 157 S. 465. 11 Am. o S. or any subsequent holder.) The place payment. 234. 38 P. 542. "Sec. 18. Goolrick vs. 154 Ky.) is from this form of indorsement.^^ where the qualification is written upon the instrument is its limits. Chambersburo. 184. The indorser who limits his indorsement by the qualifying words 'S\dthout re- A qualified indorsement course" merely transfers the title to the instrument as become liable it w^as when it came to him. 109. WHETHER THE 15. S. 56. 110. Wallace. vs. W. subsequent indorsers placing theirs under his cannot claim that they signed the instrument subject to the same qualification. vs.^^' These must be words which clearly indicate that he intends to limit his liability. 417. 269. 2 Allen (Mass.) Corbett vs. Fetzer. 39. Doom vs. Fassin vs. vs. 38 P. unless when signing they clearly indicate their intention to do so by appropriate words. 79 Ga. Corey. Hubbard. Shei-win. 66 N. 470. 82. Y. vs. as he does not of importance and it will operate if it can be clearly identified w4th the indorser's signature. When one indorser has qualified his signature. 108 Mich. 20 Colo. 920. 49 Doom A. 20 Johns. Shel•^\•in. and he does not to to his transferee. 789. Fitchbur^r Bk.^^ Each indorser must himself write the qualifying words at his o^\^l sig- nature in order that there can be no doubt of their application to him. . 596. 2SS. 56.34. 65. Allen vs. Conditional indorsement. 20 Colo. R. 365. N.Bank. 55 N. Greenwood. 47 Nebr. Where an indorsement conditional. 2. 434. 5. Ri^htmire. except the extent of the w^arranties \Yhich plied by Section 65 are im(See Sec. Hatcher 17. ^'^ upon the instrument does not interfere w^ith its negotiation. Markley 16. W.

specially indorsed during its obtains an indorsement which specifies the person to whom or to whose order it is to ." While the instrument must contain the unconditional promise or order of the person who originally issues it to pay it (Sec. Indorsement of instrument paya- Where an instrument. He may disre- gard the condition and pay the instrument to the holder at maturity and his payment will discharge his obligation. 40. OR THE PROCEEDS THEREOF. It will be the duty of the person to whom he pays the instrument to see to that. that is. The indorser may do this by indicating at his signature the condition upon which it is to become payable to the person to whom he negotiates it. 1). BuT ANY PERSON TO WHOM AN INSTRUMENT SO INDORSED IS NEGOTIATED. ^^^ nevertheless be further nego"Illinois.of some condition which he names. BUT THE PERSON INIS LIABLE AS INDORSER TO ONLY SUCH specially DORSING HOLDERS AS MAKE TITLE THROUGH HIS INDORSEMENT. is indorsed specially. SUBJECT TO THE RIGHTS OF THE PERSON INDORSING CONDITIONALLY. the holder W'ho receives payment must hold the proceeds subject to the rights of that party who made the conditional indorsement. ble to bearer.82 THE NEGOTIABLE INSTRUMENTS LAW § 40 COXDITIOX HAS BEEN FULFILLED OK NOT. the holder may transfer it by indorsement so that it shall become payable to the indorsee only upon the happening." If an instrument which if it is upon its face expressly made payable to bearer becomes negotiation. whether fulfilled or not. payable to bearer. One taking an instrument which is indorsed in this manner may in turn when the instrument is paid." "Sec. WILLi HOLD THE SAME. TIATED BY DELIVERY. But the one who is required to ])a.y transfer it to another. He is not bound by the conditional indorsement to see that the proceeds of the instrument are applied in accordance with the condition imposed by the indorser. but the instrument is not bound by the condition imposed by it is the indorser.

) The effect of this section is. through persons w^ho make means the one and those subsequent holders to whom that one indorses the instrument and who in turn make title to others through their own indorsements. the restrictive indorsement would be deemed to be notice of a defect in the holder's (Sees. therefore. of faith A distinction is made in this section between an in- strument which is originally payable to bearer and one it originally payable to order which becomes payable to bearer by blank indorsement. that an instrument originally payable to bearer which becomes specially indorsed may continue to be negotiated without further is indorsement. livery. It follows from this section that a restrictive indorsement upon an instrument originally payable to bearer would not be effective. But if such an instrument so indorsed is negotiated in breach title by the indorsee. nevertheless. 67. and does not include persons who obtain the his special indorsement.) title. In other words. named in the special indorsement title to the instrument by mere delivery without the in his special indorse- indorsement of the person named ment. This. 55 and 56.§40 be payable. which means who constitute some other person the owner of the instrument. be transferred by deit is not necessary that such an instrument shall be indorsed by the person named in the special indorsement. though may . of course. it NEGOTIATION 83 may. that is. but the liability of the special indorser transmitted only to such person or persons who made through his indorsement. (Also see Sec. That person or any subsequent holder may transfer it without indorsement if the transferee will accept it so. But the person who indorsed it specially will enjoy a certain immunity from liability. The first. he will be liable upon the instrument only to those title.

^^ as payees or indorsees are partners in a trading part19. the one having signed for the accommodation of the other. to It continues to be such notwithstanding the But the second. 41. unless the one indorsing has authority to indorse for THE others. . First Katl. Bank vs. all must indorse it unless one has authority to act for all. Fowler." When or an instrument is more persons who are as payees must indorse in order to negotiate it. or" indorsees who are not partpersons. for example. It has been held.) Where an ixstrument is *'Sec. "Wisconsin. that where two persons sign upon its face an instrument which recites that it is payable to "myself" or order. all must indorse. does not require a blank dorsement to again become an instrument payable bearer. 36 Ohio St. but if two or more persons named enforceable against both.84 THE NEGOTIABLE INSTRUMENTS LAW § 41 in- become specially indorsed. made payable to two not partners all who are named expressly This authority need not be expressly given but may be implied from the circumstances under which the instrument was issued or transferred. 34. and it was intended that the latter alone should receive the proceeds of the instrument. special indorsement. 9-5). 524. unless one who does it for all acts by the authority of the others. Indorsement where payable to payable TO THE oeder of two or more two or more payees. a transfer upon his indorsement alone mil vest the holder with title Wlien the instrument is made payable by indorsement to two or more persons who are not partners. and does require to again be specially indorsed in order to resume its former character as an order instrument after it has been changed by blank indorsement to one payable to bearer. ners. (See Sec. originally payable to order becomes payable to bearer when the only or last indorsement upon it is an indorsement in blank (Sec.

title to the instrument if the officer Drexler Smitli. Fulton vs. Loualilin. to indorse the instrument in the name of the partnership act. the indorsement. 42. ''Sec. OR THE INDORSEMENT OF THE OFFICER. 77 Pa. 796 Moorehead vs Gilmore.) 138. will not 20. AVhere an instrument indorsed to a terson as ''cashier'' or other fiscal officer of a bank or corporation.^° is and all ^ partners will be bound by his . 85 m a partnership transaction. Gansevoort vs. Williams. . Effect of instrument drawn or indorsed to a person as . convey the vs. 18 Am. by another of its duly may be negotiated by the init dorsement of the thority of the officer. 20 K E. 286. 118." ^^^^^N OR If an instrument is dra^^aI or is indorsed so that it is payable to a cashier or other "fiscal officer of a bank or corporation" it is taken to be payable to the bank or corporation of which he is is such officer. it is deemed prima cashier. or if made by such considered to be the act of the bank or corporation named and is good. 14 Wendell (N. A fiscal officer is one w^hose duties pertain to is the finances of the bank or corporation of which he an officer. AND MAY BE NEGOTIATED BY EITHER* THE INDORSEMENT OF THE BANK OR CORPORATION. 754. until the contrary shown. Hep. made by another by aubank or corporation. even in the absence of express authority. 30 Fed. Dakota poration of which he is such officer. The indorsement for transfer by a public officer of an instrument which carries notice upon its face that it is the property of the corporation. Y. St. is officer named if in the instrument. Such an instrument is payable to the bank or corporation of which the person named is an officer and may be negotiated by the indorsement of the bank or corporation though made upon or it authorized officers. facie to be payable to the bank or cor«So.§42 nersliip NEGOTIATION any partner has the right. In either case. 118 Ind. 435.

of course. and Sec. If one does business in the name of a company and and this is usually done." payee or indorsee is HE If the nanie of the misspelled or incorrectly designated or described. Where the name of a payee or indorsee is wrongly designated or misspelled. No particucapacity. Brj^ant vs. vs. Ins. 7 Gushing (Mass. in addition thereto. Firp Mass. if he think Indorsement by the i^erson named in his proper name or by his proper designation is. 217 22..-^ his proper name He not obliged to but he may. International Trust Co. 44. 43. name or proper designation. . ADDING. Hunt vs. 8.^^ Indorsement in his made payable to the company name." When an instrument requires the indorsement of a in representative capacity. 6. Quincv Mut. THINK he is FIT. person who is not a party to it except as the representait tive of another. he may is it inis dorse the instrument in the manner in which his misspelled or by his w-rong designation. good although he neglects to indorse by the misspelled name or improper designation or description. indorse by fit. Stewart. he may indorse in any way he desires in order to show that he does it in his representative and that he does not intend to assume any personal liability upon the instrument.-^ As to transfer by or offi- payment to officers of other corporations or public cers.86 THE NEGOTIABLE INSTRUMENTS LAW it § 43 negotiates for his private use. Sub-sec. 7 Ala. he may indorse the instru- C fit 61*3. Whef^e any person is under obligation to indorse in a representa^^^^ capacity. fit is "Sec. • Indorsement where name misspelled. IF HIS PROPER SIGNATURE. 23. 21. 525. ino\^^l name ^\ill be sufficient to transfer ''Sec. he may indorse in such TERMS as to negative PERSONAL LIABILITY. 370. the instrument is dorsement the title. Co. see Sec. Eastman. 21.) 111. ME NT AS THEREIN DESCRIBED.

4. Caro & Brown. Freese vs. § 45. vs. for a date often becomes very important in determining the (See Sec. Smith vs. appears. every indorsement is presum]':d presumption. ^^^ instrument. Y.. P. Cedar Rapids Natl. prima facie to have been made at the PLACE where the INSTRUMENT IS DATED. ChiTrch. Bashara. until the contrary appears. Except -where the contrary indorsement. for the reason that each negotiation garded as a distinct and new contract upon the terms of the instrument or upon such modifications as may have been imposed at any negotiation. every negotiation is deemed prima facie to have been effected before the instrument was overdue. 9 Orej^on. . 620. particularly if made in another State whose laws may yet be different from those of the State where the 24. in a controversy. Chelsea Exchg. 45. to have been made and every negotiation to have been effected before the instrument became past due. 46 NEGOTIATION 87 form of words is required.S2.) rights of the interested parties.-^ The rights and liabilities of in- dorsers before and after maturity differ in very important respects and if an indorsement is placed upon an ought to be dated. Browncll. Place of "Sec. L. Bk. First U. Any which will convey his meaning will be sufficient. 35 N. (In^. 616. indorsement ment bears date after the maturity of presumption." The place where an indorsement is made sometimes instrument after its maturity. 285. 39 Okla. it becomes important in fixing the rights or the liability of is re- the indorser. Bk. 89 Misc. 46. 52. vs. J." The date which an indorsement bears is presumed to be the date when it was made. 278. This presumpis tion may be overcome and. Every undated indorselar ment presumed.-^ Time of Except where an indorse*'Sec. the true date shouni by proof.-^ If the indorsement is made at a place other than that where the instrument is dated.) 25 26.

ouglit to indicate that fact. Mackintosh vs. Clarke. mav strike out any indorsement upon the instru- Cliemical Natl. Bk. as to others. 708. ARE THEREBY RELIEVED EROM LIABILITY ON THE INSTRUMENT. 183 N. 29. 48 instrument was made. ALL INAND OUT. vs. An instrument negotiable origin continues to be negotiable until it has been restrictively indorsed or dtsch. may be effected The by payment ways enumerated under Sec. A restrictive indorsement is made 37. 40 N.-^ All indorsements are presumed to have been the place where the instrument is made is at dated unless the concon- trary appears or clusive in favor of is showm. 92. R. vs. 199. . 119. 111 Am. This presumption in any holder due course who had no notice to the contrary before taking the instrument and the contrary cannot be showTi as to it him even if true. N.^^ Continuation of negotiable j>^- "Sec. time strike out any indorsement which The in^^ ^^^ necessary to his title. 48. 28. Kello^s. 27." An instrument which is negotiable when first issued continues to be so until it has been restrictively indorsed It continues to be nego- or until it has been discharged. 69 Atl. in the manner described in Section 36 and confers upon the holder such rights as are set forth in Section discharge of the instrument or in any of the Striking out indorsement. 1103. 192. 29 R. H.^^ tive The only form its of restric- indorsement which entirely destroys is negotiable character (Sec. jr^j. whether he be or be not himself an indorser. S. Cas. S. 47. tiable even after maturity. I.). 717.) that which forbids its further negotiation. 2 L. 75 N. Simpson vs. 681. Gibbs (N.^rged by payment or otherwise. "Kentucky. The holder* may at any **Sec. J. 36." The holder. 74 Atl. Oakdale Mf-. Y. White. Co. but has been held. that an undated indorseis to ment be regarded as having been made at the place of residence of the indorser. STRUCK IS INDORSEMENT DORSER whose DORSERS SUBSEQUENT TO HIM. A. 5 Ann. R. 158. 540.88 THE NEGOTIABLE INSTRUMENTS LAW it § 47. 299. E.

' 306. 878. title are the indorsements of the payee and of subsequent special indorsers and persons named in any special indorsements through whom the holder must The indorsement of the payee trace his ownership. Butler. whether it be the indorsement of in special indorsements will be necessary to the payee or strike out all any subsequent indorser. unless the payee has indorsed in blank. 572. the indorsement of all persons named prove the holder's title. New Haven Pulp Conn. 31. 32. 264 Mo. vs.^^ And he may do this before or at the trial of an action upon the instrument. 317. New Haven & Board Co. Carter vs. may be ing til out indorsements does not usually arise un- the instrument has been re-negotiated to a party who Porter vs. Vanarsdale vs. 177 Mich.^- Such indorsements as are necessary holder could or did acquire title to to show how the in the instrument are usually readily ascertainable from the manner which they are made upon the instrument but the holder exercise considerable care in striking must out the names of upon whom he does not intend to rely. Parties whose names are struck out cease to be liable upthose persons on the instrument as do all those who indorsed subsequent to that one or those Avhose names are thus eliminated. 126. Mfg.. Ensign vs. Cushman. Co. and. But when a blank indorsement appears upon the instrument..^'^ should never be struck out. 30.^^ and will be necessary if there The occasion for strikis no blank indorsement upon it. 107 Fed. Fogg. 76 . The indorsements of all persons named in special indorsements necessary in order to show the holder's title to the instrument. the holder may subsequent indorsements and show title under that blank indorsement. Hax.§ 48 is NEGOTIATION 89 ment which holder's not necessary to prove his ownership of Those indorsements necessary to a the instrument. 19 111.

in addi^Colorado. 128 Minn.) 250.) 535. (N.'' But for the purpose of determining whether the transferee is a holder in due course. ment of the transferor. Y. 121. Cantrell vs. 519. Edwards. 168 S. upon indorsement was contemplated. 410. C. Kiefer vs. 1:9. Goodsell vs. W.^^ ' ' Transfer without Sec. he should be required to do so as quickly as possible if his When. Div. 402. the transfer of such an instrument. the transferor neglects to indorse it before its transfer.) The holder may then strike out his own indorsement even though it be restrictive. 34. Until it is obtained the transferee will hold the instrument subject to all the defenses existing between the 33. (See Sec. and the transferee acquires. its same defenses as if other parties^* and subject to the inst rument were non-nego- Jerman vs. (U. Missouri. 29 App. Wheke the holdee of an instkument payable to his order transfers indorsement. „^^T^^ TITLE as the transferor had THEREIN. Alabama. he does not acquire with its possession the status of a holder in due course (Sec. W. State Natl. or it returns to the holder after an ineffectual attempt to collect it during which it has obtained indorsements which are in no way necessary to establish his relationship to the parties against whom he seeks to enforce it.. the effect of.. McElrov Bros."" jrj. ^^^ value without indorsing it. Martz vs. 509. The transfer of an instrument payable to order with- out the indorsement of the payee or the indorsee named in the special indorsement will convey the title to the holder but While the transferee such a transfer and by acquires title to the instrument may bring an action upon it. . Bk. 85 A. the right" to have the indorsefWisconsin. A. until he secures the indorsement of his transferor. 529. 180 Mo. Davidson. 86 Conn. C. Co. 147 App. 59) it is not a negotiation. the negotiation takes effect as OF THE time when THE INDORSEMENT IS ACTUALLY MADE. 151 N.90 THE NEGOTIABLE INSTRUMENTS LAW § 49 has previously negotiated it. Tolbert. VESTS IN THE TRANSFEREE SUCH TRANSFER "Illinois. 271. tion.

of an action in equity he will not do The Act does not provide that any holder subsequent to the transferee has this right but it is undoubted in the transferee and he can compel the transferor to in- dorse the instrument. equity will also inter- vene in behalf of subsequent holders and any such could. subject to the provisions of and further negotiate the same. unless it is one which was originally payable to bearer.^^ When prior party may negotiate instrument. If or not the transferee is in the interval the transferee without indorsement re- ceives notice of a defect in the instrument. compel its indorsement. Co. If the indorsement is made later than the date of the it is transfer of the instrument and questioned whether a holder in due course the negotiation is considered to have taken effect upon the date when the indorsement is actually made. vs.. 69. But re-issue THis Act. However. Where an instrument is xegotiated back to a prior party. and it is then subject tiated 35." WHOM HE WAS may PERSONALLY A negotiable instrument be re-issued or re-negoif in its by a party who has once before had it. 95 Ga. HE IS not entitled TO ENFORCE PAYMENT THEREOF AGAIXST ANY INTERVENING PARTY TO LIABLE. 91 Mo. it has become specially indorsed. SUCH party may.) Such an instrument is transferable by mere de(Sec. . and not the date when the instrument was transferred to the holder. Co. livery even after 30. course it returns to him. in a proper proceeding in equity. or the title to it. Orton. Abbott. 50. 677. This section gives the person to whom an instruso transferred the right to require his transferor it ment is to indorse and he may be compelled if to it do so by means voluntarily. he will be bound by such notice even if he has paid full consideration. 849. ''Sec.§ 50 NEGOTIATION 91 tiable. 56 Fed. vs. El. to all of Benson vs. Weber Thompson-Houston Capitol El.

1192. howany party to the instrument does again receive it and indorses and negotiates it a second time. 187. he cannot enforce its payment against any person to whom he himself was personally liable on its first negotiation. 76 N. Co. vs. First Nat. except himself. If. parties the instrument issue is treated as if it and were upon its first and negotiation. Barney. Aurora St. C. A. This includes parties who became such between his first negotiation of the instrument and its return to him. 38.^^ One the provisions of this Act as ever. 88 Nebr. R. Adrian vs. 190 Mass. 38a.). Froiieh vs. vs.92 THE NEGOTIABLE INSTRUMENTS LAW § 50 upon its first issue. Downinc. ^^^ (See also Sees. Quinibv vs. If the instrument has returned to the drawer or maker and it is re-issued by him. In others. vs. 1918 E. 37. Varnum. 219. Harris. App. 231. W. Bk.. it is held. not subject to this limitation. 182. Hayes-Eames El. Bk. Neeley (Tex. Civ. 671. the fact that it is in his hands is notice that it has run its course^® but if he re-issues it before maturity.^'^ As to others. 103 N. 129 S. McCaskiU. it pro- ceeds as upon a it new negotiation and in some jurisdictions its first is held that no party to is negotiation. See Note L. 139. E. 170. 23 N. 119 and 121. there- fore. C. upon what seems to be the better reasoning. who indorsed new the instrument without recourse is. then liable to anyone who takes the instru- ment upon its second issue. that all secondary parties remain liable upon their contracts of endorsement until the maturity of the instrument. . 7 Wash.) 36.

no assignment can be made for the mere purpose of collection which will enin States w^here the real able the assignee to sue upon the contract in purpose of suit his own he is name. sufficient title for the even if not a holder for value or in due course. 201 Mass. 543. Who deemed holder in due course. 53 When person not deemed to 58 be a holder in due course. never inquire whether he brings the action in his own behalf or for another. The person who is in lawful possession of the ment as payee. payment. indorsee. and will not inquire into his right of possession unless the question is raised as a matter of defense upon an allegation of fraud or bad f aith. 54 Notice before full amount 59 52 paid.§51 RIGHTS OF HOLDER ^'-^ SUBDIVISION IV. Section 51 Right of holder to sue — 1 Section 56 What ' \ payment. constitutes notice of defect. or has no interThe Court will est in the instrument or its proceeds. however. 51. title 55 When defective. holder and he is instruis the entitled to recover its proceeds and bring an action upon name. . AYhat constitutes a holder in 57 due course. even if it is the property of another. 191). Lowell vs. When subject to original defenses. a negotiable instrument differs may the instrument in his own In this from a simple contract for the payment of money for of the latter. Eights of Holder. . Riohts of holder in due course. party in interest is required to bring an action in his o\\m name. _^____ Bickford. has The holder of a negotiable instrument. or bearer (Sec. The holder of a negotl\ble instrument may sue thereox in his own NAME AND PAYMENT TO HIM IN DUE COURSE DISCHARGES THE Right of holder to sue. respect. I NSTRUMENT.^ "Sec.''^ 1.

Y.. .94 THE NEGOTIABLE INSTRUMENTS LAW If the §52 person who is obliged to pay the instrument pays a holder at or after its maturity even though he be not the owner. ^^^^. L. Lauretson. W.." 34 S. is chargeable with the duty to know that the holder has no authority to receive the payment. Barton Sav2:s. seem to mean that the instrument must have been complete when issued and negotiated in accordance with the provisions of this Act and must not. Critten vs. 14 Kv. To become entitled to the protection of the provisions of this Act in favor of a holder in due course. D. every person who takes a negotiable instrument must see to it that he does 4.. -^^^^ constitutes a holder in due course. 639. 219. Stephenson.""" This section defines the term '4iolder in due course" which has been so frequently used up to this time. and without notice that it had been previously dishonored. Russell. 158 111. 171 N. That he became the holder of it before it was overdue. 433. Manussicr vs. A HOLDER IN DUE COURSE IS A holder who has taken the instrument under the following conditions: 1. 231. show that it has been altered. Holbart vs. ^^^ •Wisconsin. was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it. One becomes a holder in due course if the instrument he holds and seeks to enforce is first of all complete and This general statement would regular upon its face. he will have discharged the obligation completely unless he knows or not knowing. 87 Vt. Bk. That at the time it so with the necessary qualifications. if such was the fact 3. The subject of payment will be treated further under Section 88. 89 A. on its face. 52. vs. That it is complete and regular ^. 2. (Iowa) 825. . 214. In re Philpot's Est.and these essential requisites to 2. vs.p^^. Marion Natl. Wriyht. Co. That he took it in good faith and for value . Bk. 368. 267. A. Chemical Bk. *'SeC. 151 N.

an instrument which is payable on demand is offered for negotiation an unreasonable length of time after its issue. 212. or passes steadily and regularly from one person to another in a series of regular business transactions. D. First Natl. 86 N. would constitute an irregularity which would destroy negotiability if they affect the sum payable or the the in- place where. D. or the parties to whom strument is payable. 867. R. time when. 10 Yerger (Tenn. he will have the burden of proving that he is a holder in due course.^ If such an instrument stops in its course for an unreasonable length of time in the possession of one holder or continues to be negotiated for an unreasonable length of time after its issue. contradictions in the instrument that they are irreconcilable. Kellogs. 31 Am. but if a lack of them is alleged against him. thus including any purchase in good faith for value of a note or bill before maturity. E. Am.§52 his title will EIGHTS OF HOLDER 95 appear with appropriate explanations at If there are such ambiguities or their proper places.). Merea. 281. 586. 21 N. The term ''due course" supposes If that the instrument has passed in a single transaction. vs. W. (Subd'n 1. a suspicion arises 3.) The holder must be show that he acquired the instrument before it matured and if it had previously been dishonored or repudiated. Flath. 10 N. and some proof offered to sustain the allegation. he must be prepared to show that he had no prepared to notice of its dishonor. without presentment and demand for pay ment. vs. Curtis. . the person who takes it will not be considered a holder in due course. 273. Kimbro vs. Lytle. He is not obliged to prove these qualifications unless challenged. and is trans- ferred under the usual customs and usages of business. 316. 585. 31 Tischer vs. Bk. or they indicate that either one of two interpretations this its may be applied with equal certainty or uncertainty. 417. 69 Me. 138 Ind. 286.

) The discount of negotiable paper by a bank will not constitute the bank a holder in due course. (N. Citizens Bk. by which his standing is to be determined. and that consideration must have been sufficient to sustain his right to recover upon the instrument. 4. but he must have given some consideration for its transfer. Div. 346. Parsons. Y. Claussen. . 5. Santa Maria Sue:ar Co. Montrose Savgs. vs.) 248. '^ Likewise if Albany Co. acceptor. under this section.* Nor does the mere crediting of a check if the customer's account continues to hold sufficient is money to pay it if it is dishonored. 610. 180 N. Ice Co. Y. (N. vs. Merchants Bk. If the is a "holder in due course" he will hold the instrument free from all defenses Avhich prior parties might have among themselves (Sec. or have acquired the instrument through some one who did. it then becomes a holder for value. 162 App. 92 App. 115. Y. is The rigidity with which the Act applied to the enforcement of the duties of maker.. 7.^ But the customer checks against the dis- count or deposit. faith is of the utmost The holder must also have taken the instrument in good and for value. drawer. (For definition of value see Sees. Y. 6. Cowles.. Bk. 136 la. Value here does not mean full value. 25 and 191. Waydell. 114 Va. 187 N. Norton. McKniii^ht vs.^ or the item if credited for collection. are applied to the holder. Bank of America vs.96 THE NEGOTIABLE INSTRUMENTS LAW when § 52 of irregularity. Miller vs. or the bank incurs a liability upon the items. vs. Div. 137 Iowa. and indorser of a negotiable instrument is not relaxed when its provisions. 390. or that some infirmity may have caused it it is the delay in presenting or negotiating again offered for negotiation.) 47. Bank vs. 73. when it is shown that the proceeds have been placed to the credit of its customer and remain in the bank. 57) and a familiarity holder with the provisions of this subdivision importance.

§52 RIGHTS OF HOLDER 97 the proceeds are appropriated by the bank to the depositor's indebtedness to it before receiving notice of any infirmity in the instrmnent or title of its transferor. 470. Sees. 548 10. W. Hall. . and just what it purports it had not a good The provisions of Section 55 determine is when the title is defective. 70 to 118. none of the defects enumerated in those two sections exist in the title of the holder. or that the person negotiating title to it. What to be regarded as notice If will be determined by Sec.^ or the bank lends its own credit for the customer's benefit. 1068. 171 S. 56. Iowa. time it lastly.^ Payment of draft with bill of lading attached by the crediting the drawer's checking account will constitute the bank a holder in due course. vs. specting presentment. City Dep. and he has not acquired the instrument contrary to the provisions of the next section. 9. demand and notice given under and delivery or the negotiation of an instrument on Sunday is affected by the fact that it is done on that day and its effect upon the rights of the holder. vs. To hold the indorsers he will be required to observe the provisions reit. Tapee vs. Elgin Banking Co. Green. 199 Tenn. 130. that was negotiated is the instrument not all right to be. App. 384. whether or not drawer had checks against the deposit at time of the credit. Bk. Varley.^" And. . "W. or before that time. 19. the holder must not have had notice at the to him. 108 S. will depend altogether upon The extent to w^hich the execution 8. 184 Mo. he will be deemed a "holder in due course" and can require payment regardless of any infirmities or defects in the instrument or its prior negotiation and recover against all prior indorsers as well as against the persons primarily liable upon except those whose signatures have been forged or such as have qualified their liability.

) When person not deemed holder in due course is Sec. 108 N. not deemed a holder in due course. then the execution or ne- completed on that day. 54 other statutory enactment. will be discharged by any unreasonable delay in presenting and demanding payment of an instrument payable on demand. S. cei^t:s "Sec. parties. 212. ^ble qn demand an unreasonable length of time is not established by this act at any fixed period nor has any definite rule applicable to all cases been laid down by the courts. will not be a holder in due course. 54. other than those primarily liable. he will be deemed a holder Notice hefore amount 11. Wallace. 193. See Sections 7-71-144 and 193 for more on full this subject. 53. and void as between the itself. 84. however. 62. Where an instrument is ' pay- the holder negotiated an unreasonabi^e length of time after its issue. (Sec. 116 A. W. this infirmity must be ap- parent from the instrument A of promissory note providing that default in payment any installment of the principal or interest shall cause the whole note to become due is overdue upon the failure to pay the matured installment. In determining what is a reasonable or an unreais What sonable delay the particular circumstances of each case must be taken into account.^^ (See Sec. Gilman vs. or if it is apparent upon the face of the instrument. ' ' 2. by statute in the State it where the transaction occurs gotiation of the instrument. When the transferee renotice of any infirmity in the instrument OR defect in the title of the person negotiating the same before he has paid the full amount^ agreed to be paid t herefor. 12 Hodge vs. 129 Wis. 938. . will be illegal if is made unlawful to transact business on Sunday.' 98 THE NEGOTIABLE INSTRUMENTS LAW If § 53. 59 N. Berry. paid. ^^ To affect subsequent holders. and one taking it after such default with notice. R. H.) Parties to the instrument.

or any signature upon obtained in the manner indicated in this section." It has already been said. he will then be considered a holder in due course only to the extent of the amount he paid before the defect or infirmity became known to him. R. that the transferee has already paid a part of the consideration for its him before becoming aware it of the defect which exists in the instrument or in the title of the person who negotiates to him. or any signatures thereto. under Sec. The title of a person who ''Sec.§55 RIGHTS OF HOLDER 99 IN DUE COURSE ONLY TO THE EXTENT OF THE AMOUNT THERETOFORE PAID BY HIM. 56. negotiates an instrument is defective «Wiscoiisiii. If it should happen. S.. one must have acquired the instrument without notice of any defects or infirmities in its title. OR WHEN HE NEGOTIATES IT IN BREACH OF FAITH. within the meaning of this act when he obtained the instrument. duress. OR UNDER SUCH CIRCUM" STANCES AS AMOUNT TO A FRAUD. When title defective. 93. the title of the instrument or signature is defective. OR FOR AN ILLEGAL CONSIDERATION. etc . ^^ But knowledge alone is not necessarily notice. that to become a holder in due course. by FRAUD. If after having made a partial payment on account of the transfer of the instrument. Cons. OR OTHER UNLAWFUL MEANS. and notwithstanding that fact pays the balance agreed to be paid for the instrument he mil not be in the position of a holder in due course as to the amount he pays after notice. OR FORCE AND FEAR. 14. person who so procured the Any person who R. and what is deemed to be ''notice" is to be determined by the application of the provisions of Sec. Dresser vs. 93 U. as transfer to it sometimes does. 52. he learns of its imperfection. Co. Missouri. 55. ' ' When the instrument it is is obtained or negotiated. but he is such only to the amount of his payment before notice.

56. 775. 104 Ark. 388.^^ he must have made a known when he made it that it was its false. or the circumstances are such as amount to fraud. 81 762. W. the general rule is that the person chargeable with the fraud must have material false representation. Hall S. time or before he acquired the instrument or if. 111 Ark. 913. App.) Fraud is consists of any wilful deception by which the the fraud is execution. 15. . not knowing of their existence. he is chargeable in law with a duty to know. 27 Colo. 258. A. Natl. if it is shown that he knew of them at the considered a holder in due course.: 100 THE NEGOTIABLE INSTRUMENTS LAW exist is also affected § 55 takes the instrument with notice that these defects or any of them by them and will not be The existence of any of them will defeat his right to recover upon the instrument against any person who became a party under such circumstances. (N. Citizens vs. 36 Tex. but the following essential elements exist in it must To be the subject of an action. or negotiation of the instrument obtained. 133 N. indorsement. Bank.) 879. vs. Y. 148 P. Bank Hale. 323. Hale vs. 584. Hodgens S. (See Sec. 149 S. without have made it reckany knowledge of or in wilful disregard of truth or falsity. Jennings. or lessly as a positive assertion. Div.^^ He must have made the false or reckless representation with the intention that it should be acted upon by the person whom he expected to influence by it and the fraudulent representation must actually have been acted upon by Grayson Co. Civ. 148 App. Whether a positive fraud. W. vs. must be determined in each particular case. Bk. Peden 16. a fraud in law. Birkle. W.. vs. Y. con- structive fraud. 317. 163 S. 845.

. 143 App. and no other reason. Cribbs vs. D. 355. Hale. Hurst vs. 670. 20. vs. or induces or procures any one to become a party to it without disclosing all material facts in relation to the instrument M^hich he to disclose to him. 326. 11 Ind. (N. 120 P. W. a member and the one signing is thereby actually put in fear of the threatened danger and for that. 1050. 997. Johnson. 149 S. . Smith. etc. 192. 87 Mich. Brayles. 71 Am. 16 N. Bank of Commerce vs. 44 S. etc. 337. he will ^^ owes a duty have perpetrated a fraud upon title to him and title will if he thereby obtains the instrument his be defective. Champion Foundry. 166 Fed.. Co. 125 Mo.. 587. is Duress a condition which exists when one is induced or compelled by the unlawful act of another to make a contract or to do or forego some act under circumstances which overcome the mind and will of a person of ordinary^ firmness and deprive him of its free exercise. C. Co. W. 516.§55 RIGHTS OF HOLDER 101 the party using this defense/' who must thereby have suffered loss or injury. S. 340. 130 Wise. 92 C. either to the signer or to some other person. 19. W. A. 845. and be equivalent to a positive misrepresentation. Lee. Keller vs. 127 N. Hodge vs. or other serious harm or loss. vs. 239. Bank 18. In re Lawrence. 213. makes the signature or indorsement. 251. 414. Y. Div.. C. Heskett. E. W. Parlin. of his family or near kinsman. 17. Y. 118 Ga. A.^^ The concealment of any material fact which it is a duty to disclose will have the same effect as. 110 N. 388. 104 Ark. Thus. ^*^ If a signature to a negotiable instrument is procured under unlawful threats of bodily harm or of harm to business^_ reputation and standing. Sowle. 102 S. when one obtains or procures the execution or indorsement of a negotiable instrument. M. not otherwise being obliged to do so.) 614. 1040. 49 N. Strickland vs.

R. Carr. S. 1042.102 THE NEGOTIABLE INSTRUMENTS LAW § 55 of such force and fear constitute duress^^ and the a person taking the title instrument under these circum- stances. 35. 76 Ga. it No he has no right. 44. McMillan. 322. Brown. 443. 149 Ind. Ackerman. 148 S. (N.) Bush vs. person has a right to negotiate the instrument in breach of faith. 581 and note Larapman vs. 2 L. W. Fire Ins. W. 52 Fla. 51 Oh. that when one has the instrument for a specific purpose. vs. Hull. L. A. 849. ^^ The defense of want of title cannot be used to defeat the enforcement of the instrument in the hands of one who would otherwise be 21. Cas. 140. 469. 129 Wis. S. Beacon Tiaist Co. 143. 91 N. Reffitt. the person obtain- ing the instrument for such unlawful consideration does not obtain a good title to it. under such circumstances as amount to title its fraud. 5 Ann. is defective. Burton vs. 190 Mass. to divert to a different use. 445. R. S. 76 N. which means. 938. 212. 1116. A. Eead what is said under Section 5 in regard to illegal provisions in the instru- ment. AYiliiamson. S. or with notice of their existence. 149 Ky. Lampman. that is. 270. he cannot obtain or convey a good to the who is chargeable with notice of fraudu- lent procurement or negotiation.35 Pa. if And the instrument or If the consideration for the instrument or its negotia- tion is illegal. W. 573. R. 27. M. 329 and note. 112 A. any signature upon it is obtained by other unlawful means. St. Gardner vs. Fountain vs. 42 .) 767. 77 Kas. Frazier Co. Co. is defective. 108 N. Rep. 116 A. Com. 118 Iowa. 300. a holder in due course. E. 84 Atl. St. S. R. 2 A. 502. vs. E. 37 N. without permission. Halsell. 2. 42 So. one not lawful. vs. or procures or negotiates transferee it to be indorsed. 48. Bigliam. R. Swear vs. the title of any holder chargeable with notice of the unla^^'ful means by which the instrument or signature was obtained. 84. 19 Am. 131. it And if any one obtains the instrument. unless it 22. 695. (N.. Wallace. Hodge vs.

825. vs. * „ ^ ^ . 77 N. Eoillv vs. he the transferee is not chargeable with notice. Neill. Lowry. 149. C . or unless the defect in the instrument is so cogent and obvious that his ac- tion in taking in it it. 64 N. these are sufficient. Bk. of the holder's right recovery upon the instrument. Fed.t A. Unless he has actual know4- edge of the infirmity or defect in the title of the person from whom he takes the instrument. A mere suspicion of the existence of an infirmity in an constitutes notice of defect. Weston. amounts to bad faith. 113 C. 159 McKinnon. to be the equivalent of Such things are not considered actual notice of infirmity in the instrument or the holder's right to negotiate it. Natl. 472. To constitute notice of an the instrument ob defect IN the title of the person negotiating the same. 172 N. E.^^ But if 23. and the next section Ijrovides wliat shall constitute notice. 190 Mass. or any other circumstances surrounding the transaction are such as Avould warn him. 149 Fed. vs. 250. Simonds. 949. or knowledge of such facts that his action in taking the instrument amounted to bad faith. 4o. though is has come in- heard by the person who so. Ed. about to take the if strument. the person to whom it is negotiated must have had actual knowledge of the infirmity or defect. 343. Union Natl. 20 How. 934. Bk. notwithstanding the obvious infirmity or defect in the holder's title. Goodman vs. or any peculiarity about the bill itself or the parties to it is such as would put an ordi- narily prudent man upon guard not of against fraud or irregTithemselves. before doing And the suspicion and rumors which attend the instrument are such as would place any ordinarily prudent man on his g-uard. What 56. usteikmity in ' instrument or in the holder's infirmity exists.-. to defeat larity. 192 Fed. '9 C. vs. 15 L. 711. 78. Fillebrown Havward. 417. C. E. A. Y.' §56 is RIGHTS OF HOLDER of it 103 shown that he had knowledge "Sec. to be title is not notice that such it Nor is mere rumor. Youni? vs.

Ed. 88 N. ^'^ fl Rights of holder in due course. and those whose names upon it were forged or made mthout authority. 979.. vs. S. 78. 48 Oh. 25 N. the person who has actual or constructive possession of the instrument Having become a holder in has the absolute right to enforce liable it against all persons of its upon it. of America. Loudenback. 147 U. 57. 518. In re Stanford Clothing Co. vs. he will not be a purchaser in good faith if he then takes it.104 THE NEGOTIABLE INSTRUMENTS LAW § 57 has reason to suspeet fraud or irregularity and he fails to investigate for fear his suspicions will be confirmed. 19 Am. 26 N. 38). Y.le vs. E. Defendorf.* and may enforce payment of the instrument for the full amount against all parties liable thereon. 123 N. TllTnmR. In re Hopper-Morgan Co." or words of equivalent meaning (Sec. 13 S. 374. 676 and note.^^ defects of title of prior parties. and free from defenses available to prior parties. 59. 172. 377. E. vs. 254. among themselves. 10 L. St. 156 Fed. 27 Oh. 37 L. 111. His title and possession are absolute and he can require payment from all persons whose names are upon the instrument except those who have qualified their indorsements by the words "without recourse. or his investigation disclose a defense to the instrument. Kavanagh 24. A holder in due couese holds the instrument free from any due course. S.. R. St. 29 Am. 540. regardless of and defenses against each other. Ct. A. Lansing. 71. Bankr. 239 404. . or unless the instrument was void at its inception because made in vioCanajoharie Natl. 171. He is not concerned with any defects or imperfections in the instrument or in the manner procurement which may amount and to matters of defense all among the parties themselves full parties are liable to him for the their rights amount of the instrument. Bk. Johnson Way. 525. 191. Bk. R.. R. E. Kitchen vs. 187 Fed. L3i. ^Wisconsin "Sec. 402.

Wten subject to ' The defenses which the original parties to an instrument. Lehmeier. Hazelrigsc. a (iiiestion upon which. acquires all the rights considered.' §58 RIGHTS OF HOLDER 105 lation of statute law. HAS ALL THE RIGHTS OF SUCH'' FORMER HOLDER IN RESPECT OF ALL PARTIES PRIOR TO THE LATTER". Sabine vs.) 9. 114 App.^^ (Sec. "Illinois. (N. AND WHO IS NOT HIMSELF A PARTY TO ANY FRAUD" OR ILLEGALITY AFFECTING THE INSTRUMENT. 58. as the maker and payee of a promissory note. all the rights which that holder had against parparty ties who signed the instrument before he became a affect the instrument as to transfer to a holder in due course the character of the instrument as an available security became established. 23. 191 N. (N. can make among themselves are called "original defenses" and a negotiable instrument is always subject to these while in the hands of the original parties. can stand on that holde r's title and enforce the t)34. Crittenden Record Press. Y. Div. even it. Wis- "Sec. therefore. in- Alexander vs.) 546. Schlessinger vs. Schlesinger vs. also takes the instrument subject to these defenses. 123 K3^ 677. But a holder who derives his tiable. 69. having acquired his title through a holder in due course and not himself a party to any fraud or any of the other infirmities which provided in Sees.) original defenses. a negotiable instrument is subject to the same defenses AS IF IT WERE NON-NEGObA^^lf' Alabama. vs. The subsequent transferee. Any holder other than a holder in due course. obtains with the transfer to him through the holder in due course. Kelly. Y. In the hands of any hold^^ other than a holder in due course. loO Ky. of the holder in due course and is himself so He 25. Div. to the same extent that an instrument would be which is not negotiable. ^ Citizens Bk. TITLE through A HOLDER IN DUE COURSE. . By the though he purchase with notice. Y. however. 55 and 56. Paine. But a holder who is not a holder in due course. tne decisions are conflicting. 166 App.

Mason. Buckley. 405. W. The holder cannot be required this proof and by any one who became a party his position cannot be assailed. 415. 141 App. 96 Md. Westminister. 135 R. instrument concerning which inquiry is made to determine the holder's qualification as a holder A\Tien the 26. 75 Md. in the of an instrument is considered to be a is holder in due course until the contrary And when it is sho^\Ti that the title shown to be was defective hands of any person who negotiated the instrument it is made the duty of that one seeking its enforcement to meet and overcome the proof offered and to show that either he himself or some other person under whom he claims became a holder in due course. vs. to the instrument before the alleged defect in the title occurred." holder in due Who deemed Every holder true. Div. Mvers. (N. Every holdee is deemed prima facie to be a holder in due course.106 THE NEGOTIABLE INSTRUMENTS LAAV all § 59 strument against parties who became parties prior to that holder in due course through title. McMun-av.) 89. ^^^'^^^^ BUT WHEN IT IS SHOWN THAT THE TITLE OF ANY PERSON W^HO HAS NEGOTIATED THE INSTRUMENT WAS DEFECTIVE. . Horan vs.-« whom he acquired his ''Sec. Cover vs. Black vs. 228. 1st Natl. 123 S. acquired the instrument under the circumstances and free from the imperfections affecting the title which are enumerto furnish ated in Sec. BuT THE LAST MENTIONED RULE DOES NOT APPLY IN FAVOR OF A PARTY WHO BECAME BOUND ON THE INSTRUMENT PRIOR TO THE ACQUISITION OF SUCH DEFECTIVE TITLE. 258 Mo. 417. Bk. S. Comstock Am. 34. 233. however. 399. Such person is not concerned with imperfections occurring after he became a party to the instrument and cannot take advantage of them. 59. McMuiTav vs. 55. 406. Y. 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. that is. 141 Wis.

185 Mass.^" be regarded as such a holder. 49 Ark. It is as to the time at which the holder acquired the instrument and if it is shown that he acquired it an unreasonable length of time after its issue. City of Adrian vs. Upon such instruments it has been urged with success in some jurisdictions that the payee can never be a holder in due course and take the instru27. 30. R. but it seems to be reasonably well established that the payee of an instrument issued to him as the creditor of a person to whom the maker is indebted is to be regarded as a bona fide purchaser. or last negotiation. 139. must be con- due course sidered. 53. C. vs. vs.. A.v indorsement from the creditor. 36 C. 56. 465. An examination of the cases cited will reveal that the question of the payee's status as a holder in due course always arises upon instruments on which there are either plural primary parties. 45 L. if a bill. 180 Mich. W. S. 171. he will not be considered to ever to be a holder in due course. In the cases. Cagle vs. Bk. or such as have been indorsed for accommodation. Boston Iron Co. 226.) is Upon sible to tlie question whether or not the payee it be considered a holder in due course has not been posis determine with any degree of assurance from the or is decisions interpreting the Act. 5 vs. and that the instrument in his hands is not subject to defenses ordinarily available between original parties. Reed. 63 Me. 39. Beard. Lane. (Sec. Brown. another element which. A. Regester's Sons Co. Whitney Center Natl. 790. whether he to not Perhaps it may be best said that he is not in all cases. however. fl4 Fed. this conclusion is reached by regarding him in the position he Avould occupy if he had received the instrument b. Lamson 822. does not concern title. . So. holder in due course.§59 in RIGHTS OF HOLDER 107 is one payable on demand.

100.108 THE NEGOTIABLE INSTRUMENTS LAW § 59 is if ment free from the original defenses. 1915 F. Brown vs. . 67 So. L. 161 N. Y. 29. by virtue of this section and of Section 55 a holder in due course. Bk. ^^ In others it held. that out any notice of equities existing between ties its the payee takes the instrument at its initial delivery with- other par- he is. Charles Savgs. Tilton. 191 Ala. vs. vs.. Liberty Trust Co. & L. 243 Mo. vs. Ex Parte Goldberg A. St. and it seems to me with the better reason. 444. R. W. 170 Iowa. Edwards. Weimer. 154 N. Builders Lime & Ceni. Co. 839. 356. 553. 462. 1098. Rowan. 217 Mass. 1159.^^ 28. S.


57). or if it can be determined from the context of the instruto sign as ment that he intended Liability of an original promisor. Colorado. or do both. 73 111. 60). the maker cannot afterward deny either of these admissions (Sec. HE WILL PAY THE AMOUNT THEREOF TO THE HOLDER. 23 Ont. 71. B. he will be liable as maker. OR TO ANY SUBSEQUENT^ INDORSER WHO MAY BE COMPELLED TO PAY IT. 6 Am. AND ENGAGES THAT ON DUE PRESENTMENT THE INSTRUMENT WILL BE ACCEPTED AND PAID. vs. HoAvland. capacity to indorse it. AND THE NECESSARY PROCEEDINGS ON DISHONOR BE DULY TAKEN. AND THAT IF IT BE DISHONORED. Bank Smith White of vs. Pav. ACCORDING TO ITS TENOR. he draws will either accept or pay the instrument its according to terms and vs. effect. impliedly admits that the payee he and at the time of the delivery of the bill to it names him has the right to indorse and is under no legal so. Co. 6 C. OR BOTH. 2. . 3.g rpjjj. He usually signs the instrument upon its face but if his signature appears elsewhere with identifying words. Asph. Love. The drawer of a ing and issuing the exists bill of bill. if the instrument is negotiated into the hands of a holder for value. L. BUT THE DRAWER MAY INSERT IN THE INSTRUMENT AN EXPRESS STIPULATION NEGATIVING OR LIMITING HIS OWN LIABILITY TO THE HOLDER. disability which would prevent him from doing gages by the act of drawing the bill He also en- that the person upon it is whom 1. that the payee whom he names has a legal existence^ and then has the right and the legal which means that he is not under any legal disability that would render him incompetent to indorse the instrument. 314. when Mex. A. Commerce Rogers. vs.) 486.. Dec. exchange by the act of drawlike the maker of a promissory note. drawer.110 THE NEGOTIABLE INSTRUMENTS LAW named payee § 61 the instrument payable to a or his order he admits. by that act alone. (Canada) 109.^ DRA^vER BY DRAWING THE ADMITS INSTRUMENT THE EXISTENCE OF THE ^Illinois PAYEE AND HIS THEN CAPACITY TO INDORSE. (Eng. (Sec.^ and. Marsaek. g-^ . 9 Mass. 250.

Barrett. ceptance AND ADMITS 1 The existence of the drawer. . The existence of the payee and his'' then ca: pacity to indorse. lie 111 duly presented to him. or to any indorser it. the fact that he does so lished. Liability of acceptor. he cannot be held to any greater liability than that to which he limits him- self.. 89 to 118). admits his in- debtedness to the payee in at least the bill is sum is for which the firmly estab- drawn. the genuineness of his signature. 62. who may have been ol)liged to pay is termed an implied promise for the reason that it is understood and agreed to by the drawer by the act of drawing and issuing the bill quite as effectually as though it were expressed in the language of the This promise instrument. or writes other words which limit or qualify his liability to the holder. and if him are taken as required by other provisions of this Act (Sees. § 62 LIABILITIES OF PARTIES In addition to this.'^ The drawer may write upon the bill any words indicat- ing that he does not undertake or agree to the promises which are implied from the nature of the instrument he signs and if he does so. A. McKenzie vs. 4. he will then himself pay the amount the necessary proceedings to charge called for by the bill to the holder. 148 111. 414. and his CAPACITY'' AND AUTHORITY TO DRAW the instrument and 2. the act of drawing that agrees by by the drawee and it if the bill is not accepted or paid thereby becomes dishonored. ''SeO. upon its dishonor. ^^^^ The ACCEPTOR BY ACCEPTING instrument engages that he will pay tt according to the tenor of his acMissouri. Though there by the is no provision in this sec- tion or elsewhere in the Act to the effect that the drawer of a bill or check. act of drawing.

By its his acceptance he admits everything essential to the validity of the bill. (N. S. The acceptor cannot afterward deny the things which his if acceptance expressly or impliedly admits the bill is in the hands of a holder for value or in due course. Bank. 132. Bank. 1100. 133."^ (Sec. Ragsdale vs. 88 N. indicating that he assents to the drawer's (Sec. Smith vs. T. 513. 308. Rallo Natl. 719. Upon ac- ceptance of the instrument he becomes the acceptor. . Natl. 37 S. Bank. 183 N. before acceptance. 1. A. E. A. Phenix Nat. Div. and named exists as the payee. 7.^ and promises to pay it according to terms and according to the purport and effect of his acceptance.) this act it By bill. Wilson. 511. 18. 6. he is rewrite his acceptance and sign it and he usually by writing his name upon the instrument with it words above order. 570 5. Bank vs. 148 Mo. Natl. Y. to an admission that the person whom the instrument is to be paid. 429. 76 N. Marsack. B. First Nat. 94 App. pay the instrument according to the tenor acceptance on the day when it becomes due. 6 C. 486. even if he has no funds of the drawer in his hands at its maturity. 141 Mo. 127 S. Jarvis vs. W. 141 Ala. Meuer vs. and has the right and the power to indorse the bill. 125 S. The accepting is also his admission that the drawer that the latter had the right and the power to draw is the instrument. called the drawee. W. Bank of Commerce vs.112 THE NEGOTIABLE INSTRUMENTS LAW § 62 The person who is named in the bill as the one upon whom it is drawn and who is to indicate when it is presented to him whether or not he will pay it at its maturity is.*^ If the bill is payable at a time after sight quired to does this and the drawee intends to pay it. R.) 331. 367. 83. Amn. Gresham.. though of his he promises and agrees just as fully as were expressed in words in the language of the that he will act of exists. 46 Conn. 33 Am. 90. Y.

DRAWER OR ACCEPTOR. effects a very substantial change in the law in one important respect. as. Roach. or acceptor. 14. S. In these.^ vs.) by Section 187 made equivalent to an acceptance which it is by this section required to pay according to its tenor. .) 62.. therefore. 14).' § 63 LIABILITIES OF PARTIES 113 This section. OTHER CAWORDS HIS INTENTION TO BE BOUND IN SOME PACITY. it had to a now is obliged to pay subsequent holder in due course in the amount for which it certified. maker. A indorser. ' person placing his signadeemed upon an instrument otherwise AN THAN 4S MAKER. (Sec. regardless of the amount for which the check was originally drawn or the manner in which it was ob- tained. he must likewise pay a subsequent holder in due course the amount for which he accepted the bill. The kinds of acceptances which may be made and their effect upon the instrument are described out regard to the in subdivision 2 of Title II. if a bank certifies a check which was its certification it fraudulently issued or at the time of ibeen fraudulently raised. ^^rj^g instruEvery person who places his signature upon an is an ment otherA\dse than as maker. IS DEEMED TO BE APPROPRIATE BY U^^LESS he clearly INDICATES When person ' ' Sec 63. different int ention. or accepts it in a raised amount.) 9. for example. Sees. indorser. And.* with- amount for which it was originally drawn (Sec. as only indorser and he is liable upon the instrument words which show such unless he writes at his signature liability and be intends to assume some other that he bound to in some other capacity. of Cinti. drawer. Parol evidence not admissible show a 8. Lio-ntner vs. Espy Bank 604. in some jurisdictions. 18 Wall. 95 Atl. of course. (U. is surety or guarantor. 132 to 142 inclusive. (Md. if the drawee of a Its certification is bill accepts a fraudulent bill.

ARTIES SUBSEQUENT TO THE PAYEE. HE IS If HE SIGNS FOR THE ACCOMMODATION OF THE PAYEE. in which case he incurs All indorser ma}' qualify his indorsement in the no other liability upon the instrument if he indicates at his signature that he signs only for the purpose of idenThe liability of an indorser tifying the presenter. or. and he may assume or lesser liability than that of indorser by using Avords clearly indicating that which he assumes. he is liable as indorsee in ac- cordance WITH THE FOLLOWING RULES: 1. 31.) Wheee a person. American Bank Macondray. if the instrument is a 10. not otherparty to ax instrument. "Illinois. PAYABLE TO THE ORDER OF THE MAKER OR DRAWER. LIABLE TO ALL P. or he may indorse merely for identification. 2. bill to its delivery at that time or at the delivery of vs.^" whose signature tion. is one kind of indorser. The section refers. places his signature upon it in blank before it is There delivered. to the delivery at the inception of the instrument. OR IS PAYABLE TO BEARER.114 THE NEGOTIABLE INSTRUMENTS LAW § 64 mangreater any ner provided in Sec. HE IS PAYABLE TO THE ORDER OF A LIABLE TO THE PAYEE AND TO ALL SUB- SEQUENT PARTIES. not otherwise being a party to an instrument. "If the INSTRUMENT IS 3. . 695. 4 Philippine. of course. 64.the face of the instrument it is necessary that he use words indicating that he signs as an indorser or he may thereby assume the obligation of a primary party. is not required in the orderly course of is the negotiation of the instrument If fixed in the next sec- places his any person intending to become an indorser name upon . Liability of irregular indorser. places a\'ISe a thereon his signature in blank before ''Sec. (See Sec." who. called an "irregular indorser. "If the INSTRUMENT IS THIRD PERSON. delivery. HE IS LIABLE TO ALL PARTIES SUBSEQUENT TO THE MAKER OR DRAWER. 38.

he is liable to all parties who subsequently take to all parties the instrument. vs. 725. 413. aside from the instrument itself. is If the irregular indorser signs the instrument for the accom- modation to the of the person named as payee. Co. etc. under these cirso notwithstanding the fact that he cumstances. that the accommodation indorser signed for the drawer-payee and. by other evidence. Duft'y. 29. . Consolidated Butter. 640. 265. Attention is directed to the fact that by the literal in- teri^retation of Sub-section 3 one who indorses for the ac- commodation to the of the acceptor of a bill payable to the is liable drawer's own order. LaAv. S. S. ^^ referred to in the ex- planation of the preceding section as the indorser whose signature is not necessary to the orderly negotiation of the instrument. though not warranted by the language of the sub-section. If he places his name upon an instrument payable to bearer or payable to the maker's or the drawer's own order.§64 LIABILITIES OF PARTIES This indorser is 115 the acceptance.) upon the instrument is as follows: If he places his signature upon an instrument payable to the order of a third person. 63 N. Wilson vs. 66 Atl. N. and he is known also as an accommoda- (See Sec. But the courts have permitted it to be shown. (La. 30 Misc. Hendee.. tion indorser. only to holders subsequent drawer-payee and not to the drawer.. he is liable to the payee and His liability who take the instrument after him. And this is became a party to the instrument entirely for the drawer's security. indorses for the accommodation of the acceptor is Kolm vs. 74 N. y. Shelmerdine 4 Mart.) 34. J. but not to the maker or drawer. they hold that one benefit of the who 11. he is liable to all not liable take the payee but he parties who instrument after that party.

192 N. 303. naming the person for whom is he is surety or guarantor. maker. E. 151 N. Waddell. 63). 65 S. etc. and it whether for accommodation or includes any indorsement in blank of any person whose signature is not required in the due and regular negotiation of the instrument. A. (N.116 THE NEGOTIABLE INSTRUMENTS LAW § 65 liable to the drawer-payee as well as subsequent parties. 75 Hun. vs. 197. except as to his immediate parties^ that he intended to bind himself in any other. Haddock B. Haddock. otherwise. That he has a good title to it. vs. surety. Brady.) The irregular indorser becomes a party to the instrument for the purpose of lending his credit and worth to the value of the instrument to which he would not otherwise have been a party. R.^^ (See Sec. . 68. S. 499. 1148. obligation he assumes (Sec. Y. etc. 666. Holland Trust Co. 2G N. Y. guarantor or indorser. Co. It is not at all material. 13. Y. if he does so. and all those who become parties before deliver}^ and have heretofore been variously held to be. "^^C' ^^^^^^^ ^^^^^^ negotiating Warranty where ^^ instrument by delivery or by a qualinegotiation by fied indorsement warrants: delivery. S. be held to the upon the instrument indicating any other capacity in which he is to be charged he will.. his liability is as fixed in this section. for what purpose he indorses the instrument. Chicago Title. W. & Co. vs. 980. 12.) 136 and note. 1. an irregular indorser and it may not be shown by extrinsic evidence.^ ^ It applies to all irregular indorsers. and if he would not otherwise have been a party to it. x\n irregular indorser who signs as surety or guarantor. and with other words descriptive of the capacity in which he becomes bound. held in whatever In the absence of words however. 165 Mo. what it purports to be. 46 N. however. 19 L. 104. S. That the instrument is genuine and in all reliability of spects 2.

While not liable upon the instrument as one Avould be who indorses without qualification. 46 N. would impair the validitit of the instrument or ren. but waris ^ Am. 57 S. and he its may be sued for instru- breach independently of any action upon the ment. E. 486. 536. He also warrants by delivery or by this form of indorsement that all He warrants by his qualified indorsement. Rep. But WHEN THE NEGOTIATION IS BY DELI\T:RY ONLY. 644." A warranty is a representation either expressed or implied that the thing warranted is really what it appears and is represented to be. and if it proves to be defective he will be required to make good any loss which may result from its failure. or parties to the instrument who became parties prior to himself had the legal capacity to and were able lawfully to become parties to be bound upon the contract in the manner in which -they signed it. ^ ^^ Leonard vs. Chamberlin. is held the warranties expressed in this section. Glidden vs. 73 N. 187 Mass. by delivery.§65 3. who a valid and subsisting contract. the person negotiating the instrument by delivery or this form of indorsement can be held for any failure of his warranty.^^ He does not warrant that the instrument one does 14. 167 Mass. E. 38). der it valueless. . as indorses without qualification. that his title to the instrument is good. OTHER THAN BILLS AND NOTES. LIABILITIES OF PAKTIES 117 That all prioe pabties had capacity to conteact That he has no knowledge of any fact which 4. The pbiOvisions of paragraph numbered three of this SECTION do not APPLY TO PERSONS NEGOTIATING PUBLIC OR CORPORATE SECURITIES. and a person who negotiates an instrument by delivery w^ithout indorsement or by qualified to indorsement (without recourse see Sec. Draper. THE warranty extends in favor of no holder other than the imjmediate transferee. 103. 479 and note.

Leonard 16. . Bank. etc. 3 S. 11. vs. 225. Irvine. Gordon vs.. E. or which would make of no value. and it prior signatures are genuine. 187 Mass. 144. I.^^ One w^ho negotiates the instrument by qualified indorsement warrants also that the instrument is. 54 N. Y. 66. that all that it is not a forged instruments^ and that prior to its parties who signed of enter- negotiation by him were capable ing into a legal and enforceable contract. Bank vs. 1. Lennon vs. Eveky indorser" m^ho inLiability of qualification. 105 Ga. Farmers. 141. two and three of the next preceding section and qualified indorsement or ''Sec. 5 R. 433. 044. 159 166 S. can be held to them only by the person to whom he has transferred it. Gnnicr. 986. promissory notes and checks of corporations but does not apply to public or corporation bonds or other securities. apit Thus has been held that the transferee of a note may recover from the if seller the consideration paid for the instrument the the latter it knew at the time of the transfer that parties to fact were actually insolvent and concealed that from all him. Farmers Natl. 151. E. 536. W. A qualified indorser impliedly makes these warranties to all persons who become parties to the instrument after his indorsement.118 THE NEGOTIABLE INSTRUMENTS LAW know it § 66 rants merely that he does not of any fact or thing it which would make the instrument less valid than pears to be. : . warrants dorses without general indorser. 73 N. Draper. 159 N. The warranty that all prior parties had the capacity to contract upon the instrument applies only to the negotiation of bills of exchange. The matters and things mentioned in paragraphs numbered one. 15. Chapin. Bursfess vs. You will observe from the next section that the liability of general indorsers differs very materially from that of parties who negotiate by by mere delivery. to all subsequent holders in due course "Illinois. E. but one who transfers the instrument by mere delivery without indorsement. Kv.

^*^ Sub-sections 1. in- if it is 17.) 117. HE WILL PAY THE AMOUNT THEREOF TO THE HOLDER. or that of a person not an indorser who negotiates the instrument by delivery. Their warranty as to the validity of the instrument is broader than the warranty of one who qualifies his indorsement. S. Y. but warrant that the instrument which they indorse is valid and in force and has effect as . as for collection. Lambeck. AND THE NECESSARY PROCEEDINGS ON DISHONOR BE DULY TAKEN. and more. 2 have changed this section in respect to accommodation parties. 38)." General indorsers are cation tively. vs. according TO ITS TENOR. for they warrant not only that the instrument is what it purports to be. . be accepted or paid. Bouck vs. 118 N. (N. 63 Misc. IT shall. 70 Minn. AND THAT IF IT BE DISHONORED. Y. 18. or both. by the accommodation indorser do not extend to the party who first disis counts the accommodation instruments^ but he cluded in their engagement to pay the instrument dishonored. OR TO ANY SUBSEQUENT INDORSER WHO MAY BE COMPELLED TO PAY IT. including those who indorse restricto subsequent They are bound holders in due course by the warranties prescribed in and 3 of the preceding section. all who indorse without qualifi- (Sec. every accommodation indorser in such States as engages in the same warranties as a general indorser.a legal and enforceable negoExcept tiable instrument at the time they indorse it. and not only that they do not know of anything affecting its validity and that all prior parties had the capacity to enter into a legal and enforceable contract. he engages that on due presentment. 251. 494. as the case MAY be. Crosby Wright.§66 LIABILITIES OF PARTIES 119 in- 2. It has been held that these warranties. That the instrument is at the time of his dorsement VALID AND SUBSISTING. in addition. And.

Northwestern! Natl. S. vs.). Exclianije Natl. or both. of Barnesville. will be accepted or paid in accordance with its pureffect. 17 S. 207. he will immediately pay the amount it. this section of the Act was intended to and does effect an important change in the law as it was formerly interpreted in some States^ and now makes unnecessary the '^ written guaranty of prior indorsements which banks usually stamp upon these items when they forward them This warranty is for collection to their correspondents. S. 982. 612. 28. 114 N. 11 Am. 19rt Besides engaging in the warranties set forth in this and in the preceding section. R. now implied from their indorsement for collection with- out additional words. at the right place. of the instrument to the holder or to any indorser subse- quent to himself who may be obliged to pay is It is by reason of this engagement that the holder 19. Natl. port and He further engages that if all if it is not so accepted or paid. not required First Nat. U. Bk. E 632. Kansas Citv Bank of Conunerct 107 Mo. Park Bank vs. 102. Bank. 185 . 19a. First Nat. 260. and necessary steps are taken by the holder in proceedings upon dishonor to charge him. 20 N. Interstate Trust Co. United States vs. inclusive). Bank (Colo. W. S. Natl. or which are to be collected through the clearing house. a general indorser. and one indorsing restrictively. Seaboard Bank. as is provided in this Act (Sections 70 to 118. Bk. 70 Fed. 58 0. Bank vs. of Belmont vs. 232. 402. 15 L. A. R. Y.120 THE NEGOTIABLE INSTRUMENTS LAW collecting is § 66 A collection spects liable bank which endorses the instrument for bound by these warranties and is in all reas an indorser unless it uses words of qualIn this respect ification Avhich negative this liability. Pac. Am. imj)liedly promises and agrees by his act of indorsing the instrument that upon presentment in due and proper time it to the right person. includ- ing an accommodation indorser.

"Sec.. If he has indorsed specially his liability is limited." A negotiable instrument payable to bearer. but e\t:oHlinois. being transferable by mere delivery. but any person who does all indorse such an instrument as- sumes and incurs of the liabilities of an indorser and. they are liable in the order in which they signed the instrument.. . liabil- according to the character of his indorsement. * Liability of to the parties primarily lia- "Sec. dence is admissible to show that as between OR among themselves they ha^'te agreed otherwise. The . but they are permitted to show that as between or among themselves they have agreed to be otherwise bound. Upon dishonor of a bearer instrument which has been indorsed. to only such holders as (Sec. This is the prima facie order of their liability. 40. These will be found in the next subdivision of the Act. 68. requires no indorsement."" An instrument which passes from one person to another. 67. Joint payees or joint indorsees who indorse are Order in which indorsers are deemed to indorse JOINTLY' AND SEVERALLY'.-4™ T.) make title through his indorsement.§67. Upon en- forcement of the indorser 's liability they are all liable to the holder but in their relation to one another.68 LIABILITIES OF PARTIES 121 upon dishonor to first resort ble upon the instrument. receives indorsement at different times from the holders who negotiate it. Their names appear upon the it instrument in the order in which was held. however. order in which they indorse. the same proceedings must be observed in order to charge an indorser as are required upon an instru- ment payable to order bearing indorsements. his ity will be as fixed in the two preceding sections. ties of an indorser. As respects one another. Where a person places his ixdoesement on an instrument negotiaindorser where paper negotiable ble by delivery he incurs all the liabiliby delivery. indorsers are liable prima facie in the liable.

108 N. Mershon. Knoxvillc Bank Maddox 21. the order of his liato be fixed by a different position upon the paper. 350. Cunninghman. Goldman Goldberger. Davidson. 24 L. 395. but is of importance to determine the liability of the in- dorsers to each other. 109 N. parol evidence. the circumstances of the occasion for their endorsements and 20. Duncan. 169. . ^^ 95 U.122 THE NEGOTIABLE INSTRUMENTS LAW § 68 instrument usually shows in what order the indorsers are to be held proper that among themselves and it is important and each place his name immediately after the from whom he acquired it name of the person in order that his position in the order of liability may be readily ascertained. 267 vs. 877. Trejro vs. 637. 22. 143 Mo. Between themselves they are equally liable and one paying for all may have contribution from the others. E. The holder may sue any indorser or all and by statutory provision may join primary and secondary parties in one action upon the instruments*^ including the personal representative of any who may have died.-^ This liability is called joint and several. 215 N. he can recover from the others the (See part which each ought to pay unless a different liability Accommodation InThis need not be shown by an express agreedorser. unless. 534. vs. it may be shown by Bnrdette vs. 613. S. E. Payees and indorsers who place their names upon an instrument at the same time with the intention of making themselves joint indorsers are severally as well as jointly liable to a subsequent holder. 111.) ment but may be made to appear or be inferred from is fixed by agreement. & Tn. 152 Ky. Y. 367. 45 S. The position of an indorser's name or the order in which he signed does not in the least affect the holder's right of action against liim upon dishonor of the instrument. 481. 208 Fed. Ed. that is. vs. 688.st Co. Bartlett. W. bility is by agreement. Curtis vs.

. The prescribed by Section 65 are those which attach to a party who negotiates the instrument by de- livery or qualified indorsement. This section determines the liability of an agent who negotiates an instrument without indorsement. 20 and 21 fix his liability when he negotiates the in- strument by indorsement and Section 44 prescribes the manner in which one who is under obligation to indorse an instrument in any representative capacity may do so if he does not intend to assume personal liabilities liability upon it. he incurs all the liabilities PRESCRIBED BY SECTION 66 OF THIS ACT.§ 69 LIABILITIES OF PARTIES 123 "Sec. 69. To the extent prethe instrument in that scribed in that section.'' Liability of an agent or broker. indorsement. Sections 19. unless he discloses the name of his principal and the fact that he is acting only as an agent. and one who negotiates manner impliedly warrants that the instrument is genuine. ''Wheee a broker or other agent negotiates an instrument without "Illinois. that all prior parties had capacity to contract and that he knows of nothing which would impair or destroy its validity. UNLESS HE DISCLOSES THE NAME OF HIS PRINCIPAL. AND THE FACT THAT HE IS ACTING ONLY AS AN AGENT. an agent or broker ates who negoti- by delivery or qualified indorsement also becomes liable upon the instrument.

74 75 76 ^1 Instrument must be exhibited. to enable the holder to give notice of parties.. 84 Presentment where instrument payable at bank. When presentment need not 88 °' o- nule where instrument paya^^^ ^* b^^^Wliat constitutes payment in i . he does not pay its it.g^ ^jien delav in making prement is not payable on desentment is excused. by non-pa}Tnent. all others are "secondarily" liable.. -. Section Section 70 Effect of want of demand on 80 Wlien presentment need not principal debtor. Each secondary party has the right to expect that the in- . -. Time of maturity. 71 Presentment where instru. 192. Presentment Avhere principal 85 Liability of person secondarily liable is when instrument dishonored. 1 Presentment to persons . 4- • J.. Time. j -ii dispensed with. should fail to "Primary" parties are those who by the terms of the instrument are absolutely required to pay it. due course. mand and where payable on ttti a ^ 82 When presentment may i. dishonor to secondary to pay only The secondary parties have impliedly promised if those primarily liable upon the instrument do so. (Sec. be 1 on demand. -J. 73 Place of presentment. be made to chaise drawer. t^ ^ is dead.124 THE NEGOTIABLE INSTRUMENTS LAW § 70 SUBDIVISION VI..) ment These cannot be held to this promise unless the instruis duly and properly presented and pa^onent is demanded of the person whose primary obligation it is and unless notice of its dishonor is at once given to them. Peesentment for Payment. be made to cliarge indorser. '' i. The object of presentment for liable person primarily payment is to give the upon the instrument the opporif tunity to perform his part of the contract to which his signature binds him and.86 liable 78 79 as partners Presentment to joint debtors. re TO TTi t A ^ \\ hat suincient 72 constitutes ^^ When instrument dishonored presentment. how computed.

person primarily liable on the instrument. is necessary IN order to charge the drawer and indorsers. 70. jg able and willing to pay it there at maturity. terms. except in certain cases which be afterward mentioned. is a note or acceptor of a not entitled to presentment and notice because it is his duty to remember his obligation and pay it when it becomes due and Ms sig^lature upon the instrument imports an absolute promise to pay it. presentment. New York. Upon is a bill of exchange it is the ac- ceptor and his liability not affected by the holder's The failure to present the instrument for payment. loss A holder who gard is fails to use all necessary care in this re- deemed to be guilty of negligence and it frequently happens that secondary parties are released from liability by reason of his carelessness. But as the section of this subdivision provides. But except as herein otherwise provided. upon the inmust payment presentment for made in order to charge them. such as the maker of bill.^ SUCH ability and willingness are equivalent to a tender of payment on HIS part. Ohio.jg -^Qrj. drawer and indorSer of the bill and the indorser of a benote.§70 PRESENTMENT FOR PAYMENT if it 125 dis- becomes honored he is entitled." ' ' is The person primarily liable upon a promissory note the maker and presentment for payment is not neces- sary to charge him. and he ''Kansas. being secondary parties w^hose liability does not come be fixed until the person primarily liable fails to strument pay it. by its Wisconsin. payable at a special place. the party priliable first marily upon the instrument. necessary in order to charge the cipal debtor. . for payment. Presentment for payment Effect of want of Sec. to immediate notice of its strument will be paid at maturity and will dis- honor in order that he may protect himself against by whatever means may lie in his power.'' but if the instrument is. demand on prin.

^ and not to instruments payable on demand. S. for payment will be sufficient if made ^Vermont. the others need not be presented for pajTuent on upon which the maker They may be presented within a reasonable time after the dishonor of that one of the series which is not paid at maturity. Foote. 81 and 82). Creteau vs. presentment "So. The next section provides upon what day presentment for payment must be made. demand and where payable on Where it is payable on demand. Dakota. presentment must be made within a reasonable •^t"^^ "Nebraska.s THEREOF. and one the day of the dishonor of the one defaults. The latter are payable at any time the holder may wish to demand payment. is. (N.126 THE NEGOTIABLE INSTRUMENTS LAW § 71 If the bill or note is payable at a place named therein. '^ Unless presentment for payment the is dispensed with in Act or delay in presenting the instrument is excused (Sees. Div. on demand. Y. it must be made upon the very day w-hen it falls due. Glass Co. The fact that the maker or acceptor has provided sufficient funds at that place and is able and willing to pay it there. . 71. dishon- ored. This applies in this to instruments manner provided payable at a definite and fixed or a deter- minable time after date or acceptance. considered to be the equivalent of an offer by him to do so. etc. WITHIN A REASONABLE TIME AFTER'' THE LAST NEGOTIATION ^'^^T 1 wrolSLent "Sec..) 215. 1103. 57 N. presentment is not payable on must be made on the day it fali^ due. 40 App. payable Wheee the instrument . and if the person obliged to pay it is able and willing to pay it there at maturity he is not required to go elsewhere to make payment.. of itself. If a series of notes contains a provision that in default of payment of one of them at maturity those maturing subis sequently shall become due at once. Y. New Hampshire time after its issue/ except that in the case of a bill of exchange.^ 1.

210. But now this Act is interpreted to mean that this distinction This section negatives all such decisions in States where a contrary rule prevailed and a promissory note bearing indorsements and w^hich is payable on does not exist. and presentment and demand. cannot carry the note an indefinite and long time its its in security without presenting it. if it is a bill. if it is not paid. in order to charge the indorsers. must be presented for payment and payment demanded within a reasonable time after its issue. was held to require presentment. however. whether it manner provided 2. making demand for giving notice of payment and. notice of its dishonor must be given to each indorser in the demand. however. E. that if the instrument is payable on demand it must be presented within a reasonable time after its issue if it is a promissory note. 1020. bears interest or does not. 185 N. Before the adoption of this Act a promissory note bearing indorsements.§71 It is PKESENTMENT FOR PAYMENT 127 provided by this section.If it is not paid. might be made and notice given at any time after its issue. the time for enforcing statute of limita- payment then being limited only by the their enforcement is tions applicable to such instruments in the State in which sought. Such a note bearing interest was. Zimmerman. held to contemplate a continuing loan.. it was held. in this Act or he vs. of course. Commercial Nat'l Bank N. he may wait as long as he likes for its payment. on the day of or the day after its issue. demand and no- tice to indorsers immediately. within the statute of limitations. 77 . The holder of a promissory note which is payable upon demand and bears indorsements. payable upon demand without interest. dishonor to the indorsers in the man- ner provided in this Act. or after its last negotiation. will be discharged. having made the presentment and given due notice of its dishonor. But. Y.

As short a period as four months has been held to be unreasonable. is In the case of a of exchange which payable on demand. four after the note is months This being done. it seems months or even one month. Decisions by courts are uniform that a delay of more than three years to demand payment upon a promissory note payable upon demand is unreasonable. subject to fixes the time at bill statute which will be barred. Bank. used. Frazer vs. would be regarded as an unreasonable length 3. The utmost precaution should be exercised in this regard by the holder and when a demand note contemplates a tablished in such a long time loan indorsers ought to be required to waive presentment. 175. 193) what shall be considered in determining what is a "reasonable" or an "unreasonable" time. for demand notes. notice given within a short period. the its demand must be issue or last ne- made within a reasonable time after is gotiation and all that here said in regard to promisto the writer. in ordinary cases. 161 Ky. This Act provides (Sec. a delay of four sory notes applies with equal force to such an instru- ment. and notice of non-payment. not to exceed.128 THE NEGOTIABLE INSTRUMENTS LAW is § 71 es- What a reasonable time for presentment is not by the Act or by any interpretation of the Act manner as will permit a fixed rule to be given. . 170 S. it is thought entirely unsafe to delay presentment and demand upon such an instrument longer than four months after its issue. Under certain circumstances delay for a much shorter period might be considered unreasonable. but regardless of circumstances. W. as these instruments are now of 532. Plienix Nat. or de- mand should be made and issued. except that.2 The New Hampshire Act fixes sixty days. it if the instru- ment run which is not replaced by another the it may be permitted to of limitations indefinitely. and this includes a check. demand.

vs. able elsewhere. 134 Wise. W. Moodie. that is.'* is This Act provides elsewhere (Sec. subject to the qualification that if bills of exchange shall come into more extensive use as the means of discount and investment rather than as collection items. the day of or the day after their issue or deposit if they are banked at the place of payment. or they must be forwarded by direct route within that time by the collecting bank for presentment to the bank upon which they are drawn if they are payated. particularly when they have been deposited for collection by a bank. While they continue to be negotiated and until they are deposited in bank. . I shall present in considerable detail in another part of this book the requirements of the law as they are applicable to the presentment of checks by a bank. 110 N. 685. 4. there does not seem to be any good reason why checks need be presented with any greater disbills of patch than other exchange payable on demand. vs. 476.§71 PRESENTMENT FOR PAYMENT 129 time to delay presentment or to interrupt the negotiaThis statement is tion without making presentment. Checks require even more prompt presentment. in so far as the liability of indorsers may be affected by the length of time they continue to be negoti- But checks which are not intended for negotiation must be presented at once. that if a check not presented for payment within a reasonable time after its issue the to drawer will be released from liability the extent of any loss he may suffer by reason of the Plover Savings Bank 113 N. 135 Iowa. W. custom will order that the same rules of delay as are now applied to promissory notes shall apply to bills of exchange. 218. 29^ Columbian Banking Co. which seems now to be their present most general use in this country. 186). Bowen.

. 5. 24 Stevens. Eastman Mallon vs. (See Sees. 9 6 Cinti. There drawee bank should fail before his check is no similar provision in favor of be held that they are also reit indorsers and if it shall leased by delay in making presentment of a check must be because of banking custom and the need of most men is for the immediate use of money. When arate a time instrument is payable in installments sepat the maturity of each demand must be made and in- upon dishonor. 69. supply the other two elements to be taken into account in determining what or is not a reasonable delay.) Cal. unless the strument contains a provision that in default in the pay- ment of any installment all shall become due. and see Sees. notice must be given in the manner provided in Sees. and the synopsis of the law applicable to the collection of checks at the conclusion of Title III. demand must be made and notice e-iven sum at the first default in order to hold the in- dorsers. Thurman. (Sec. 6. demand may be postponed until the last install- ment falls due and then made.^ unless the accelerated maturity is optional with the holder. L. 2 and 52. Reprint. 89 to 118 as in other cases. 144 and 193. THE NEGOTIABLE INSTRUMENTS LAW This is. Law Bui. 379.130 delay. 193. 702. 1042. If the later installments are to mature at the option of the holder. § 71 of course. intended as a protection to him is in case the presented. vs. 6 Ohio Dec. In that case the presentment and demand at the maturity of the first installment at which default is made effects the dishonor of the whole instrument if it is not paid and no further presentment or demand need be made.^ When the instrument shall contains a provision that the whole mature and be payable upon default in the payment of any installment of interest. Am. B.) Read in con- nection with this explanation what has already been said under Sections 7 and 53.

Foss vs. Norris. A. is not authorized by the holder to collect it and surrender the instrument upon payment. it must be shown by satisfactory proof.. 145 App Div.. TO ANY PERSON FOUND AT THE PLACE WHERE THE PRESENTMENT IS MADE. Jones Sales Bk. 72. 50 N. N. TO be sufficient.Y.^ Something more is required of such an instrument and.^ The mere possession of an instrmnent payable bearer for is is to it sufficient evidence of authority to present payment but would not be sufficient if the instrument payable to order. 3.'^ Therefore. Kennedy. 70 Me. 310. vs. it must be made at a reasonable hour on a business day by the holder or by some person acting for him to whom he has given authority to receive payment upon the instrument. 4. 9. Pkesentment for payment. . Y. At a REASONABLE HOUR ON A BUSINESS DAY. Y. vs. What sufficient Presentment for payment must be made in the manner prescribed in this section and to be made in a manner that will charge the drawer and indorsers. At a PROPER PLACE AS HEREIN DEFINED. this wdll not be a sufficient presentment. 183 111.) 669. 117. when required. 8. St. if the person who takes the instrument for the purpose of presenting it for pajTiient to the party obliged to pay it when it becomes due. Some one must be sent with the instrument who is authorized to receive the money upon it. OR IF HE IS ABSENT OR INACCESSIBLE. To THE PERSON PRIMARILY LIABLE ON THE INSTRUMENT. Doubleday Kress. (N. Fowler Paper Co. Natl. must be made presentment. j3y the holdek ok by some pebson ^ AUTHORIZED TO RECEIVE PAYMENT ON HIS BEHALF 2. Bank vs. while the authority to make presentment and receive payment need not be in writing. §72 PRESENTMENT FOR PAYMENT constitutes ' ' : 131 Sec. that the person making presentment did so by authority of the 7. or goes merely to notify him that the holder has the instrument and makes only an informal request. 410. of Co.

Potter. 17. Betts. Cas. Robertson 11. 362. 29 Fed.132 THE NEGOTIABLE INSTRUMENTS LAW if § 72 in- holder. diligent inquiry ought to be made by the presenter to learn whether he has any authority to pay the instrument and whether or not he has any business connection with the party obliged to pay it. .) der it if it becomes necessary to do What is the proper place is defined in the next section. and he must have the instrument with him in order that he may be prepared to exhibit or surrenso. the presentment will not have been properly made. vs. 46. Crane. The person who makes presentment must go to the proper place. or in some other manner if the instrument is lost or misthe presentment in the 74 to the person who is to 10. Waring vs. 73. (Sec. his indorsement does not appear upon the strument. If payment is refused a careful record should be made upon the instrument. presentment to him is good. 27 Miss. 61 90 Va. Although the person fouund there may have no connection with the party primarily liable upon the instrument. presentment may be made to any one found at the place where presentment is to be made. Am. 74.291. (Sec.) Arriving at the proper place at the proper time.^^ All days of the year are business days except Sundays and such holidays as are established by statute or by proclamation in the various States. D. If the instrument is presented to any person other than the party primarily liable to pay it. If that person is absent or access to him is refused or cannot be had. Watt vs. it taken there too long before the beginning or too long after the close of business hours. he must make manner required by Sec. 520.^" If the instrument is payable at the place of business must be presented there during business hours on a business day and if sent or the party is to who pay it. 53. pay the instrument.

167. This is true even if the place named is neither the residence nor place of business of the person who is to pay the instrument and he at that place. even if it is would seem not the duty of the presentei'. however. 13. 73. notwithstanding Gilpin vs. Wheee a place of payment is specified ]n the in1. dress IS GIVEN AND THE INSTEUMENT" IS PEESENTED AT THE USUAL PLACE OF BUSINESS OE EESIDENCE OF THE PEESON TO MAKE PAYMENT. 201. Pkesentment foe payment made at the peoper place." KNOWN PLACE OF BUSINESS OE RESI- The holder is deemed to have made a sufficient presentment if he has presented the instrument in the manner described in the preceding section. 27 Pa. OE IF PEEPlace of presentment. 249. 201 N. at the place it to named in it as the place where pre- sentment is to be made. steitment and it is tpieee peesented 2. . SENTED AT HIS LAST DENCE.^^ But. although in that case proper. Y. Stnatliers. is (Sec..^^ ^ waiver of presentment by telephone is of the reason given for the refusal.) "Sec. where he is known to be if there is no authorized to pay or refuse payment at the in the instrument. but the addeess of the peeson to make payment is given in the insteument and it is theee presented. Savaj^e. at it is known to be to be elsewhere. of the date and hour whom it was presented and Presentment and demand for payment by letter or by telephone may not be made and if attempted will not charge an indorser. 86 Tenn. Where no place of payment is specified. 4. to de- mand payment ment one of the person who is to paj^ the instru- at the place who is place named 12. Pierce vs. good. Wheee no place of payment is specified and no ad3. 82. Bank of Charleston. Snlzbacher vs. or has caused be done. In ANY OTHEE CASE IF PEESENTED TO THE PERSON TO MAKE PAYMENT WHEEEVEE HE CAN BE FOUND. and not the time of presentment. §73 PRESENTMENT FOR PAYMENT and the person to 133 placed.

Saekin. 114 N.^^ proper. . 42. If both are given the place of payment mentioned in the body of the instrument is the place where it must be presented even if it conflicts with the is to it person who pay the instrument. the statute does not require this and it need not be done. (N. Y. S. Henderson. who to either his usual place of Ironclad Mfg. 257. Co. 42. vs. 129 App. presentment at the main bank will be strument. 129 App. or decisions which intimate that an attempt ought to be made to find the person who is named in pay the instrument if he is not at the place it and that place has been abandoned by him. (N.^^ to If no place is mentioned but the address is given of the must be presented at that address. 5 Yerg. 15. Y. It is the duty of the person primarily liable upon the instrument to provide the funds for its payment and have them ready at the place of payment in the hands of someone at that place who is authorized to pay the instrument. If the branch has been discontinued and is no longer doing business at the maturity of the instrument.) 555. If the instrument or Trust designated. Co. 114 16. vs. is payable at a designated branch of a bank it Company if it is must be presented at the branch in- in existence at the maturity of the Presentment at the principal office will not. Div. address of the person who is to make paj'^ment. Ironclad Mfg. (Tenn. it may be presented at business or residence.) 104. Y. Saekin. and it is equally the duty of the holder of the instrument to present it for payment at that place. Y. St. Nashville D. 14. ^^ When the instrument mentions no place of of the person payment is and does not give the address pay it. Bank vs.134 THE NEGOTIABLE INSTRUMENTS LAW § 73 former decisions to the contrary.) 555. N. 26 Am. in that case be good. Div.

Fant.^^ If the lost instrument is a bill of exchange and protest be is necessary (see Sec. notice of its dishonor must be given immediately. present- ment and demand for payment without the bill or note must be made on the day of maturity and while the person who is to pay it might properly refuse to do so. in Sec. if his refusal is not for that reason. if requested to do so. or it may be made to him personally wherever he can be found if the instrument cannot be pre- sented for payment in accordance with the other require- ments of this section.§74 PRESENTMENT FOR PAYMENT 135 In any other case. and when it is paid must be delivered UP to the party paying it. 331. Ocean iS^at '1 Bank vs." The person who makes presentment of the instrument Instrument must be exhibited. 74.payment is then refused proceed in the same manner as if it had been dishonored a copy produced. must show it to the person of whom payment is demanded. Y. upon a copy Wlien the instru- ment or might be well to again present it for payment and if . The instrument must be exhibited to the person from whom payment IS demanded. Klots vs. K Y. 50 Hinsdale vs. presentment may be made to the person obliged to pay the instrument at the place where he was last known to have been engaged in business or to have lived. 18. 474. 152). Silver. "Sec. 118 N. must have it in his possession and.) it it must made in the manner described is or written particulars. . 1090. S. The loss or destruction of the instrument will occasion complications in determin17. If it is secured by collateral he must be prepared to produce and deliver up the collateral.^' He has no right to reijuire payment unless he is prepared to deliver up the instrument immediately upon its payment. Miles. 5 Conn. When it is paid he must deliver it up to the party who pays it. upon the day of its maturity. 160. 153 (Sec. If the instrument is lost or destroyed.

but this open for business of remay depend upon local custom and in some localities a presentment at any time while the bank remains open for business is deemed to be sufficient. In that case it may be presented at the bank after banking hours but before the bank is closed for the day. the early The early pre- will be considered premature. Co. and the person later deposits sufficient ment demand who is to pay the instrumoney to pay it. Div. Columbia-Knickerbocker Tr. Y. Columbian Bk. vs.' 136 THE NEGOTIABLE INSTRUMENTS LAW § 75 ing the liability of the secondary parties the solution of which must depend upon the circumstances of each particular case. Where the instrument is ''Sec. 242. Bowen.^'' sentment is sufficient to charge secondary parties. Presentment where instrnment payable at a bank. "Nebraska. Miller.) 810.^^'' Ordinarily. 134 Wis.. Bk. vs. but the person obliged to pay the instrument would not be chargeable with fees and costs on protest after the preISa. vs. Citizens Central Bk. Y. Y. presentment for payment must be made during banking hours/ unless the person to make payment HAS NO FUNDS THERE TO MEET IT AT ANY TIME DURING THE DAY. it must be presented during banking hours unless the person who is to pay it has not at any time during the day on which it is presented for payment. Banking hours are those hours during which the bank ceiving and paying out money. 19. German. 156 App. Div. sufficient money at the bank If named with which to pay it. ' an instrument is to be paid at a bank. IN WHICH CASE PRESENTMENT AT ANY HOUR BEFORE THE BANK IS CLOSED ON THAT DAY IS SUFFICIENT. for is if the demand is made early in the day and payment not obtained. (N. . Nat. (N.) 554. S. 218. Milliman. (N.) 87. 31 Misc. 128 App.American Bank 65 N. payable at bank. Y. Xew Amsterdam vs. 75. pa^mient at a bank is ought to be demanded near the close of banking hours.

'Presentment Where the person primaron the instrument is dead. Div.§76 PRESENTMENT FOR PAYMENT 137 mature presentment if it is shown that he had sufficient funds at bank to pay the instrument before the close of banking hours on that day.) 76. IF SUCH THERE BE. ily liable If the person who is first of all liable to pay the in- strument there is is no place of payment dead at the time pa\Tnent becomes due and specified. . (N. Observe that by Section 2 of Section 72 the presentment must be made at a "reasonable hour. he required to effort to learn who he is cumstances to protect his own interests. ^^^ two or more executors or administrators of the decedent's estate. Spear. which make such active inquiry and and where he is to be found as an ordinarily prudent man would make under similar cirmeans. (Also see Sec. and principal is dead. acting by appointment of some court. presentment FOR PAYMENT MUST BE MADE TO HIS PERSONAL representative. Reed vs. Y. HE CAN BE FOUND. it is the custom to send the instrument to the bank where it is to be paid and leave it there until the close of business of the day on which where it is payable. the executor or administrator of his estate." If it is not convenient to present the instrument at a reasonable hour at the bank at which it is payable. ^tq place of payment is specified. 107 App. the holder is required to use reasonable is diligence.) 144. himself a party to the bill. presentment to one of them is If there are sufficient. AND IF WITH THE EXERCISE OF REASONABLE DILIGENCE. its presentment for payment must be made to his personal representaThe personal representative of a dead person is tive. If the personal representative of the deceased is party prove to be one who 19a." "Sec. To ascertain who is the proper person to whom presentment should be made when the person primarily liable upon the instrument is dead. 87.

87 L. S. Spear. Bank. the presentment should be tive of the deceased made at the dece- dent's late place of residence. (U. Cas. notwithstanding the fact that the part- nership has been dissolved.) 144. Reynolds. -^ "Sec. Y. 20. not partners. Ma. 94 Y. No. 954. 704. it may be presented to either of them." Presentment to joint debtors. Presentment to one of sev- eral partners or former partners is sufficient and it may If a made in the manner prescribed place is named in the instrument as be to be presented for in Section 73. 22. S. 3 Pet. vs. primarily liable on the instrument.) 954. Cox vs.^^' If it cannot be determined who is the proper personal representative of the deceased person or where he may be found.) 87. or if having become liable as partners. 739. and no place of payment is spbcified. Washinj^ton Bank N . 23. 1007. 78. Reynolds. presentment must be made to them all.-^ If no pernonal representa- person can be found. S. 2 Fed. 77. and no place of payment is specified. 612. presentment for payment may be made to any ONE of them. even THOUGH THERE HAS BEEN A DISSOLUTION OF THE FIRM." If persons who are partners are primarily liable upon the instrument. Cas. 25 L Ed. (U. the not paid he must proceed with the steps nec- "Sec. Where the persons primar- ILY liable on the instrument are liable as partners. S. Reed vs.2Presentment to persons liable as partners. (N. 21. Where there are several persons.138 THE NEGOTIABLE INSTRUMENTS LAW capacity § 77 is presentment to him in his representative nevertheless required. 100 U.e:nKler vs. the holder may in- make presentment strument is to the widow or other member if of the family of the deceased at his residence and essary upon dishonor. the place where it is payment. their partnership has been dissolved before the time when presentment must be made and no place of payment is named in the instrument. Washington Bank vs. Union Bank. New York St. 2 Fed. Div. a presentment at that place is a proper presentment even though the partnership has dissolved or ceased to do business there. Ed. 107 App.

as. he is not then entitled to notice of its dishonor. for example. and in order to be sufficient to charge the indorsers upon their instrument. under these cir- .§79 PRESENTMENT FOR PAYMENT may 139 Several persons join in the execution of the in- strument and thus all become primarily liable but not as partners. if it should appear that the drawer has no right to expect the drawee or acceptor to pay the instrument. The failure of the holder to present the instrument and give him notice of its dishonor will not. If they reside in different cities this cannot. presentment must be made to each of them if no place of payment is named in the instrument. ' And if only one is found there. of course. (Sec. liable to pay only if the drawee or acceptor does not. 82 will dispense with presentment to those to whom made it cannot be made. when he draws the bill for his own accommodation and. presentment must be it is good even if none of the joint makers or acceptors are found at that place. If a place of there and payment is named. 89. In that case the saving clause of Sec. the drawer of a draft or bill of exchange is entitled to have the instru- ment presented for pajTnent for he is a secondary party. q-^ require that the drawee or acceptor WILL PAY the instrument. or no right to require him to do so. having agreed to do so. If the instrument remains unpaid at maturity he liability will be discharged to by the holder's failure give him the notice to which he is entitled. These are called joint makers or acceptors.Presentment for payment When presentis not required in order to charge the ment not required to charge drawee where he has no right to expect the drawer. be done." ' Unlike the maker of a promissory note.) ^^^. 72. presentment to him is sufficient. as the case may be. he does not put the acceptor in funds with which to pay it from make presentment and demand and when due.) However.^^. (Sec.

-^ unless he drew^ with the understanding that he would provide the acceptor with funds to pay it at maturity and failed cumstances. vs. will discharge him. 581. 60A. But there is now a ver^^ important qualifying clause in the section which considerably modifies this old and well established rule. 1062. 25. . 434 95 C. but they hold. Welch vs. if it can be sho-wm that the accommo- dated indorser had any reason to expect the maker to pay the instrument if presented. Roberts (Mo. 234 Fed. inf erentially. so that now. 696. Taylor Co. Pendleton. presentrequired in order to charge an inis not rement not quirecl to charge dorser where the instrument was made the indorser.^^ None of the cases cited directly decides the point as I have stated and I have not been able to find any that does. But the fact alone in the hands of the drawee fmids drawer had no that the when he drew the bill is not sufficient to dispense with presentment of the bill for payment. that if an accommodated indorser has it any reason to expect that the instrument will be paid if it presented.. Third Nat T Bk. McDonald Belch vs. ''Sec. 82 111. C. C. A. S. 112 U. 177 S.140 THE NEGOTIABLE INSTRUMENTS LAW § 80 liability. 579. he w^ill be discharged by the failure of the holder to make presentment. Luckenbach. 170 Fed. 481. C. q^ accepted for his accommodation" and When Presentment for payment ''Illinois HE HAS NO REASON TO EXPECT THAT THE WILIj IN- STRUMENT be paid if PRESENTED.. release him from to do so. 708. A. The Life Insurance Co. a failure to present 24. Murray vs. 148 C. . 247. erly present it for payment at maturity. vs. by the failure of the holder to prop- the accommodated party Lentil its ment. 80. B. W.)." This section effects a very important change in the law in respect to the right of an indorser who is himself to require presentment for payenactment such a party was held not to be discharged from liability upon the instrument under any circumstances.

that he had no reason to expect it to be dation paid if presented. if payable upon a day men delay in making presentment is excused. and can be shown. does not contain a similar qualification. Delay in making is present-- ment for payment certain.§81 section PRESENTMENT FOR PAYMENT now makes made 141 applicable to a promissory note or an for the accommodation of an acceptance which is indorser. AVhEN THE CAUSE OF DELAY CEASES TO OPERATE. if he has any reason to expect the maker or acceptor to pay it." While by Sec. and it seems to provide. as. a rule similar to that enunciated in Sec. OR NEGLIGENCE. 71 the instrument. PRESENTMENT MUST BE MADE WITH REASONABLE DILIGENCE. Except in such States as have omitted the words ''and he has no reason to expect that the instrument will be paid if it is presented" now necessary in order to it to present the instrument for pay- ment charge an indorser for whose accommo- was made or accepted. or to his own wrongful is himself act. ''Sec. and not imputable to his DEFAULT. care- . that the instniment must be presented for payment in order to charge the accommodated indorser. Section 115. including a sudden and severe sickness. the money with which to pay the instrument at maturity. excused when the delay is caused by circumstances beyond the control of the holder. must be presented upon the day when it falls due. misconduct. delay in making the presentment is excused when it is caused by circumstances beyond the control of the holder. unless it is kno\ra. or under his control. 79 which is applicable to the drawer of a bill. by logical inference. if he has put into his hands. for example. 81. wherein it is provided that notice of dishonor need not be given an indorser for whose accommodation the instrument was made or accepted. and not chargeable to his failure to obliged to perform a duty which he perform.

964. 73. or. cumstances which are relied upon by the holder as an excuse for presentment at the proper time. It need not be of a bill of exchange." 152 Ky. Rep. 1915 vs. must be alleged and proved by him in any action which he may bring upon the instrument to charge any of the parties liable upon it who are entitled to notice of its proper and timely presentment and dishonor.142 THE NEGOTIABLE INSTRUMENTS LAW The holder owes § 82 lessness or neglect. Presentment for payment need not be made at all if after the exercise of reasonable diligence it cannot be made made is. 329. . Where the drawee is a fictitious person 2. in the manner required in this Act. it is not possible for him to present the instrument for payment upon the day when presentment ought to be made." 3. A. the delay will be excused. or even attempted. 153 S. as the Act Ann. 380. Senier. in good faith and carefuUy. Evansville. 14 Wis. The cases cited enumerate some of the circumstances which do and others which do not dispense with presentment or ex- cuse delay in making it. B 148. Exchange Bank. and if he does so and yet. express or implied. 109 Am. 925. not real or does not exist. 102 N. Presentment for payment ''Sec. 124 Wise. W. 82. Bank of W. that one who is vs. 26. by some circumstances beyond his control. 68 L. after the exercise oi' rea^ ^i*^sonable diligence presentment as required BY this act can NOT BE MADE. : . Cas. Upon the removal of the cause of the delay the holder must make the presentment and The cirhe must proceed with reasonable diligence. Young Aebi 293. y^ljen may with presentment is dispensed be dispensed Where. St. in presenting the instrument for payment. R. if the holder learns that the drawee is a fictitious person. 444.^^ to all parties to the instrument the duty to act promptly. By waiver of presentment. Wilson vs.

R. 30. Cas. may it is be implied from any words or acts of sought to charge. of course. Bankers State Bank 97 N. Note. 476 & 31. 23 Ind. and he writes upon the instrument.) 282. this at his signature. 45 Am. need not be in writing but obvious that when an indorser expresses his willingness to waive pre- sentment for payment. vs. Ycat man-Gray Groc. Neal vs. 456 63 A. 406. 1079-Note.the a separate writing. Fowler vs. Nill. . No consideration need be given for the waiver. C. Mason Hand Lathe Co.20 or after the maIt need not be made by the at. waiver expressed in But if . 143 has been interpreted to mean. Corner 28. by letter or is telegram^T or in spoken words^^ it is equally bindproof ing although.-^ party himself but may be made by his authorized agent. 523. R. Bank. The express waiver it is may made It before. 64 Pa. Ark. Uhler vs. 3 Bur-ettstown Nat. Robinson vs. one who though living and real has It is no interest also (Sec. the more difficult. 446. W. 186. w^hich is The waiver by incor- may be expressed. Ill Churchill vs.. Pratt.^^ A waiver of presentment for payment and notice of non-payment the person 27. usually done porating the waiver in the body of the instrument before its issue. whether made before or turity of the instrument.) dispensed with by waiver. 164 S. 70. 213 Pa. 529. 121 Iowa. 138 Mass. A. 5 Ann. 570. or the person waiving presentment may write words at his signature. will settle is all question of his intention. Fleming. 670. The waiver may also be implied from be his words or conduct. S. 24. 9. L.. W. Farmers Nat. 283. Barnett. N. Co. 29. Bank vs. 1 McMul. in that case.§82 PRESENTMENT FOR PAYMENT in the instrument. or from any one who vs. (S. 19 Fla. Wood. words expressing that he does so. L. at or after the maturity of the in- strument. or may utter spoken words at the time of transfer which expressly declare that he does not require presentment.

20 How. 46 N. Maj^er & Bros. Glidden S. R. Johnson. Siple. a waiver binds no one except that person who either expressly makes or authorizes it or against whom. 989. 32 Ohio St. Chamberlain. 208. 71 N. Lititz Nat Bank 145 Pa. Matthews. 60 Fla. and if the words^* or acts proceed from any perto fix the liability of the son other than the one to be bound by them. 109. Bank of Toledo. S.=^^ 110) . 295. Y. 167 Mass. vs. meaning of the terms used. by reason of his words or acts. or after the maturity of the instrument. Boyd Ross vs. 33. 526. Appeal. 486. vs. 14. Am.144 THE NEGOTIABLE INSTRUMENTS LAW liis § 82 at. 477.32 A waiver is also implied if the words or acts are uttered or done in such a manner as him in believing that the will justify the holder in believing that they are intended to induce him to forego the usual proceedings necessary drawer and indorser. Hurd. speaks or acts by authority in the matter before.^^ A waiver will not be inferred from doubtful language or acts. AVorley vs. vs. it is implied (Sec. 15 L. The language or acts relied upon to sustain a waiver by implication will be strictly construed and will not be interpreted beyond the fair. Ed. E. if the words or acts are of such character as will satisfy any reasonable person that a waiver was intended. a waiver by one will not operate against the others. 49. 87 Pa. Worley 35. (U. Sigerson vs. Johnson. (Also see and 111. 295.) Of course. 129. 32. 110 whom he assumes to act. 60 Fla. 103.) 496. 34. his authority to waive must be clear and without doubt or it will not bind the person for Sees. 22 A. 57 vs. and where there are several parties to the instrument who are entitled to presentment and notice. . or as will justify if they are such drawer or indorser intended to dispense with presentment of the instrument for payment.

The Act nowhere "excuses" presentment. Subject to the provisions when the instrument is disOF this act. 83. but that section also provides that when the cause for delay ceases to operate. arily liable thereon accrues to the holder. OR When instrument dishonored by non-payment. presentment "must" be made with reasonable diligence. or if he cannot obtain payment at the place where it is to be made. dis- pensed with in accordance with Section Liability of ''Sec. The use of the word ''excused" in this section would seem to be unfortunate and it properly means "dispensed with. It seems.84 PRESENTMENT FOR PAYMENT ''Sec. Delay in presentment is "excused" by Sec. PllESENTMENT IS EXCUSED AND THE INSTRUMENT OVERDUE AND UNPAID. -j^ 145 The instrument is dishonwhen. 81. 84." That term would have been more appropriate. 2. parties seconddishonored. non-payment by ored j^ ^^ ^^^^ presented for PAYMENT AND PAYMENT IS REFUSED OR CANNOT BE OBTAINED.' §83.'' IS The dishonor of the instrument fixes the liability of its parties and the holder may proceed upon the dishonor if he has properly presented the instrument for pay- ment and payment is refused. therefore. person secondarily liable honored by non-payment an immediate when instrument right of recourse to all. A neglect to pay the instrument after presentment and demand is equivalent to a refusal to do so. The person or persons who by the terms or the nature ' of the instrument are required to pay it are the persons . that this section must be under- stood to is mean that an instrument is dishonored when it overdue and unpaid and presentment has been 82. although it is sometimes used as a synonym for the former. The instrument is also dishonored when it is overdue and remains unpaid and presentment is excused.

struments falling due*" on Saturday are Kentucky. t^ereix without grace.''*^ Every negotial)le instrument matures and must be paid on the day when it is expressed to be due if a fixed or determinable date of maturity is mentioned in the instrument. be presented New York. 177. Massachusetts. The therefore. 85. (Sec. not Saturday if it is a demand instrument. oi ^^ Saturday when that entire day is eRhode Island NOT A HOLIDAY. . 111. 19 vs. 192). subject only to the provisions of this Act. or join them all in one action upon the instrument. the option of the holder. Rogers. it upon or a must be presented on the next succeeding l)usiness day.** InColorado. however." When the day New Hampshire. or a N. If the instrument falls due on 36. and it must be presented for payment on that day unless a delay is excused. Sunday or upon a holiday. but may proceed at once against all the parties. Time of maturity. not required to pay the instniment until it has become dishonored by reason of the primarily liable to do so. 347. Morrison 64 Ind. c« ^^^ maturity falls upon Sunday. failure of the person When all the instrument . the next succeeding business day. except that in•^Delaware STRUMENTS PAYABLE ON DEMAND MAY. Carolina holiday. There are no days of grace except in tliose states indicated in the marginal note. the instrument is payable on Iowa.has be- parties secondarily liable are immediately liable to the holder who can not be required to look to a primary party for payment. AT Kansas. ^^ ^^ presented for payment on the next SUCCEEDING business day. ment* is payable at the time fixed "Massachusetts. He may proceed against them separately until full satisfaction is obtained. ''Arizona. come dishonored.146 THE NEGOTIABLE INSTRUMENTS LAW all § 85 primarily liable and liable other parties are secondarily parties secondarily liable are.^*^ Every negotiable instru*'Sec. ^^^ payment BEFORE twelve 'clock NOON "Iowa. Fisliell. Moore vs.

OR AFTER THE HAPPENING OF A SPECIFIED EVENT. "Where the instrument is ^ixde payable at a bank. or unless day. or the happening of an event which it names. unless it is excusis ably delayed. "Illinois. Rule where pTyable^at bank.87 PRESENTMENT FOR PAYMENT may is 147 An for instrument payable on demand the presentment it be presented not an entire payment on Saturday when that day if is holiday made before twelve o'clock need not again be presented on the next succeeding business day. 86. THE TIME OF PAYMENT IS DETERMINED BY EXCLUDING THE DAY FROM WHICH THE TIME IS TO BEGIN TO RUN. To make presentment of a demand instrument on Saturday or to wait until the next succeeding business day is at the option of the holder. how computed. sight. Where the instrument is payable at a fixed period after date. (Sec. 194. ^Missouri. thereon . sight. AFTER SIGHT. 87. '" mSxiesoU. and when such an instrument is presented to the bank named it is obliged to pay it for the account of the principal debtor out of any suflacient funds he may .'' To deteiTQine when an instrument must be paid if it is payable at a fixed number of days after date. is dishonored. AND BY INCLUDING THE DATE OF PAYMENT.^ it is equivalent TO an order to the bank to PAY the same for the account of the principal debtor Nebraska. When at a an instrument is made payable bank the effect of making it so payable is the same as if an order had been given to the bank to pay it.) given on that day or the next business day. the day of its date. 85.) it is a Saturday.' §86. Sunday or a holi- "Sec. the notice of dishonor must be (Sec. "Sec. or of the happening of the event is not included but the last day of the period for which it is to run included and becomes the day upon which presentment for payment must be made. but if the presentment is made on Saturday and the noon and instrument Time.

363. 88. its failure to obtain payment out of the funds appropriable for that purpose will discharge parties secondarily liable upon it. Hennincer.^" An instrument so made payable becomes the Therefore. 1017. 496. 82. Cas. Am. W. 215 N. 127 Wise. 105 Pa.) It is made in due course Payment if it is made at the time or after the instrument is becomes some person authorized by him to receive pa^nnent. would be liable to the owner making it of the instrument in from ment its neglect. Foreman. Y. 584. A. Natl. 76. Madison vs. Marling' vs. Fourth Natl. 450. St. 38. for own account. R. is If damages if a loss afterward result the bank at which such an instruits payable has the instrument as holder. Bank vs. 7 Ann. . 39. 364. if it has the instrument for collection. Y. if an instrument equivalent of a check. Nommensen. 150 Pa. 88. S. Smith. St.148 THE NEGOTIABLE INSTRUMENTS LAW § 88 have to the credit of his general account on the day of its maturity Avhich are not specially applicable to another purpose. 138 Pa. Bank.'' in due course discharges the instrument and relieves the person making payment from all further obligation upon it. vs. N.^^ Such a payment will discharge the person obliged to pay the instrudue and payable and made to the holder or to 37. 632. S. A. St. Aetna 38a. 119. a collecting bank. Commercial Bank vs. 474. 844. Mechanics & Trader's Bk. 412. 106 N. (Sec. is made in dub made at or after the MATURITY OF THE INSTRUMENT TO THB holder thereof in good FAITH AND WITHOUT NOTICE THAT What constitutes *'Sec. Seitz. Cabalek. Baldwin's Bank vs. Bedford Bank vs. German Natl. Aeoain. 125 Ind.^^^ A lesser sum than the full amount due upon the instrument need not be appropriated.^^ thus payable is not charged to the account of the party payable at a bank and who has available funds there to pay it at maturity. Payment pasnnent in due course course when it is HIS TITLE IS DEFECTIVE. Bank vs. 46 N. 86 111. 5 L. 115 R.

Wyman. Louisville. 290.he party receiving the pa>Tnent. 96. Keyes. S. or defect in the holder's title. 83 Ky.^o But payment made before the instrument becomes due not payment in due course and. Watson vs. N. if it is made in good faith and to the without notice of any deception.§88 PRESENTMENT FOR PAYMENT if 149 ment even no title to made the wrong person or to one who had instrument. Bambridge Williams R. 153. that ment should not do satisfied himself positively that the person asking paywill please refer to ment is entitled to receive it. 40. 41. 285. 4 vs. 438. W. R. notwithstanding that the person asking payment has the instrument in his possession and presents it for payment. 90 Mich. 30 Am. therefore. 99 Am. if made to the wrong person or to one whose title to the instrument is defective. .^^ It is binds only t. S. 51 161 Mass. vs. A payment before maturity is no defense against a bona fide holder and the payer will make it at his own risk. You Subdivision 8 for the general subject of discharge of the instrument and discharge of parties. one liable to pay an instruso before maturity unless he has It follows. 520. the person paying it is not discharged from liability to the real owner of the instrument.

Protest. when need not be made when must be made. Section 89 90 91 92 93 94 I Section To whom notice of dishonor 105 must be given. upon dishonor of the instrument. Deposit in post office. 106 Notice given by agent. When When notice dispensed with. 95 96 97 98 99 When Form 100 101 102 103 notice sufficient. In order to charge the parties secondarily liable upon a negotiable instrument they must be given notice of its •dishonor by non-payment or non-acceptance unless. wL''t constitutes. or a neglect within the time provided in this Act. When Notice need not be given to indorser. Waiver of protest. Notice to partners. Where pai'ties reside in different places. of notice. Notice by subsequent party time of giving. 111 112 113 Waiver of notice. When By whom given.hq tiee. Delay in giving notice. notice Notice to bankrupt. 109 When agent may give no. Who bound by waiver. Notice where party is dead. Notice to persons jointly liable. Effect where notice is given 108 by party entitled thereto. the notice may be dispensed with. will release the parties en- . The giving of notice is made an it important duty and any oversight or omission to give to observe the necessary formalities in giving it promptly. Where notice must be sent. . ^^ 118 Effect of omission to give notice of non-acceptance. by reason of the exceptions provided in the Act.. notice notice How be 114 115 need not given to drawer. 116 non-payment of where acceptance refused. Where 104 parties reside in same place. sender deemed to have given due notice. To whom notice mav be given. Time within which must be given. excused. 150 THE NEGOTIABLE INSTRUMENTS LAW §89 SUBDIVISION VII. Effect of notice given on be. Notice of Dishonor.107 half of holder.

fix the liability of the parties to whom given to him and to persons claiming through him or to whom he is liable. even notice he gives will it is they be quite remote. Aebi vs. He is required to act with promptness and dispatch when called upon by default in the acceptance or payment of the instrument to convey the information of its dishonor to the secondary parties to whom he looks for its payment.§89 titled to notice NOTICE OF DISHONOR 151 and they cannot again be made liable upon the instrument except by their own voluntary act. . and every is holder sions obliged to observe carefully this subject if he all of their provihis rights upon would save upon the instrument. whom he intends to He may give it to all or select only those to if whom The he looks for payment. himself to give 1. 73. and the parties to whom the notice must be given. Rowland. that a knowledge of how to proceed upon dishonor safety. therefore. Therefore. unless the giving of the notice it is is dispensed with or delay in giving excused.^ The following sections of the Act prescribe the manner in which. 18 Ala. 665. as well as by whom. 124 Wise. W. 102 N. Bank of Evansville. for his own protection. receives notice of the dishonor of the in- whom when an indorser strument he ought. 329. Tt is ap- parent. may be understood to be this. Smith vs. of the instrument is very essential to his The general rule in regard to notice applicable to the three forms of negotiable instruments to which this Act particularly applies. The holder in whose hands the instrument is dishonored is required to give notice to every party hold. and to all parties prior to the holder who have notice is a right of recourse against the parties notified. Intermediate and prior secondary parties to not given will be discharged. the time at which.

WOULD HAVE A RIGHT TO REIMBURSEMENT FROM THE PARTY TO WHOM THE NOTICE IS GRTEN. AND ANY DRAWER OR INDORSER TO WHOM SUCH NOTICE IS NOT GIVEN IS DISCHARGED. OR BY OR ON BEHALF OF ANY PARTY TO THE INSTRUMENT WHO MIGHT BE COMPELLED TO PAY IT TO THE HOLDER. notice of dishonor must be given to OR THE DRAWER AND TO EACH INDORSER. 90 notice to the parties to whom he looks for payment.: 152 THE NEGOTIABLE INSTRUMENTS LAW § 89.) 230. Sec. is to. When he receives notice of the dishonor of the instrument. IS Johns. (K Y. The maker not entitled to notice. 89. the noIf the instrument tice is is required to be given to each indorser. and who usually does give it is the holder of the instrument at the time of its dishonor. Except as herein otherwise provided. AND WHO. ing. Sec 90. UPON TAKING IT UP. Smitli. The notice may be given by OR ON behalf of THE HOLDER." of dishonor must be given. The provisions of the Act in respect to notice are as follows To whom notice ^^^^ been dishonored by non-acceptance non-payment. " The person who ought the notice of dishonor. Utica Bank vs. If the dishonor is of a promissory note. And a party ing for him.- need not wait until he himself receives notice before giving notice of dishonor to other parties whom he desires to hold. he 2. ' ' By whom given. however. when a negotiable instrument ' ' which becomes dishonored by nonacceptance or non-payment is a bill of exchange notice of its dishonor must be given to the drawer and to each indorser. no matter what means of information. . He may give the notice as soon as he becomes his source or aware of the dishonor of the instrument. or given by an agent act- The agent's authority need not be in writThe notice may be given by any party or by any person on behalf of any party who is liable upon the instrument and who might be compelled to pay it to the holder and would thereupon have a right to recover from the party to whom the notice is given.

Supp. 14 Mass. . Harrison Stanton 5. J. (N. 104 App. Y. Blossom. 15 Md. He may give the notice in the name of any other party who is entitled to give notice even if the party in whose name he gives it is not the person for whom it is he is acting as agent. Y. 4. Miller. 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. vs.^ 3. 6. vs. Smith. D. & W. except those primarily liable and those not entitled to receive notice. he it may give it in his own name or he may give in the name of the person for whom he is acting." When the notice is given by one person as the agent of ^S^^^- Notice given by another. 235. 522. 15 M. 92 Mass. IS Johns. Jones. Cabot Bank Utica Bank Warner. vs. 16 N. 150. Rrailsford vs. 15 L. 21 Tex.^ to accept and a party who has been "Sec. Williams. 93 N. Rnscoe. 91. give notice of dishonor^ but it may may is not be given by a stranger. Payne vs. 433. vs. Div. WHETHER THAT PARTY BE HIS PRINCIPAL OR NOT. Bank 768. his authority need not be in writing. 231. Exchg. definition includes a and this drawee who has refused discharged. This section that all may therefore be understood to mean parties to the instrument. Lawrence vs. Y.) 230. A stranger is one who neither a party nor the representative of a party to the instrument. vs.^ if given in a wrong name not a sufficient As already stated.§91 NOTICE OF DISHONOR 153 must give notice to other parties to whom he looks for payment within the time prescribed in this Act unless he has already done so or has knowledge that the holder at the time of dishonor has already given the notice to them. 110. Traders Natl. such as one for whose acconmiodation the instrument is made. 116. but notice. 680. 559. 74 Am. Patrick.

notice is given by or Sec. 93 N. 128." to the instrument If the notice is given by a party is who if it not the holder but who entitled to give notice. 8.154 THE NEGOTIABLE INSTKUMENTS LAW ' ' § 92-94 Effect of notice Sec. when the holder has given notice of dishonor to all the parties to whom it is required to be given it is not necessary that any other party give The notice by the holder operates for the benefit of all. HE MAY EITHER HIMSELF GIVE NOTICE TO THE PARTIES LIABLE THEREON. 104 App. qn behalf of the ^^^ benefit of all subsequent holders AND .*^ but he is bound only to give it to his immediate indorser if he looks to him alone for recourse. 157. Ti-aders Natl.* it. been dishonored in the hands of an AGENT. it enures for the benefit of the thereto. or by someone for him. Supp. 768. 7. Effect where entitled to give noPARTY' notice is given OF a ON BEHALF by party entitled ^ice. it given by ok enures for the instrument. West River Bank Linn vs. 131. receives the notice. 92. In other words. Y.\LL PRIOR PARTIES WHO HAVE A RIGHT OF RECOURSE AGAINST THE PARTY TO WHOM IT IS GHT^N. Jones." If the notice of dishonor is given by the holder. Bank vs. It operates also for the benefit of all parties before the holder giving notice who have a right to enforce the instrument against the parties to whom the notice is given. 17 Wise. Taylor. Wheke notice is given on behalf of holder. to the ' ' Where holder and all parties subsequent NOTICE IS PARTY TO is WHOM GIVEN. OR HE MAY GIVE NOTICE TO HIS PRINCIPAL. 34 N. or is given by someone for him. Y. it operates for his benefit and for the benefit of all persons who aftenvard become holders of holder. Horton. 433. Div. vs.. 93. the notice operates for the parties after that one to benefit of the holder of the instrument as well as for all who became given. whom it the notice is It thus fixes the liability to them of the party to whom the notice is given and fixes as well to that party from whom he When agent may ''Sec 94. . Where the instrument has give notice.

D. 11. Ann. that is. 148. Rosson vs. Upon receiving the notice. UPON THE RECEIPT OF SUCH NOTICE. 90 Tenn. HAS HIMSELF THE SAME TIME FOR GIVING NOTICE AS IF THE AGENT HAD BEEN AN INDEPENDENT HOLDER. 42 Am. W. it and it must at once proceed to give notice of dishonor must do this within the time required in this sub- division of the Act. Exchanije Bank. 12. 215 Mass. 293.^ If the agent gives the notice he must do it within the time required fixed in Sections 103 and 104. Thayer.§95 If NOTICE OF DISHONOR 155 he give notice to his principal. Sampson vs. 80. A written notice* need not ^^ signed. Gleason vs. 1915 B. Jefferson Bank. Carroll. 90. notice may be supplemented and valimisdescription of dated BY verbal communication. 444.^principal. If he fails to give his it principal notice within the time in which is to be given his neglect will be imputable to his principal and will destroy his principal's right to give notice. Vahev. 153 S. Y. Cas. AND THE PRINCIPAL. Shea vs. Turnev. (Tenn. . 95. not- withstanding that after receiving notice from his agent.^ ^ A collecting agent ought not to take anything but money in payment of the instrument.^*^ A collecting bank will be liable to its customer if it fails in this respect. but if it receives a check which afterward proves to be worth- less.). 248. A 9. and an insufficient written' "Kentucky. the its agent may it give notice of dishonor to the parties liable upon or he may give the notice to his principal alone. must in turn give the notice within the prescribed time after receiving notice from his agent. Brill vs. (N." If the instrument is in the time of its hands of an agent at the dishonor. 159 App. the principal may give or attempt to give the notice to his prior parties within the time prescribed in this Act.) 461. 5 Hump. 10. 152 Ky. Young vs. 87 Conn. a collecting bank for example. 443. the the person for whom it is acting. 419. When notice "Sec. Div. sufficient. he must do so within THE SAME time AS IF HE WERE THE HOLDER.

It should also show by whom the notice is given. as the case may be. The notice may be in weit"Kentucky. it care must be used in preparing the notice. state where the dishonored instrument is held and the names instrument. the terms of the notice are not prescribed by the Act in any particular.156 THE NEGOTIABLE INSTRUMENTS LAW § 95. '*Sec. Form of notice. by whom made of all parties to whom notice of its dishonor has been However. notice of dishonor need not all If he fails to do so and the notice contains it the requirements of the next section. for that reason. . is nevertheless good. and correctly describe the date. 96 THE INSTRUMENT DOES NOT VITIATE THE NOTICE UNLESS THE PARTY TO WHOM THE NOTICE IS GIVEN IS IN FACT MISLED THEKEBi'/' The person giving written sign it. init whom is given is actually misled by the mistake. and indicate that it has been dishonored by non-acCEPTANCE OR NON-PAYMENT. receiving it if the has not been misled by the mistake. If a written notice omits any of the requirements of be supplied by verbal com- the next section they may munication and this will make good a notice which would otherwise be invalid. It MAY IN ALL CASES BE GIVEN BY DELIVERING IT PERSONALLY OR THROUGH THE MAILS. and that pajTnent or acceptance was demanded and was refused. ^^^ q^ merely oral*^ and may be gi\'en in any terms which sufficiently identify the instrument. If the notice incorrectly describes the instrument dishonored valid unless the party to it is not. Any words may be written or spoken to the party to be notified which describe the instrument well enough to enable him to idengiven. should amount and nature of the or accepted and indorsed. 96. and distinctly state the fact that it was presented for payment or acceptance." Notwithstanding that the preceding section will permit the correction of any mistake in the written notice party.

R. 597. given either to the party himself or to HIS agent in that behalf. . the very general custom to When holder the parties or their addresses are it is unknown to the make out as many copies of the notice as there are separate parties to be notified and send them all to the immediate party froin title. as the case may be. 97. 125 Tenn.) parties to be protest and the reason given for non-payment or non- acceptance must be stated in the protest. 1000. S. 235. A. 739. the cause of (See Sec. 143 S. W. 328. Zollner vs. Notice of dishonor may be To whom notice may be given. 644. 15. he will encounter no sending the notices promptly and properly.has in whose hands the instrument meets with dishonor. 60 L. 431. W. and that the holder looks to him for pajanent. R..^^ *'Sec. vs. 103 Am. Fertilizer Co.^^ The reasons given by the party refusing to accept or pay the instrument need not be stated in it but they may be for the information of the party notified. 72 Atl. 751. If the instrument is protested. The notice may be given personally or sent through all the mails and when the addresses of notified are difficulty in known to the holder.'^ The notice of dishonor may be given to the party to be notified or to an agent who has authority from him to 13.^^ notice is entitled under Sec. 66 Nebr. entirely proper to do this. to the same time for givto him as the holder . ing notice to parties liable Each party who receives 107. A notice given by telephone is good if it is clearly shown that the party to be notified was communicated with. American Nat'l Bank 337. however. whom the holder obtained He in turn will forward It is the notices to the next before him and so on back to the party who originally negotiated the instrument. 222 Pa. 153. Carr. Oaklev vs. Moffitt.§97 NOTICE OF DISHONOR 157 tify it and clearly make him understand that the instrument has not been accepted or paid upon presentment. 14. 92 N.

is Notice given to an attorney or to a ser\^ant it is usually insufficient unless shown that the attorney or servant was expressly or impliedly authorized to reit by the person sought to be charged/" but it has been held that a notice given to an agent who has author- ceive ity to indorse negotiable paper will be sufficient. 51 Ala. Contr. N. Bank 82 Minn.he contemplates giving the notice has authority to act for hi's principal in behalf of the dishonored instrument. W. 17. . Y. 387. 162. etc. Co. 18. Thrush. 85 N. 125 Tenn. Fertilizer Co.158 THE NEGOTIABLE INSTRUMENTS LAW it.. & Cress. vs... 305. Selma Savin<?s Bnk. 306. § 97 receive The words ' ' his agent in that behalf ' ' do not its dis- permit that notice of the dishonor of the instrument be given to a party by communicating the fact of honor is his to some person who is a mere employe or one who agent in other matters unless the agent acts for w^ill him in such a capacity as justify the person gi\^ng is the notice in believing that the agent instrument. either personally or by mail. Natl. N. 328. or if an ordinarily prudent man would have reason to doubt his authority. Contr. 387. 597. Grisri^s.. W. 8 Bam.^*' Ordinarily the words ''in that behalf" mean "for that purpose" and sufficient if the person giving notice of the dishonor of a negotiable instrument does not know and has not reason to think that the agent to whom .^® Avoid giving notice of dishonor to an agent unless satisfied that he is authorized by the party to be notified to act for him in regard to the dishonored instrument. 305. vs. Selma Savings Bank... Co. may Amer. Froth vs. 143 S. Y. and remember that although a second- Kinc: vs. Costly delay 16. a notice to an agent who is clothed with general authority to conduct his principal's business would be proper and sufficient. vs. authorized to act for his principal in the matter of the dishonored Thus. the notice should not be given to the agent but should be given to the principal. etc. ensue. 51 Ala.

62 E. B. vs. IF THERE BE ONE. If the party giving notice is not aware of the death of the party to be notified.). Reprint 159. AND IF WITH REASONABLE DILIGENCE HE CAN BE FOUND. . .) 98. 137 vs. 20. L. C.'' If the party who is to be notified is is son giving the notice knows that he resentative of the deceased party. Warren. 122 Mass. If THERE BE NO PERSONAL REPRESENTATIVE.he must use reasonable diligence to find and notify the personal rep- Eeasonable diligence has been defined to be that degree of diligence M^hich business men usually exercise when their own interests de- pend upon obtaining correct information. 76 in regard to presentment where the party is dead to whom present- ment for payment must be made applies also to giving If the rep- notice of dishonor under such circumstances. Goodnow Count vs. ^^^j^ ''Sec. 400. Guildin. a notice given in the usual manner as to a living person at his last known residence or place of business is sufiicient. vidual notice. scribed in this Act. (Eng.§98 ary party NOTICE OF DISHONOR 159 may actually know of the dishonor. -g-jg When any party is dead. 54. Notice where party is dead. Liudeniau's Executor Thompson 34 Pa. THE NOTICE MUST BE GIVI^N TO A personal REPRESENTATIVE. death is known to the party GIVING NOTICE. 400. 82. resentative of the deceased party prove to be one who is himself a party to the instrument in his individual capacity and as such entitled to notice. St. the notice should be given to him both as an indi\ddual and in his repre- although knowledge of dishonor gained through the notice given to him in his representative capacity has been held to be the equivalent of indisentative capacity. NOTICE MAY ^ BE SENT TO THE LAST RESIDENCE OR THE LAST PLACE OF BUSINESS OF THE DECEASED. dead and the perdead. 7 C.^" 19. 108. he will be if released from liability upon the instrument that knowl- edge is not communicated to him within the time pre(Sec.^^ AVhat is said under Sec.

^^ Notice to joint parties partners must be given to hable. . j^. however. THE NEGOTIABLE INSTRUMENTS LAW. St. the latter cannot be is held to his indorsement unless notice of dishonor given to him.. 137 S.^^ Notice to persons jointly upon the instrument. 1912 D. 535. their right to contribution. Ann.-^ The 22. AYilliams vs. Bank. 350.§ 99. W. ^y^^^ ^^j. 20 La. is Notice to one partner notice to all and to the firm. if in business as partners will not excuse notice to they are not liable upon the instrument as part- Unless their liability is clearly as a firm notice one signs as of dishonor must be given to each. each of them. Paintsville Natl. Joint indorsers who receive notice are not released by failure of the holder to give notice to all and may themjointly with selves give notice to those who indorsed them and thus preserve 21. but all difficulty will be avoided if the notice is given prompt- ly to each of the parties without regard to Avhether they are jointly or severallj^ liable upon the instrument. 99.'' Partners who are liable upon the instrument as such pa are not indi\adually entitled to notice even notice is to if at the time be given the partnership has been dissolved. Ann. Boyd.160 Notice to ners. Cas. Maillott & Co. and if maker and the other as indorser. Folaiul vs.^^ The fact. 100 "Sec. notice of its dishonor must be given to each of them unless one has authority to accept notice for the others. 23 Pa. 476. unless one of them HAS authority to receive such notice for the others. 781. 100. 143 Kv. 75. that two or more persons who are parties to an instrument and entitled to notice are en- gaged each ners. 23. AVheeler vs. Where the paeties to be notified are partners^ notice to any one PARTNER IS NOTICE TO THE FIRM EVEN THOUGH THERE HAS BEEN A DISSOLUTION. This is a situation which jointly liable requires care in the act of giving notice of dishonor.'' When two or more persons who are not partners are ''Sec.

103. it must be given" before the usual hours of rest on the day following. Notice may be given as soon ^g ^^^ instrument is dishonored: and unless delay is excused as hereinafter probe given witfiin the times fixed by this It is provided here that the notice may be given at once upon dishonor of the instrument. Time within which notice must be given. ' an assignment for the benefit of his creditors. notice must be given "Rhode Island within the following times: 1. If sent by mail.' ' ' §101-103 NOTICE OF DISHONOR 161 . and that if it is not done immediately it must be given within the time fixed in this Act. (Sec. it must be deposited in the post3. and must be given to one or the other. 101. If given at the place of business of the person to RECEI\T1 notice. vided. ' must "Sec. however. The next two sections fix the time within which the notice must be given and in Section 113 will be found the circumstances which excuse delay Where parties in giving it. or to an insolvent who has made Notice to bankrupt. to look only to those to whom he gives notice. ACT. 102. 89. "Sec.holder will be required.) "Sec. 2. NOTICE MAY BE GIVEN EITHER TO THE PARTY HIMSELF OR TO HIS TRUSTEE OR ASSIGNEE. it MUST BE GIVEN BEFORE THE CLOSE OF business hours on the day following. is properlygiven if it is either given to the bankrupt or insolvent or is given to the trustee appointed in the bankruptcy proit ceedings or the assignee of the insolvent. Where a party has been adjudged a bankrupt or an insolvent. or HAS MADE AN ASSIGNMENT FOR THE BENEFIT OF CREDITORS. If given at his residence. Notice to a bankrupt. ^-^ '^-^^ same place. Where the person giving reside in same ^^^ r^^^ person to receive notice reside place. ' not excused by some circumstance mentioned in Section 113. office in time to reach him in usual course on the day following. the notice must be given at the When delay is .

14 Wise. ^ "Sec. fixed boundaries and to avoid any question of the sufficiency of tlie notice it should. be given personally or by messenger upon the day of or the day after dishonor. whenever possible. 344. or village. OR IF THERE BE NO MAIL AT A CONVENIENT HOUR ON THAT DAY. 104. Adams Wright. Supi). it must be deposited in the post1. except in Kentucky. Y. If the notice is given at the residence of the party to be must be given before the usual hours of rest on the day folloA\ang the day of dishonor. gi\t1n 24. or the same business community outside of a city or village in which the usual business transactions between persons side there are conducted who re- by personal interchange. The designation "same place" may he understood to mean the same city. office IN TIME TO GO BY MAIL THE DAY FOLLOWING THE DAY OF DISHONOR.owing times: If sent by mail. 121 X. Where the person givixg rpj^^ perSOK TO receive NOTICE RESIDE ix different places. where it is required to it be in writing. Peck. 408. Wilson vs. or ])e deposited in the mail upon the day the instrument notified is dishonored or the next day. and if addressed to his residence it must be delivered there before the usual hours of rest on tlie day following the day of dishonor and it is of no importance that he was not there to receive it.-^ The notice may be communicated by telephone within the same time.162 THE NEGOTIABLE INSTRUMENTS LAW when § 104 times provided in this section the party giving and party entitled to receive the notice reside in the same place. The term "same place" can not be described as having any definite. vs. and not coimnonly by the use of the mails. If it is sent by mail it nmst be deposited in the postoffice in time to reach him before the close of business if addressed to his place of business. . the notice must be ^-v^j^ within the foli. Where parties reside in different nlaces. BY THE NEXT MAIL THEREAFTER.

' § 105 NOTICE OF DISHONOR 163 2. 24b. Y. 597. given by telegraph or communicated by telephone.-^" go by to The mails contemplated be used are the mails at the place of dishonor. 531. 87 N. Smith vs. Div. or at the place where a party himself receiyes notice of dishonor who desires to notify other parties by mail. Jnr<]:er. it must be given within the time that it would have been received if it had been sent through the mails and within the time above prescribed. (Sub-section 1 of this section. If day after the day of dishonor is very none at a convenient hour. and if it is given in this manner it must then be deposited in the postoffice on or before the day following the day of dishonor in time to go the only mail on the early or there is by the last mail on that day. valid ' 24a. When sender ''Sec. pqstoffice.)" The notice may be sent and delivered by mail by one person to another when they reside in different places. notwithstanding any miscarriage in the mails. If the notice is given by delivery or is in any manner other than through the postoffice.s vs. and these means may be used to correct a failure to give timely notice by mail or otherwwise.).^^^ Notice of dis- honor actually received by the party to be notified. Y. if it had been deposited in the postoffice within the time specified in the last SUBDIVISION. the sender is deemed to have given due notice. 105. but not given within the time provided in this Act. Wickman. will not be and will not bind any party w^hom it is sought to Section 108 so provides. . If given otherwise than through the postoffice^ then within the time that notice would have been received in due course of mail. which may in time to be understood to be at or after the beginning of business on that day. (N. Poillon. hold upon the instrument. 590. Where notice of dishonor deemed to have jg dxjly addressed and deposited in the given due no ice. the notice must be deposited the first mail thereafter. 124 App.

139 Wise. If the notice is delivered by the sender to a mail carrier for deposit in the postoffice and he "Sec. would not be been duly given. and for that reason undelivered. 126. Y. of course. postal it there in time. vs. Bank vs. its carry binding notice. S. deposited in any branch postoffice or in ANY letter box UNDER THE CONTROL OF THE POSTOFFICE DEPARTMENT. deemed to regulations require carriers to receive prepaid letters tendered to them for mailing. Notice what ^^^^^ deposited in neglects to deposit held. Y. a letter delivered to a mail carrier is considered to be the equivalent of its 25. While an unit stamped letter or one with insufficient postage it* may some- times be delivered and delivered would. is not hand. excused. delivery would be in the receipt due to the sender's own neglect and delay would not be 106. (N. or such as are under its control and used by the department for the collection of mail at regular intervals are contemplated by this section of the Act and not such private receptacles as are provided by persons residing upon rural free delivery routes. 10 Misc. it it has been have been duly given. Supp. Miller. a failure of of a notice so sent Deposit in postoffice. a branch postoffice or an official letter box from which mail matter is collected by a mail carrier at regular intervals. vs. or private mail boxes in cities. Townsend Auld." Letter boxes sup])lied and placed by the postoffice department.^'' is deemed to have the postoffice when constitutes.-'' The notice must be deposited in a postoffice. . Wilson Peck. 344. the notice. 26. 121 N.) 343.164 THE NEGOTIABLE INSTRUMENTS LAW § 106 A notice office properly addressed and deposited in the post- but unstamped or insufficiently stamped. On the other has also been held that since the U. unless the time required in deemed to have was actually received within Sections 103 and 104.

and he must observe all the requirements of those sections in giving it. must be ^>^t as follows 1." A party who receives notice of dishonor is allowed by same time for himself giving notice to upon the instrument to and before him. that was not deemed wise Notice by subsequent party. 180. : Either to the postoffice nearest to his place of residence.-''' Sec. then the notice must be sent Where notice sent. which the notice must be sent is of the When the party to be notified has Neg-. THOUGH NOT SENT IN ACCORDANCE WITH THE REQUIREMENTS OF THIS SECTION. as the holder has under Sections 103. Wheee a party receives noqp dishonor. p. THE SAME TIME FOR GIVING NOTICE TO ANTECEDENT PARTIES THAT THE HOLDER HAS ^j(^ J. BUT IF HE HAS not given such address. time ' ' to adopt the rule that delivery to a letter carrier is sufficient. 104. . its branch postoffice or letter box by the sender. 107. For the provisions of the Act concerning the form of the notice see Section 96.§ 107. notice of DISHONOR must BE SENT TO THAT ADDRESS. 106. however. 108 NOTICE OF DISHONOR The Act seems. in the latest edition of his book. Inst's Law. tlie 165 to re- deposit in a postoffice. SOJOLTRNING IN ANOTHER PLACE. NOTICE MAY BE SENT TO EITHER PLACE OR. 108. 4th Edn. 27. 2. If HE LIVE IN OKE PLAGE. 105 and 106. AND HAVE HIS PLACE OF BUSINESS IN ANOTHER. Crawford's Ann. NOTICE BE SENT TO THE PLACE WHERE HE IS SO SOJOURNING." The place to utmost importance. after the re01 giving. Sec. he has. . 3. AFTER THE DISHONOR. "Sec. If HE IS MAY But WHERE THE NOTICE IS ACTUALLY RECEIVED BY THE PARTY WITHIN THE TIME SPECIFIED IN THIS ACT. Note to . CEIPT of such notice. IT WILL BE SUFFICIENT. or to the postoffice where he is accustomed TO RECEI\T: HIS LETTERS OR. this section the parties liable Where a party has added address xo his signature. quire that the notice must be placed in postoffice. and auit thor has stated.

63 Misc. the holder made must make diligent effort to learn his place of residence or usual place of business by inquiry among persons most is likely to making know it. vs. even though he If may not be or it is not the address at which he usually receives his mail. Roonev. 220. postoffice at the place sent to either place. the notice at that place. that is to a reasonable effort must be say. is it is If a notice sent to one at the place where he temporarily if sojourning time. vs. 379. Y. Albany Tr. 183 Mass. vs. Y. 581. each of which is a postoffice. vs. E. Lankofsky 29. 489. If he is temporarily absent from it his usual place of is to business or residence at the time the notice be given and the person who address. this should not be done. 7 Pa. Co. 98. Hazlett 30. 344. Super. 67 N. or to the postoffice at which he usually gets his mail. vs. if it is known. 598. S. the notice may be the notice sent by mail. If the party lives at one town and has his usual place of business at another.^^ knows his temporary may be addressed and sent to him is to give But. ordinarily. 217 Mass. Raymond. 343. 363.^^ and if it must be addressed to the where he lives or does business or the one nearest that place. The notice ought to be addressed and sent to the party at his usual place of business or residence although the holder knows his temporary address and knows that the notice would be delivered is at the temporary address. 117 N. E.166 THE NEGOTIABLE INSTRUMENTS LAW to his signature. . the notice § 108 added an address there to receive must be sent to or given at that address it. 99 N. Dupont Towder Co.^* he has given no address to find him. 104 N. S. Frothiuoham. 381. Bragdon. Lowell Trust Co Pratt. 50 Misc. but not received by him good sent in it is not considered that one engaged in business is who is absent from his usual place of business ordinar- ily as well able to attend to the affaii's of business at his place of temporary sojourn as he would be at his usual 28.

^. Aebi Toole vs. or unless so.) 119. in writing or 31. he was ignorant er's omission to give the notice. of Evansville. ' to the instrument or at any other time before. although may not have been sent in accordance with the above section. vs. to be sent to the place where the party to be notified is sojourning unless the sender has made is diligent inquiry to learn his its temporary address and sure of ijrompt delivery there. It should then appear. 2 Caines (N. a party may waive. Bank 329. however. Eden. ' ' Notice of dishonor may be WAIVED. . that at the time of the v^aiver the party waiving must have knowledge that the holder was in default. 81. EITHER BEFORE THE TIME OF GIVING NOTICE HAS ARRIVED. being. A party who would otherwise be entitled to receive noparty tice may waive this right at the time he becomes a Waiver of notice. Crafts. although by the omission to give it he would have been discharged from liability upon the instrument. and this is so not- withstanding that the section seems to be mandatory in its specific provisions. Stewart vs. OR AFTER THE OMISSION TO GIVE DUE NOTICE. 32. 102 N. besides. He may waive notice orally. -^^ lie will leave someone in more reatown to The notice ought not. AND THE WAIVER MAY BE EXPRESS OR IMPLIED. Sec.although it makes no difference that knowing of the legal effect of the hold- the facts.' §109 NOTICE OF DISHONOR it 167 place of business or residence. 33. 193 Mass. C. at. Y. or after the time for giving notice has arrived.^^ either expressly. or it may he imW. requested by the party to do Actual notice received by the party he receives it to be it charged is good and will bind him if within the time provided in this Act. sonable to suppose that attend to his business. 110. Even after the time provided in this Act for giving notice. 124 Wis. 109. L. 73. therefore.

will be held to his obligation to pay the instru- As has been said under Section 82. Turnbull Maddox. 579. . Wlien words of waiver are employed in the body of the instrument. 71 N. but doubtful or equivocal acts or language willnot imply a waiver. . 82.) If the person otherwise liable upon the instrument. or im- proi3er or insufficient notice of non-payment. but who claims discharge by reason of no notice. 68 Md." bound by waiver. IT BINDS HIM ONLY. has said or done anything which ought fairly to be construed to mean a waiver of notice in favor of the person seeking to enforce the instrument against him.) 33a. vs. it does not affect also Sections the other parties who became such either before or after him and who do not themselves waive. If it is not embodied in the instrument itself in- the waiver may be written upon the instrument by an binds him only. IT IS BINDING UPON ALL PARTIES BUT WHERE IT IS WRITTEN ABO\T) THE SIGNATURE OF AN INDORSER. (See 82. (See Sec. It dorser and if it is. 14. all persons who become parties to such an instrument are bound by the waiver and none are entitled to notice. Y. BODIED IN THE INSTRUMENT ITSELF. a waiver will be implied and he ment. 110. 109 and 111. Who A negotiable sons instrument may be so drawn that all per- who become parties are required to waive present- ment for acceptance or payment and waive notice of its dishonor. making this a condition of its negotiation. Ross vs. Hurd.168 THE NEGOTIABLE INSTRUMENTS LAW if § 110 plied he does or says anything which may reasonably be interpreted to mean a waiver.^^" Where the waiver is em''Sec. the acts or words from which it is sought to imply a waiver must be interpreted according to their fair meaning and the facts and circumstances of each particular case must be taken into account.

BUT ALSO OF PRESENTMENT AND NOTICE OF DISHONOR. degree of diligence which men of or- dinary intelligence and prudence usually exercise when their own interests depend upon obtaining correct infor- mation or upon prompt. they are considered to be a waiver of present- whether ment and Except is notice of dishonor as well as of formal protest. 118). OR NEGLIGENCE." If the words employed in the waiver are a waiver of in protest. deemed to be a waiver of presentment. after every When notice dispensed with. the case of a foreign bill of exchange or other negotiable instrument. 111.' §111-113 NOTICE OF DISHONOR "Sec. 169 Waiver of protest. MISCONDUCT." Notice of dishonor need not be given if. demand and notice of dishonor as w^ell. 112. caused by circumstances beyond the control OF THE HOLDER. in the case of a foreign bill of exchange. Delay in giving notice of dishonor is excused when the delay is excused. after the exercise of REASONABLE DILIGENCE. IT CANNOT BE GIVEN TO OR DOES NOT REACH THE PARTIES SOUGHT TO BE CHARGED. 110. Notice of dishonor is dispe^sed with when. "Sec 113. It is also dispensed with if the party obliged to give the notice has attempted with reasonable diligence to give it within the time and in the manner provided in this Act and the notice sent does not reach the person for whom it is intended. A waiver of protest. but it may be made and if the waiver is em- bodied in an instrument which does not require protest it is. protest not required upon dishonor of a negotiable instrument (Sec. 82. Reasonable diligence 98. Delay in giving notice. careful action. NOTICE MUST BE GIVEN WITH REASONABLE how DILIOGNCE. that is. it cannot be given. (Also see Sees.) "Sec. 109. is deemed to BE A waiver not ONLY OF A FORMAL PROTEST. reasonable and diligent effort to give the notice to the party entitled thereto. WhEN THE CAUSE OF DELAY CEASES TO OPERATE. as it has been defined under Sec. nevertheless. ' . AND NOT IMPUTABLE TO HIS DEFAULT.

130). whom the in- 4. he is not then entitled to notice of its dishonor. is entitled to notice of its dishonor. being a party secondarily liable upon the instrument. *'Sec. . and not caused by his fault. a delay caused by circumstances beyond the control of the person whose duty it is to give the notice. 130. When notice need not be given to drawer. (Sec. being done. and it must be given to him in the same manner as it is required to be given in order to charge an indorser. The notice must be given promptly and properly." The drawer of a bill. however. when one draws the bill upon himself or it is drawn upon him by his agent or branch house (Sec. Where the drawer has countermanded payment. since he failure to accept himself causes the dishonor by his or pay it. 114. However.170 THE NEGOTIABLE INSTRUMENTS LAW § 114 While notice must be given at the time and in the manner required in Sections 103 and 104 if it can be done. and is fully he is not affected by a failure to give him notice. his wrongful act. or due to his negligence. 1.) . own aware of it without notice. Where the drawer has no right to expect or require THAT THE DRAWEE OR ACCEPTOR WILL HONOR THE IN- strument 5. Being then primarily liable upon the instrument and having the same liability as that of the maker of a promissory note. Where the drawer IS strument is the person to presented for payment. when the circumstances which cause the delay no longer interfere or prevent it will excuse its omission. Notice of dishoxor is not required to be given to the drawer in either of the following cases: Where the drawer and drawee . 3. Where the drawee is a fictitious person or a person not having capacity to contract. are the same person '2.

bill he not entitled to notice. If instead of giving notice of countermand he withdraws all of his funds available in the hands of the drawee for the payment of the bill. Cas. though he may not be named in it as the drawee. 16.815. one if who does not the exist. or gives a stop pajmient order and prevents payment of his check at bank. 3 Ind. If the A drawer who countermands payment. No. he is not entitled to notice. who pay the bill. this act in effect. mthout any expectation of replacing them for the purpose of paying the inis. When the drawer of a bill has no right to expect that the person upon whom it is drawn will honor it by acceptance and pajmient he is not then entitled to notice if the drawee fails to do either and the bill becomes dishonored. that is. 9). a is countermand and upon dishonor of the 34. McDaniel. 28 Fed.§114 If is. 4 Mason vs. NOTICE OF DISHONOR he has drawn the existing. Valk vs. bill 171 upon a interest fictitious person. he is not entitled to notice upon his own default in its acceptance or payment. he has drawm the upon a person who. 275. that as has already been explained. . or has is no in instrument he en- and whose name titled to notice if used for the purpose of deception Neither bill is (Sec. notifies the acceptor not to strument. Spangler Simmons.^^ 113. from want of capacity to contract. drawer is the person to whom the instrument is presented for payment. This seems to be so even issued the ter of the if in the last two cases the drawer has bill without knowledge of the fictitious characdrawee or without knowledge of his want of capacity to contract. cannot be made to pay the instrument if he does accept it. thereby becomes himself responsible for its dishonor and is not thereafter entitled to notice of its nonpayment.

and unless it has been waived. Under these circumstances the indorser. . notice of dishonor must be given to the indorsers upon a negotiable instrument. (See Sec. for he is himself liable for the payment of the debt evidenced by the instrument and ought to have provided funds to pay it. 80 of the Act wherein it is provided that presentment for pa^onent is not required in order to charge an accomto expect that modated indorser unless he has no reason the instrument will be paid if presented. . whom the Where the instrument w^as made or accepted for this sec- his accommodation. need not be given notice already knows. 115. being who refuses payment. Examine Sec. 9.172 THE NEGOTIABLE INSTRUMENTS LAW notice need § 115 When not be given to inciorser. ''Sec. what he The third provides that when the instrument is made or accepted for the accommodation of the indorser. The first exception covers that situation in which the indorser upon a bill of exchange knew at the time he indorsed the instrument that the person upon w^hom it was drawn was a fictitious person. Where the drawee is strument 2. or that it was drawn upon one who had not the power to enter into a valid and enforceable contract. AND THE INDORSER was aware of the fact at the time he indorsed the in1. indorser is the person to presented for payment . notice of its dishonor need not then be given to him and it is apparent why he is not affected by lack of notice of its non-payment or non-acceptance. Where the is instrument 3." In every case except when dispensed with by tion. Notice of dishonor is not required to BE GIVEN TO AN INDORSEE IN either of the following cases : a fictitious person or a person NOT having capacity TO CONTRACT.) is The second person to is that in which the indorser himself the the person of whom the instrument is presented for payment.

Notice of non- "Sec. The reason for the rule is. 1 of this Observe that by the provisions of Sub-section section. it is again dishonored. this time by non-pay- The notice of dishonor all parties. 116. no further notice need be given when the date arrives upon which the instrument ought to have been paid and ment. the indorser a fictitious is bill of exchange drawn upon person or one not having capacity to contract and must be given notice of dishonor. honor by non-acceptance has been given. of course. but if it is. unless meantime the instrument has been accepted.§ 116 It is NOTICE OF DISHONOR recommended that 173 notice of dishonor be given to each person to be charged upon the instrument notwithstanding that the instiTiment may have been made all of or ac- cepted for the benefit of any or this them. unless he was aware of the fictitious character of the drawee or of his want of capacity to contract at the time he indorsed the instrument and that in this respect it ditfers from the provision of Sub-section 2 of Sec. that the drawee's refusal to accept the bill implies a refusal to pay it when due and therefore the bill need not be presented for payment. even though they were properly notified of the dishonor by non-acceptance. by non-acceptance is suffi- cient to charge unless the instrument has been If this should occur it accepted in the meantime. 114 which dispenses with notice to the drawer under similar circumentitled to stances." If an instrument requiring acceptance the dis- becomes honored and notice of its dishonor by non-acceptance has been given. in notice of a subsequent dishonor by non- payment is not necessary. will be necessary to give notice again upon dishonor by nonpayment in order to charge its parties. even though may sometimes appear upon a to be an excess of precaution. notice of non-payment upon its further . Where due notice of dis- payment where acceptance refused.

''Sec 118. when protested for non-acceptance or nonmnst be made. its He may proceed to give notice of refusal when dishonored presentment and he can hold all of the parties who are liable upon the instrument in the same manner and to the same extent as though the bill had not previously met with dishonor. for example. as the case may be.118 dishonor at maturity not required unless. transfer to one who be- its dishonor by non-accepprevious dis- The holder in due course who now presents the its instrument for acceptance. -gggp^ qj omission to give notice of nonacceptance. tice of dishonor by non-acceptance does not prejudice the rights of a holder in course subsequent to the omisj^^je siON "" A may a holder who acquires the instrument in due course is after dishonor by non-acceptance. bill not affected by an omission to give notice of the dishonor. The has inal- strument itself may not disclose the fact that its it ready been dishonored before came its holder subsequent to tance. payable at a fixed period after sight. the bill has been accepted. An omission to give no''Sec. "Wisconsin. unaware of honor and not chargeable with any duty to know it. Where any negotiable instrument has been dishonored it may be made. ' . payment. 117. if he does so in the manner and upon his mthin When the time prescribed in this subdivision. in the mean- time. is not prejudiced by the failure of his transferer or any former holder to give notice of its previous dishonor.' 174 THE NEGOTIABLE INSTRUMENTS LAW is §117. but the REQUIRED EXCEPT IN THE CASE OF FOREIGN not PROTEST IS protest need not be BILLS OF EXCHANGE. arise This situation when a requiring acceptance. has been presented for acceptance and refused and it is afterward nebill gotiated into the hands of a holder in due course by the holder who failed to give notice of its dishonor.

Promissory notes and inland bills of exchange may be protested by the holder if he desires to do it and if attempted. of need. or before presentment payment any bill to the acceptor for honor or referee in case bill is." Inland bills of exchange are also defined and are such as are. 167. both drawn and payable within the same State." and it also i3rovides that ''unless the contrary appears on the face of the bill. to be (Sec. or which. both drawn and payable within same State. upon the face purport to be. the holder may treat it as an inland bill. . the protest must be made as required in Sections in Section 129 152 to 160 of the Act.§118 Pi otest is NOTICE OF DISHONOR 175 not required to charge the parties to a ne- gotiable instrument upon its dishonor except upon dis- honor of a foreign for bill of exchange.) Section 129 defines a foreign or on its other than one "which face purthe ports to be.

1. the Act makes provision for the discharge of the and the manner in which a secondary party will be discharged by positive acts of other parties to the instrument. 105 Md. '^Illinois. how jg "Sec. however. effect of. 124 Alteration of instrument. By the intentional cancellation thereof by the HOLDER 4. 164. 10 L. . Section 119 Instmment liow discharged. Under of the the provisions of the two preceding subdivisions fix Act which the manner and time for presentment is for payment and of giving notice of dishonor. 47.) 99. S. -o Vanderford vs. By payment in due course by the party accommo2. 120 When person secondarily liable discharged.^ Instrument: discharged. (N. 176 THE NEGOTIABLE INSTRUMENTS LAW § 119 SUBDIVISION VIII. . Discharge of Negotiable Instruments. 125 What constitutes a material alteration. Farmers.. 3. Its provisions are exclusive. . Bank. Natl. A. . R.. Section 123 Cancellation unintentional burden of proof. "By any other act which will discharge a simple contract for the payment of money. 121 Rights of pai-ty who discharges instrument. 119. and a valid negotiable instrument cannot be discharged in any instrument itself other different manner. dated. 122 Renunciation by holder. the dis- charge of secondary parties to a negotiate instrument effected by the failure of the liolder to perform any of the important duties which they prescribe or by his negligence in their performance. etc. In this subdi\'ision. 1. 68 A. discharged: -( A negotiable instrument By payment in due course by or on behalf of the principal debtor. WHERE THE INSTRUMENT IS MADE OR ACCEPTED FOR accommodation. 168.

goods. 268. 61 N. vs. by authority of his prin- The motive which prompts its cancellation is immaterial. 177 Mo. W. or when it is paid in that manner by the party. 998. 141 Wise. App. W. 154 N. Findley vs. for w^hose accommodation it is made or for in the if it is him accepted. the thing offered was intended to be in extinguishment of the note or other instrument which Discharge also was given to pay. 124.^ provided there its is no fraud. check. Montgomeiy Schwald. it a renewal note. an accommodation instrument. and the instrument will be considered to be cancelled if it is intentionally marked so or is mutilated in such a manner as will indicate an intention to cancel it. property. ' The complete discharge effected liable of the instrument itself is when it the obligation of the parties primarily is upon performed or extinguished. SO 111. 75. Kester vs. Br. INSTRUMENTS 177 5. 93 Iowa. If any- thing other than money is offered and received as. Kecter. Liesemcr vs. 999.. 3. 4. Co. When the principal debtor becomes the holder OF the instrument at or after maturity in his own RIGHT. . Y.^ occurs when any holder who holds in his it own right. Cowles. 123. In re Utica Natl. Hyde. 10. or one of several parties. cancels the it instrument with the intention of it discharging or when one who holds it as the agent of another intentionally cancels cipal. 38 Ore?:on.^ An unintentional can- cellation is not operative. This oc- curs as a matter of course when the principal debtor pays the instrument so pays it in full in lawful funds or some one manner described in Section 88. A. 389. 123. however. Buckley. or must appear that when given and received. romstock vs. 63 N. Tvler vs. 228. for example. mistake. 106 Mich. draft.' § 119 DISCHARGE OF NEG. or duress in the procurement of cancellation. Bunr. 635. as you will observe from Section 2. 62 P.

In re Metallic Specialty Co. therefore. When person secondarily liable on. Y. 178 THE NEGOTIABLE INSTRUMENTS hX\\ in the § 120 The discharge sub-section of act which manner mentioned in the fourth tliis section embraces every voluntary- would relieve the person obliged to pay money under the terms of a simple contract from the duty to do so.) 728. therefore. 824. vs. . 210 Fed. To have this effect he must have acquired it in his own right as its absolute owner. vs. discharged. Div. becomes its owner at or after its maturity. Post.^ If he becomes the owner of the instrument before maturity he it. "Illinois. free from the rights of all other persons and not in any representative capacity. Macksoud. Moore. be one Avhich engaged in and performed between the rightful holder and the party primarily liable upon the instrument Avhose duty it is to pay it. 94 App. 131 App. The act which is relied upon to discharge the instrument under this sub-section must. Schwartzman Korkemas vs. ^^^ ^^ ^^^ instrument -. 28 Fed.^ The instrument is also discharged when the person who by its terms is required to pay it. Y.. (N. may then re-negotiate It is so provided in Section *'SeC. Crawford 6. l^aryland. to be the principal debtor. 663. (X. ^- PERSON SECONDARILY LIAis discharged y^ ^^^ ^^^ ^^'^ which discharges the : A ^'Wisconsin.^ 5. By party . Div. . 120.. and who appears. in fact the principal debtor. and it must be of such a nature that it will relieve him of his obligation to pay is the instrument to the holder. or when one for whose accommodation the instrument was made and who is. ^'Missouri INSTRUMENT By the intentional cancellation 2. however.) 474. 477. "^^' '^^^ discharge of a prior ^party f a valid tender of payment made by a prior 4. 50. ^p jjjg signature by the holder.

This. INSTRUMENTS 179 A RELEASE OF THE PRINCIPAL DEBTOR. Avill discharge all subsequent secondary parties. DISCHARGE OF NEG. '* Parties other than those primarily liable on the in- By ' strument are discharged in the manner provided in this section and. Any act whereby the instrument discharged as provided in Section 119.* 6. The valid discharge by the holder of a prior party. of the holder to by the failure make proper presentment and to give strict due notice of dishonor in visions of subdivisions 6 accordance with the pro- and the provisions to and 7 of this Title of the Act the same effect in Title 2 relating itself is particularly to bills of exchange. OR^ UNLESS" THE RIGHT OF RECOURSE AGAINST SUCH PARTY IS EXPRESSLY RESERVED. w^iether primarily or secondarily liable upon the instrument.§ 120 5. Each secondary party to the instrument engages separately with each subsequent holder that he will pay the instrument His engagement is transif the primary party does not. By any" agreement* binding upon the holder to extend the time of payment.'' UNLESS MADE WITH THE ASSENT OF THE PARTY SECONDARILY LIABLE. mitted by the negotiation of the instrument to subsequent holders and his liability extends from one to another as the instrument is acquired by them. A secondary party is also discharged celled when his signature is intentionally can- by the holder. discharges the secondary parties. It may will happen that this liability to the holder at maturity be discharged by the latter 's omission to give him notice . as a matter of course. does not contemplate relief from his obligation upon the instrument obtained by a party in any other manner than by the positive act of another subsequent party to w^iom he is liable. however. as has already been stated. UNLESS THE holder's right of RECOURSE AGAINST THE PARTY SECONDarily liable is expressly reserved. or to postpone the holder's right to ENFORCE THE INSTRUMENT.

to willingness is made. however. that is. therefore. disit is not necessarily discharged as to all.) 137.180 THE NEGOTIABLE INSTRUMENTS LAW if § 120 of the dishonor of the instrument but fied he is duly noti- by an intervening party to whom his liability has been transmitted. therefore. but by the actual offer to do so accompanied by the exact amount of money due upon it. that although the liability of a secondary party may be completely charged as to one or some other secondary parties. 128. they will not be discharged. 12 Barbour (N. A valid tender of payment. may proceed against him upon West River Bank vs. Taylor. ner by which secondary parties are discharged under particular circumstances. Holmes. the instrument is. Holmes vs. 131. If he expressly reserve his right of recourse against them. and they 7. secondary parties will be discharged unless the holder reserves his right of recourse against them. operates in favor making it. he continues to be liable to that intermediate party J You will see. A secondary jjarty is also discharged party offers to pay the when any prior instrument and makes a good is tender of payment which refused by the -holder. impliedly reserved to them. as by failure to make proper presentment and give notice of dishonor. 8. . not by the mere expression of a pay the instrument. Y. 34 N. Under these circumstances the rights of parties secondarily liable to recover against the principal debtor are. There are appro- priate other sections of the Act which govern tlie man-. notwithstanding his release by the holder. and if it Such a tender is refused. and these will be found fully indexed.^ of all parties subsequent to the one When a release is granted by the holder to the printhe person whose primary obligation cipal debtor. Y. all such parties are discharged.

Austin. whenever the holder agrees to release the principal debtor from his upon the instrument. Wheee the instrument is p^iD by a party secondarily liable there^^^ ^^ jg ^^^ discharged. 2 Cai. their remedy it up the instrument and proceed upon against the principal debtor and prior parties. If the is secondary parties are dissatisfied. 256. 246 Pa.) 429. INSTRUMENTS 181 taking up the instrument. . Stewart 10. 174. Sec. EXCEPT : 9. vs. Eden. Natl. unless the agreement is made with their consent or unless.^^ It must be understood that this express reservation of to take the right of recourse against secondary parties does not dispense with the necessity of presentment. (N. St.) 207. Park Bank Koehler. Y. he must indorse upon a declaration or state in the release that he reserves right of recovery against the parties secondarily his liable to him. 204 N. 155 App. Stratton. vs.^ obligation it Therefore. Y. 7 Wend. AND AGAIN NEGOTIATE THE INSTRUMENT. the secondwill ary parties cease to be 6 liable and the holder have no right of recourse against them. AND HE MAY STRIKE OUT HIS OWN AND discharges instniment. who ALL SUBSEQUENT INDORSEMENTS.§ 121 DISCHARGE OF NEG. Y. but the party so paying it is remitted to his former rights as regards ALL PRIOR parties. 121. (See subdivisions and 7. and notice of dishonor.) Rights of party "Sec. demand. Rilbe vs. for these are omitted when. the holder expressly reserves his right to proceed against them in the meantime. 121. if he intends to look to them for payment. is at its maturity. Bank vs. at the time of making it. (N. Graham. Div. and foreign bill of protest in the case of a if of exchange. Torabeckbe Bank vs. the instrument not paid. Secondary parties will also be discharged if the holder enters into enforceable agreement with any party by which the time of payment of the instrument is extended. Natl.

" By any strument of the acts set forth in Section 119. the in- becomes discharged and it cannot again be negotiated upon being discharged in the manner deitself scribed in that section at or after its maturity. it is And now. Quimby vs. provided in this sec- when a party secondarily liable takes up the instrument by payment to any after maturity. either before or except the one to whom the payment ^ those parties subsequent to the indorser is made and who pays it. even to the principal debtor. (Sec. Vanuiin. it is not discharged as to any party upon it holder. and 2. 50. 190 Mass.^ The party paying is again in the position which he occupied when he first negotiated the instrument and he may strike out his signature and the signatures of all who became parties after him. to whom he would himself ])e liable. before maturity.182 1. 50) against all parties upon it prior that of the who placed party who pays This cannot be done. THE NEGOTIABLE INSTRUMENTS LAW Where it is § 121 son. But when an instrument is negotiated back to a prior party. notice that it 11. of itself. no party can be held to his signature placed upon the in- strument prior to its reissue. however. The instrument remains in effect as before own payment by him their signatures it. he may again reissue and negotiate it. or if the instrument is paid by the party for whose ac- commodation it was made. (Sec. 214. and has been paid by payable to the order of a third pekthe drawer. if the instrument is a bill of exchange payable to a person other than the drawer or the drawee and the drawer himself pays it. . and negotiate it again as by a new indorsement. 211.) If he does. Where it was made or accepted for accommodation AND HAS BEEN PAID BY THE PARTY ACCOMMODATED. you tion that will observe. When such a bill is in the hands of the drawer that fact is.

139. 102 App. see Sec. Wash. Dew. 16. 7 Wash. Pitt vs. release. voluntarily give up. Varnum. Natl. or abandon all of his rights under the instrument including his right to payment. Renunciation holder. 355. . 108 P.^^ For the effect of striking out indorsements may be necessary to and what signashow holder's title. UNLESS THE INSTRUMENT IS DELIVERED UP TO THE PERSON PRIMARILY LIABLE THEREON." A any time renounce. INSTRUMENTS its 183 has run ily course and is sufficient to cause prudent person to make inquiry to it is any ordinarlearn whether it the bill is has not already been paid. Exchange Bank. An absolute and unconditional renunciation of his rights against the principal debtor made at or after the maturity of the instrument discharges the instruMENT. AT OR AFTER ITS MATURITY. It must be absolute and unconditional. The holder may expressly renounce his rights against any party TO THE INSTRUMENT. 13. (N. CIATION MUST BE IN WRITING.^^ rights delivers If the party intending to renounce his maturity to intention of 12. Div. that is. Harris. First Natl.§ 122 DISCHARGE OF NEG. But a renunciation does not affect the rights RENUNOF A holder in due COURSE WITHOUT NOTICE. 14. 190 Mass. 123 Md.^^' The renunciation must be in writing unless the instrument is delivered up to the person obliged to pay it.^- And when paid by the accommodated indorser tures 48. Qiumby vs.^-^ He usually does this without consideration but a renunciation may be made in compromise. extinguished. 122. "by *'Sec. Little. 211. 941. BEFORE. 58 Whiteomb Leask vs. up the instrument before. or in exchange for something else which the holder accepts in place of the instrument is and the section is applicable where the renunciation executed for a consideration. Y.) 529. 15. without The holder may at transferring them to someone else. 612. vs. at or after its the person primarily liable upon it w^ith the renouncing his interest in it and his rights Bank vs.

123. ' If the cancellation of tlie instrument. the instrument is payable but who no longer a holder in if executes a renunciation. not afterward recover from any party to renunciation is instrument course. "Sec. 120-3. or of any sig- nature upon it is made by mistake not operative. THE NEGOTIABLE INSTRUMENTS LAW the instrnment is § 123 completely discharged. he canit. this will not affect a holder of the instrument who is due course the person without notice. but party it if made in favor of a secondary it is discharges only that party in whose favor those parties subsequent to made and have a right of Cancellation. force the instrument. afterwards negotiates the instrument to a holder in due if is he has previously done so. him who w^ould recourse against him if called upon to (Sec. or is But if the and the retained by the person giving it and he made before maturity. that primarily liable upon an instrument desires a renun- must obtain is it from the holder and its if the in- strument not delivered to him. unless he had notice of And if whom it. absence must be satisfactorily accounted for or the renunciation may not prove to be an effective discharge. unintentional burden of ^ uroof.) pay the instrument. OR UNDER A MISTAKE OR WITHOUT AUTHORITY. or without authority of the holder. it is does not cancel the instrument or the signature of the party and when any signature upon the instrument or the instrument itself .' 184 to it. is inoperative. oe under a mistake. or without authority It of the holder. this holder in due course one to holds not bound by the renunciation and can enit. BUT where an instrument OR ANY' SIGNATURE THEREON APPEARS TO HAVE BEEN CANCELLED THE BURDEN OF PROOF LIES ON THE PARTY WHO ALLEGES THAT THE CANCELLATION WAS MADE UNINTENTIONALLY. ciation he It is obvious then. . When made in favor of the principal debtor the renunciation discharges the whole instrument. A cancellation made unintentionally. in writing.

meaning one who took it with the qualifications preand without notice of the 52. 124. however. Certain material alterations may it. after the instrument has been issued. not be made. 14 and 48. scribed by Sec. and he is not a party to the unauthorized . "Sec. § 124 DISCHARGE OF NEG. INSTRUMENTS 185 appears to have been cancelled. he may enforce payment thereof according to its original tenor. who has himself EXCEPT AS AGAINST made." The changes and insertions which may be made in cWisconsin.. "Illinois. is When any in in- strument Avhich has been materially altered w^ithout the assent of parties in the hands of a holder due course. the instrument by the holder without the consent of parties are to be found in Sections 13. Alteration of instrument effect of. Dakota. "Where a negotiable ixstrumext is ''materially altered* withOUT THE ASSENT OF ALL PARTIES LIABLE THEREON. axd subsequext ixdorsers. the person seeking to enforce the instrument may show that the cancellation was made unintentionally or without authority. author- ized. or assented" to the alteratiox. alteration. authorized or con- sented to the alteration and except those indorsers who. ^So. indorse the instrument after the material alteration had already been made. But when an instrument has been" materially altered'' axd is in the hands of a holder in due course. But he must prove this to be so by evidence sufficient to overcome any evidence offered by the opposing party in support of his claim that the cancellation was made intentionally. without the consent of all parties liable upon from the next is section. not a party to the alteration. If What these are will appear any material alteration which is prohibited by that section made without the con- sent of all against all parties the instrument will be avoided as except those who made. without notice. ^ party IT IS AVOIDED.

authorized or consented to the alteration. is imat portant the that it instrument must actual. Bingham vs. Jameson. Builders Lime & Cement Co. . have legal had time was altered an existence as a negotiable instrument.^'^ the technical In order to avoid an instrument upon ground the of material alteration. Tliaip vs. No.) 100. 943.^^ this effect The instrument obtains when there has been a valid initial delivery and therefore. original tenor. 434.. In this respect. W. App. 159 N. 583. 801. W. 151 N. 439. and whether or not the it is contract in the form in which the identical contract sought to be enforced of the upon which the minds it parties met.) 165. Com. 134 N. Jones. Civ. E. vs. Zander vs. this section effects a change in the law. 74 S. Upon to the general subject of alteration that in it may be well explain determining its effect upon the instrument a controlling regard will be had to the time when is the alteration was made. 1414. Weimer (Iowa). Matson vs. W. Y. vs. R. Jarvis (Tex. Cas. any alteration made before the inception of the instrument it. 100. 154 la. 77. may enforce it according to instrument in according to meaning that lie may recover upon the the original amount and according to its original terms against all parties.186 THE NEGOTIABLE INSTRUMENTS LAW lie § 124 its material alteration. C. 941. 102 Pa. 102.). except under special circumstances. 81 Misc. at p. Reddy. (N. Heretofore it has been almost universally held that an instrument which has been materially altered is thereby completely avoided and is unenforceable either in its altered effect or according to its original tenor. S. would not avoid Even if made after the instrument has been negotiated a change in its language or form or in any which does not disturb 17. 133 S. A. 39 L. Arons. (N. 18. or he its may enforce it altered effect against the parties who made. its legal effect way im- Wicker Levi vs. 3 Fed. 107. 404.

21. Any alteration which a material alteration. any party whose authority to make them has not first been obtained or who does not give assent to them after they have been made.) 128. Pitt vs. 941. even though they may appear to advantage of the person who will avoid it as to pay the instrument. What constitutes ''Sec. The time or place of payment. vs. 559.§ 125 DISCHARGE OF NEG. 3. 89 Minn. The number or the relations of the parties. 394. R. Div. 355. IS A MATERIAL ALTERATION. White. if made without authority is of all parties to the to be to the instrument. 95 N. vs. 4. 204. 142. either for principal or interest. 607.^^ 19. Maguire. Car^ill. 21 L. Bank. Beem. W. OR ANY OTHER CHANGE OR addition WHICH ALTERS THE EFFECT OF THE INSTRUMENT IN ANY RESPECT. 247. 67 Me. 302. A. 121 Am. or change their identity or the identity of the instrument. ^^ al- Since the next section defines what are material terations further observations the instrument will be upon their effect upon made 125. S. W. Little. not even lessened f^ the rate of interest increased or diminished f^ or the instrument made payable with interest when none was contemplated. 677. Comm'l Bank Hefferman. Cas. 817. will not avoid it or discharge its parties. 51 Wise. 554. 36 Ind. Kronskup vs. changes 1^ The date. Martindale. 146. E. or which adds a place of payment where no PLACE OF payment IS SPECIFIED. 2. 22. Sanford vs. Life Ins. Rech. 15 Ky. . 8 N. The medium or currency in which payment is to BE made. 103. 151 vs. N. 5. 212. A. 241. S. (N. Y. Broadway Nat. The sum payable may not be changed. 75 N. 80 Va. : there. 220 Mass. 88 P. Hewins vs. Wash.) 1045. R. 58 Crowe vs." Any of the material alterations enumerated in this section. R. (N. Bank Columbia Dist. L. App. 362. Co. 207. 37 Am. Co. 12 Ann. Batchelder vs. The sum payable. 20. INSTRUMENTS 187 pair the obligations of the parties or their rights. 108 P. Y. Cairo Citv Nat. vs. 75 Kan. Sliontz.

Such an alteration would destroy the identity of the instrument and has very frequently been held.^*^ Greater difficulty has been en- when a genuine name has been intentionally added as maker to an instrument upon Avhich the liabilitv of the makers is several. Handsaker vs. Pelton vs. Lehman. C. to be a material alteration both on this ground and because. Bank vs. 579. vs.. Pedersen. 42 111. 375. this. 25. 594. Johnson. Melton. 321. after a promissory note executed and it delivered. Co. Pensacola Bank. has been held in some jurisdictions. 26. by mistake.^^ but if designated is a bank which continues to is afterward succeeded by premises formerly occupied by the bank designated. Wallace vs. 126. Baker vs. etc.). 127 Ala. 6 N. Houck Graham. (Ala. 448. this is not a material alteration. 28 S. 160 Fed. 12. vs. Barnum. 23. before the passage of the Act. 21.. Gosnell. 218. 65 S. A. Pensacola State Bank vs. 292. 106 Ind. 245. 113 Cal. Jewell.. 71 Wash. 91 la. San Jacinto Lbr. Eichbore. it confuses the evi- dence of the debt and affects the right of contribution between the parties. Wilkes-Barre 1st Nat.^* The time at which the instrument its is payable may not be changed^^ and the number of lation to each other parties or their re- may not be altered Avithout the conis sent of all. If. will avoid the instrument as to those parties who do not consent to the addition of his signature. 195. Brown Soaps Co. and that his true relation to the instrument may be shown). 210 Fed. Browning vs. 45 P. 24. the another that substitution of the occupy the name of the successor bank would not be a material alteration. in the case of a joint instrument. E. 190 Fed. . 21 Ohio St. however. 166. 57. one should add his name as maker. Melton vs. 163 (holding also that if a new party signs on the face of note. A. vs. and the new name countered. 111 C.188 THE NEGOTIABLE INSTRUMENTS LAW place of § 125 A sent the payment ma^^ not be inserted without conis when place the instrument payable generally.

Y.) 128. W. S. Mersman vs. 39. Co. vs. Y. Weracs. Where one fraudulently alters the instrument he cannot. Farrell (Iowa). for example.^^ 27. 139. (N. 29. where a note has been taken in extinguishment of a debt. Beem vs. without consent. recover upon either the instrument or the consideration. Blair. ^^ If the instrument is payable upon named conditions these may in not be changed without consent. Wilev. the the is additional name is a instrument avoided. 1044. Columbia Dist. Smith. 27 N. 400. App.§ 125 DISCHARGE OF NEG. perhaps. instrument in any Under certain circumstances. for that was merged in the note. Co.^'' This is true even if there is an entire absence of fraudulent intent in making the alteration. 108 N. the alteration was made by a alters it in a material respect stranger. for this sub-section expressly provides that any alteration which changes the number or the relation of the parties to the instrument is a material alteration. Y. Winnie. Harvesting Mach. 374. one who and thereby avoids it. 54. as. can have no recovery on the original debt. 28. The kind of money which other it is payable may not be changed nor may any alteration be which would change the material respect. Weston vs. 146 Mo. although there It great conflict of authority if upon this question. 112 U. of course. . and will avoid the I instrument and think that the decisions abundantly is support it. unless. 151 App. 141. 29 N. vs. Brownell vs. INSTRUMENTS ^'^ 189 has been added as additional security after the instru- ment has been issued and negotiated. Div. Rech. 30. 386. McCauu-hey vs. 78 Ind. But sub-section 4 of this section seems to have changed the law on this subject and one can now reach no other conclusion than that the addition of another name to the instrument as maker is a material alteration. effect of the made. has even been held that forgery.

386. between original parties to an instrument. 80. vs. to be upon examination. Unless this section tify is changed. Harvesting Mach. was a mere spoliation of the instrument and that the instrument could be enforced by the holder in its original form. however. may enforce the in- strmnent according to its original tenor. in States where this Act is in effect. by any person not having a beneficial interest in it. however. appears to have been clearly intended to adopt the rule that alteration by a stranger will avoid the instrument and a material alteration by a stranger cannot now. Blair. 13 Ind. vs. not a party to the alteration. This interpretation will probably find opposition and doubtless the courts will reluctantly substitute the English rule for that so universally recognized in our o\^^l decisions.190 THE NEGOTIABLE INSTRUMENTS LAW § 125 The literal interpretation of Sections 124 and 125 must now. there may always be a recovery on the original consideration. App. prior to the enactment of this section and Section 124 of this Act. no matter by whom ties the alteration was made. A. Kingan & Co. which declare that a material alteration made by It a party or by some one acting with his knowl- edge. will be found this based upon previous statutes. or approval. But it had long been held to be the law in this country. 146 Mo. These. 32.^^ 31. . that a material alteration made by a stranger to the instrument. consent. that is. be regarded. include alterations made by strangers as well as by parties to the instrument. its language will not jusinstrument has not any other interpretation. Silvers. 374. however. will avoid the instniment. If the been altered with fraudulent intent. Co. it As to the original par- themselves.^^ is As to a holder in due course this in still the law. differing from section. as a mere spoliation. a material alteration avoids the instrument even though was made by a stranger. since by Section 124 a holder due course.

payment has been made on an altered instrument under a mistake of fact. 102. Do not alter the instrument in any respect without in the If first obtaining the consent of all parties. C. 22 N. 1009. teration enters into consideration at fraudulent in- presumed if the material alteration is beneficial to the person making it. 36. Bedford.^*' S. is material and will avoid it. Carpenter. Howard. he cannot then recover this being the rule applicable to it. Y. 112 Wicker vs. and these sections are not to be aijplied to determine the effect of any agreement or understanding between or among the parties to a negotiable instrument by which its terms. Sheridan vs. 159 N.^^ The alterations contemplated in this and the preceding section are physical alterations of the instrument itself.^^ Alteration by cutting off a part of the paper on which the instrument is w^ritten. 61 Me. E. he may recover it if no negligence is imputable to him. 197. 672. except manner expressly permitted by Sections 13 and 14. 177 Mass. by a party who had been discharged by the alteration. vs. 19. 132 Mo.^^ But if the payment is made under a mistaken knowledge or impression of the legal effect of the alteration upon the rights of the party paying. 669. INSTRUMENTS the matter of intent in its 191 al- Whenever tent will be making a material all. any payment made under a mist-ake of 33. Dove vs. Fansler. 35. App. Tabor Flvnn vs. or by which their liability upon it is to be changed. 1109. 118 N. in such a manner as to change its etfect. in ignorance of the alteration. law. 109. Jones. 83. 34. W.§ 125 DISCHARGE OF NEG. New .

bills parties to rights of made.192 THE NEGOTIABLE INSTRUMENTS LAW INTRODUCTORY. The provisions clare of the Act embraced in this second bill. the manner of accepting and paying for honor and how protest must be made when it is required. Sections 1 to 125 inclusive. Title relate to bills of exchange. These instruments are expected to become a considerable part of the resources of banks and that Act being designed to encourage their use. for acwhat its form shall be. applicable to negotiable instruments other than bills of exchange when it is to be made. applies to all negotiable instruments and bills its provisions are applicable alike to notes. WITH AN OUTLINE OF THE BUSINESS FEATURE OF THE FEDERAL RESERVE BANK ACT. This is particularly true in view of the declared purpose of the Federal Reserve Bank Act the principal business feature of which is intended to promote their use in this country as a means of discount. TO TITLE II. of course. if it is successful in its endeavor it is expected that it will entirelv transform the conditions under which . BILLS OF EXCHANGE. the ceptance must be drawn in a set. The First Title of the Act. while the use of bills of ex- at present comparatively less extensive in this in England and on the Continent it is nevertheless of great advantage to know the law applicable to the interpretation of the rights and duties of the parties to a bill. Its provisions in They define a how presentment de- regard to protest are. of exchange and promissory As has already been change country than is said.

It is the theory of those who have advocated this change in our banking laws that count market as is if a dis- created in this country similar to and wide reaching as those of the principal financial centers of Europe. and they are intended to supply the varying need discount. Germany and France. re- they will deal only with their member banks.INTRODUCTOKY TO TITLE U 193 commercial paper is bought and sold. These banks are to be primarily banks of is. What it is hoped to accomplish and the manner in which it is to be done are best set forth in the report of the Banking and Currency Committee which accompanied the bill and from which I quote the following: . one place any abnormal supply which may local facilities are inadequate to the local demand. the discount of commercial paper between banks will become one of the principal functions of the business banks and not a mere incident to the business of banking. meet and withdrawing afterward whatever surplus may exist whenever these extraordinary requirements have been met and normal business conditions again prevail. to by sending be required and in the country generally. as at present. with a controlling influence to be exercised by the Federal Reserve Board and Banks. In each of the twelve Federal Reserve Cities in which Federal Reserve Banks have been established the banking activities of the district which each is to sen-e will be centered. loans effected between banks. that for money in their districts. and funds transferred from one part of the country to another. The method by which local business banks when will be able to obtain funds to supply their customers needs when their own supply is inadequate is altogether by re-discount with the Federal Reserve Banks of the commercial paper in which their own funds are invested. in most respects like that exercised by the great central banks of England.

It does not mean that the paper thus re-discounted for 90 days bnt that it shall shall have been originally made have at the time of being re- discounted 90 days more to nm. The meaning of this provision is. For obvious reasons it is forbidden that any such paper shall be ad- . to keep "The fundamental requirement throughout discount section of the proposed to the bill is all of the that antecedent performance of a service by a Federal Reserve for a member bank which applies therefor the member bank shall indorse or guarantee the obligations whicli Bank it offers for discount. that any paper drawn for a legitimate business purpose of any kind may be re-discoimted when of all provides that notes proposed within 90 days of maturity. Thus a paper drawn for 120 days originally could be re-discounted when it was 30 days has been it old. The Federal Reserve Banks are at the outset authorized to receive current deposits from their stockholders or from the Government or from other Federal Reserve Banks in so far as the latter may need funds with them for exchange purposes. briefly.194 THE NEGOTIABLE INSTRUMENTS LAW "In Section 14 (which is Section 13 in The business section of the ^j^g j^j^ ^g enacted) ' is set forth the fundabill new banking and currency mental business purpose of the in providing for re-discount operations. bill first Subject to this requirement. industrial or commercial purposes or the proceeds of which have been used for such purposes shall be admitted to re-discount. the and bills having a maturity of not over 90 days and drawn for agricultural. In view of the great difficulty of defin- ing 'commercial paper' the actual definition of the same left to the Federal Reserve Board in order that may adjust the definition to the practices prevailing in ditf erent parts of the country in regard to the transac- tion of business and the making of paper.

'"^ ^he fourth paragraph of Section 14 (Secregard'ti''''''' acceptance by tion 13 in the bill as enacted) grants per- mission to reserve banks to re-discount acceptances of member banks which are based on the ex- portation or importation of goods. the total of such re- discounts not to exceed one-half the capital of the bank for which the re-discounts are made. unless such a bank has a reserve perfectly adequate to take care of any necessities that are likely to present themselves in the meantime. provided that not more than onequired have a maturity exceeding 90 days. the reserve bank may re-discount commercial paper having a maturity of not more than 120 days. or bills of exchange . national banks are authorized to accept drafts drawn upon it to an amount not exceeding one-half its capital.INTRODUCTORY TO TITLE niitted to re-discouiit if II 195 made for the purpose of carry- (As enacted the bill excludes notes and bonds of the United States from this prohibition.) "It was felt that in some parts of the country the permission to re-discount paper having a maturity of 90 days might not fulfill all of the requirements imposed by the business practice of those regions. This is the requirements of portions of the country with an extremely long term of credit. In the sixth para- graph. The acceptance business. and bear the signature of one member bank in addition to that of the acceptor. but it is half of it shall intended to fulfill clear that no reserve bank should be allowed to put ^ its funds into a form in which thej will be tied up to such ' an extent. minimum (such excess margin to be determined by the Federal Eeserve Board). run not more than six months. and therefore it is provided in the third paragraph of Section 14 (Section 13 in the bill as enacted) whenever the reserve of any Federal -Reserve Bank is reasonably above its.reing stocks or bonds.

poses of the acceptance business 'The fundamental difference between European and American banking has its origin in the dissimilarity between the evidences of indebtedness which lie behind the '' item of loans and discounts. In granting the accommodation the obligation that the credit. an essential part consists of what are known as bankers' bills— that is. the funds of European banks. employed. It is the opinion of expert bankers that it could be ap- The following extract from a discussion of acceptances by Lawrence Merton Jacobs explains the method and purplied in the United States to excellent advantage. whereas the assets of leading New York " ' banks are largely based on stocks *^® ^^^^^ ^^ exchange in which are either through loans or dis- and bonds. bankers' customers or those to whom they are indebted may secure immediate arranged that the customers themselves shall draw the bills and in others that the bills shall be drawn by third parties for their account. Paris and Berlin. by sale to a broker or by discounting at a bank. ^^^ counts. however. is a new form of business heretofore forbidden to national banks. They are bills in exchange for which. very common in Europe. which have forbidden them to lend their credit or to incur contingent liabilities thereby. behalf bills drawn on bankers and accepted by them on of customers in accordance with arrangement previously made. by reason of the provisions and interpretations of the national banking act. and has been found exceedingly serviceable. In some instances it is . The ac- ceptance form of loan is.: 196 THE NEGOTIABLE INSTRUMENTS LAW it is which thus proposed to authorize. "Bankers' Bills" in Europe. denced in the fact that time It is bills most strikingly eviof exchange form a considerable proportion of the resources of the great banks of London.

INTRODUCTORY TO TITLE bankers take upon themselves the bills is II 197 that they will accept upon presentation. Ordinarily. the courts have decided that national banks have no power to make them. When a banker grants accommodation to a customer of an acceptance. This acceptance consists in the bankers writing across the face of the drafts the '' word Accepted. and to pay him a commisbills sion on the transaction. prevailing rate of discount for bankers' '' 'In the United States the national• The discount system in the United States. is ing the shipment. act does not specifically prohibit such acceptances. this commission varying accord- ing to the length of time the are to run and the financial standing of the customer. the banker's risk being much tomer the same as if he had discounted the customer's note running a certain length of time. he by means may secure himself in various ways. a specified number of days or — months from the date appearing three days later if in the acceptance. or grace is allowed. It is in the nature of a certification that the bills will be paid at maturity that is. to* pay off the bills three their maturity. as in England. bank act does not permit banks to accept ^-j-^-^^ ]j-||g drawn on them." adding their signature and the date. a banker accepts a customer's draft merely upon his general responsibility. which documents he then turns over to his When is a credit of this kind opened the usual practice for the banker to require the signature of a form containing an agree- ment place to hold him in funds sufficient to to days prior him harmless for accepting the bills. The cost of the ac- commodation to the customer is this commission plus the bills. is Where the cus- an importer the banker ordinarily accepts the drafts upon the delivery to him of the documents covercustomer against a trust receipt. This restriction has had a very consid- . Although the i i i. 4.

198 THE NEGOTIABLE INSTRUMENTS LAW upon the development of banking in this country. In the case exchange drawn on and accepted by of the time prime banks and bankers there is practical uniformity of security. merchants and manufacturers provided themselves with funds by discounting their promissory erable influence notes with their local banker. which makes possible a public discount market it is the lack of it in single-name paper which makes such a marAs a result. however. the pro- bank acceptances has led to the creation of a vast amount of promissory notes instead of time bills of hibition of exchange. In the case of our promissory notes or comtransactions. came to place their notes in the hands of brokers who in turn disposed of them to such bankers as possessed greater surplusses than they could satisfactorily invest at home. pean and American banking. In European centers the discount rate the eyes of the financial it is is the rate fixed. the strength of the paper depending on the standing of miscellaneous mercantile and industrial concerns.. A ^ " 'The difference between these two „. . G-radually. many concerns finding that their needs were outstripping the banking accommodation which they could secure in their immediate vicinity. W u/on tS extent for the difference between Euro- bills of mercial paper there is no such uniformity. Ave have great discount ket impossible.' " . For some time after the passage of the national-bank act. It is this method of borrowing which is now largely employed. pubhc discount market will be classes of instruments accounts to a great . Paris and Berlin and none in New York. " 'It is this uniformity of security on the one hand . In other words. upon which In New York community are the rate for day-to-day loans on the stock exchange. markets in London.

they believe.. ropean markets the acceptances given by lianks are. on the other hand. maturing on time or demand and taken either directly from the individual seeking funds or purchased from note brokers whose facilities enable them to place their instruments in markets wherever a surplus of funds ment. will form the largest part of the re-discount operations of the Federal Reserve Banks. is known to be seeking invest- These instruments. Some of the most prominent bankers. whose expressions upon the subject are regarded as profound authority. : the Documentary Bill ^. have expressed the belief that to it will be impossible to replace. by far more predominant and these are of two principal kinds of bills and the Commercial Credit Bill. bearing bank inIn the Eu- dorsements. till. the firmly established method of making loans on promissory notes bearing one or more individual or firm names. when it shall come into use ^ The first i here the American merchant desires to make purchases abroad he will first arrange with his bank to accept drafts for his account drawn upon his bank or its foreign representative to which shall be attached the documents covering the shipment of his purchases. A variety of opinion exists. j t* it.INTRODUCTORY TO TITLE To what extent and how rapidly which will tlie II 199 the new form of credit bill is so admittedly designed to encourage supplant the present method by which the industries of our country supply themselves with funds will depend vei-y largely upon the si)irit in which the banks accept the proposed change. any great extent. shipping documents are attached. usually by being shown the bank's . documentary ^ The . having way that his first been assured in some satisfactory draft will be accepted. form of credit. The foreign merchant from Avhom he makes his purchases. under this form is that of a bill to which .

has availed himself of the credit of his bank to pay his obligation abroad. like the one above described. and will be expected to conclude his part of the agreement by placing the bank whose credit he has used in funds to pay the bill a few days prior to its maturity. to every practical purpose. long established. The effect of this transaction is that the American merchant. This bill now bearing the acceptance of the American bank. its a loan of its credit by the bank its to its customer. is just the same. the bill being then drawn upon the American representative of the foreign bank.200 THE NEGOTIABLE INSTRUMENTS LAW to accept. the Commercial Credit Bill. principall}^ because few of our are engaged in The commercial credit bill. is that bill is which. "When a bill is to be drawn by an American exporter the pro- banker for the cedure. however. by the payment of a small commission. is prepared to enter the discount market which is to be created here or those already established in Europe upon an equal credit footing with the acceptances of foreign banks. The bank is then not re- . It it that the bank permits customer to draw on means at some agreed maturity upon the understanding that the customer Avill supply the accepting bank with funds to pay the bill before it falls due. the equivalent of a loan by the bank to customer upon his promissory note with the important difference. will find a agreement of his ready sale to his local bill which he will draw for the account American customer. whose primary obligation it now is. that instead of being a loan of cash it is. The second form of bank acceptances. In due time his bill with invoice and document of shipment attached will be forwarded for acceptance to the American bank upon which it is drawn and upon its acceptance the shipping documents will be released to the American merchant. own banks this kind of operations.

INTKODUCTORY TO TITLE quired to advance any of its its II 201 to give is own cash but merely its signature to an acceptance which customer en- abled readily to discount at some other bank. To the banker. obtaining the money needed to carry on their business operations by direct loans or loans obtained through note brokers. Long ago. by means of their own promissory notes placed with banks having loanable funds. as a rule. sell his bank's credit with Another form of Customer's bills bill of exchange . is will. or with a broker or to individuals wiio attracted to this tank acceptances. the time his bill merly extensively employed in our own. be of investment. in certain parts of this country. the charges for acceptance and discount rather than to pay the higher interest rate for a cash advance. form and is enabled to use the cash thus realize^ j^jg ^^ bijginess. In those countries where system of credit is is employed the rate of interest for a cash advance very much higher than the discount it rate for acceptances and tageous to the customer to more advandraw on the banker and pay is. drawn by the merchant or manufacturer upon customer and accepted by him. -r^ • JtLiuropean countries and lor- r. To the customer. . there a distinct advantage bank an equally marked this in this type of credit and to th^ gain. (trade acceptances) is m use m . col- . much -. the use of this bill began to be discontinued as our industries gradually -assumed a cash basis. Drafts his cus- drawn by the merchant or manufacturer upon tomer now rarely appear here except in their limited use as instruments of value only for the purpose of lecting outstanding accounts. having no available loanable cash. without doubt. the accept- ance business enables him to profit.

meet with the hearty co-operation of the banks for the reason that our industries are now regarded as unchangeably established upon a cash basis. therefore. the regarded suspiciously as a circumstance affecting their solvency if avaUaSe^for re-discount. and their customers. it .202 THE NEGOTIABLE INSTRUMENTS LAW based on Bills actual has heretofore been the n n custom of banks to carry practically all it • Inasmuch as commercial transactions desirable as ^^ their customers' paper. one of the main purposes of the Federal Reserve Bank Act to promote the use of bills idle of exchange between merchants. will not. bein^ even not. But those who have advocated the renewal of the former and the best use of these instruments are hopeful that the bill will meet with success in re-establishing this form of credit. . They believe that offerings of these bills bearing bank indorsement will freely appear wherever . and the return of these instruments as proper and desirable items of bank discounts is expected to result as one of the important consequences of the business features of the bill. It is. any do evidences of the banks' investments in the form of promissory notes have not been available for the investment of funds of other banks except in the restricted vicinity of the banks in and among the correspondents of some the larger cities which have had the It courage to undertake re-discount operations. at first. manufacturers and per- sons engaged in agricultural pursuits. as distinguished from bills "arising out of the import and export of goods. has been thought entirely unwise that the credit operations of banks shall be thus limited or that they must dejDend to such a great degree upon the facilities of note brokers for placing desirable credit instruments in markets where funds often await investment without any demand for them. It may also be expected that the revival of their use in domestic transactions.

the future. and at no very distant date. Commercial paper as the basis for future • • commercial paper ^j^jy ^j^g ^f ^j^g is intended to be not . by another provision of the Federal Reserve Bank it is made now the partial and is ultimately to beThese will. as but. of this it seems to many men. the restriction which limits acceptances by national banks to bills growing out of export and import operations will be removed. be made only by Fed- and will replace the present note issues of the business banks based upon the security of eral Reserve Banks. in conae the sole basis of the future note issues of national banks. therefore. As has been said in the introduction to the First Title there is now. that eventually. I have given this outline of the business feature of the Banking and Currency Bill in order to illustrate the importance of a practical knowledge of the provisions Second Title of the Uniform Negotiable Instruments Law" relating to Bills of Exchange.INTRODUCTORY TO TITLE loanable II 203 money can be shall located and that they will even attract the surplus funds of Federal Reserve Banks whenever they engage in open market operations. t i j i principal resources of the it currency issues. already is. It may be hoped. of the bill The concluding paragraph the business feature of the Committee report on carries the insinuation that. . banks of this country. Act. men learning the law as men engaged in business. after the banks of this country become more familiar with the proper use of acceptances. Our . bills drawn upon and accepted by banks for actual commercial transactions not limited to export and import operations will also appear for investment and will largely replace bills drawn by the merchant or manufacturer upon his customer. a greater need than ever before that well as men interpreting the law. shall become familiar with the provisions of this Act.

. upon State and In the firm belief that a currency which will automatically expand and contract with the immediate business needs of this country is to be thus is provided. With this dignity added to the already grave importance of this class of our business obligations a better knowledge of the laws which govern our commercial paper be regarded as a duty.204 THE NEGOTIABLE INSTRUMENTS LAW of wider need. the provisions of Second Title of the Uniform Negotiable Instruments Law. committed by the Act to a The bank notes which will be issued against a segregated deposit of selected commer- paper and bear the Government's guaranty of their redemption in gold. and that there shall also be set aside from its general funds 40 per cent of the amount of the notes in gold or lawful money. I trust. the explanations will prove to be an aid. deserve careful study and in this. relating especially to the one form of commercial paper with which business men are not so familiar as with promissory notes and checks. this may very properly To that end. Government and in time Municipal Bonds. the Government guaranty of cial its soundness. require as an indemnity that an equivalent amount of re-discounted commercial paper bearing the indorsement of one or more shall be set aside member banKb from the assets of the Federal Reserve Bank which issues them.

5 Champion vs. signed by the PERSON giving IT. ' A bill of exchange is more commonly known. 129 Bill not an assignment of funds in hands of drawee. or available to his credit. 632. as a draft and sarily. usually. to some other person whom he names. St. it is in this country. 10 Am. 64 Am. BY one person to another. Gordon. except that a bill of exchange. 131 Inland and foreign bills of exchange. When I. R. as in other negotiable instruments. Bailey. 126. 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 ORDER OR TO A bill of exchange BEARER. the exact language to 1. These Subdivision 1) and while. Referee in case of need. in the case of a check. 13. used as a credit instrument. A bill of exchange is an unconditional order in writing addressed defined. .' . though not necesis drawn by one person upon another who in- debted to him or with whom he has established a credit. 130 Bill A addressed to more than one drawee. is There is no presumption. 474. 70 Pa. drawn against an existing fund. 18.^ It directs the person upon whom it is drawn to pay the money due upon the drawer 's account. Oh. When bill may be treated as promissory note. "Sec. §126 BILLS OF EXCHANGE 205 TITLE II BILLS OF EXCHANGE. are fixed in this Act (Title Morrison vs. D. Section Section bill 126 127 128 of exchange defined. such an order is to be issued certain requisites of form must be observed. SUBDIVISION I FORM AND INTERPRETATION. 681.

The time may be stated to be on demand. A bill of itself does not operate as an assignment of the funds in the hands of the drawee available -pQ-^ rpg-E PAYMENT THEREOF.) The bill must. As a person who draws it is whom drawn. signed by the and must name the person upon is to pay it. or is indebted to the person who draws it and which are to be applied to its payment. The drawer may withdraw his funds or direct the drawee to apply them in some other way if he does so before the bill is presented and accepted. usually in a bill of exchange termed or it may be at sight. 10. The bill may also be drawn to become payable in a given time after the happening of an event which certain to of the happen or its maturity may be fixed ways mentioned in Section 1 of this Act. be in writing. does not operate as an assignment of the money in the hands of the person upon whom it is drawn and who has funds of. and who ' ' ' ' rule bills of exchange are not dra^vn for a longer maturity than six months and domestic bills rarely for that at is long. fixed at a stated period after date. sight or demand. It must mention the sum of money to be paid and the time when it is to be paid. The relation of the drawee to the drawer of the bill does not change and the drawee does . the substance with. an "Sec. The bill of itself. with the certainty required by Sections 1 and 2.206 THE NEGOTIABLE INSTRUMENTS LAW bill is § 127 be used in drawing a of the law not prescribed. of course. 127. with the degree of certainty required by Section 1 of Title I. even if drawn against existing funds. 10. must be complied it (See Sec.) described in this Act will not be regarded as a negotiable of exchange. which is any A bill bill not dra%vn substantially in the manner (See Sec. AND THE DRAWEE IS NOT LIABLE ON THE BILL UNLESS AND UNTIL HE ACCEPTS THE SAME." Bill not assignment of funds in hands drawer.

vs. Co. etc. 156 N. etc. and he must then pay the money due upon the bill at its maturity. in the This section has most frequent application determination of the liability of a bank to the holder of a check upon which the drawer has stopped payment. Mfrs. 399. .. 136 Mich. Mfrs. tion the check must be paid to a holder in does not then matter whether the certification was given before or after receipt of the stop-pa^mient order. S. S. The nature and extent of the acceptor's engagement upon acceptance or certification are explained in Section 2. Baldinger. Baldino-er.. 3.^ but anyone takes it from him without notice. 62. not become liable upon the unless he accepts The drawee's acceptance of the instrument.The payee of a check certified by mistake cannot enforce it against the certifyor ing bank because his position has not been altered to his injury or prejudice by the mistake. & Citizen's Trust Co. Y. When the drawee acceiJts to the holder the ))ill he is thereupon entitled immediately to appro- priate sufficient of the drawer's funds to enable him to pay it if the bill was issued against a its deposit. Applied in its simple sense its language leaves the bank of a check it under no uncertainty as tion. Co. 460.§127 BILLS OF EXCHANGE bill 207 it. Mfsi'. ^45. Preston Nat'l Bank. W. 156 N. creates an obligation from him and all other parties to the instrument. Its certification is upon has certified made It the equivalent of an acceptance by Section 187 and after certificadue course. was given by other mistake. vs. 445. however. Mfg-. vs. Union Trust Co.. to its position in such a situa- The bank is not liable to the holder which payment has been stopped unless or accepted the check. who may recover upon it. 99 N. & Citizen's Tmst Co.. Y.

drawn in foreign countries to be payable in our o\vn^ and checks issued in one State and drawn upon a bank in another. vs." All others are foreign bills bills. 27 S. that is.^ But if the bill is so drawn that it is not apparent upon its face. of course." Inland and ''Sec. that it is payable outside of the State in which it an inland eign bills bill. 389." meaning a negotiable bill of exchange. q^ more drawees in the alternative* or Bill . (N. Y. 561.l^^addressed to jointly. may be drawn upon two or more persons jointly. if it cannot be determined from the face of the instrument alone.208 THE NEGOTIABLE INSTRUMENTS LAW ' ' § 128 ^^^^ ^^^ ^^ addressed to ^^^. is of was drawn the holder may treat it as The distinction between inland and forimportance upon dishonor. Y. AnY OTHER BILL IS A FOREIGN bill. or on its face purports to be. even though bill. may be pro- Amsinck Casker vs. 129. Unless the contrary appears on the face of the bill.) Hoyt. the holder may treat it as an inland bill. 159 App. for it is pro- vided in the Act that while the former 4. Kuhne. ^ IN SUCCESSION. Rogers. without the aid of anything else. but a negotiable bill may not be drawn upon one person or another so that the holder may or is required to present it to one or the other and it may not be drawn upon two or more persons in a man. and in these are included. foreign bills of exchange. whether drawees more two or more than one drawer. ner which requires presentment another in successive order. 5. vs. A they are not partners. D. first to one and then to An inland bill of exa bill which is. Div. they are partners or not but not to two "Wisconsin. 252. both drawn and payable WITHIN THE SAME STATE. change is Any bill which appears upon its face to be drawn and payable at a place (not necessarily the same place) within the same State is called an ''inland bill. 189 N. Mankey .

at his option. drawee has no capacity to contract. Staunton Co. Co. 17. in 209 tested latter order to fix the liability of secondary parties. if the person upon w^hom it is draw^n is a fictitious person meaning. "Wisconsin. the holder may treat the instrument.. the holder may then treat the bill as the promissory note of the drawer.'^ Likewise. of the parties to the bill are like those of New New 7. and dr-^wee are the same person. (See Sec. 16 N. vs. AVhen any of these conditions exist the right to treat the instrument as a promissory note or as a bill of exchange is optional with the holder. Bk. or if existing. or the bill is drawn upon him by or by him upon his agent or his branch house. vs. for example. as has already been said (Sec. either as a bill of exchange or a promissory When NOTE. is a person who in the has not and was not intendinstrument and whose ed to have any interest is name used merely for the purpose of deception. Porthouse vs| Parker.) 82.. 325. 61 Wash. Meyer.§ 130 BILLS OF upon dishonor tlie EXCHANGE must be. (Section 152. a person not of legal age. 51 Ala. that is. or an officer of a corporation who has no legal authority to bind the corporation by contract. a person of unsound mind. .) Where in a bill deawer ''^^c. 9). M.. York. He has this option also if the instrument is so ambiguous that there is doubt whether it is a bill or a note. one the subject of a guardianship. Co. the rights. 305. etc. 419. 130. Selma Savgs. biU may be treated as promissory note. Co. Clemens vs..*^ if one makes a draft upon himself. duties and liabilities 6.) If he elects to treat it as a promissory note. or where the drawer is a fictitious person." The holder of the bill may treat it as a promissory note if the drawer and drawee are the same person. as a person under If the some legal disability. Home Ins. 1 Camp (Eng. 66.. York.* q^ ^ person not having capacity to contract. 51 Ala. if a partner draws on his firm. etc. First Nat'l Bk. vs. one who does not exist.





maker, indorser and payee of a note and it is governed by appropriate provisions of this Act other than those
especially applicable to bills of exchange.

"Sec. 131. The de\wer of a bill and any indoeser may insert thereon the NAME of a person TO WHOM THE HOLDER MAY EE„SORT IN CASE OF NEED, THAT IS TO SAY, IX CASE TFTE BILL IS DISHONof need.

Referee in case



the drawer or indorser has doubt of the will-

ingness or ability of the person upon
to either accept or


it is


pay the instrmnent, or both, and does not desire to have the bill meet mth dishonor. He therefore refers the holder to a person other than the drawer whom he expects to accept or pay it, if tlie one upon

whom the instrument is drawn fails or Any indorser may insert the name of a
dorsement or

refuses to do so.
referee at his in-

any other place on the bill. The reference in case of need is not usuallly employed unless it is of the utmost importance to the drawer or indorser that the bill shall be accepted and paid, as when it is drawn at a considerable distance, or under special circumstances and then as a



it is

desirable to

provide against damages and costs on re-exchange or when the circumstances seem to the drawer or indorser to


this precaution in

order to preserve his credit.

The referee in case of need usually pays the bill after protest upon its dishonor by the drawer but he may become the acceptor for honor and if he does it will be necessary
to observe the requirements of subdivision 5 of this Title in order to preserve his liability.

In foreigii



in foreign countries the reference is indicated

by the

French words ''Au hesoin, ches M.

" and the thing







do when a
is to



dishonored which contains these and present it to the person indiit

cated who will very likely accept or pay
of the party

for the honor


inserted the reference in the



pays the


for honor the provisions of subdivision 6

of this Title will determine his rights


his duties,


they prescribe the manner in which the payment for honor must be made. You will observe that the holder is
not required to resort to the referee in case of need but

mav do



he think








132 133 134


how made,


137 ^^^

Holder entitled to acceptance on

Liability of drawee retaini"g ^r destroying bill. Acceptance ot nicomplete

Acceptance by separate




to accept; when equivalent to acceptance. to accept.


Time allowed drawee

141 142

^^^^^^ ^^ acceptances. ^yj^^^ constitutes a general acceptance. Qualified acceptance. Rights of parties as to qualified acceptance.


Acceptance, made, etc.


''Sec. 132.

The acceptance

of a buAj

requires presentment intends to pay


(see Sec. 1-43 for

the kind which do), he expresses his intention by "ac-

cepting" the



it is

exhibited and presented to

He must do this by writing appropriate words upon the bill, or upon a separate paper (Sec. 134) and he must sign it. The drawee usually writes the word "accepted" across the face of the bill, and signs his name underneath. Indeed, you will see that by the next section the holder

given the right to require the acceptbill.

ance to be written on the
the maturity of the

If the

drawee dates


acceptance, and he must do

a date

necessary to
as of the

he ought to date

day when the presentment was made. (Sec. 136.) K the date is omitted and one is necessary to fix the ma-





turity of the
(Sec. 13.)




insert its true date.

The drawee's acceptance is his promise to pay the bill when it becomes due and he is not permitted to express any other means of payment than payment in money. He
may, however, state in the acceptance that the holder may have the option to require him either to pay the bill in money or do something in lieu thereof (Sec. 5), but if the acceptance attempts to put any obligation upon the holder to receive any other means of pa^nnent than money, it is no acceptance at all and the holder must The acceptance becomes treat the bill as dishonored.
effective only

by delivery or

notification (Sec. 191) to the

holder and until




incomplete and



be revoked (Sec. 16), unless notice of the acceptance

has been given to the holder.^

The holder of a bill pre''Sec. 133. senting the same foe ACCEPTAisrcE may beon the bill. quiee that the acceptance be written on and, THE bill, if SUCH REQUEST IS REFUSED, MAY TREAT THE
Holder entitled
to acceptance


The person who holds
acceptance upon the



ceptance has the right to require the
bill itself.

and presents it for acdrawee to write his If the drawee refuses

do this the holder


treat the bill as dishonored.


universal custom the proper place for the acceptance

across the face of the

but an acceptance written


on the instrument has been held to be

Any words which

will indicate the intention of



comply with the order of the drawer and
Natl Bk.
of Nash-

First Nat'l Bk. of Murfreesboro vs. First ville, 154 S. W. (Tenn.) 965.



Flvnn, 118 Mass. 537.

First Nat'l Bk.'vs. Clark, 61 Md. 400, 48 Ilsley vs. Jones, 12 Gray (Mass.), 260.


R. 114.

First Nat'l Bk. vs. Trognitz, 14 Cal. A. 176, 111 P. 402. Brannin vs. Henderson, 12 B. Mon. (Ky.) 61.





pay the instrument at its maturity, will be regarded as an acceptance^ but the simplest, best manner in which it can be done is by writing the word "accepted" on the
face of the

above the signature of the acceptor.
bill is sufficient.*


has even been held that the mere signature of the acceptor upon the face of the

While the

now seems

to require

something more than that,

the signature of the drawee appearing across the face

has repeatedly been held to import a full assent to the order of the drawer and that parol evidence is not admissible to prove a ditferent intention, but when
of the



ambiguity parol proof


admissible to
effect of



intention of the signer clear.^


an accept-

ance written upon a paper other than the
of a promise to accept will
Acceptance by
separate instrument. °IUinois

and appear from the next two
bill itself

Where an acceptance is ''Sec. 134. written on a paper other than the biu. itself, it does not bind the acceptor ex-

So. Dakota.

cEPT in favor of a person" to whom it is shown and who, on the faith thereof, received the bill for value.'' You will observe from the above section that the acceptance



made on

a separate paper.

If the bill is

by the holder an acceptance upon a separate paper, as for example, by letter or telegram, is not desirable and ought not be taken if it can be avoided, although, as this section provides, and the custom of merto be negotiated

chants sanctioned for the convenience of mercantile af3.



vs. Smith, 2 E. D. Smith (N. Y.), 124. Whilden vs. Merch. Nat'l Bk., 64 Ala. 1, 32, 38 Am. R. Fowler vs. Gate City Nat '1 Bk., 88 Ga. 29. Schwartz vs. Barrinoer, 20 La. Ann. 419. Wheeler vs. Webster, 1 E. D. Smith (N. Y.), 1. Haines vs. Nance, 52 111. A. 406. Steele vs. McKinley, 2 App. Cas. 754. Cook vs. Baldwin, 120 Mass. 317, 21 Am. R. 517. Murrell vs. Edwards (Tex. Civ. App.), 179 S. W. 532.








Present the

an acceptance on a separate paper may be made.^ bill, even if it is inconvenient to do so, and upon the acceptance being written across its face.


separate written acceptance will bind the acceptor in
for value after
the subsequent

favor of any one .who receives the

acceptance in that manner, but only


holder has been shown the separate acceptance before taking the


and receives the


for value in reliance

upon The language
liability of the

of this section is explicit

and excludes

acceptor to persons other than those
for value


from the holder after having been shown the separate acceptance and who so receive This would it upon the faith of the separate acceptance. seem to create no liability upon the acceptor to pay the
receive the
bill bill to

the holder to


he gives the separate accept-


and who already had the bill before the separate acceptance was given, but this section must be interpreted
in connection with Section 68 to preclude such a conclu-

provided that the acceptor, by accepting the instrument, engages that he will pay it according to the tenor of his acceptance, and this section permits


it is

a separate acceptance to be taken.


of course, the

acceptor's engagement,

when he

accepts on a separate


promise to the holder who already has the However, all dispute and delay bill and it must be kept. of in the enforcement the instrument will be avoided



Cook, 4 East (Eng.), 57, 102 Eeprint, 751. W. U. Tel. Co., 144 la. 605, 619. First Nat'l Bk. vs. Comm'l Savsis. Bk.. 74 Kas. 606, 87 P. 746, 8 L. R. A. N. S. 1148. 11 Ann. Cas. 281 First Nat'l Bk. vs. Muskoi^ee Pipe Line Co., 40 Okl. 603, 139

Clark Wells



P. 1136.


vs. Citizen's St. Bk., 67 Kan. 338, 72 P. 874. First Nat'l Bk. vs. Muskogee Pipe Line Co., 40 Okl. 603, 13» P. 1136. Lehnhard vs. Sedway, 160 Mo. App. 83.






the acceptance

obtained in the proper manner, in

proper place upon the bill, and upon whenever practicable.
Promise to

this should be insisted




unconditional promise''


ecLuivalent to

in writing 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
to accept a bill is not



always to be deemed an acceptance of the instrument even though it be made However, when an unconditional promise in writing.



to accept is


in writing within a reasonable time
it is

before the

bill is


regarded as the equivalent

considered to be in effect an actual acceptance in conformity with this Act in so far as those persons are concerned who receive the bill for value upon the



faith of the written promise to accept





be drawn.^
receives the

In this case

it is

not necessary that one


must be shown the written promise
It is

accept as in the last preceding section.
that he take the

only required
of the

for value

upon the strength

he must have been influenced to take the bill by a knowledge of the written promise that it will be accepted Avhen it is drawn.'^ In order to give to the
promise, that


to accept the effect of a valid acceptance the

vs. Payson, 2 Wheat (U. S.), 66, 4 L. Ed. 185 (in which be found a full review of this subject). Morgantown Bk. vs. Hay, 143 N. C. 326, 55 S. E. 81. Woodward vs. Griffiths-Marshal Co., 43 Minn. 260, 45 N. W. 433.




Ledyard, 49 Ala. 279.


vs. E. G.



134 Cal. 189, 66 P. 210.



Ledyard. 49 Ala. 279.
vs. Griffiths-Marshall

Mich. Bk.

Co., 43

Minn. 260, 45 N.


vs. Ely,

17 Wend. (N. Y.) 508.






must be drawn in strict accordance with its terms. ^" But if the bill drawn does not conform to the agreement to accept, another conforming to its terms may be drawn

within a reasonable time after the date of the agreement,


if it is, this will

bind the drawee.^




Merchant, which governs when



otherwise provided in this Act (Sec. 196), authority to

draw a


implies an agreement to accept




drawn, if the authority to draw is known to and relied upon by the person taking the bill.^^ This authority is usually granted in the form of a letter of credit which is given for the purpose of being shown to third parties by the person to whom it is issued, and it imposes upon
the person



who issues it a binding obligation to accept drawn under its authority when drawn in accordits

ance with


Letters of Credit are of two



open and

The open

letter is


any one



be presented; the special

letter to a specified person, requesting





vances or extent credit to the person described in the


in that case

no other person

authorized to

make advances

or extent credit under



letter, of either character, is

usually limited both as to

time and amount and it is the duty of the person making advances to satisfy himself that the authority to draw

has not been exceeded in either particular.

The drawee is allowed ''Sec. 136. twenty-four hours after presentment, IN WHICH to decide WHETHER OR NOT HE WILL ACCEPT THE bill; but the acceptance, IF GIVEN, DATES A-S OF THE DAY
Time allowed
drawee to accept,


Hodges vs. Iowa Barb. Steel Co., 80 Iowa, 65, 45 N. W. Brinkman vs. Hunter, 73 Mo. 172, 39 Am. R. 492.
Saiilsburj' vs. Blandy, 53 Ga. 665.


11. 12.


Vs. Clark, 39 N. Y. 216.
vs. Pavson. 2 Wheat (U. S.), 66, 4 L. Ed. 185. Renauld, 100 N. Y. 256, 261, 3 N. E. 182.



or refuses withix twenretaining or ty-four hours after such delivery or destroying bill. to return the bill accepted ^-Wisconsin. ceptance or one payable at a fixed time is presented to the drawee for acceptance. the holder must treat the dishonored. 143. Burt. may have Case vs. "Illinois. Sub-sec. 589. 15 Mich. Hoboken Citv Bk. Y.'"' When the holder leaves the bill with the drawee it be"Sec. ^^^^. for such do not require presentment for acceptance except when drawn to be payable as is pro- vided in Sec. If the bill is not left with him and.'' ^^^^ stroys ^ ^^ comes his duty to again call upon him at the end of twenty-four hours.) 396. the holder ought again to request its acceptance within the time he has allowed the drawee for its examination/' it and and if it the drawee signifies his intention of accepting has not been left with him. payable upon demand which requires ac3. will. the holder again. 563. Dakota. the drawee does not accept the instrument at once.218 THE NEGOTIABLE INSTRUMENTS LA\Y § 137 This section must not be understood to grant twentyfour hours for the payment of a bill payable at sight or on demand. J. Albany City Bk. S Barb. availing himself of this provision. vs. of course. take the bill to him Whether the bill has or has not been left with the drawee. . But if a bill and are payable at once. if he does not give the acceptance within twenty-four hours. L. Ovei-man vs. 56o. Chicago Lbr. 572. (N.. 150. unless a longer time has been granted.) Where a drawee to whom delivered for acceptance dethe same. Liability of bill as (Sec. ^^^ non-accepted to the holder he wiix BE deemed to have ACCEPTED THE SAME. WITHIN such other period as the holder S. 31 X. allow. 94 N. Montoonieiv Citv Bk. or such further time as he 13. 137. 82.W.. 117 Wis. Co. AVesfberg vs.. he is allowed twenty-four hours from his first sight of the bill within which to ex- amine the state of his accounts with the drawer and determine whether or not he will accept it.

a its bill may its be ac- cepted by the drawee after dishonor by non-acceptsubse- ance and thus restored to credit (Sec. act. if Sees. Smith vs. to grant a succession of extensions. 665. . the drawee failed to ac- His failure to do so will have effected their discharge (Sec. Aebi vs. and within the time prescribed 89 to 118. when each successive ex- tension is granted before the expiration of the one that went immediately before it. Of course.^^" It seems to be perfectly proper and however. 124 Wise. and if this is done the bill need not be treated as dishonored by the drawee's fail13a. up to the limit of a reasonable time. 18 Ala. consideration. I. ACCEPTANCE foi its 219 granted return it. therefore. that tice would be an unwise pracrisk to grant a request bill if accompanied by considerable for further time for consideration of the for additional time last is the request made later than the day after the day originally granted. 102 X. 50) and they cannot again be made liable upon the instrument except by their o\m voluntary safe-. bill drawee refuses to return the or it if he destroys he will be deemed it.§ 137 BILLS OF EXCHANGE. Bank of Evansville. W. treat it must as dishonored. would seem. to have accepted and if will be required to pay Section 150 provides that is the bill has been duly presented and the holder not accepted within the prescribed time. Rowland. Title cept within that time. inclusive. You then is see that a mere neglect unaccompanied by any and the holder must treat it signification of the drawee's intention to accept the bill as a dishonor it regarded It as such. and request the drawee If the it either accepted or non-accepted. 329. 138). 73. but recourse against the drawer and indorsers quent acceptance will not revive the holder's right of if he lost it by failure to give them notice of dishonor in the in Subdivision manner 7.

therefore. its pa\^nent must be demanded. . 17 L. S. 220 Pa. 589. 8 vs. Foster. 79 Misc. 35 Mo. 589. Ry. 17. 2 vs. S. 312. of itself. Co. Louis & W. Y. vs.. Foley 16. If the instrument is it a foreign need not be protested as for non-acceptance. Chicago Lumber Co. 572. Co. a dishonor of the inThere must be a positive re(Sec.. 804. New York vs. Savg's Bk.15 fusal to return the instrument or a destruction of it by the drawee before he have accepted it. Duff. Ingram St. 572. 915. Smith K.^^ and some of these decisions have been rendered since the adoption of the Act in States where it is in effect.) the piration of the last extension. Westbero' 15. (Enc. 95 W. on the contrary.. Such circumstances being unusual.^^ This conclusion is considered to be in accordance with the best decisions on this question and in accordance with the plain meaning of the Act. 17 955. Cas. First Nat'l Bk. however. The drawee's refusal to return the instrument or his destruction of being considered an acceptance. 94 X. N. vs. Am R. vs. 611 and note. vs. 21. should be communicated to all parties to the instrument immebill it upon the maturity of the bill.^^ seems. the usual prodiately 'and 14.. 150. Westburg Wisner Chicago Lbr. the instrument is not thereby dishonored and no notice need be given to the drawer or indorsers. 493. 139 N. 1266 and note.. equivalent to and to be treated as an ac- ceptance but is.220 THE NEGOTIABLE INSTRUMENTS LAW it § 137 ure to accept It unless it remains unaccepted at the ex(See Sec. W. B. A. S. James. W. 490. R. 150. 68 A. 117 Wis. S. S. 78 Ark. that it mere failure left of the is drawee to return the bill if has been with him not. 94 N.) strument. 117 Wis. although there are authoriis deemed to ties which hold that the drawee's mere failure to return its the bill either accepted or non-accepted within the period allowed him for consideration and examination shall be deemed to be an acceptance of the instrument . Rousch Ann.) 242. 220. 955. If it is then refused.

THE HOLDER." It is not necessary that the bill shall be complete and be may by the drawer before it is accepted. 138.) is negotiated after maturity. between the holder and the acceptor. But when a bill payable after sight is dishonored by non-acceptance and the DRAWEE subsequently ACCEPTS IT. however. A bill may be accepted befoee it has been signed by the drawer.§ 138. A general acceptance ASSENTS WITHOUT QUALIFICATION TO THE ORDER OF THE DRAWER. But if the instrument is one payable at a period after and therefore requires that the acceptance be dated in order to fix its maturity. If it is overdue or has previously been refused by the drawee and dishonored by non-acceptance or by non-payment. however. the holder may require him to date his acceptance as of the date when the bill was first presented to him. that an instruit ment is payable on demand when (Sec. he may nevertheless accept it and thus re- store it to credit. MENT. IN THE ABSENCE of any different agreement. the acceptance may be given any other different date. Kinds of An acceptance is either *'Sec. Sec. or when it is overdue. 139 BILLS OF EXCHANGE. 139. or by non-payment. By agreement. A QUALIFIED ACCEPTANCE IN EXPRESS TERMS VARIES THE EFFECT OF THE BILL AS DRAWN. IS ENTITLED TO HAVE THE BILL ACCEPTED AS OF THE DATE OF THE FIRST PRESENTAcceptance of incomplete ' ' bill. general or qualified. sight Attention is called to the fact. ACCEPTANCE charge 221 ceedings upon dishonor must be taken to the drawer and indorsers. 7. OR after it has been dishonored by a previous refusal to accept. and if it has been dishonored by non-acceptance and the drawee afterward accepts it. ." acceptances. The acceptor upon it before it is signed by the drawer or while it is yet incomplete in any other resig7ied place his acceptance spect. OR while otherwise incomplete.

311. 477. unless it expressly states that the BILL IS to be paid THERE ONLY AND NOT ELSEWHERE. A qualified acceptance is in effect a new offer which in turn requires the consent of the parties already liable on the bill be- fore become a binding contract. 496. St. ance. 37. D. 221. Citv Bk. vs. terms and amount and at ment the time and place named by the drawer in the bill. 626.). to lay This section acceptance in is is intended down the rule that an which the only condition named by the acceptor that he will pay the instrument at a particular place.. 29." Continue to the next section now A general acceptance has already been partially de- fined in the preceding section. vs. Y. vs. 19 X.^" and then read these two in connection with Section 62 and what is said there upon the liability of the acceptor. Stotesburg Mvers Massengale. 45 Am. By a qualified acceptance the acceptor promises to pay it subject to the terms which he himself im- poses at his acceptance and such an acceptance changes the effect of the bill to the extent that the qualification imposed by the acceptor may vary the terms expressed by the drawer when he drew the bill. L. St. Lauman. Mvers vs. Standai-t. 140. App. 11 Todd vs. ^^ Tf it does not distinctly vary the terms it will to qualify of the bill the acceptance will be regarded as general. Standart. 3 Bush (Kv. "Sec. Gordon. Staples. without expressly 18. to the person to whom the bill directs him to pay it or to the holder.^* The intention must be clear and unmistakable and the language used by the acceptor will be taken most strongly against himself. An acceptance to pay at What constitutes a general a particular place is a general acceptacceptance. Oh. 13 Mo. 29. 11 Oh. Clark vs.222 THE NEGOTIABLE INSTRUMENTS LAW accepting the bill § 140 By generally the acceptor agrees fully to the order of the drawer. C. 226. agrees to in exactly the pay the instru- manner. 768. State Bk. 37 S. 44 Me. Sylvester vs. 20. . 19.

only in accord- ance w4th the terms of his acceptance and the holder can not require payment upon any other than the terms if he takes such an acceptance. of course. an acceptance to pay only . Local. notwithstanding a general one. as a matter of accommodation and convenience the bill ought to be presented at the place designated by the acceptor in his acceptance place of business. but not of all. The acceptance he promises and agrees to pay the bill. Tf he does take it he will have . but if none is designated may be presented at the acceptor's residence or usual But. But now see the next section for the effect of will an acceptance which designates that the acceptor pay at a particular place and there only. '^Sec. of some one or more of the drawees. ONLY OF the amount FOR WHICH THE BILL IS DRAWN 3. 5. an acceptance to pay part 2. 141. Qualified acceptance. at a particular place 4. but that. that is. the imposition of this condition. if the instrument does not require presentment else- where. ACCEPTANCE it 223 stating that he will pay is there only. that is to say." Section 62 provides that the accej)tor engages. which makes payment BY the acceptor DEPENDENT ON THE FULFILLMENT OF A condition therein stated. that is to say. . Partial. The next section declares that the holder may refuse to take of his qualification a qualified acceptance. and not elsewhere. fied which is An : acceptance is quau- 1. that is to say. Qualified as to time . not a qualified acceptance.§ 141 BILLS OF EXCHANGE. such an acceptance is considered to to present the ))e The holder is not bound instrument for payment at the place named by the acceptor if he does not see fit to do so. An instrument accepted in this manner must nevertheless be presented for payment at the place of payment named in the bill itself if it one is designated. Conditional.

^ 71 Conn. 50. Bk. C. 22 form of qualified acceptance is the acceptance of the bill payable "when in funds. Wolfendale. 129. 55. Bldg.^^ If the acceptor agrees to pay only a part of the amount bill.-^ the draw^er puts the acceptor in possession or control of actual funds for the purpose of paying the The possession of securities. 401. 20 Am. French. 483. Campbell vs. 153. although of a value more than sufficient to pay the bill. 25. vs. Such a condition is fulfilled only when bill. S R 235 Cook vs. 7 Me. E. Douglas. or property. 742. 74 P. Assn. 105 Mass. Lamon Hogan vs.224 THE NEGOTIABLE INSTRUMENTS LAW by its § 141 to abide terms and the burden of proving compli- ance with the qualification or condition imposed by the acceptor in his acceptance rests upon the holder. 140 Cal.^^ The acceptance is qualified when the acceptor promises to pay the instrument only upon the happening or fulfillment of some condition which he names. quently done in such bills as are accompanied by documents of shipment as. called for by the his acceptance is qualified and he becomes 21.^^ or upon completion of work in progAnother frequent use of this ress of construction. . Co. Boettcbcr. 40 Am. 43 A. 659. 420. Hooks. or the This is frehappening of some independent event. 25 Wis. vs. or surrender of bill of lading. 142. does not fulfill the condition. liable only for the amount for which he acvs. Doyle. when the acceptance is given to become payable only upon the actual arrival of the shipment to pay which it is drawn. 387. 174. Wallace vs. 71 Am. Petteugill. 88 Am. Carlisle vs. Globe Mut." which means that the acceptor will pay only when the person for whose account the bill is dra^vTi shall have provided him with the money with which to do so. . 5 Colo. 126. 191.. 610. Ford 22. Dee. 58 Tex. 24. 349. Rep. for example. 21 S. 37 Mo. Coloradc Nat. vs. 185. D. Angelrodt. 40. Burns Lbr. goods. 37. 23. 116 N.

. WITHIN A REASONABLE TIME. 29. UNLESS THEY HAVE EXPRESSLY OR IMPLIEDLY AUTHORIZED THE HOLDER TO TAKE A QUALIFIED ACCEPTANCE. 469. by the terms cepted. ACCEPTANCE 225 The drawee's acceptance is also qualified when he engages to pay the instrument only at a particular place in a city which he names and that place is not the place named in the bill. Standart.§ 142 BILLS OF EXCHANGE. 73 111. vs. it is not qualified. Bk. or if he states in it that he will pay it only at a particular time which is not the time named in the bill. 403. Where a qualified acceptance is taken. Fanshawe vs. & N. 243. unless the one accepting has authority to accept for all. 132. OR HE WILL BE DEEMED TO HAVE ASSENTED THERETO. C. are required to accept it. Peet. 2 H. the DRAWER AND INDORSERS ARE DISCHARGED FROM LIABILITY ON THE BILL. 27. WhEN THE DRAWER OR Rights of parties as to qualified acceptance. Fairman Maeh.. in addipayment in money as required in the (Sees. 1.) tion to promising bill. An acceptance is also qualified if it is made by one or more of the drawees but not by all who. HE MAY TREAT THE BILL AS DISHONORED BY NON-ACCEPTANCE. and if he j^Q^g ^^^^ obtain an unqualified acceptance. St. HE MUST. and 132. 31 Barb. 11 Oh.) If the acceptor attempts to qualify his acceptance by promising performance by any other means than by the payment of money it does not amount to even a qualified acceptance and the instrument must be treated as dishonored. (Sec. But if his acceptance. The holder may eefuse to take a qualified acceptance. OR SUBSEQUENTLY ASSENT THERETO. AN INDORSER RECEIVES NOTICE OF A QUALIFIED ACCEPTANCE. 5 gives the holder the option to require something to be done in lieu thereof.) ''Sec. Ray vs. EXPRESS HIS DISSENT TO THE HOLDER. Faulkner. R. Niagara Dist.^^ of the instrument. Tool Co. Myers vs. 145. 142. or he intentionally restricts or modifies the time of payment named in the bill in any way.'' 26. (Sec. 4 E.

that is.) By giving notice of dishonor to the drawer and all indorsers. general acceptance. 138. the holder will preserve his rights pending an unqualified. express their dissent. he obtains authority from each of them to do so. If he suft'ers loss by reason of having taken a qualified acceptance he cannot recover from the parties secondarily liable upon the instrument unless. dishonor unless the acceptance offered fully protects the rights of all parties to the bill. or has been taken. Their assent as well as their authority it may from be either expressly given or their may be implied words or conduct by implication. (Sec. 82 for explanation of the express waiver and of waiver Upon offered receiving notice that a qualified acceptance ])y is the drawee. having taken it and notified them. In general a qualified accei^tance should be refused by the holder and the instrument proceeded upon as upon take it. or. (See Sec. the drawer and indorsers must. they perils his right of recourse assent to it. That section provides that the particular facts and circumstances of each case and the customs of a particular place and business must be taken into consideration. What is considered a reasonable time must be determined from Section 193.226 THE NEGOTIABLE INSTRUMENTS LAW § 142 When a qualified acceptance is made or offered the holder may refuse to take it. within a reasonable time.) in regard to the matter. or until such time as the drawer and indorsers . before he takes it. He is entitled to have a general acceptance and if he does not obtain it he im- upon the drawer and indorsers of the bill. It has already been seen that an instrument once dishonored by non-acceptance or even by non-payment may afterward be accepted and restored to credit. their refusal to consent that the holder may and anyone who does not express dissent is considered to have assented thereto.

not hand over the his bill for dishonor and protest unless of other parties re- own it. the holder must use sound judgment in such a matter as this and . of course. interests and the rights quire . ACCEPTANCE 227 shall expressly authorize him to take the qualified acceptance offered by the drawee but.§ 142 BILLS OF EXCHANGE.

Section .

or at sight. or on demand after date. If such a its presented for acceptance is on the day of maturity and acceptance refused . must first be presented to the drawee for acceptance before If all it is being presented to him for payment. that presentment for payment alone the is necessary to charge drawer and indorsers upon such a bill. bill may be presented for payment at the if residence or usual place of business of the drawee it specifies no other place of payment (Sec. sented for acceptance the drawer and be discharged. It has been held that a bill of exchange payable upon a day certain or at sight. if it an inland or a foreign payable at a fixed period after sight or demand. it expressly provides that shall be. The the third sub-section which requires presentment when bill is payable elsewhere than at the drawee's resi. 73). but if its presentment for acceptance is required for some other reason bill is it must it be made. if it fix its maturity. Sub-section 3 nullifies all these decisions and a bill of exchange payable at a designated certain time. or on demand after its date at any place other than the residence or usual place of business of the drawee.3 BILLS OF the instrument is EXCHANGE is 229 Whether bill. such an instrument need not be presented for acceptance because of the provision of Sub-section 3.§ U. Since a It must be first presented for acceptance. or if it is subject to any condition requiring acceptance in order to sented for acceptance. It is not pre- indorsers will no longer bill sufficient or proper to it await the maturity of a so drawn and present for payment. dence or usual place of business effects a change in the law in some States. need not be presented for acceptance even though the place of payment which it names is not the drawee's usual place of business or residence. it must be preof course. It must be presented.

Div. according to the character of the bill. 127 App. nor can the drawee's liability upon the instrument be any other way. 2. Y. 27 N. for cannot otherwise be known fixed in whether or not the instrument will be paid. 586. tion to be presented for acceptance must either present it for acceptance or negotiate it within A reasonable time. N.) 624.230 THE NEGOTIABLE INSTRUMENTS LAW § 144 need not again be presented for payment. (See next section and Sec. to present for acceptance even it when it is payable at a certain future day. but it ma- turity if too long in its course without further negotiation. 111 89 N. but its negotiation may not be delayed for an unThe holder to whom such reasonable length of time. (N. Y. or until the day of payable at a fixed time. the it On the contrary.^ but in such a case the delay to make presentment must be satisfactorily accounted for. the drawer and all inporsers are discharged. 144. Park Bk. . 927. 147. 8. Y. it may from one person time. to the drawee for acceptance Plate Nat'l vs. wise provided. the holder of a bill which drawer and is required by the next preceding secindorser. it is usual and best if bill is intended for further negotiation. 628. if to another for an indefinite length of its payable on demand. vs." Wlien failure to present releases So long as a bill it which requires presentment continues need not be presented for acceptance. must not stop One who does not intend to negotiate the instrument further it should at once present 1. Saitta. E. Reynolds.) must not be understood from the provisions of this section that instruments which do not require acceptIt ances may not be presented.2 Except as heeein other''Sec. to be negotiated an instrument is transferred may and pass it on in the usual thus circulate course of business by indorsement or delivery. 1106. If he fail to do so.

127. probably would be 71 read.) The failure of the holder to present the negotiate it bill for acceptance or to within a reasonable time will release the drawer and that one all is indorsers who became parties prior to chargeable with the delay. 71. 193. who (See Sees. contemplate more prompt negotiation and presentment both for acceptance and payment than do promissory notes and it would be entirely unsafe to delay presentment of a bill for acceptance for the same length of time for which one might safely delay the presentment of a note for pay- ment. he is required to What is an unreasonable delay will be determined in accordance with Section 193. 53. or at what time in the negotiation of the bill the unreasonable delay occurs. (Sec. which 3. for the facts of each particular case and the custom of each community or l)usiness are to be regarded. 368. therefore.§ 144 if BILLS OF the instrument is EXCHANGE do so. Snydam. Allen vs. no matter where his position may be in the chain of title. In this connection Section and what is there said is referred to and should be The custom of merchants and banks differs in regard to presentment of notes and of bills and what would be considered a reasonable delay as to the first. 7. Drafts or bills as they are now used in this country. in their present use. A bill. . and their release will relieve them of all liability to him and to the endorsers subsequent to him. you have observed the provision in Sec. its Either negotiate the it bill within a short time after receipt or present to the drawee for his accept- ance. 310. No rule of delay can be given. regarded unreasonable as to the other. 17 Wend.) Of course. Dec. for collection. might be and. see note in 34 Am.^ 231 and in the hands of an agent. by which the drawee does not become liable upon the bill unless and until he accepts it.

281. R. presentment may be made to him Presentment. . 466. Sharp vs. "Sec. 9 Ind. . by the holder or some one acting for him. unless one HAS AUTHORITY TO ACCEPT OR REFUSE ACCEPTANCE FOR ALL. Drew. if ity. 145. 16 L. 36 Md. but does not become his obligation to pay until it obtains his acceptance. how made. Where the drawee is dead. or to his trustee or assignee. 11 Am. IN WHICH CASE PRESENTMENT MAY BE made TO HIM ONLY.'' The manner in this of making the presentment is prescribed presentment for acceptance is required it must be made before the instrument is overdue. S. Hale. of the the holder's duty to satisfy himself that the person who accepts on behalf no acceptance is obtained. (U. ON A BUSINESS DAY AND before the bill is OVERDUE. TO THE DRAWEE OR SOME PERson authorized to accept or refuse acceptance on his behalf. presentment must be made to them all. to satisfy himself that the person who refuses the bill is likewise acting by the drawee's author- drawee is authorized to so do or. If an acceptance is taken from or the presentment it is is made to any person other than the drawee. and the holder may require the agent Wiseman vs. Chiapella. Ed. Sehuchardt vs. When must be made to the person named in the bill as the drawee or to some one to whom he has given authority to accept or refuse the bill in his behalf. Where a bill is addressed to two or more drawees WHO are not partners. to show the 23 How. 5901.232 THE NEGOTIABLE INSTRUMENTS LAW § 145 continues to be negotiated without acceptance remains merely an order upon the drawee to pay the sum it mentions. Presentment for acceptance must be made by or on behalf of THE HOLDER AT A REASONABLE HOUR. Where the drawee has been adjudged a bankrupt or an insolvent or has made an assignment for the benefit of creditors. and it section. presentment may be made to his PERSONAL REPRESENTATIVE 3. 514. 2.^ 4. and: 1.) 368.

The requirements of those two sections and of this one are alike and it will not be necessary to repeat at a reasonable The presentment must be made the explanations here. Title I. The provisions of Sub-sections honor when the bill is 1 and 3 of this section are similar to those in regard to giving notice of dis- addressed to two or more drawees who are not partners. read Sections 72 and 85 and what is there said in regard to presentment for payment.^ Presentment should then be made ment or attempted in the manner explained in the treat- of the provisions of the Act in regard to giving no- tice of dishonor under similar circumstances. If one of several drawees or one of a firm accepts the instrument. In this connection. but the holder provision in his favor 5.) If the drawee is dead. it The principles agency from which behalf of his principal are discussed at Section 19. Melton. hour on a business day. its acceptance by anyone acceptance (Sec. or one of the drawees. 133 Mass. 369. If the bill is not addressed to anybody but is payable at a designated place. (See Sees. presentment for acceptance to his personal representative need not be attempted. Smith vs. . It is excused and the bill may be treated as dishonored by non- may waive this and present the bill to the personal representative of the deceased drawee if he desires to do so. 100 and 101. 148). or when the drawee. is a bankrupt or an insolvent.§145 BILLS OF EXCHANGE 233 nature and extent of the authority he claims to have This authority may have been expressly given or it may be implied from the relations between the drawee and the of the law of can be determined whether the person accepting or refusing to accept the instrument on person who acts for him. 371. he will be bound by his acceptance.

it is required that the presentment be made to him at either the one place or the other.234 THE NEGOTIABLE INSTRUMENTS LAW § 146 deemed to be an admission that he was intended as the drawee. Where a place of payment is designated in the instrument presentment there is regarded as sufficient if the residence or place of business of the drawee is unknown to the holder and cannot be ascertained with reasonable diligence.) 146. if the presentment made before twelve noon. 368.""* And remember it that when a bill is payable elsewhere than at the residence or usual place of business of the drawee must ))e pre- sented for acceptance to the drawee at his residence or place of business or wherever he may be found before it is jH-esented for payment *'SeC. A BILL MAY BE PRESENTED acceptance on any day on which negotiable instruments may be presented be made. ON THAT DAY\" In connection with this section read what has already been said in explanation of Sections 72 and 85. "Colorado. (Sec.^ 5a. at the place where it is payable. Dec. (Sec. 424. 85 Am. or can be ascertained with reasonable diligence. vs. Those V * days ^„«On what presentment may ^'^^^ two sections are expressly made applicable to this one. tions seventy-two (72) and eighty-five ^^' "When Saturday is not ^^'^^ ^^ ^"^^ ^^^Arizona otherwise a holiday. . Mason Donsay. but where the drawee's residence or place of business is at that place will be known. NOON. 1. 35 111. presentment for acceptance MAY' BE MADE BEFORE TWELVE o'CLOCK. Sub-section 5. for payment under the provisions of secKentucky. a bill may be presented for acceptance is upon that day o'clock. While under Section 85 presentment for payment of a bill falling due on Saturday should not be made until the next business day.) The Act does not attempt to designate the place where presentment for acceptance must be made. 143.

The drawer and indorsers will not be discharged by the failure of the holder to present the instrument for pajanent upon the day of its maturity if the delay is caused by the time consumed in the endeavor to first present the bill for acceptance. ance is excused. however. present the bill for pa>nnent at the place where it is drawn to be payable as soon as possible. and if he has used reasonable diligence in attempting to do so and yet is not al)le to present it for pajmient at the place of pay- ment on the day when it becomes due. 148.^^. the delay caused by presenting the bill for acceptance will excuse the delay in presenting it for payment. comes into the possession of the holder too late to permit its present- ment for acceptance before presenting it for payment at the place where payment must be demanded on the day that it falls due. When presentment is ''Sec. not presentment for payment. is Where the holder of a 147. the delay. AND DOES NOT DISCHARGE THE DRAWER AND INDORSERS/' When a time bill which requires presentment for acceptance by reason of Sub-section 3 of Section 143. IN either of the following cases . THE DELAY CAUSED BY PRESENTING THE BILL FOR ACCEPTANCE BEFORE PRESENTING IT FOR PAYMENT IS EXCUSED. bill rj. any necessary delay caused by first presenting it for acceptance is excused. treated as dishonored by ance. The holder of a bill drawn in that manner is required to present it for acceptance to the draw^ee at his residence or his place of business or w^herever he can be found. EXCHANGE 235 Presentment when time insufficient. The holder must. being excused. Presentment for acceptand a bill may'' be non-accept: excused. drawn payable elsewhere than at 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.§ 147. 148 BILLS OF "Sec. because it is payable at a place other than the residence or usual place of business of the drawee.

or if he has absconded." ON SOME OTHER Presentment for acceptance need not be made or attempted if the drawee is dead. S. or has absconded. R.*^ is name is used by some other employed for the purpose of (Sec. is Where. or person under other legal disability.''' the holder can not do so. The term. after the exercise of 2. reasonable . 86 Tenn. . PRESENTMENT CANNOT BE MADE 3. If the presentment has been made in an improper manner and the bill is refused by the drawee. It means a nonif existing person. THE NEGOTIABLE INSTRUMENTS LAAV §148 Where the drawee is dead. if he has departed secretly or is in hiding to escape paying his debts or to escape arrest. as an infant. 37 A. 7.236 1. after attempting presentment with reasonable diligence. 9. after making such efforts to present the bill as an ordinarily prudent and careful person would make under the same or similar circumstances. dili- Where. ACCEPTANCE GROUND. and not by rea6. Bank of Charleston. but his refusal is stated to be upon some other ground. or fictitious person or a person not having capacity to contract by bill. ''fictitious person" this Act in its used here as elsew^here in very broadest sense. 201. that is. Phillips vs. its presentment is then also excused. Y.) Presentment for acceptance is also excused if the drawee is a person who has not the power to contract by bill. And if. 982. Mercantile Nat'l Bk. and the bill need not be presented if the drawee is is a fictitious person. 140 N. 556. one who has not the capacity to enter into an acceptance to which he can be held in law. one who is is not a party to and who not interested in the instrument in connection witli whicli his person but w^hose name deception. Sulsbacker vs.. 35 N. 596. that is. although presentment has been HAS BEEN REFUSED irregu- lar. that is. or an existing person. gence. E.

Sub-division 8. AND the BILL IS NOT ACCEPTED. under these circumstances. 149.' ' § 149. or when its presentment is excused by the preceding section and the bill is not accepted by the drawee. excused. 136 and in the manner provided in Sec. 2. its proper presentment is. cepted within the prescribed time. As upon a dishonor by the refusal of the drawee The bill • to accept the bill notice must then be given in accord- ance with the provisions of Sections 89 to 118 of Title I. Where a bill is duly presented for acceptance and is not acaccepted. When and indorsers of the presentment for acceptance is excused the drawer bill are not discharged by the failit. When presentment for acceptance is excused. 137 he must treat it as dishonored by non-acceptance. A non-acceptance : bilt. is dishonored by When it is duly peesented foe ac-" 1^ CEPTAXCE. ' becomes dishonored by non-acceptance when it is presented and the kind of acceptance that is either required or permitted under this Act is refused or cannot be obtained. "Sec 150. "Sec. ure of the holder to present When dishonored by nonacceptance. and SUCH AN ACCEPTANCE AS IS PRESCRIBED BY THIS Act is refused or cannot be obtained. If he does not at once proceed upon its dishonor and give notice of dishonor to the drawer and all indorsers whom he desires to hold in the manner provided in Sections 89 to 118 inclusive. 150 BILLS OF EXCHANGE 237 for acceptance son of the improper presentment. and it must be given to all parties whose liability the holder desires to fix. or. he w^ll lose his right of recovery against . ' When and it is the holder has presented the bill for acceptance not accepted by the drawee within the time pro- vided in Sec. the person presenting it must treat the bill as dishonored BY non-acceptance OR HE LOSES THE RIGHT OF RECOURSE Duty of holder where bill not AGAINST THE DRAWER AND INDORSERS.

He has the right to at once proceed against the drawer and indorsers and they must pay the bill regardless of the solvency of the drawee and his ability to pay. . who may take it up and pay The drawer is." Rights of holder whete hill aok The holder of a non-acceptance is which has become dishonornd by not required to proceed against the bill it is person upon whom drawn to enforce it and he is is not required to present and coUect for payment after it.I'^l^ hex a biul is dishoxobed by xox-acceptaxce. Their liability among themselves determined bv Section 68. 129 for definitioii) must be protested. appears npon its it face to be a foreign bill (see Sec.) test will be The provisions ' of the Act in regard to pro- fonnd in the next Snb-division. unless. Title I. of recoubse agatxst the drawer axd ixDORSEBS ACCRUES TO THE HOLDER AXD XO PRESEXTilEXT FOR PATMEXT IS XECCESSARY. (Sec. Sub-divi5?ion 5. liable to is all. of course. 152.238 THE XEGOTIABLE Ds'STEUMEXTS LAW If the bill § 151 them. subsequently accepted. ^Vs upon a promissory note which has become dishonored by non-payment. the indorsers upon the bill are each liable to the holder and each is liable to all parties to the self instrument subsequent to himit. with his consent. ax immediate right aeeefiied. its it dishonor by non-acceptance. ' ''*^^*^.

it includes all of the steps necessary to charge the parties secondarily liable upon the instrument protested as well as the formal declaration of dishonor called protest. 1. Peoples Bank vs. Section 1. 160 ^Vhere made. 153 1. familiar with these as well as the provisions of Subdivision 3 of this Title upon the subject of presentment for acceptance. Peotest. \rhen nsed in reference to commercial paper. iuclusive. ' How made. relied and if the protest is to be exclusively upon to prove the it liability of the parties to be charged iipon dishonor must show that a demand was made and that all the necessary steps were taken to These steps are the presentment for fix their liability. PROTEST 239 8rBr)ivisir)X IV. When to be made. Law . Broc'ke. Mason vs. Protest both for non-acceptance and non-payment. § 1.^ acceptance or payment at maturity and the usual proceedings upon dishonor. In its broader. its sense the term protest. Protest where bill is lost. 159 By whom made.52 Section Protest before niaturilhr (for better security) When protest dispensed with.. 71 X. 7.54 155 156 157 158 In what cases necessaiy. more popular sense and as used among banks and men in business. 31 Mvl. ^ 4«2. means only the foiTQal declaration of dishonor drawn np and signed In Strict technical by the person making the protest. J. and the provisions of this Act bv which these are governed will be found in Sections The protesting officer must be 70 to lis. Kilconrse.52 BILLS OF EXCHANGE.

Mankey vs. W. 561. Hoyt. that outside and a bill. al- in If the holder neglects which requires it he will lose to make protest of a all right of recourse upon the drawer and indorsers.240 THE NEGOTIABLE INSTRUMENTS LAW § 152 "Sec. one which is not or does not from its face appear to be both drawn and payable in the is same State. While promissory notes and inland bills of exchange may be protested. Protest for non-acceptance and for non-payment are made in the same manner and differ only in the statement of the cause for protest. which originated payable within the United States. D." A bill. 167). 152. 27 S. 230. or if the instrument is which has been accepted for honor supra protest. protest is necessary and is it is equally neces- sary whether the dishonor by non-acceptance or nonbill payment.^ and. 132 N. including a check. bill bill. 167. which by Sec. then. 129 may be treated as an inland though it is actually drawn in one State and payable another does not require protest. If IT IS NOT SO PROTESTED. AVhERE A BILL DOES NOT APPEAR ON ITS FACE TO BE A FOREIGN BILL. WHICH HAS NOT PREVIOUSLY BEEN DISHONORED BY NONACCEPTANCE IS DISHONORED BY NON-PAYMENT IT MUST BE DULY PROTESTED FOR NON-PAYMENT. . PROTEST THEREOF IN CASE OF DISHONOR IS UNNECESSARY. Where a foreign bill apFEARING ON ITS FACE TO BE SUCH IS DISHONored by non-acceptance it must be duly PROTESTED FOR NON-ACCEPTANCE. holder The section referred to also provides that "unless the contrary appears on the face of the the may treat it as an inland bill. They are discharged.) Upon is. AND WHERE SUCH A BILL. 2. 129. protest of exchange is not necessarj^ in order to contains a reference in charge any party upon them except in the case of an inland bill when it case of need and the holder desires to resort to the referee for acceptance (Sec. a bill (Sec. as defined in Sec. the dishonor of a foreign bill of ex- change.^' In what cases protest necessary. THE DRAWER AND INDORSERS ARE DISCHARGED.

pay. or no one was found upon whom proper demand could be made. The cause or reason for protesting the bill. 1. The protest must specify the time and place of presentment and recite that the instrument was presented to the drawee or acceptor or to some other person authorized by him to accept. if any. 4. and the manner thereof 3. a scroll seal. containing a copy of the instrument protested.'' The protest is a writing by the person making it. and a statement that the instrument was presented to the person obliged to pay or accept it. that reason must be stated in the protest. fact that the drawee or acceptor could not be the or . If no person w^as found at the place of presentment and it. The demand made. was given.§ 153 BILLS OF EXCHANGE. The fact that presentment was made. signed by him. the writing must state what demand was made and what answer. FOUND. as the case may be. the protest must so state. and if any reason was given for the refusal pay or accept the instrument by the person of whom the demand was made. 2. to seal is not required. if any. bill. protest. The TIME AND PLACE OF PRESENTMENT. at his signature. although it is usual to attest the solemnity of the act of protest by making upon the paper. If the protest is made by a Notary Public he must sign it in his official capacity and attach his notarial If it is made by a person other than a Notary a seal. and that its payment or acceptance "was refused. 241 protest must be anmust contain a NEXED TO the AND SEAL OF HAND THE UNDER BE MUST COPY THEREOF. If anyone was found upon whom demand was made. this being a circle . or refuse and that payment or acceptance was demanded. and the answer given. AND Protest: The made. AND MUST SPECIFY. or to which the instrument itself is attached. PROTEST how ''Sec. and was refused. or THE NOTARY MAKING IT. 153.

or respectable resident of the place where. is Any respectable resident of the place where the bill is dishonored may make lives at the place A resident is. lost. is a per- son w4io has his place of residence. 155 that thereof. unless this is permitted by statute or firmly established and sanctioned by the custom of a particular place. and who are generally known to be truthful persons. Protest may be made by: ^ j^ Notary Public.' 242 THE NEGOTIABLE INSTRUMENTS LAAV made with the pen within which tlie § 154 or bracket *'seal" tested is is it word cannot written. The protest is a personal act and cannot be made by one person in another's name. . 154. Ocean Nafl Bk. 275. It is not necessary that they accompany the person making protest when he presents the instrmnent believed by other persons in the 3. If the instrument which is to be proit or the person entitled to hold it is obtain or has no copy. 49 N. made by a Notary be made by a Notary. ^Yil!iams. 102 Mass. dishonored. Y.^ If protest is made by a resident. Coinmeroial Bank vs. By any ' The protest may be and usually Public but it need not necessarily the protest. whom made. Ml. THE bill is dishonored. Cred- ible witnesses are such persons whose testimony would be accepted or whose statement of any fact would be community in which they live. IN THE PRESENCE OF TWO OR MORE credible witnesses. provided in Sec. 269. Varnum. by "Sec. the protest shall contain written particulars What Protest: are written particulars will be explained under that section. that is one who where the instrument and a respectable resident is one who is in good standing in the community in which he lives and who enjoys the respect of his neighbors and associates. vs. he must make it and sign it in the presence of two credible witnesses or acknowledge to them that he did so. 2.

(N.§ 154 BILLS OF EXCHANGE. Citizen's Svgs. Nelson vs. 36 N. be invalid for that reason'' unless statute.. . App. if it has not been lost. to the party 4. Div. 6. Cas. 7. Patton 962. 639. S. of Lafayette. Bk. N.^ even if he is a stockholder in the bank. 5. 26. Northbrid^e. 1 App. who to Dyknian vs. One w^ho cannot write best that the protest be his name may sign by mark. 69 Fed. The protest is never made until after the instrument has been dishonored except when it is protested for better security under Section 158. A. 4 Ann. The person making the protest must take the instrument. 36 N Y. Northbridoe. would not appear to made so by other There is always considerable uncertainty and confusion.) 26. S. 592." But the practice is not recommended. 28. In the absence of some prohibitive statute or regulation in the banking laws there is no legal objection to the protest being made by a notary who is also a bank officer. Bk. 5 L. 664. 965. 798. S. their presence being required only at the execution and signing of the protest by the person making it. and they must attest the protest to the as witnesses. E.*'' and it has been held his that an officer of a bank his who is a notary may protest own note. though there need not be. 29 U. about the right of an officer of a bank to legally protest paper belonging to bank or in which his bank is interested. 53 S.. is destroyed or wrongfully detained. 554. 97 Ky. Y. AVhile it is made by a disinter- it and expressly qualifications the possessing person any provides that which it prescribes may make it. Div. It is not usual that any- ested person the Act does not require one who is a party to the instrument shall it is make the pro- test but if done. 124 Ga. 1 App. 211. vs. and the protesting officer possesses it the qualifications of this section. Dvknian "962. S. Moreland's Assignee vs. First Nat'l Bk. PROTEST 243 drawee and makes demand. vs. Y. R.

244 THE NEGOTIABLE INSTRUMENTS LAW it. unless delay is excused as herein provided. and such other information as he may think necessary to enable him afterward to make out the formal protest. and sign this memorandum upon the instrument either by name or by This is called *' noting" and it is done to his initials. Protest: when to ''Sec. such peotest must be made ox the day of its dishonor. the reasons for the protest. When a bill is protested.'" The officer must protest the instrument upon the very day of its dishonor unless delay is excused by reason of the provisions of Section 159. which has already been dishonored. Such refusal does not dispense with the formality of presentment and demand by the protesting officer at the place where protest is to be made. serve as a truthful reminder which will enable the person . the demand made and the answer given. the person pro- must declare that he does protest the instrument and must write upon it. After pre- senting the instrument. and in his register. or acceptance. 81) or in giving notice of dishonor. even if it has already been presented by the holder and payment or acceptance has been refused. § 155 where it is to be paid or accepted. except as it is proat the place pay or accept vided in Section 156. 113. the protest MAY BE subsequently EXTENDED AS OF THE DAY OF THE NOTING.) in The protest usually proceeds two steps. the month. date and year when it w^as done. a memorandum of that fact. When the cause of the delay no longer prevents be it being done. 155. (Sec. be made. the protest must made with reasonable diligence. When a bill has been duly noted. is The same degree of in- diligence required as is ncessary in presenting an strument for payment (see Sec. as the case testing the instrument may be. making demand and after failure to obtain pay- ment.

^ unless. OR DEMAND ON. scribe the customary. of of the instrument in the upon dishonor the notice is manner and inclusive. upon exclusively as proof that a demand was made and all necessary steps taken in order relied to fix the liability of the secondary parties. as I have already stated. .^ Persons who make protest of negotiable instruments must make themselves familiar with the provisions of Sub-division VII. IT MUST BE PROTESTED FOR NON-PAYMENT AT THE PLACE WHERE IT IS Protest: where made. Peoples Bank vs. except THAT WHEN" A BILL DRAWN PAYABLE AT THE PLACE OF business. or to whom. 472. of the Act. scribed in Section 153." When is the the de- protest is extended the protesting officer will issue to holder a certificate of protest. HAS BEEN DISHONORED BY NON-ACCEPTANCE. A bill must be protested ^^ -jhe place where it is dishonored. Kilcourse. which governs the manner of giving notice of dishonor. extending the protest. 442. and it may be done as of the date of This is '* the noting. J. 71 N. or residence of some person other than THE DRAWEE. Brooke. make out his formal cerbe Upon this being done the protest may made at any subsequent date. even after action has been begun on the instrument. 156. THE DRAAVEE IS NECESSARY. AND NO FURTHER PRESENTMENT FOR PAYMENT TO. 75 Ala. Brown.^' 8. be given This certificate Notice of dishonor must. how. officer the at the time required if and by Sections 89 to 118. "Sec. 7. Law. given by the protesting protest usually recites that such notice It is was de- given and to whom. Martin vs. 31 Md. course. too. the protest is and now repeat for emphasis. 9. that it manner of giving the notice although it is not necessary that the certificate recite that notice was given or state what notice was given.§ 156 BILLS OF EXCHANGE. Title I. PROTEST the protest to later 245 making tificate. EXPRESSED TO BE PAYABLE. Mason vs.

4. since he has been apprised of the presence of the instrument by its presentment to him for acceptance.). § 157 Demand or a bill payable at a fixed period after sight. Y. When a bill is so drawn requires presentment for acceptance before being presented for payment. but the protest must be made at the place where the instrument is expressed to be payable. 10 Barn & C. 3 Johns (N. .) ''Place" may be understood to mean any place in the same city. Mitchell vs. A bill which has been protested for subsequently mext. in order that the drawee may have an opportunity to examine the instrument and the state of his accounts with the drawer. to provide funds with which to pay able if it at the place where it is pay- he intends to do ''^EC.246 THE NEGOTIABLE INSTRUMENTS LAW or sight bills. Barino-. 3. " non-acceptai^ce may be protested for non-payof the instrument AMiile protest upon dishonor by non- payment after it has already been protested upon nonacceptance. Xo further demand need be made it upon the drawee. Franklin. than that at which the drawer lives or where he conducts and it may mean another ness community other than that one his business in town or busiwhich he lives it or does business. Mason vs. Sub-sec.^*^ Protest both for non-acceptance and nonpayment. as used in this section (Sec. town or business community other city. except when required by 10. foreign bill If such an instrument it is a and is dishonored by non-acceptance would seem that it is necessary to protest it upon its dishonor by non-acceptance (Sec. 202. or one payable at a designated maturity are often made payable at a place other than the residence or usual place of business of the drawee and these require presentment for acceptance before being presented for payment. so. 143. 152). need not be made. 157. whose duty seems then to ])e.

BEFORE THE BILL. THE HOLDER MAY CAUSE THE BILL TO BE PROTESTED Protest before maturity where acceptor is FOR BETTER SECURITY AGAINST THE DRAWER AND INDORSERS. The is to be made and acceptance an manner in which such the formalities which attend it are prescribed and de- usually prepares the way scribed in Sections 161 and 170. "Sec. been accepted or unless.§ 158 BILLS OF EXCHANGE. PROTEST it 247 the preceding section. the acceptor becomes insolvent or a banka bill if rupt or bill will he has made an assignment for the benefit of to fear that the his creditors and the holder has reason not be paid at maturity. notice of subsequent dishonor by non-payment is not required (Sec. If notice has been of its dishonor by non-acceptance has its al- ready been given. 158. MATURES. as is provided in the preceding section. it must be done. he may protest it for better securit}^ This protest does not hasten the maturity of the or dispense with its bill protest at maturity if protest is then required by the nature of the instrument. before maturity. This protest does not give the holder an immediate right of recourse against . the bill has been dishonored by non-acceptance at the drawee's place of business or residence. effect is to Its ordinary it bring about an acceptance for honor and for such an acceptance. in the meantime. or elsewhere. 116) and no further protest need be made in order to charge drawer and indorsers unless the instrument requiring protest has. bill) and if meantime the instrument (a foreign accepted. and it is payable at the place of business or residence of some person other than the drawee. Where the acceptor has been adjudged a bankrupt or an insolv^^^^ ^^ -^^^ made an assignment for the BENEFIT OF CREDITORS.'^ When its has been accepted and afterward. in the may be done if desired.

the noting After the cause of the delay has been removed. ment itself cannot be produced by reason of . 160. with particulars showing its date. When the cause of delay ceases to operate. and all endeavor used to be correct and exact which the particular circumstances wall permit. If the instrument which if it is is to be protested is lost or destroyed or son the wrongfully detained from the perit who is entitled to hold at the time when protest of must be made. Protest is dispensed with by any circumstances which would dispense with notice of dishonor.) The provision in this section regarding delay in noting or protesting is the same as in Section 113. inclusive. 111. the bill MUST BE noted OR PROTESTED WITH REASONABLE DILIGENCE. If a and indorsers. must be done or the protest made promptly. (Sec. or of all whose names can be obtained.248 THE NEGOTIABLE INSTRUMENTS LAW §159. This may if be sub- stituted for the instrument to be protested the instruits loss. protest may be made on a copy or written particulars thereof. the protest may be made upon a copy bill if copy cannot be procured a written description of the instrument must be drawn up." Protest where bill is lost. Title I. w^hen and to whom payable. misconduct or negligence. Sec.'' protest ' ' When dispensed with. Where a bill is lost or *'Sec. 159. the names of the drawer one can be obtained. by which delaj" is excused in giving notice of the dishonor of the instrument by non- payment. amount. Protest may also be dis- pensed with by waiver.160 drawer and indorsers as upon dishonor and he cannot sue them upon the bill before its maturity. Delay in noting or protesting is excused when delay is caused by circumstances BEYOND THE CONTROL OF THE HOLDER AND NOT IMputable to his default. The circumstances which dispense with the necessity of giving notice of dishonor will be found in Sections 109 to 118. destroyed or is wrongly detained from the person entitled to hold it.

) Hinsdale vs. Miles. His intentional destruction of the instrument will be deemed a cancellation and liberately the instrument discharged. its production is not excused.§ 160 BILLS OF EXCHANGE. PKOTEST 249 destruction or wrongful detention from the holder and must then be made as though the instrument were actually in the possession of the holder. . 331. If he has himself de- and intentionally destroyed the bill he cannot protest on written particulars. 11.^^ The holder must himself be without fault in his failure to produce the instrument and if its detention is not wrongthe protest ful. (Sec. 5 Conn. 119.

Acceptance for Honor. after it is called an it acceptance "Supra protest" only after the bill for the reason that protested. Section Section 161 When bill may be accepted 166 Maturity of bill payable after sight accepted for for honor." When bill may ''Sec. Acceptance for 162 167 Protest of bill accepted for made. can be made has been It is an acceptance by a person. a stranger. Where be accepted for . acceptance or protested for better security. may at any time before maturity accept it for honor has been protested for non-acceptance or if. any person not already a party liable upon may intervene and. made. after acceptance by the drawee. AND IS not overdue. 164 165 Liability of acceptor for 169 170 When delay in making prefor honor. OR FOR THE HONOR OF THE PERSON FOR WHOSE ACCOUNT THE BILL IS DRAWN. the bill is protested This acceptance before maturity for better security. how drawer. honor. THERE MAY BE A FURTHER ACCEPTANCE BY A DIFFERENT PERSON FOR THE HONOR OF ANOTHER PARTY. 163 When deemed to be an ac168 Presentment for payment to ceptance for honor of acceptor for honor. sentment is excused. honor. with the consent of the holder. a bill of exchange has been protested for dishonor by non^onoT. The acceptance for HONOR MAY BE FOR PART ONLY OF THE SUM FOR WHICH THE BILL IS DRAWN AND WHERE THERE HAS BEEN AN ACCEPTANCE FOR HONOR FOR ONE PARTY. etc. 161. Dislionor by acceptor honor.250 THE NEGOTIABLE INSTRUMENTS LAW § 161 SUBDIVISION V. ANY PERSON NOT BEING A PARTY already liable thereon MAY. WITH THE CONSENT OF THE HOLDER. INTERVENE AND ACCEPT THE BILL SUpi'tt PROTEST FOR THE HONOR OF ANY PARTY LIABLE THEREON. 'Wl\q\\ the drawee has refused to accept the bill as it drawii. how honor. Engagement of acceptor for honor. .

however.that one for Avhose account it has been drawai. Walton Baring vs. A. he bill is protest before maturity for obliged to await maturity of the before he can enforce his right of recourse against the acceptor for honor and those parties to the instru- ment for whose honor only if it was accepted.) 264.§161 or tlio BILLS OF drawee. Clark. 80 Am. otherwise require the acceptor for honor to pay the When an acceptance for honor its is obtained by the holder by reason of better security. made in order to save the credit and the honor of the drawer or any other party who is liable upon the bill. 567. 1. Scliimmelpennicli vs. .^ The acceptance for honor may be for all or a part of the sum for which the bill is drawn and there may be more than one such acceptance for one or more than one party. if EXCHANGE 251 he is not already a party liable upon the instrument. 167. 138.) 220. 209 Note. The drawee. 7 L. or of. properly present the it to the drawee at maturity and protest it again if the drawee persists in his determination to allow the bill to go to dishonor and (Sec. 347. See note 92 Am. 1 Pet. Bavard. Williams.) is not then paid. not paid at mal)ill He must. Ed. 19 Pick (Mass. (U. his acceptance will take the distinctive character of this peculiar and very unusual be kind. R. D. Ross. 44 Ala. may accept it for honor and if he does. this ceptance creating a conditional obligation to the form of pay the acbill drawee does not pay it at maturity. then.^ The acceptance for honor if may made only with the consent of the holder and the holder permits the bill to be accepted for honor he has then the right to enforce it against the acceptor for if it is honor as well as turity. 7 L. 579. S. if he is unwilling to accept the bill generally and is not bound in good faith to do so. Swope vs. 2. The holder cannot bill. all other parties. vs. Dec. 40 Pa. 186.

no provision in the Act which seems is the dnty of the acceptor for honor immediately give notice of the fact of his acceptance the party for whose honor he accepts the bill. P. But of has been considered essenif tial to his right of recovery he pays the bill give immediate notice his intervention. Story on 4. 7 Ohio (Pt. and must be signed by the acceptor for honor/ ^ Such an acceptance must be in writing. By the law of agency any one can do b^^ another that dicate that it is 3.* AYhen an acceptance for honor is made for the honor of one party other acceptances may be subsequeiitly made for the honor of other parties liable upon the bill. Acceptances for honor: how made. 2 Camp. does not seem to affect injur- iously his right to recover to upon the it bill if he is required that he pay it at maturity. but it seems there cannot be a series of acceptances of separate parts of the sum for the honor of the same party. Jackson vs.^ If any acceptor for honor is required to pay the rights are as fixed by Sections 175 and 177. If he fails to do so the omission. " If the acceptance does not expressly state that it is an acceptance for honor its language must in' . (Eng. ' and any of the above forms do that sufficiently. Pui?h. An acceptance for honor supra protest must be in writing. It is usually made upon the bill and the words generally employed are ''Accepted Supra Protest" or "Accepted for the " or in their abbreviated form Achonor of cepted S. Wood vs. and indicate that it is an acceptance for honor. Bills. 162. 2) 156. in so far as it can be determined from the Act. . 259. bill his "Sec. for bill the reason that the rights of other parties to the thereby suspended and are may be injuriously affected by it.) 447.252 THE NEGOTIABLE INSTRUMENTS LAW is it § 162 While there to require to to it. Sec. Hudson. It must be signed by the acceptor for honor.

^^^.^ Liability of the acceptor for honor. drawer. upon the familiar doctrine that a written contract cannot be varied by parol proof. .^^'^^^^ acceptor for honor is liable to the holder and to all parties TO the bill subsequent to the party for ' ' whose honor he has accepted. the absence of words positively and clearly statis ing that the acceptance for honor was made for the honor of some other party even if it to the bill this cannot be shown It be a fact. it is deemed to be an acceptance FOR the honor of THE DRAWER. if the next section. therefore. 164 BILLS OF EXCHANGE 253 wliicli lie can himself do and an acceptance for honor by is any person which When deemed made and is signed by his agent. and the honor of the his acceptance is will deemed to be for re- drawer he have no right of course against the indorsers after payment. is for his liability affected thereby as will appear from. 3 Dana (Ky. duly valid authorized for that purpose. all parties subsequent to the drawer. Gazzam Armstrong. Sec. that bill. is therefore most important that the acceptor for honor state clearly for whose honor he accepts the instrument. he gives the acceptance. Where an acceptance for honor does not expressly state for whose honor it is made." One who accepts of the bill to in this manner is liable to the holder whom it. 163. if he does not state for whose honor he accepts the liability 5. his extends to vs. for none of these are liable to the drawer." If the acceptor for his acceptance for honor does not expressly state in acceptance and in whose honor he accepts the bill his deemed to be for the honor of the drawer. of course. to be an acceptanci for honor of the * ' and enforceable. 557.) 554. parties after that party for whose It is and he is liable to all honor he accepts apparent.§ 163.





Engagement of

acceptor for honor.

His acceptance like any other is in the nature of an agreement that he will pay the bill. While he is a voluntary party to the instrument and may himself have no interest in the bill or its proceeds, he is bound by his agreement and must pay, but only after the holder has
duly presented the bill to the drawee and demanded payment and thereupon duly protests it for non-pa>anent if the drawee does not then pay it.^ Ordinarily when a bill has been dishonored and protested for non-acceptance and due notice given the drawer and indorsers they are not discharged by failure to protest it again for nonpayment, or by a failure to give notice of dishonor by non-payment. But in this respect the liability of an acceptor for honor and his rights differ from theirs. He
will be discharged if the holder fails to protest the bill

upon dishonor by non-pa>anent and
tice of the dishonor,

to give

him due no-

although protest had already been


prior to his acceptance for honor and notice of the

dishonor of the

by non-acceptance had already been

Where a bill payable after Maturity of bill "Sec. 166. payable after sight is accepted for honor, its maturjxy is calculated from the date of the noting for non-acceptance and not from the date of the acceptance for honor." A bill payable after sight requires presentment for


for honor.

acceptance to

fix its


(Sec. 143.)




Schofield vs. Bayard, 3 Wend. (N. Y.) 488. vs. Leverett, 10 Mass. 1, 6 Am. Dec. 97.






bill is

dishonored by non-acceptance, and

noted or

protested and notice of dishonor



it is

ward accepted for honor, the date when it is to become due is calculated from and determined by the date when noted upon its dishonor by non-acceptance. Its due date

not to be determined or affected by the date of the ac-

ceptance for honor.


act of ''noting" the protest is

defined and explained in Sec. 155.
Protest of bill accepted for nonor, etc.







provided in Section 152 that



than those appearing upon the face to be foreign bills do not require protest, yet certain bills, inland or foreign,

whether they appear upon the face to be such or do not so appear, must be protested for non-payment under certain circumstances.

tested for better security

supra protest


bills which have been proand are then accepted for honor accordance with this subdivision and a

These are

which contains a reference

in case of need.




are described under Section 158 and the latter in Sec-

tions 161

and 165. Such bills must be protested upon dishonor by non-payment before being presented for payto the acceptor for


honor or the referee

in case of

need and failure to do so will release the acceptor for honor from liability.
Presentment for



Presentment for payment ''Sec 168. to the acceptor for honor must be made
as follows:

acceptor for honor: how



j^ jg ^^


presented in the place

made, it low^ing its maturity.

where the protest for non-payment was must be presented not later than the day fol-






The acceptor for honor is entitled to have the bill presented to him for payment and presentment must be made to him within the time provided in this section. If the bill is to be presented to him in the place where it was protested for non-payment it must be presented not later than the day following its maturity. "Place" here


city or village, or business

community as defined

under Section


and attention

directed to Section

85 fixing the maturity of instruments which fall due on

Saturday, Sunday or any holiday.



bill is


to be presented to the acceptor for

honor in the place



was protested


must be forwarded within the

time provided in Section 104 for giving notice of dishonor by non-payment. The instrument need not and
should not be forwarded to the acceptor for honor but

should be sent to some other person or a bank at that place, and that person or bank authorized to present

him and demand its payment. The presentment must be made at the place named in the bill, if a place of payment is specified, or at the usual place of
bill to

business or residence of the acceptor for honor unless a different place of presentment is designated in his acceptance.

(See Sec. 73.)

If the acceptor for

honor does not

pay the bill the instrument must again be protested at the place where it is presented to him (Sec. 170) and notice of parties who are to its non-payment must be given to all be charged upon the dishonored instrument, in the manner and within the time required by the provisions of
Sections 89 to 118, inclusive.



169, 170




'*Sec. 169. The provisions of Section Eighty-one apply wheee there is delay presentment is in making presentment to the acceptor excused. p^P honor or referee in case of need." Any of the circumstances which will excuse delay in making presentment of any negotiable instrument for


delay in


payment as provided in Section 81 making presentment for pajTnent
honor or

will excuse delay in

to the acceptor for

to the referee in case of need.

But when the

causes of the delay no longer prevent

the presentment

must be made with the same degree
Dishonor of

of diligence as is re-

quired by that section in other cases.

by acceptor for

"Sec. 170. When the bill is dishonored by the acceptor for honor it must be protested for non-pay^ment by him. ,
of the bill

Upon dishonor
do so at

by the failure or refusal of

the acceptor for honor to






presentment in accordance with Section 168, must be again protested. Thus, such a bill may reFirst,

quire three protests:



dishonor for non-

acceptance by the drawee, next, upon dishonor by his

non-payment, and


by dishonor by non-payment

by the acceptor for honor if he fails to pay the bill at maturity, and upon each protest notice of dishonor is required to be given the drawer and all indorsers who are to be held upon the instrument. The certificate of protest usually states that notice of dishonor was duly and properly given upon dishonor of the instrmnent and

when it does, that was done.' When
bill, it

recital is


facie evidence that


there are several acceptors for honor

either of the whole or parts of the


called for




seems, be necessary to



upon the dishonor of each.

Zollner vs. Moffitt, 222 Pa. 644, 72 A. 285.





Payment for Honor Supra Protest.
Section Section 171 Who may make payment for 175 Effect on subsequent parties honor. where bill is paid for 172 Pa3'ment for honor; how honor.

Declaration before payment for honor. Preference of parties offering to pay for honor.



of refusal of holder





Rights of paj^er for honor.

The general rule of law that a stranger cannot voluntarily pay the debt of another without his knowledge and consent and acquire the right of re-imbursement, is
subject to the exception that in the case of bills of ex-






any person,
to the

whether he be a stranger or one already a party



intervene and pay it for the honor of some other The payment is made in this manner when it is

desired to protect the credit of the
the particular party for

generally, or of

whose honor




course the obviously easy

bill to


for the

way to accomplish the same person who desires to take up the
There are no


by transfer from the holder.


way of accomplishing this if the bill one payable to bearer or is indorsed in blank and it will not then require the indorsement of the holder. (Sec. 30.)
difficulties in the

If it requires his indorsement he


transfer the


without himself incurring any liability upon it by indorsing without recourse (Sec. 38), if he is unwilling to add
If ho will not consent to any form of transfer, the payment for his


to the security of the instrument.

honor must be resorted


The exception





171, 172
bills of


it is


only to

exchange and

not extended even to

negotiable notes.

The following

sections prescribe the




the pajTnent for honor must be made and the rights of the payer for honor and the liability to him of the parties

upon the instrument.
''Sec. 171. Where a bill has been pkotested for non-payment, any person may honor. intervene and pay it supra protest for THE honor of any PERSON LIABLE THEREON OR FOR THE HONOR OF THE PERSON FOR WHOSE ACCOUNT IT WAS DRAWN.'*

Who may make

payment for


Payment for honor may be made by any person, whether an acceptor for honor or not, or whether or not he is already a party to the bill, after the bill has been
protested for non-payment.

His payment is called a payment "Supra Protest," that is, he pays it after the protest, for the honor of some person liable upon the bill, or for the one for whose account it was drawn. He

thereupon entitled to receive the
it is




provided in

Sec. 177.


in strict

accordance with the prois

vision of this subdivision of the Act, such a pajTuent

not deemed to be a voluntary pajanent made by a third person, a stranger (Sec. 172), and does not discharge
the instrument


in the next section

drawee, unless the

made in the manner described although made by a party, even the bill is drawn against funds of the
it is


in his

hands and he








The payment



Konig vs. Bayard, 1 Pet. (U. Note in 92 Am. Dec. 579.

S.) 250, 261, 7 L.

Ed. 132.


may be



Considerable formality accompanies a pajment for



in order that


distinguished from

mere voluntary payment. The latter discharges the bill as upon payment by a primary party, while a payment for honor discharges from liability only certain parties to the instrument and constitutes the payer for honor a
purchaser of the



the rights of the holder to


he makes the payment (Sec. 175).



and attested by a notarial act of honor which must be executed upon or attached to the protest,
fore be attended

or so identified with




can readily be perceived to
following after and conseact of

be an extension of



quent upon the protest.

The notarial




scribed in the next section.



a third person takes

up the


ment after maturity without the formality incident to a payment for honor, his act is presumed to be a purchase
rather than a payment. ^
how^ever, will
it is

to be so regarded,

depend upon the intention of the parties, and this is to be determined from the acts and declarations of the parties themselves and the circumstances surrounding the transaction.^

Whatever inconveniences and difficulties such a payer may encounter when he comes to recover his outlay upon



be avoided


he will declare his intention

pay for honor and execute

in accordance with the

requirements of this subdivision.



Natl Bk.

Schnabaum, 86 Ark. 82, 86, 109 S. W. 1163. vs. Thompson, 129 Mass. 438, 37 Am. R.


Irving Bk.
Cantrel vs.

Wrtherald, 36 N. Y. 335. Davidson. 180 Mo. A. 410, 168





Guarantee Tr.

Co., 128 U. S. 416, 32 L.

Ed. 472.



HairgTove, 214 Mo. 142, 112 S.



People's Bk. vs. Craig, 63 Oh. St. 374, 59 N. E. 102, 81 S. R. 639, 52 L. R. A. 872.


§ IT.S,


"8ec. 173.



founded on a declaration made BY THE PAYER FOR HONOR OR BY' HIS AGENT IN THAT BEHALF DECLARING HIS INTENTION TO PAY THE BILL FOR HONOR AND FOR WHOSE HONOR HE PAYS." The notarial act to be written upon the protest or appended to it, or which must be identified with it, must

Declaration before payment for honor.

notarial act of honor

contain a statement that the payer for honor or his agent,



authorized to act for him in that particular mat-

ter and for that purpose, has declared his intention to pay the bill for honor. It must also state for whose

honor the jjayment
ficient that

made. It does not require the signature of the payer for honor or his agent, it being sufis

he or his agent declare his intention to the

notary who thereupon, over his own signature and
writes out the declaration of honor.


then makes a

record of the declaration in the protest, or appends
to the protest, or

having already written out the proit,

writes out a separate declaration for honor and

identifies it

with the protest by reference to

thus com-

pleting the notarial act of honor.

or more persons the honor of difj^gjjg^^rj, parties, the person whose payment WILL discharge MOST PARTIES TO THE BILL IS TO BE GIVEN THE PREFERENCE." This section does not seem to require exx3laiiation. No very good reason can be conceived why a holder should want to prefer one offer to pay for honor over another and he is directed by this section to accept that one -which will discharge the most parties to the bill. It is
Preference of

''Seo. 174.

Where two

parties offering to pay for honor,

offer to pay a bill

within the possibilities, of course, that the holder might
fail to give

preference to that offer which would disit is

charge the most parties and in that case
possible that complications will arise.

also quite

honor whose payment he accepts


The payer for receive the bill and

If the holder lost this right by his failure to accept the tendered payment he can- not transmit it to the payer for honor whose payment for honor he accepts.262 THE NEGOTIABLE INSTRUMENTS LAW all § 175 be subrogated for and succeed to ties of the holder. in view of Section 120. if the holder is acquainted with his duty to give preference to that offer to pay for honor which will discharge the most parties liable upon the instrument and *'Sec. 175. those parties will be discharged whose behalf a Section 176 who stand between that one on tender was made and the one on whose was accepted. The payer for honor is regarded as a purchaser of the bill who takes it as by indorsement from the holder and is invested with all his rights as against . Perhaps be. of the penalty prescribed by Section 176 for his failure subsequent to do so.) 4. both the rights and duties of the holder as regards the party for whose honor he pays and all parties liable to the latter. but the payer for honor is lionor. Sub-section Title I. I am not aware that this question has ever been raised or decided and there seems to be little probability that it ever will be. subrogated for. the rights and du- (Next section. all parties subsequent to the party for whose honor it is paid are discharged. Wheee a bill has been paid FOR HONOR. and succeeds to. are discharged. wherein it is pro- vided that secondary parties are discharged by a valid tender of payment made by a prior party. for behalf the offer to pay for honor may be regarded as adding cumulative force to the suggestion that they might you will ob- serve it provides that the holder loses his right of re- covery against any party who Avould have been discharged by such payment. Perhaps." Upon payment for honor having been made all parparties where bill is paid for ties whose liability upon the bill is subsequent to that one for whose honor the payment Avas made.

See observations under Section 174. give notice of his payment for honor to such person. 7 Ohio (Part 2) 501. IS ENTITLED TO RECEIVE BOTH THE BILL ITSELF AND THE PROTEST. not excused or cause it . He therefore. of course.) 554. 5. Where the holder of a bill The section above states the law in such obviously is plain language that no explanation difficult to necessary. 97. 10 Mass. to be given. It is conceive of any reason w^hy a holder should refuse payment when it is offered to him but if he does. due course. in some States. Leverett. Pugh.' ^ § 176 BILLS OF EXCHANGE 263 the person for all whose honor the payment was made and If the holder is a holder parties liable to that person. he loses his right of recourse for honor. the section declares that he cannot recover from any party who would have been discharged by the payment. be accompanied by a valid is ten- and what is considered to be such a tender defined in Section 120. on paying to the holder the amount of the BILL AND THE NOTARIAL EXPENSES INCIDENTAL TO ITS DISHONOR. within a reasonable time. offer must." "Sec. 3 Dana (Ky. Rights of payer for honor. ' Lenox vs. 176. He is is also charged with all the duties of all the holder and obliged to take steps required of the holder in order to charge the party for whose honor the instrument is paid and to charge all other parties liable from giving notice of dishonor if none had been given by the holder previous to his payment for honor* and. against any party who would have been DISCHARGED BY SUCH PAYMENT. . 6 Am. Wood Gazzam vs. the payer for honor becomes so notwithstanding the fact that he acquires the bill after maturin ity (Sec. The payer for honor. 58). . ^^ REFUSES TO RECEIVE PAYMENT Slipra PROof holder to receive payment test. Dec. vs. is. Armstrong. "Sec. The der. 177. 4. 1. it has been held that he must himself.

In addition thereto he must pay to all notarial expenses caused by the dishonor and protest. . test must be given it Upon doing this the bill and prohim.264 THE NEGOTIABLE INSTRUMENTS LAW so payable. He then has the right to enit force against the party for whose honor he paid all and against parties who are liable to that one. he will be required to pay interest from the date of maturity to the date of his pajTnent. including interest if it is If it is not payable with interest and is not expressly payable with- out interest. § 177 The payer for honor must pay the amount due upon the bill.

of bills drawn of 179 Rights of holders where different parts are nego. Y. Such bills. Payment by bills drawn t7i«2.) 297. result A issued in order to avoid delay and in- convenience which riage of the bill may from the loss or miscar- and to facilitate its transmission for ac- ceptance or payment. intended and operates as a notice bill bill is so to every party and to the drawee. The separate numbering and reference to the other part or parts the other parts contained in each to be is. 387. (N. and to accomplish this the separate parts are usually sent by different means or at different times. Caras vs. Bills in a set are such of which an original and one or more duplicate parts are drawn and issued at the same time. who in. separately numbered. sons. Div.^ 1. Byles on Bills. 138 App. Section Section 178 Bills in sets constitute one igl Acceptance . . of no matter how many parts they is may consist. Their most common use is in the form of foreign exchange issued in or upon foreign countries. Bills in a Set. • 180 Liability of holder -. that the foreign has been issued in several parts. consti- tute but one bill when each part contains a reference to and each They are usually drawn in three and sometimes as many as four parts. Thalmann. acceptor in sets. of course. -^ ^^o 183 -u j: Effect of discharginiT ° ^ one of ^ j- ^ set. or one part sent directly to the drawee for ac- ceptance and the others negotiated.§ 178 BILLS IN A SET 265 SUBDIVISION VII.182 tiated. dorses two or more parts of a set to different per. in sets.

179 Bills in sets Where a bill is drawn in a each part of the set being numbill. they should be separately negotiated. ' constitute one A is bill issued and marked as exist. "holder in due course" yet holds would not be the owner of the bill as against one in possession of another part in who is a holder due course. They separate only If it when they are forwarded comes necessarj^ bill. Where two or more parts of a set are negotiated to different hold^^^ ^^ p^. and then becomes necessary to determine bill.) holder in it But two or more persons may each be a due course of a separate part of the bill. however. ' ' their manner of acceptance and in the five succeeding sections. §178. who is the true title first owner of the accrues is In that case. (As to who is a holder in due course see Section 52. IN DUE COURSE.^. THE WHOLE OF THE PARTS CONSTITUTES ONE g^^ BILL. 178. His title "accrues" at the . to be- determine who is the owner of the A holder who is not a one part of the bill. BERED AND CONTAINING A REFERENCE TO THE OTHER PARTS. for acceptance or payment." The bill is issued in parts only in order to avoid delay and inconvenience which may result from the miscarriage or loss of the bill and it is not expected that its parts will be separately negotiated. ACCEPTS OR PAYS THE PART FIRST PRESENTED TO ' HIM. 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. other than that one exhibited to him. that one whose the real owner.' 266 THE NEGOTIABLE INSTEUMENTS LAW ''Sec. is provided in this section notice to every person that its parts. Sec. Rights of holders where different parts are negotiated. bourse. 179. of a bill and when more than one part indorses tw^o or drawn in a set is negotiated the holders' rights and the liability of one who more parts to and payment are provided for different persons.

The in- Lans vs. 449. 389. 294. He cannot be required to accept other part. And in- each indorser upon that part which he has bill Since only one part of a all drawn in a set will be accepted.^ But if the person upon whom the bill drawn accepts or pays in good faith in due course bill any other part of the son whose or pay any title which is presented to him. "Sec.§ 180 BILLS IN A SET 267 time he becomes the owner with the qualifications required by Section 52 of the part of the bill which he holds and therefore. than the whole number of parts being advised that other parts exist. 10 C. although the right of bill is some person accepted or other than the one whose part of the paid has first accrued. Payment in ''due course" re- member. Holdsworth vs. 2. requires that he have no notice that a prior right to payment has accrued to some one other than the one whose part of the bill he has accepted or paid. 7 Bing. Where the holder of a set indorses two or more parts to different holder who he is liable on every such part. becomes entitled to all the other parts of the Anyone taking of the at his is bill. to different persons is liable is liable two or upon all. does so less own peril. his rights are not af- fected by this section. . as if such parts were separate bills. however. 180. (Eng. The term is defined in Section 88. Hunter. dorsed.) Byles on Bills. and at that time. persons indorses two or more parts of a and every indorser subsequent to him is set to different li^bl^ on the part he has himself inpersons. Smith. B. other parts which have been separately negotiated will return to and must be taken up by that holder who negotiated the m separately." A holder of a set of bills. w^ho indorses more parts dorsed. . he bill. be- fore the presentment of that part held by another per- has first accrued. 284. and paid.

more than bill to the drawee. Downes & Co. and it is the same as if each were a separate bill. of the set of bills If the holder should present may be ac- cepted or paid.' ' 268 THE NEGOTIABLE INSTRUMENTS LAW is §181. 425. be liable upon each acceptance to its holder and if the accepted parts are negotiated to different holders in due course. 13 Peters (U. Upon presentment of the separate parts to the drawee it is proper for him to take up and retain all but that part ance. he is liable to the holder thereon. and such accepted parts are negotiated to different holders in due course. Church. vs. 3. the acceptor is liable upon each one part of the even if the acceptances were all given to the holder bill. but only one. however. in the same manner as though they were separate bills. If the drawee accepts more than one part. ^jll When the acceptor of a drawn IN a SET PAYS IT WITHOUT BEquiring the part bearing his acceptance ' TO be delivered up to him.182 same as though the parts were bill which are dishonored separate bills. and that part at maturity is outstanding in the hands of a holder in due course. .) 205. 6 Wis. Acceptance of "Sec. Walsh vs. and he usually presents more than one part is presented by sepathem all. "Sec. Payment by acceptor of bills in sets. The acceptance may. 181. notice of dishonor must be given or they must be protested. be bills drawn in written on any pabt and it must be wkit^®*^' ten on one part only. upon which he places his accept- This he returns to the holder. 422. if protest is required. he IS liable on every such part as if it were a separate dorsers' liability the The parts of a BILL. Blatchford. ' Any part. or if rate holders and the drawee accepts more than one. that is. who presented the several parts of the The acceptor's liability is to each holder in due course upon the accepted part which he holds. S. 182. by non-acceptance or non-payment must be proceeded upon by the holder^. he will.

' . as provided in the preceding section. ' CHARGED. Y. Div. but has been negotiated is not delivered to the (See Section and remains outstand- ing in the hands of a holder in due course. he is liable to a holder in due course upon such outstanding part bearing his acceptance and must pay that also notwithstanding his payment of any other part of the Effect of bill.) 297. Caras vs. (N. § 183 BILLS IX A SET paying. Thalmaun. or the discharge in any other manner (as provided in Sections 119 to 125) of one part of the bill. where any one part of a bill drawn IN A SET IS discharged by payment Qj^ otherwise.^ This is not so. . the part of the set bearing his acceptance acceptor.a bill 269 Upon drawn bill in a set the acceptor must re- which bears his acceptance to be surrendered to him. when. If he neglects to do so and it is or has been negotiated and at its maturity is still outstandquire that part of the ing against him.) 4. . Except as herein^ otherwise provided. how- ever. the whole bill is dis'*Sec. discharges the wdiole set. "Wisconsm. discharging one of a set. ' Pa^Tuont of one part. 183. 182. 13S App.

the principal debtor. fect of. cheek defined. Within what time a check must be presented memo- A :. 184 Promissory note certificates of defined.. title. he is. The drawer is regarded somewhat the same as a maker of a promissory note.^ 184 TITLE III. and the legal etfect of the failure of the holder to present the check for payment within a reasonable time after give the drawer notice of tion its its issue. Page 280. Section • Section 188 Effect where holder of check procures it to be certified. the distinction between a check and an ordinary bill is This distinction exists principally in the consequences which follow upon. Promissory Notes and Checks. randum ef- In this brief pointed out. the failure of the holder to present the its is- check for pa}^nent within a reasonable time after sue and notify the drawer of its dishonor if it is not paid by if the bank upon which it is drawn. after defining a promissory note. Statement of the duties and liabilities of banks and other agents in the collection of commercial paper. and while prompt presentment for payment after its characteristic of a posed issue or last negotiation is required to charge indorsers upon a check. Certification of check. 189 When check operates as an assignment. 270 THE NEGOTIABLE INSTRUMENTS LAW . of his failure to its certifica- dishonor and of when procured by to be the holder. 187 check. deposit 185 186 bonds and their coupons. will release him only its he has suffered a loss through extended negotia- tion or through a delay or neglect of the holder to pre- . from the inception of the check. that is. but another distinctive bank check is that it is always supdrawn upon a fund which exists at its date to the credit of the drawer. Forms and Interpretation.

This section contains the definition of a ''negotiable promissory note" and as Title I. in order to constitute a negotiable promissory That section and its explanations are referred to without further observation. A SUM CERTAIN IN MONEY TO ORDER OR TO BEARER.§184 sent is it PKOMISSORY NOTES AND CHECKS 271 promptly for payment. SIGNED BY THE MAKER ENGAGING TO PAY ON DEMAND. his and is transferred to the holder." As has already been stated in the introduction to the first Title and at Section 3 in that Title. WhERE A NOTE IS DRAWN TO THE MAKER 's OWN ORDER. Its interpretation and enforcement. however. not all promissory notes are negotiable and a written promise to pay money may be regarded as a promissory note although it is not negotiable. denned. risk terminates After a reasonable time. a risk which the law imposes upon the drawer for a reasonable length of time a loss which after its issue. IT IS NOT COMPLETE UNTIL INDORSED BY HIM. The loss contemplated may occur by the failure of the bank upon which the check is drawn. is incom- . promise in WRITING MADE BY ONE PERSON TO ANOTHER. it will be seen by reference to Section corporates all 1 of the definition in- of the requirements of such it an instru- ment note. (Sec. This section is related to Section 30 and to Sections 15 and 16 in that it provides that a promissory note.) A negotiable promissory note WITHIN THE MEANING OF THIS ACT IS AN unconditional. when payable to the maker's own order. 184. 188. tiation of By Section 30 the nego- an instrument payable to order is accomplished by its indorsement and delivery by the holder to his transferee. gotiable instrument. At another place (Section 186) something will be said about the degree of diligence required of the holder and about the effect of the certification of the check w^hen procured by the holder. are not governed by this Act if it is not a nePromissory note ''Sec. OR AT A FIXED OR DETERMINABLE FUTURE TIME. however.

63 Ala. . & Tr. Durr & Co. Witter. 68 Wis. 16. to require dorse it. St. the promissory note of a bank. Wilself. (which are yet applicable in the absence of express provision in this Act to the contrary) demand for payiuent 1. Act upon the subject of certificates of deposits or Bonds and their Coupons. 89 Am. Am. also see 2.^ if it It is fully negotiable contains words of negotiability and otherwise meets the requirements of the first Title of the Act (Sections 1 to 23). 547. These two forms of negotiable instrmnents are in effect and in fact promissory notes. 345. 45 Oh. 37. Tallant. distinction between a certificate of deposit and a promissory note may be said to lie in the by judicial interpretation of the rules of the Law Merchant. a Certificate of Deposit. vs. The only important fact that. 799. and in fact. S. 61. E. Brummagin vs. Dec. 526. Citizens Nat'l Bk. 503. Note 4. 4 A. 11 N. Lehman. R.. Co. 35 vs.^ 272 THE NEGOTIABLE INSTRUMENTS LAW it is § 184 plete until indorsed by him. vs. 21 Fla. is future specified date upon surrender of the Therefore contains all the elements of. and it contains the promise of the to repay the amount upon demand or at a certifica:te. is the w^ritten acknowledgment of a bank that has received from the person to of whom it is issued the sum money bank it it mentions. it The first. You will find no special provision in the Certificates of deposit. 18. Blackman vs. 154. 29 Calif.. Agnew. 36 Nev. When such an instru- ment it is negotiated without the indorsement of the maker will not bind him unless the transfer was made under him to in- such circumstances as will entitle the holder by reason of the provisions of Section 49. 39. 174 Fed. Maxwell vs. Curran vs. Pierce vs. 215 Mass. State Nat'l Bk. R.. Brown. 57. is necessary before action to recover from Forest Jensen Safety Bks:.

496.. Auten vs. S. Bk. the holder to adopt the first view and thus preserve his rights beyond the possibility of mistake.. it is perhaps better for was written. '*to French word cut. 1 L. R. E. Elliott vs. Y. ment seal. Y. See 64 Am. W. A. named from "con per" meaning 3. 357. Georpa R. corporation or the Bonds. Y. 4. particularly when the certificate has been outstanding long enough to raise a presumption that it is past due. some courts holding that it begins to run from the date of the certifi- cate. R. Venice. City St. . A. Co.. 1 L. R. 198." express the amount of inthe Hillsinger vs. R. note. E. 53. Y. others from the date of demand. 29 Barb. 108 Ga. 103 N. 736. but those so holding are regarded as based upon the sounder principle. 428. 25 N. they contain words of negotiability. Gould vs.^ although it is probably correct to conclude that certificates of deposit were not contemplated when the section In the presence of conflict in regard to the time M'hen the statute of limitations does begin to run and the necessity for demand. 81 111. Cottle vs. S. 75 Am. 502. Bk. Also see Note 1. Cap.. A. 500. R.. 777. and note. etc.^ The decisions are by no means uniform to this effect.' not aiTected by the fact that they 6. Dec. (N. Buffalo Mar. of is Their negotiability government which issues them. 299 note. N. Brainerd vs.' Bk.) 442. 166 N. 1130 and note. bear a (Section so Title I.. 33 S. 111 Am. are likewise regarded as. N. and are in fact the promissory notes departBonds and their *^f ^^^^ person.§ 184 PROMISSORY NOTES AND CHECKS 273 maker of the certificate. R. 5. Crahan. S. if coupons.) Their coupons. 985. The view that the certificate statute begins to run from the date of the would seem to be supported also by Section 70 of the Act which seems to dispense with the necessity for demand. 59 N. As a conthe sequence a division of opinion likewise exists as to the application of the statute of limitations. 128 Iowa 275.

29S. The coupons are designed to be the cenvenient instruments for the collection of the interest installments upon the principal obligation. but no seal is required upon the coupons and the signatures upon them are usually a printed or lithographed fac-simile of the signatures upon the bond. is payable in a particular kind of current money to be (Sec. ^ Trustees of the R. of course.® The bond. 27 L. the maturing interest coupon is cut off and presented for payment at the place where it is payable on the date when terest payable it is due. that it contains a provision allowing its registry or gives the holder a choice to require something done in lieu of its pa\Tnent in money. 938. 13 S.. Fund vs. 424. for securities of a different (Sec. R. 3). 6). 34 Fla.. the bond. as they mature and they enable the holder of the bond to dispense with the necessity of presenting iting it for the purpose of cred- upon it the interest payments as they are made. it the privilege to exchange kind. Perrinc. 6. must bear the seal of its maker and be signed by its issuing officers. Anything which affects the validity of the bond likewise affects its coupons but they are so far regarded as separate instruments after maturity that they w^U then maker of the bond defaults in the interest payments and when detached have all the attributes of negotiable instruments and recovery upon them may be had in a separate action when they are thembear interest if the selves payable to order or to bearer. I.) Thompson Kas. 100 Ala. .274 THE NEGOTIABLE INSTRUMENTS LAAV and the time at § 184 which each installment will be due and. 106 U. 589. I. 228. City. 4. vs. Cobb. S. Lewis. Ed. Co. It is no objection to the negotiability of the bond that it contains a statement of the transaction out of which it arises (Sec. for example. etc. vs. as the date of its maturity approaches.

if the check is upon its face a foreign bill (Sec. they are in reality the sealed promissorj^ notes of their makers. Div. (N. But in their effect of the Act. A A A check drawn upon a bank or a banker is considered exchange payable upon demand. unless it Every is upon its face made payable at a specific date. check is a bill of ex185. containing a promise for the unconditional payment of time. . ON DEMAND. Riddle Bk. made applicable to a check unless by the Act of the liabilities it itself is otherwise provided. Bonds are usually payable to the bearer. '*Sec. Wth" what time a check must be presented.§ 185. then requiring indorsement and the entry of each transfer upon the register of the corporation." vs. or on money at a definite and fixed demand after date.) 207. 7. All of its provisions in regard to notice of non-payment and in regard to protest. "Illinois." check defined. A check must be presented FO^ payment within a reasonable time after its issue" or the drawer will be discharged feom liability THERfeoN to the EXTENT OF the loss caused by the delay. 145 App. by this section. in this upon the drawer the provisions respect. Y. and. "Sec 186. THE PROVISIONS OF THIS ACT APPLICABLE TO A BILL OF EXCHANGE PAYABLE ON DEMAND APPLY TO A CHECK. 129) must be complied with in order to charge indorsers. are greatly modified by the next section. or at sight. ExCEPT AS PAYABLE BANK A change DRAWN ON HEREIN OTHERWISE PROVIDED. is. of Montreal.'^ provision of this Act which governs the interpretation to be a bill of and enforcement and rights of parties to a bill payable upon demand. Failure to do so will discharge them as upon failure to give notice or make protest of a bill of exchange. 186 PROMISSORY NOTES AND CHECKS registry the 275 Upon bond is transferable in somewhat the same manner as certificates of stock are transferred.

after its receipt. the drawer will be released from liability to the extent of the loss he may have suffered by the delay. 113 N. in order to preserve the liability of the drawer if a loss is sustained through no fault of his. While a check may continue in negotiation for any reasonable length of time after its issue without presentment for payment at the bank upon which it is drawn. 218. Bk. yet if it is so delayed and loss is sustained. as is the case with an ordinary bill. 29. Moodie. the indorsers will not ])e discharged. If the check has been transferred from one holder to another without having paused an unreasonable length of time in the possession of any one of them. Bowen.) it Upon this subject is desirable to distinguish more clearly the duty which the holder owes to the drawer and other parties 8. its unreasonable (Sections 7 and 71. 45L Plover Svi-s. if the bank upon which a check is drawn which has not been presented for payment within a reasonable time were to fail. and its failure cause the loss of the money called for by the check.^ But if it is detained for an unreasonably long time at any negotiation then such indorsers as are not responsible for the delay will be released from liability by detention. to a check to present the same for pay- Columbian Banking Co. there is no good reason why it ought not to be presented at once. vs. the drawer will be released from liability upon it. . A check differs from other it is bills of exchange payable upon demand in that presumed to have been intended for immediate payment and it must be presented for payment within a reasonable time after its issue and not. W. 476. 135 la. 685.276 THE NEGOTIABLE INSTRUMENTS LAW § 186 A check ought not to be held an unreasonable length of time either by the payee or by any indorsee. 110 X. after its last negotiation. vs. 114 X. W. W. Unless it is the check of a bank and was intended for negotiation. Thus. 134 Wis.

through which it makes such collections. whether by the failure of the bank upon which the check is drawn or by its dishonor for Avant of funds. be borne by the bank. receipt when a check is deposited in bank. and the facts of each particular case will be (Sees. unless it fixes a date when it is ing ® the i • . or a bank receiving it for deposit or collection. You will remember that upon the question of what or is is not a reasonable time the nature of the instrument. The time for its presentment is usually the day of and never later than the day after its. and the established and known custom of the bank in regard to the instrument the duty to present it collection of checks. 71. whenever it is word "Memorandum" across its i While such a check must be paid face. out of town checks are deposited with a bank it for collection owes to its depositor the duty to pre- method and if it or its banking connections. . unless it transcends reasonable limits or is contrary to law% will prevail to determine w^hether or not it When sent has been negligent in the performance of its duty. When the immediate presentment of the check is not intended by the parties this usually indicated by writ. ow^es to every other party to the and obtain the money due upon it immediately. presented. Memorandum check. The authorities are quite uniform that the payee or indorsee of a check. w^hatever usage of trade there may be in regard to such instruments. as between the depositor and the bank.§ 186 PROMISSORY NOTES AND CHECKS 277 ment with the utmost dispatch. Title I shall describe At the end of this in more fully the duty of banks the collection of checks and the methods employed. 193. 7. when it is no longer to be negotiated. any loss them by the most practical and direct occasioned by its delay must. unduly and unnecessarily delay their presentment and collection and loss is thereby sustained.) is taken into consideration.

) 612. The certification of a check by the bank upon which it is drawn is the same as an acceptance of a bill of exchange and its effect is to make the bank the principal It does not relieve the debtor upon the instrument. Inasmuch as certification of a check has the effect of making the liank which certifies it the principal debtor. 62. Leather Mfrs.^. Franklin Bk. certified. the application of the Act in respect to its immediate presentment is thereby modified. of a ^^ ^^ w. cannot affect their liability upon the instrument/* Such a check is issued as an evidence of an indebtedness owing by the drawer to the person to whom it is issued and to the extent that its immediate presentment is thereby waived by the drawer and all parties. Y. 187. Where a check is certified ''Sec. the delay in presenting being altogether con- templated by the parties and expressed by the Jiature of the instrument itself. In all other respects a memorandum check is governed by its provisions.. 11 Paige (N. holder of the duty to present the check for payment within a reasonable time. 16 Pick.irr. (Mass. Bk." Certification of check: effect of.) 535. ^^ the bank on which it is drawn. Dvkers vs.'nrn np ri?T? ceror to be accepted procures are indorsers the drawer and all thereon.278 THE NEGOTIABLE INSTRUMENTS LAW it §187. 15 Mass. the check is thereby se- cured to the extent that the strength and worth and ability of the bank to pay its obligations are considered security.188 payable." liability discharged from Where the holder _ it 9. the CERTIFICATION IS EQUIVALENT TO AN ACCEPTANCE. Cushing. Freeniou. The liability which the acceptor assumes by cer- tification is discussed . 69. vs. . under Section 188.vs. unless the holder himself procures its certification. Effect where the check holder of check procures it to be tified.^ '*Sec. or in any other way alter the rights and duties of the drawer and indorsers. Gore.

160 Mass. Bk.§189 PROMISSORY NOTES AND CHECKS 279 Now.. This does not occur. A check of itself does not operate as an assignment of any paet of the funds to the credit of the drawer WITH the bank. of the it calls. 86 N. E. 401. to use them for any other Randolph Nat. draw^n accepts or certifies however. and THE BANK IS NOT LIABLE TO THE HOLDER. 87 N. 439. even done at the "Sec. etc. 43 Misc. S. 45. 189. by operation of law." A it is check merely an order upon the bank upon which drawn directing that upon presentation the bank is shall to the pay the amount person whom it money for which it is written names or to his order. in effect. is When it the bank upon which the check it. and the money to drawer's account for that purpose. amount for which This section makes this express provision and all thereby repudiates decisions to the contrary. Twelfth Ward Bk. 92 111. substitutes the bank as the only party to whom he looks for payment and the drawer and all parties who indorsed the check before certification are discharged from liability upon it. it does then operate as an asis signment of so much of the drawer's deposit as quired to pay presentation is it re- pay the check upon then immediately. Poess vs. Wright vs. 857. St. Cas. 14 Ann. that a setting apart from the rest of the money to the drawer's credit in bank.. . ^^ If the l)ank permits the drawer to withdraw his funds set aside out of the required for 10. UNLESS AND UNTIL IT ACCEPTS OR CERTIFIES THE When check operates as an assignment. 189. holder's request. MeCarthv. not of itself an assign- ment. when certification the holder of the check himself procures its by the bank he thus.^*^ when the draw^er procures if it is the certification before delivery. its payment or vs. Blake vs. Y. 73. Hoinblower. Hamilton.. 120. 11. CHECK. or directing of It is that it be paid to the bearer. is. Bk. 79 Oh. A. however.

but the bank is not required to appropriate any partial sum belonging to him if it is insufficient to pay the w^hole amount of the instrument or to appropriate any special deposit for that purpose. 87 of Title If the debtor at the date of its to maturity deposits the money required pay the instru- . If the sufficient deposit M^iich the debtor instrument so to is made payable is that it is made payable it bank the fact equivalent to an order on at a the bank pay for the account of the principal debtor. and the Methods Employed. be obliged to certification pay the check presented for so accepted by whenever it is payment. the bank becomes the agent of the Paper payable holder to receive payment. purpose.280 THE NEGOTIABLE INSTRUMENTS LAW it will. I shall next indicate the principal duties of banks and other collecting agencies in regard to the collection of checks and other commercial paper.) (See Sec. q^^ires the collecting Its duty re- counting banJc. is left When at the instrument it is for collection at the bank which payable. A Law Relating to the PrinAssumed by Banks and Liabilities and cipal Duties Other Agents in the Collection of Commercial Paper. I. bank to charge such an instrument to any may have there to the credit of his general account on the day of its maturity. Brief Statement of the The deposit of commercial paper with a bank for col- lection constitutes the bank the agent of the holder to collect it and it owes to its customer that degree of care in the performance of its this duty which it would use to protect own interests. nevertheless.

Alley vs. 383. 19 Gratt (60 Va. as to the parinstrument. It is quite immaterial whether or not the bank receives it compensation for the service exercise in the performance renders in collecting the it is instrument and the degree of care which of its required to the same duty so. effect his discharge. 276. 277.RELATING TO COLLECTIONS ment. the debtor may safely pay the bank instrument to the collecting bank at any time after maturity. 120.^ is whether engage it is or is not paid for doing It is very well recognized that banks frequently. Rogers. and the instrument afterwards (Sec.) 722. for the purpose of paying not presented at the bank where it. his readi- ness and ability to pay there will relieve him at of the payis ment of interest and costs if the instrument not preit sented there. payment at the collecting bank will maturity its possession right to receive Exdianoe Bk. S.^ If the instrument is in the possession of the at or after dence of its ties to the 1. 2. 28 U. principally with a view to the advantage they will thereby gain in patronage. if of the bank. Bailie vs.) make proper presentment. Ed. (Sec. or to the profits which they expect to derive because of the chance that they the proceeds of their collections. 284. (L. dishonored secondary parties will be released by the failure of the holder to 70. in fact almost always in this service without compensation. 281 is and the instrument it is payable.. .) 366. Bk. 112 U. Augiista Syc^s. 717. his ability to its pay the in- strument there at maturity would.) If the bank which is payable fail after that date. 70. 288. 95 Ga. may be allowed to use The authority of the paper. E.. S. in if many is cases. Tlurd Nafl Bk. vs. is prima facie evipayment and. to collect to collect continues after the it maturity remains unpaid and in the possession agency and in the absence of notice that its has terminated. 21 S.

Y. (Sec. method to be pursued in collecting must be strictly observed by the Bliss vs. wliich is explained in Sections 36 j -^ i » and 37 of inis instrmnent for coliection effect. he does so at his Duties in general If own peril. the instrument under this it One taking is sufficient to form of indorsement. (N. constitutes the indorsee the agent of the indorser and does not transfer to the indorsee the in- dorser's ownership in the funds represented by the in- strument. 119 of Title I.) specific instructions are given as to bank.282 THE NEGOTIABLE INSTRUMENTS LAAV it" then discharge the instriinient even rendered. particularly a check.) 9. as is explained in the sec- tions referred to. ^^^^ the instrument these 3.) The rpj^j^ its restrictive form of indorsement. . acquires no ownership its ment or proceeds except his representative ca- pacity as the agent of the indorser.) Its language is usually ''Pay to collec- (name of bank) for tion and credit to the account of (signature of depositor). 37. 88. depos- ited with a hank." This form of indorsement holders that the instrument is a notice to subsequent be transferred only for may the purpose indicated in the indorsement. although enable him to bring an action upon it in the instruin in his own name. but on bills and notes left for collection the special or blank indorsement described in Section 36 of Title I is most frequently used. Cutter. or his representative.3 The usual method of indorsing the it is not sur- (Sees. (Sec. 36. 19 Barb. This form of he pays inis dorsement is also regarded as notice to the person if it who to obliged to pay the instrument that any person other than the one named. The restrictive indorsement. and ugnally employed when an j strument.

421.^ usage in such cases. N. W. its proper regulations and the law relating to such matters. 7. R. vs. Newland. Amer. to its it has properly performed knowledge of these customs will be imputed customer even though he did not in fact know of A their existence or application. S. Fanners Bk. No matter what usage may gard to the collection of the prevail in re- instrument it will not excuse the performance by the collecting bank it is of those proceedings which obliged to take for the immediate fulfillment of its duty to collect it and to properly protect its customers' rights. S. 5. 627. Ed. See Note in 34 Am. 612. A. 309. Citv Bk. 39 S. Hilsinffer vs. Nat '1 Bk. 332. Dec. 182. 52 S. 329. S. is required by law to perform. 194. 1913 D. 2 L. Milwaukee Nat'l Bk. 252.. the bank duties required to perform the various in which are embraced the business of col- lections in accordance with its established method. S. R. Cas. Union Nat'l Bk.® It is only the method of their performance which will be af- fected by custom or usage. No usage will justify its omission to jDerform any substantial or material duty which the collecting bank 4. 527. . 6(i8. S. Exch. 6. Ann. to whom must transmit them/"^ In the absence of such instructions. 97 Ky. will have in its much influence determining whether or not duty. 8 Ann. 145 Ala. Farley Nat'l Bk. vs. unless they are un- reasonable or contrary to law. 117 Am. Morris vs. 83 N. and it will be presumed that he intended the bank to act in accordance with themJ Usage can only collection.RELATING TO COLLECTIONS collecting bank. 286. 151 Mo. of Commerce vs. W. 13 S. Ti-ickott. St. 8.^ 283 it and is its sub-agents. Cas. 77 A. 50 L. R. 320.) 417. 464. 265.. of which it is presumed to have such a knowledge as is usually possessed by Its established men engaged in that business. however. S. of Oswego. A. 26 U. 74 Am. 99 N. 370. R. 44. Bk. vs. 103 U. Pollock. 305. 332. E. (L. 321. R. D. 86 Oh.

23 Ed. Second Nat'l Bk. by reasonable implication. E. 401. vs. S. is received for accompanied by documents of shipment or collateral. the contrary was intended. 18 S. vs. 43 N. Commercial Bk. . The manner in which they are quired to be done under the provisions of the Negotiable Instruments Law is explained in appropriate places in the preceding pages. 115. R. ceedings to be observed in this business of collection are the presentment and demand for acceptance of and payinstrure- ment. in the absence of any instructions to the contrary. 24 Am. 208. But Nat'l Bk. Cummiims. . the documents must in no case be delivered until it '^ is paid. If the instrument is a sight draft. received for collection. 618. R. in the absence of specific instructions requiring that they be delivered before payment. of L.® Presentment of bill ^^ bank is not liable for its failure to pre- of sent for acceptance a bill which does not requiring acceptance.. or. collection is a time bill of . W.. 756. etc. whether these be days of grace or not. or is payable not more than three days after sight. for duty requires it at once present the instrument for payment. 91 U.284 THE NEGOTIABLE INSTRUMENTS LAW The important and material pro- nor will any usage justify the substitution of any other act as its equivalent. notice of dishonor and protest the ment if it is not paid. Chieaoo. R. Commerce vs. Co. these documents. 609. exchange 11 re- <iuiring acceptance and 1 • is payable more than tliree days after sight. Mereh. Nat'l Bk. require acceptance and less is it would be a usein- procedure to do so when such an its strument that 9. and if it is ac- companied by the documents of shipment. in accordance with the customary dealings of the parties. S. 89 Tenn.. must be released to the drawee by the collecting bank upon his acceptance of the bill unless. 160 Til. g-jjg If the instrument which . 92.

bank's duty to present a bill once. or by a mistake of facts. 291. must be presented for acceptance It is the if it is payable elsewhere than for acceptance at is at the residence or usual place of business of the drawee. Ed. it would be liacaused by its ble for any loss mistake. for the reason that only by acceptance can the drawee be bound. 11. The third sub-section of that section. The place where the instrument is to be presented for acceptance and the manner of making presentment are tained. 34 Am.RELATING TO COLLECTIONS if 285 the bank by a mistaken conclusion or opinion as to the legal effect of the instrument.^^ These are to be found in Sections 89 to 118 of Title 10. 62L . on the day of its receipt if acceptance required. and if it chooses the latter course it must return the instrument in time to allow that the notice may I. vs. S. Dee. comprising subdivision seven of this Act. described under. 77 A. Dec. S. Exch. 142. and be- cause the owner of the bill obtains the right of an im- mediate action against the drawer and indorsers upon the failure or refusal of the drawee to accept. even though payable at sight. 311. 151.) 722. if that cannot be ob- (Sec. Section 143 of the Act determines Avhen presentment for acceptance must be made and in no other case is it necessary.) it must treat the bill as dishonored. S. Upon lecting the dishonor of a bill by non-acceptance the col- bank is obliged either to give notice of its dishonor or return the instrument to its customer in order that he may do so. If the 28 U.. See Notes in 34 Am. R.^" (Sec. should is fail to required.) It is its is duty to obtain a general acceptance unless another authorized or assented to and. 61. 276. re- quires that a draft. 112 U. Bk. (L. unless it is received after business hours. Section 145. be given in accordance with the provisions of this Act. Third Nat'l Bk. or should make presentment for acceptance when it make it improperly. you will observe.

unless it has been subsequently accepted or has been accepted for honor. It must know and be able to determine when protest is required and it will be liable to its customer if loss result from its failure to perform this duty. Subdivision 3 of Title IT. 167. own The Uniform Negotiable Instruments Law upon the subject piymenr*^ of presentment for payment will be found in Sections 70 Presentment of The requirements of the ^^'^ to 88 inclusive It is the comprising Subdivision 6 of Title to give notice a I. W. custom of most banks few days before the maturity of the instruments which they hold for collection. 283. Georgia Nat '1 Bk. vs. Rep.A bill which is dishonored by non-acceptance need not be presented for payment (Section 151). Rep.^. 65 S. 487. 112 Ky. provisions of the Act which govern the manner of making presentment for acceptance are to be found in Sees. Henderson. require the none of whom can. BankV . 590. 138. Co. 133. 143 to 151 inclusive. 46 Ga. diligence which the its bank required to exercise in the performance of bill duties in respect to the for acceptance has been described as that degree which a prudent man. Aslier. St. 12 Am. Louisville 99 Am.286 bill THE NEGOTIABLE INSTRUMENTS LAW requires protest the collecting bank is obliged to de- liver the instrument to a notary for that purpose. (Sec. careful of his would exercise to protect his own interests. of as a matter of right. bank to give this notice. While in many places this custom is ver}^ general. an omission about to fall to observe it is not regarded as prejudicial to the rights to the instrument. But when notice of the approaching maturity of the instrument has been given it does not dispense with any of the requirements of the Act upon the subject of present- any of the parties 12.) is The degree of presentment of a affairs. informing the debtor by this the instrument is means that due and requesting him to call at the bank and pay it at the proper time. vs.

or dispense witli the necessity of 287 makif ing deinand and the duty to give notice of the instrument is its dishonor payment must be not then paid. 76. Title I. presentment may be made to either of them. negotiation if a bill. any delay is in making presentment is excused when the delay caused by circumstances benegli- yond the control and not due to his gence. (Sees. presentment must be made to them all.RELATING TO COLLECTIONS meiit for paymoiit. if When there has been a dissolution of the and where several persons who are not partners are primarily liable upon the instrument. sometimes produces a waiver of presentment. .) two or more persons primarily liable upon the instrument are partners. The presentment for made notwithstanding the notice of its approaching maturity and notwithstanding even that the collecting bank may have knowledge that the instrument will not be paid when presented. While the presentment for payment must be made upon the day the instrviment falls due if it is a time infound in Sections 79 Time when strument. misconduct or failure to perform a duty of the holder (Sec. In that case the instrument must be presented for payment to his personal representative. even firm.) The circumstances under which presentment for payment is not required in order to charge the drawer or indorser will be and 80 of the first Title. or within a reasonable time check. 77 and 78. Its effect. stances 104. demand and notice of dishonor and the waiver and the manner in which it it is accomplished and under what circumf^2. or last plyment must^be after its issue if a note or made. however. 110 will be implied are discussed in Sections and 111 of Title I. The presentment must be made even if the party primarily liable upon the instrument is dead. and it is payable on demand (Sec. 71). (Sec.

& J. Bk. it may be done on the next succeeding business day. 85). unless it is done contrary to his instructions. Yankton Svg. Johnson. D. 71 and other be Presentment for payment if dispensed with altogether under the circumstances mensections there referred to.^^ The remittance must be made in accordance with any special instructions which it may have received from its customer or.) 29 1. 87 N. 14. 9 Gill vs. Friar. in the absence of these. App. THE NEGOTIABLE INSTRUMENTS LAW What will taken into account to determine whether or not the instrument has been presented within a reasonable time is discussed under Sec. 39. 13. 15 S. 88 Mo. vs. (Md. Co. If the instrument is paid upon presentment the collecting bank must remit the proceeds to the person from whom it received the bill or note for coL Duty of the lection unless it appear that another is ^re^entment their true owner. If the collection is made for the account of a depositor and the proceeds are credited to his general account that will be a fulfillment of the bank's duty to remit.^^ or the cus- tomer must be notified of the payment of the instrument and the proceeds lield subject to his order. W. tioned in Section 82. 974. Special provision is made in the act for the presentment of instruments falling due on a Saturday or a Sunday (Sec. Union Bk. .. and another section (Sec. This procedure is simple enough upon payment of the instrument but upon dishonor the collecting bank exposes itself to liability for loss unless it strictly observes the requirements of its the Negotiable Instruments Law in regard to the pro- cedure then prescribed. 192) provides that when the day or the last day for doing any act which is required or permitted by the law to be done falls upon Sunday or a holiday. in accordance with its general custom.288 81). Bank vs. Harvesting Mach. 196.

charge. vision of Section 94 of the may avail itself of the proto its Act and give the notice usually does. or the collecting bank accepts the instrument for collection under circumstances from which a duty to notify sonably inferred. or one which presented to the referee in case of need (Sec. 487. 152 and 167). 161). all is necessary that notice of dishonor be given to to give Duty parties whom the holder desires to dishonor. 118. 12 Am. (Sec. 129). Henderson. . it all secondary parties can be rea- will be obliged to give the notice of itself to its cus- dishonor to every party and will obligate tomer for any 15.RELATING TO COLLECTIONS Any 289 negotiable instrument which has been dishonored by non-acceptance or non-payment may be protested upon is either dishonor. Rep. not required l)ill except in the case of a foreign of ex- change. but protest protest. however. A collecting bank. are pre- scribed in Sections 152 to 160. will observe Yon ments of dorsers from Section 152 that if any of the requirethe Act in that regard are omitted the bill will be discharged. Georgia Nat '1 Bk. loss he vs. if principal alone. inclusive. of the Act. be- ing the agent of the holder. by whom it is to be made it arid the formalities to be observed in making it.^ "^ will be liable to its The subject is explained generally in Sub- division 4 of Title II. or a bill is which has been accepted for honor. must be protested (Sees. and this it If a different agreement requires it. and even if it is not required. When it protest is made. If it not have been 'Muly protested" and the drawer and inwill this should occur through the negligence of the bank customer. The place and manner of protest.) If the dishonored instrument eign bill is a for- (Sec. may sustain by its failure to do '/90. 46 Ga.

S. Irwin vs. inclusive. Wilson vs. 48 N.. W. If the instrument has been forwarded for collection through its sub-agents l)y the bank of first deposit. A. Louisville Bksj. 47 L. 187 111. by the bank. 112 Kv. Asher. by Sections 103 and 104.290 so. 719. 608. 52 L. E. S.^" THE NEGOTIABLE INSTRUMENTS LAW The provisions of the Act which describe the manner in which it must be done and determine when and to w4iom the notice must be given will be found in Subdivision 7 of Title I. Brown vs. The and effect of the notice. he is beyond the time allowed which fix the time within which required to give the notice to antecedent parties. 99 A. 133. 52 S. 58 N. in sections numbered from 89 to 118. it is duty to forward the instrument on the agent. 59 Fla. 17. 50 N. to and by whom it it must be given wiiat parties are benefited by to. 317. 54 vs. ^^J ^^ ^^^^ ^^y ^fter its receipt to a submust use due care in the selection of its subagent and must not intrust any of its customers' business to one to whom it would not intrust business of its own. 337. 20 Ind. E. 90). 250. S.its located. Manistee Nt. 138. He must not wait until the dishonored instrument at least he ought not to delay is returned to him.. 283. It 16. Reeves Pullev Co... 101. Co. Bk. 52 L. 601. 222. If the customer actually knows of the dishonor of the instrument and the formal notice of dishonor to other parties is not required to be given. Carlinville Nat 'I Bk. Auten vs. the customer must himself proceed at once to notify all those to whom he looks for payment (Sec. Svc?s. Peoples A. E. S. R. 67 Ark. each sub-agent may give the notice to his immediate transferer within the time fixed in Section 94 or he give it may to the parties generally. R. 243. 632.^'^ care required. is are discussed in the sections above referred When the collection to be made at a place other is than the place where the collecting bank Selection of sub. A. 163. Bk. N. A. 65 W. . 329. R. R.

20. Metropolitan Bk. 470. 5 Minn. 109 Miss.. . Shipsey vs. vs. Armour Pko-. Second Nat'l Bk. 6 C. Bk. in Title III. or is in any way to interested in the instrument adversely to the in- terest of its owner. payment Mdthin a reasonable time You will observe then that checks re- Borap vs. vs. Planters' Mercantile Co. 293.^*^ it will be liable to its customer The Act. Merch. 59 N. Exclig. Nafl Bk.. 485. Y. Nininger. Co. will to learn whether or not has been re- Any neglect to do so liability from which a collecting loss results impose a upon the bank to the extent of the loss sustained.^'* If the sub-agent selected to make is the collection is the bank ujion wiiich the instrument drawn... must forward these lect to also. App. 56 Fed. 183. 69 So. First 967. 71 Mo. 523.^^ Should its sub-agent negacknowledge the receipt of the instrument within it a reasonable time after was sent. C. the collecting bank will not be deemed have used due care in its selection if the sub-agent default in the collection of the instrument or the remit- tance of the proceeds. A. 19. Am. Bowery Nat'l Bk. Fourth Nat'l Bk.RELATING TO COLLECTIONS If it lias 291 received any specific instructions in regard to the collection of the instrument or the its it manner in which endeavor to collect it is to be reported to its customer. 451. 930. length of time after its issue Section 186 provides that the drawer will be released from liability to the extent of any loss he may thereby suffer by reason of the delay. defines a check to be a bill of exchange drawn on a bank and if its presentment for unreasonable The coUection of pajment is delayed an checks. Ill Ky. Elsewhere the act provides that a bill of exchange payable on demand must be presented for after its last negotiation (Section 7). and for his loss. the sending bank it must make inquiry ceived.. vs. vs. Nat'l Bk. 18.

the counter of the bank as This provision applies. to receive de- and they combined its care with their business of manufacturing gold and As an evidence of their indebtedness to silver plate. Robert Martin . Early history of It banking and the ^^ evolution of tne check. This becoming inconvenient as men used their banking credits in their business. to his When the customer wished to draw a part of his deposit he was obliged to present his certificate banker so that the amount of his withdrawal might be credited upon it. in about the year 1729. Secretary of the London Bankers Clearing House. at least m v^ngland. to the presentment of the check by the holder at upon which it is drawn as well when these instruments are collected through other banks. their customers for the deposits made with them they gave them certificates against which their customers were money from their customers permitted to draw. from whence so many of our banking customs have tr' been derived. an improve- ment was evolved by the issue of several receipts in con- venient amounts. It w^as the practice then of the goldsmiths. instead of a single certificate for the whole deposit. who were posits of the bankers in those early days. Later these were followed. perhaps it will be interesting to know how checks and the present wonderfully efficient methods of effecting their collection have been evolved from the primitive necessities of the early bankers. The Uniform Negotiable Instruments Law recognizes in this provision a universal banking custom to handle checks quire with the utmost dispatch. Mr. • against banking ^ the issue of chocks deposits was unknown.292 THE NEGOTIABLE INSTRUMENTS LAW more prompt presentment than do bills. by the issue of printed bank notes which in their wording. appears that very early in the history i j. but their collection being peculiarly a function of banks. of course. according to the Hon.

a to issue printed checks to be few years later." as the collectors were called. each day after made between the clerks from the different banks and the balances due each were paid in cash. The volume of checks handled at these meetings and the large amount of cash of often required to settle the balances. of checks was exchange the lunch. these "walk clerks" formed the practice of meeting at lunch time at the "Five Bells." a public house in Dove Court. Early method of "clearing" and settling balances. Again this method their collection proving inconvenient by reason of the increasing number London bankers.RELATING TO COLLECTIONS Holland. the next development appears to have been an endeavor to facilitate upon which they were drawn. room. caused the bankers to be alarmed at the attendant risks and they rented a room near this place in which their clerks might meet and make their exchanges and settlements with greater safety. near the site of the There in the public present London Clearing House. As the use of checks ^ _. Not yet fully 298 Bank of England of meeting the convenient requirements filled in of their customers the bankers began. If. grew and each bank-1 er found himself daily ^ . he was obliged to send out his clerks to collect them at the banks This method of collection being attended with considerable difficulty and involving delay and the danger of loss and robbery. by sending the ''walk clerks. by the customer himself. resembled the notes of the today. Lomlmrd street. n m • • possession ot -P checks drawn upon other banks which had been left with him for his customers' credit. to meet at one bank one week and another the next to effect exchanges. time to time convenient regulations were provided to enable the clearing clerks to complete their exchanges with dispatch and later the use of cash in set- From .

millions of dol- lars in the aggregate of checks are daily reduced to com- paratively small ba'lances and immediately paid. effectually relieve the collecting bank from any imputation of negligence in effecting its collections. In this manner was evolved the won- derful organizations of the Clearing Houses of today by means of which. these being voluntary as- bankers whose within the control of their members. with instant dispatch. Clearing Houses control the qualifications of their members and frequently restrict their number or limit their membership to National Banks to the exclusion of State Banks and Trust Companies. They thereby assume a risk not attaching to member banks if checks deposited with them are unduly delayed in presentment because fit to present them for payment through clearing banks and. they are not re- they see lieved of liability to him if loss is sustained which is at- . or private bankers. Compliance with their reasonable regulations for the collection of instru- ments which pass through their control will. however. gains or losses being paid by drafts upon the all England at which bankers then found it convenient to keep balances for that purpose. Being voluntary associations. although no usage of the Clearing Houses will dispense with the performance by the collecting bank of those duties imposed upon it by law. in the absence of permission or assent by their customer to this course of dealing. A description of the methods employed in exchanges and settlements at sociations of making the the Clearing Houses would operations are entirely serve no useful purpose here.294 THE NEGOTIABLE INSTRUMENTS LAW Bank of tlements was dispensed with altogether. Non-member banks doing a deposit business are then required to clear their checks through member banks if they would avoid the necessity of presenting them at the counters of the banks upon which they are drawn.

Bank of Alma.. Most banks fix a time in the day's business ]M\)i-iwhich checks must be deposited if they are to be colIt is usually at or about lected on the day of deposit. N. as when the bank receiving the de- impending insolvency of the drawer of the check or the bank upon which it is drawn. 9 S. noon and deposits are all. 987. 97 Mich. 312. Hinsrham Nat'l Bk. however. 21. 68 W.KELATlN(i TO COLLECTIONH tributable to the delay that 29. 386. in some special cases. Kanawlia Valtev Bk. First Nat'l Bk.^^ The depositor may give express instructions as to the manner in which he desires his check or other instrument collected and if the deposit is is accepted subject to his instructions. particularly if it can be presented at posit has knowledge of the once without great inconvenience. Pinknev vs. no deviation will be excused notwithstanding 21. vs. by custom. 123. Y.) Deposits which are received subsequent to the clearing hour are. Cas. vs. A. Ann. 396. . Finch vs. received and credited to their customers' accounts subject to their pay- ment by the banks upon which the checks are drawn after presentment through the clearing house. 186 Mass. W. 186. the risk of holding it until the next day. E. 1012. 254. All checks received before the clearing hour are to be presented on the day of their deposit and a failure to do so might make the bank any loss due to its negligence. or if it the custom of the bank to handle the deposits of cer- tain of its customers in particular ways.32 L. ^^ 22. E. 99 Ark. 1912 B. . 115. properly held liable for until the next day's clearing unless they are received with special instructions re(iuiring their immediate pre- sentment at the counter of the drawee bank or unless. would materially increase.. 71 N. 320. Fourth Nat"l Bk. (Sec. Ordinarily a notice to that effect is printed in the customers' deposit book. 324. Va. 472. Karste. S. R.-) may be occasioned by thu method of presentment. Second Nat'l Bk. 161. 77 N. 136 S. 56 N. W. Lord vs. its general usage..

and it will not be required to concern itself over any question about the title to the instrument or its proceeds. its mistake will note before the close of the day after (Sees. Bank Bank vs.. 34. 149 111. 155) and in the case of an ordinary bill or a in that event.. Bk. This would have to be done in the case of a foreign bill requiring protest. Mononealiela Nat'l Bk. If accepts a check or ex- change in pa\mient which should prove uncollectible and its failure to olitain proper payment operate to prejudice the owner of the instrument entrusted to it for collection. N. First Nat'l and note. in it the absence of special authority from its depositor. it does so at its o^^^l risk. 26 L. vs. 115. 620. A. 1098 S. 976 75 Atl.3.^^ brief exposition of I stated at the beginning of this and liabilities the principal rules whi ch govern the duties "IT 94 Hazlett vs.) its dishonor. Ha\dng accomplished the collection of the mstrument it is the bank's duty to remit the proceeds to its customer or dispose of them in the manner I have already described. R. 103. on the very day of its maturity (Sec.^^ If it dis- cover the imposition and recover the instrument for which the worthless check or exchange was given in time to take the necessary steps to preserve the liability of the secondary parties to the owner the of the instrument no liability will attach to collecting bank. Connel Bk. 118 19 AtL 55 S. 89 Tenn. for. having fully performed its duty when it pays over the proceeds to its principal. Cumminos. 18 Union Trust Co. 270.. 609. 132 Pa. St. 226 Pa. . vs. have proven to be quite harmless. the bank will nevertheless be liable to him. 104. St.296 THE NEGOTIABLE INSTRUMENTS LAW ^^^^ collecting bank is not authorized to payment. W. 359. accept in payment of the collection any other means of payment than money and when it does accept the check of the debtor or the paying or remitting The medium of bank.

E. 65 S. 27 N. 115. 319. W. but they do not deprive the owner of the instrument of his right of action against the sub-agents.^^ Others hold that all are sub-agents of the first bank and each of the one from which it received the instrument. vs. A. 250. 21 S.. Exchg.. for the acts of each subsequent sub-agent. Columbia See.. 930. Natl Bk. 52 L. and the collecting bank becomes the simple Carlinville Wilson First Sec. 297 and agents in the collection of commercial paper that the bank which receives the instrument for collection from its customer becomes his agent in its collection. 89 Tenn. R. Bk. Farmer's Natl Bk. " and note. 18 S. 58 N.^^ Upon the collection of the instrument the agency re- lation ceases 25. Natl Bk. Y. 849. R. it must sometimes be determined what relation the sub-agents bear to the owner of the instrument. 11 Ky. 24 A. S. 98 A. of Pitts. vs. 609. S. Third Natl Bk. Natl Bk. 221 111. S. 128 N. E. and these cases hold that the bank which receives the instrument in the first instance. 717. 277. 439. . vs. 26.. St. each bank in the series is held to be directly liable to the owner of the instrument. Natl Bk. 4.RELATING TO COLLECTIONS of banks Relation of depositors to sub-agents. 222. R. 187 111. if he elects to pursue it against them. Natl Bk. W. Bk. If the collection is effected by the employment by that bank of sub-agents. 618 vs. is liable to him for the acts or omissions of its sub-agents. Bailie vs. Bank of Whittier. Cummin^s. Some courts hold that each bank is liable only for its own acts or omissions in the performance of its particular duty in the collection and where this interpretation prevails. 276.. from its customer. Nicholas Bk. There appears to be conflict of authority upon this subject based upon conflicting views of the liability of the first bank or any bank in the series through which the collection is made. 26. Y. Chicago vs. E. 95 Ga. Merch. of N. 632. 112 U. vs. Augusta Svgs..

Armstroiii^. vs. vs.^'^ unless the collection was undertaken under an agreement by the terms of which the proceeds are to be otherwise held. Corp. 27.. Ct. 137 N. Car. 308. . Merch. E. C. 50 S. the proceeds will be held under the terms of the trust agreement. 148 U. 13 S. when. & Farmer's Bk.298 THE NEGOTIABLE INSTRUMENTS LAW contract debtor of its customer. of course. 537. Comm. S. of Penn. 533. Cas. 50. 697. Nor. Commercial Bk. 2 Ann.

191. Definition and meaning of *®"^* 'Bank' includes any person or association of persons carrying on the business of banking whether incorporated OR not. stitutes. Instruments Law. 192 Persons "primarily liable 195 Api)lication of Act. unless the context otherwise requires: means an acceptance 'Acceptance' notification. 'Holder' means the payee or indorsee of a bill or note." "Sec. or the bearer thereof. 'Delivery' means transfer of possession. Section Section 193 Reasonable time. when e r c li a n t second.191 GENERAL PROVISIONS 299 TITLE IV. and 'note' means negotiable promissory note. . M .States and is of importance only for citation and reference. 'Bill' means a biij:. 'Instrument' means negotiable instrument. 'Bearer' means the person in possession of a bill OR note which is payable to bearer. Act. of exchange." The title of the Act is omitted in many of the . The Act is very generally known as the ''Uniform Negotiable Title of the ''Sec. 190. wliat con190 Title of the Act. actual or constructive. This Act shall be known as XHE Negotiable Instruments Law. from one person to another. 'Indorsement' means an indorsement completed by delivery. or deli\'ery completed by 'Action' includes counter-claim and set-off.§190. ' ' . who is in possession of it. how computed. 191 Definition and meaning of 194 Time. terms. ary parties. In this Act. General Provisions.1!)() Law on instiTiment srovems.

'Written' includes printed. has said that its it judicially on the English is the duty of courts to give to language its plain ordinary meaning. for example. plainly expressed terms." It is not difficult to "Sec determine who. 'Person' includes a body of persons.the application of this law. It is the law\ must be interpreted Before its same manlaw simple.300 THE NEGOTIABLE INSTRUMENTS LAW § 192 'Issue' means the first delivery of the instrument. Lord Herchell. 192. whether in- corporated OR not. terms of the instrument is absolutely required to pay the same. is Reference to the law as it previously stood is itself unnecessary when the language of the Act plain and explicit and fully covers any situation to be inquired into. by the terms of an instrument. 'Value' means valuable consideration. uninfluenced by a consideration of how all the law previously stood. All other parties are 'secondarily' liable. every person who signs . commenting Act. the proper course to pursue ([uire is first to examine its language and in- what is its natural meaning. is required absolutely to pa}^ it. and our own Act being body ner. and 'writing' includes print. in view of what has already been said in other places where the terms defined have been employed." These definitions seem sufficiently complete to emable any person readily to understand them without further explanation. to be authority. "Kansas. Upon a promissory note. complete in form. all conflicting judicial interpretation of the merchant cease Person primarily liable on instrument. in code like the form English Act an attempt to emthe law upon the subject of negoin the tiable instruments. to a person who takes it as a holder. In determining. ''The person 'primarily' liable on an instrument is the person who gy rpj^j.

71 and 144 much has already been said on this subject and the effect of a failure to negotiate or present an instrument for acceptance or for payment within a reasonable time."" Here is a provision for the observance of which it is Reasonable time: what constitutes "So. or may be delayed in its presentation. the drawer is then the person pay even when unaccepted. since bill by Section 130 the holder may treat such a promissory note of the drawer. INSTRUMENTS.' regard is to be had to the nature USAGE OF TRADE OR BUSINESS (iF THE OF THE INSTRUMENT. Under Sections 7. l)e the person who pri- marily promises to pay unless he indicates by ap- propriate words in writing upon the instrument that he does not undertake to \jay it in the capacity of is maker.§193 it GENERAL PROVISIONS its 301 upon face would appear to it. shall be taken into account as part of the facts of the particular case. The acceptor of a bill of exchange the person appear- ing upon the face of an accex)ted bill to it. Dakota. has already been pointed out. AND THE FACTS to such respect with any) OF THE PARTICULAR CASE. It seems that the intention of the parties is not at all taken into account. be the one pri- marily and absolutely required to pay But when one draws a bill absolutely obliged to upon himself. 53. . See these sections. 193. What would be a rea- sonable or an unreasonable time in respect to one instrument might not be so regarded in respect to another. In deteemining what is a 'reasonable time' or an 'unreasonable r^jj^^j. only the nature of the instrument and the usage of a trade or business and the facts of a particular case. impossible to state a general rule. unless the last clause of the section is to be regarded as so comprehensive that the intention of the parties in regard to the time the instrument may stop in the course of its negotiation. as the "Sec.

or the last Time: how computed.195. "Sec. in contemplation of the provisions this Act. The . One of the elements of a valid custom." Negotiable instruments executed before the passage of this Act are not governed by its provisions. it must be so done. presentment. it may be done upon the next succeeding business day and. to be effective. is that it must be reasonable. EFFECT hereof. If long delay in the presentment or negotiation of negotiable instruments is relied on to aid in determining whether or not. or giving notice of the dishonor of a negotiable instrument falls upon a Sunday or a holiday. ''Secular day" means worldly or business day as distinguished from that day of each week universally given over to religious worship and which. "The provisions of this Act do not apply to NEGOTIABLE INSTRUMENTS made and delivered prior to the taking Application of Act. THE ACT MAY BE DONE ON THE NEXT SUCCEEDING SECUhesitation in saying that LAR OR BUSINESS DAY.195 What usage prompt not impresentment of the instrument is also possible to see. is Sunday. "^^C. OR ON A HOLIDAY. oArizona.302 THE NEGOTIABLE INSTRUMENTS LAW of a trade or business will excuse difficult if §194. protest. payment. Broadly then. it very much doubtand I have would not. in this country. one absolutely necessary to give it the force of law.'' Section 85 of this Act contains the pro\asion that an instrument falling due on Sunday or a holiday shall be pre- sented for payment on the next succeeding business day. 194. when the day for doing any act in connection with the acceptance. for doing any act herein required OR permitted to be done falls on SUNDAY. it is a custom which sanctions and purposes of ed that such a custom would little excuse the delay. day. By this section the same provision is applied to any act which the law requires or permits to be done. the delay is unreasonable. Where the day.

Schmidt. In any case. do not apply. all which this embodied in a multitude of judicial of which were well kno^v^l to the Conference Act was prepared. 577. 196. 168 Mo. Gate City Nafl Bk. the rules of the Law Merchant. vs. In any case not provided for Law Merchant: when governs." Therefore. for which no provision is made in the Act the authority upon which our disputes are to be settled nmst be sought and found in that vast collection of judicial decisions upon the "principles of equity and usages still of trade. which general convenience and a common sense of justice have merchants and mariners of the civilized 1. it can with safety be said that the negotiable instruments code contains provision for practically every case which may arise in the multi- tude of our business transactions involving the use and interpretation of negotiable instniments. ix the Act. in In tiie conflict with its provisions. 81 N. App.^ "Sec. being decisions. world" —the Law Mackintosh vs.^. established to regiilate the dealings of in all the commercial countries Merchant. rights persons who became parties to an instrument made and delivered before the passage of this Act will be enforced and determined by the law as it was upon the date when the instrument was made and deThe duties and rights of livered and not by this Act. . those who become parties to the instrument by indorsement after the date when the Act has taken effect are likewise governed by the law in effect at the date when the instrument was made. however. 153. the rules of the Law Merchant SHALL govern. J. in any case which is provided for in this Act. Gibbs. 580. 156. L.§]f)(i GENERAL and liabilities of PH()\'ISl()XS :}0. introduction to these of the papers a brief history of the first Law Merchant and recorded use of bills of exchange and promissory notes and a short history of the early codification of the rules of the Law Merchant in respect to them were given. These at rules.

warehouse receipts cates of stock. certifi- These are called. ''Quasi-Negotiable. The first two represent the right of . as freely as possible." that they are negotiable in a certain sense and to a certain degree and I shall next endeavor to explain the most important prin- ciples of the laws by which they are governed. greatly to be desired. The law^s which govern those instruments which have to some extent the quality of negotiability are not established with such uniformity as is the law on commercial every indication that acts prepared by the conference of the Commissioners on Uniformity of State Law^s will gradually obtain the approval of all or paper but there is a very substantial will is. To do so would be mere repetition for the reason just stated. References will be made' to sections of these Acts but the Acts themselves will not be reprinted in this book. In the following treatments of the Uniform Bills of Lading Act and the Uniform AVarehouse Receipts Act I will use. belong. the language of these Acts themselves. Warehouse Receipts and Certificates of Stock are closely allied in modern commercial use to promissory notes and bills of exchange. number of the States and that they of course. Bills of Lading.304 QUASI-NEGOTIABLE INSTRUMENTS the class of instruments for the government of To which we must yet look to a great extent to the uncodified rules of the Law Merchant and to other statutes. although they possess some of the qualities of negotiability. for the lack of a bet- ter designation. bills of lading. and is. Quasi-negotiable Instruments.

the last 305 an undivided and activities of corporations and the right to receive a proportionate part of their earn- ings and to participate in a distribution of their assets. that after negotiation it is for value to a holder in due course. "Order Bill. without notice." name of the person from whom and the pl^ce where the goods have been received. written or printed terms the date of the What must '^'StraTghtBill". Each has been accorded by mercantile custom acteristic this char- of negotiability. It is in the title of prior not possible. to state any general rule or theory of the law in respect to all of these in- struments for each has an origin and nature of different ities. In form a its bill of lading is required to embody within its issue. which are transportation receipts for goods shipped. and contain an Negotiable bills ^on of lading. its own from the others and from other kinds of secur- Bills of Lading. (The references are to sections of the Uniform Bills of Lading Act. the place to which the goods are to be transported and a statement whether the goods received will be delivered to a specified person (called a "Straight . as the evidence of their ownership and existence. agreement to deliver the goods described to the shipper or consignee or to his order. free from such defenses as are involved owners.BILLS OF LADING property and possession interest in the assets in goods. be the subject of barter and sale. however.) Bills of Lading. They are a symbol of the goods which they represent and while the goods yet repose in the custody of the carrier the bill of lading may. are issued by railroads or other comcarriers of freight.

and be signed by the carrier or The carrier may insert in the bill agent. Washington and Wisconsin. Pennsylvania. (Sec. Rhode Island. or the packages containing them. (Sec.) They have some of the qualities of ne- Their principal resemblance to is in the fact that when a commercial paper negotiable bill of lading is issued in which it is stated that the goods gotiable instruments. Michigan. Iowa. it represents are consigned or destined to the order of the person named in the bill. Idaho. 1.) any other terms or conditions consistent with its real agreement with the shipper provided they shall not be contrary to law or public policy. New Hampshire. New^ Jersey. New York. Minnesota. QUASI-NEGOTIABLE INSTRUMENTS or to his order (known as an "Order Bill"). Massachusetts. Maine. 2. and shall in no wise imits pair its obligation to exercise that degree of care in the transportation of the goods which a reasonably careful man would own.) It must also contain a description of the goods. . Louisiana. Missouri. it is transferable by the con- signee or his transferee and any subsequent holder acquires the right to the delivery of the goods and to bring an action upon the bill in his own name. Illinois. Ohio. For the sake of business con- venience and to Bills of make uniform the laws of all the States a Lading Act was prepared by the Conference of Commissioners on the Uniformity of State Laws which is now effective in the following States: Connecticut. exercise in regard to similar goods of his (Sec. Maryland. Vermont. 1.mi Bill). is Upon the liability of the carrier and the rights of the bill holder of a negotiable conflict of ^^^s- of lading there extreme of opinion. the courts of many States holding and persistently announc- ing views directly opposed to those of the courts of other States.

it would be assured. If they are the carrier issuing them . in all probabil- Should the States which have not yet embraced the Act continue to decline to do so. under the Uniform Act. a bill to make applicable to interstate shipments the provisions of the uniform Act prepared by the Conference of the Commissioners on Uniformity of State law^s was recently passed by the Congress The Act now governs bills of of the United States. the 99% of all commodities shipped would nevertheless be carried upon will l)e bills of lading which It subject to the provisions of this Act. and the extent to which bill the liability of the carrier to a holder of a which has not been taken up and cancelled upon delivery of the goods to the consignee. It will not be possible to include a discussion of this feature of the Act and its effect within this article. seem reasonably proper then that this upon the subject be confined to the consideration Uniform Act.BILLS OF LADING 307 Radical changes in the laws of some States are effected by the Act. At the suggestion and upon the recommendation of the Senate Committee on Interstate Commerce that it be enacted. lading issued for interstate shipments. particularly in regard to the liability of the carrier when the issue of a bill of lading has been. excepting Alaska. all of the States will. North America. and its speedy adoption by ity. may not. from hearings had before the Interstate Commerce Commission. be issued in sets. it being intended merely to show the nature of these documents and explain some of their features of negotiability. Negotiable to bills would analysis of the law of the issued for the transportation of goods any place May not be '^*^' in the United States on the continent of io'what'' countries. proall cured without the delivery to the carrier of any or of of the it fixes goods which it describes. appear.

of negotiability.) The negotiation of the bill may be by special indorsement to a specified person or by endorsement in blank. 4.) Its negotiable character it is not affected by the fact that arrival of names a person who is to be notified of the the goods and the fact that it names such a bill person or it is not notice to a purchaser of the that he has may have any represents. while a blank endorsement specifies no endorsee and under it to the goods are deliverable to the bearer of the bill bill. 18.) The indorsement of the bill does not make the indorser liable for any failure on the part of the carrier and previous indorsers to (Sec. But no ^. 29.308 QUASI-NEGOTIABLE INSTRUMENTS under that Act. withstanding any provision in the it is to be negotiable not- the contrary. 35. goods they describe the bill for value in good faith. if it states that the goods are deliverable to the person named bill to or his order. Negotiable by indorsement or delivery. represents are destined or con- signed to the order of the specified per- negotiable. And if the bill con- words held. for failure to deliver the to anyone who purchases a part of if will be liable. (Sec. son whom it names. 5.) fulfill their respective obligations. rights or equities in the goods which (Sec. 8. tains . (Sec. (Sec.i ^"^^ name xi person j. The by delivery when accompanied by an express or implied agreement to transfer also be transferred may the title to the goods which it represents. to whom i or whose order the goods are to be transferred. that is.) . holder of one of the other parts of the (Sec.) A special endorsement specioi the i? ^^^ ^^ j.„ bill of lading it is negotiable unless it expressly states that the goods . upon the best authority. even the purchase be made after the delivery of the goods by the carrier to a bill.

(Sec.) surrendered for cancellation. or der a special indorsement by the consignee or an indorsement in blank by him or by his mediate or immediate indorsee. (Sec. 10. is obliged to deliver the goods described in the bill upon a When carrier demand made either by the consignee or The carrier.''^^'^ liverable to him. to an officer it w^as to a or agent of the carrier whose actual or apparent duties include the power to act upon it. or 11. (Sec. m the absence of *° '^'"''®' goods^ l^y the holder of the bill.) But a carrier is not obliged to deliver and not .BILLS OF LADING 309 some kiwful excuse. prior to making actual delivery. 11. if it has been properly negotiated. and it must be made or given in time to enable him to w^hom it is given to act with reasonable diligence to stop delivery of the goods. upon his offer to satisfy the carrier's lawful bill claims against the goods. been requested ])y or on behalf of a person having a right of property or possession in the goods to withhold such delivery. or such information given. that the carrier has not.) But when a negotiable bill has been issued no stoppage in transitu will affect or defeat the rights of any purchaser for value in good seller's lien or right of . or had information at the time of delivery that person not lawfully entitled to their possesSuch a request must have been made (Sec. 11. however.) sion.iustified in delivering the goods to an unpaid seller unless the bill is first 10. (Sec. This is subject to the qualification.) it is transferable by delivery. The carrier Carrier liable is justified in delivering the bill to if goods rep- resented by a negotiable session the person in its if whose posbill it is by terms they are dehe holds the un- delivl^. to be effective. to surrender the indorsed and to sign an acknowledgment that the goods have been delivered if requested to do so by the carrier.

and notwithstanding the fact that the goods were delivered (Sec. 41. . 14. addition is made in it after its issue with- out the written authority of the carrier. Alteration of bill. 13. (Sec. Upon delivery of the goods the carrier must take up and cancel the negotiable bill and if he fails to do so he will be liable to any one who in good faith purchases the bill for value. erasure or addition is void and the bill will be enforceable according to its original effect. the alteration.r» to the person entitled to their possession. (Sec. If the bill is altered or an erasure or „ . .) This is the negotiation has been subsequent to the notice to the carrier of the seller's claim to the goods. or that he claims a lien upon them or claims the right of stoppage in transitu. describing the goods or packages delivered or the part which possession. 14. 15.) If a negotiable bill is lost or destroyed the owner of the goods for which it was issued can only obtain their delivery.• . without the carrier's .310 QUASI-NEGOTIABLE INSTRUMENTS faith to whom so even the if bill has been negotiated.) If it remain in its fails to do so the carrier goods speciany one who in good faith and for value purchases the Ijill. whether the purchaser acquired title to the bill before or after such delivery. (Sec.) . (Sec. or unless its authority is noted on the bill. was made to the ]ierson entitled to their posses- (Sec. 41.) Must take up and cancel bill. J V -„ only of the If the delivery j tj is of part or plainly write cancel the bill goods the carrier must either take up and upon it a statement that a still partial delivery has been made. whether he accjuires title to it before or after such partial delivery and notwithstanding the will be liable for its failure to deliver all the fied in the bill to delivery sion.) . Partial .. delivery.

Liability oi when carrier The carrier for it. 22. even to the carrier. or it if contains a statement that the condition of the goods or contents of the packages are or words of like purport. extent of any damage he may all fer by the non-receipt of or part of the goods or by their failure to correspond to their description in the of the goods bill at the time of its issue. or upon (Sec. will be liable to the holder (Sec. ter])lead or it may require claimants to in- may itself bring an action for this purpose. (Sec. if none were delivered (Sec. will not be liable for the failure to deliver the bill goods of the kind and quantity described in of lading if they are described in the bill merely by a statement of the marks or labels upon them.) .BILLS OF LADING consent. 19. relying in good faith upon its scription of the goods which ^^ ^^^^ represents. are goods the Nor will it be liable if the bill states that said to be.. however. or in a certain condition. or the packages are said to contain. .. of a negotiable bill who has given it value de- Sf^llo™ receipt of goods. by the aid of a competent court :ni whose order nnist re<iuire liim to indemnify the carrier or any person injured by the delivery against liability or loss by reason of the original bill remaining outstanding. but must respond to him. 16. (Sec..) » ^.) The carrier. unknown to the carrier. 22. suf- correspond to description. relying for recourse upon If Interpleader. ^j^^^ its indemnity. goods of a certain kind or quality. title to more than one person claims goods or the carrier has notice that in possession of the all l)ill some one other than the person of lading claims them.) Even upon such an order the carrier will not be relieved of liability to a jjerson to whom the negotiable bill has been negotiated for value without notice of the proceedings or the delivery of the goods.) the packages in which they are contained.. 22.

other words of like import.1 shipi.) Every person of lading has title to whom a negotiable bill the transferee. it any damages resulting from the improper loading or the misdescription of the goods represented by the bill. unless there has been loss or damage in transit for w^hich it would be responsible if due will not then be liable for to -T ^ some negligence . 31.) to de- Not . 25. 32. unless the bill expressly states for what other (Sec. rectuired to deliver unless bill ^ The carrier cannot be compelled liver the ^^ ^s STor'cha^ges. or are perishable. 31. even . 26. or the holder's failure to receive all that are described.) He also acquires the direct obligation of the carrier to hold the goods for of the him according bill is to the terms If the bill. insert X m • the 1 bill -n the words "Shipper's load and count.312 QUASI-NEGOTIABLE INSTRUMENTS Exception when "shipper's load and count. goods described in the bill until surrendered or the goods are im(Sec. pounded by a court.) ." or this statement is true." When .) It is charges a lien may be claimed. if the bill is negotiable. (Sec.) negotiated to the holder. (Sec. whatever the goods his transferor (Sec. been negotiated acquires had or could convey and such title as the consignee and consignor had or had power to convey to a purchaser in good faith. or because they have not been claimed. as against the transferor. storage and other charges incidental to the transmission of the very goods described in the bill. the goods are loaded . 22. (Sec. or hazardous. l)ill not liable to the holder of the of lading for delivery after the goods have been sold to satisfy its lien. of its own. by the J. and. the title to the goods sul)ject to the transferred but not terms of any agreement between them. the transferee acquires with the transfer.) It has no lien upon the goods except for freight. 23.1- per the carrier may if . to (Sec.

with the acknowledged limitations upon them. the transferee may compel the transferor to indorse the bill unless it appears that its indorsement was not intended. 33. bills of Courts have never been willing to give the bills of it. (Sec. 33.: BILLS OF LADING 313 To negotiate feree the the bill person to another in means to transfer it from one such a manner as to make the transwhich it owner of the property in the -goods represents.) Anyone who negotiates or transfers a l^do'JsemU^r delivery. lading the same quality or degree of negotiability which is accorded the exchange and notes. including one bill. 34. If the transfer of a negotiable bill is made for value by delivery and its en- dorsement by the transferor is necessary for negotiation. 34. that the bill is genuine. admitted to be as follows Right to require indorsement. provided that these warranties would be implied if the goods themselves had been transferred under a contract between bill. (Sec.) He also warrants that he has a it right to transfer the title to the goods represents and he warrants that the goods are merchantable or fit for the particular purpose for which they are intended. however. an assignment of a claim secured by a the liability . unless the contrary is made to appear. (Sec.) The negotiation is regarded as taking effect at the time when the indorsement is actually made and in the interval the title of the transferee is exposed to equitable defenses and adverse claims w^hich may be asserted against the transferor.) In the case of blil. that he has a legal right to transfer it and that he has no know^ledge of any fact which would impair the validity or value of the bill. in fact. bill of lading for value by indorsement or delivery. they have expressly denied Their principal attributes of negotiability. the parties without the (Sec. are. who assigns for value a claim secured by a warrants.

) Neither of these provisions can. fraud. etc. (Sec. and he subsequently negotiates the bill to one who in good faith continues in possession of a negotiable bill takes for value.) Rights of holder without notice of to . (Sec. however. 38. will not exceed the of the assignor. the holder will obtain with his purchase of the bill the title to the goods it represents as fully as if the it first purchaser of the goods had expressly authorized the bill. subsequent negotiation of the (Sec.. amount of the claims to secure which the bill is assigned.-jj to fulfill if their obliga- previous indorsers or carrier. de- (Sec. the title of such subsequent holder is not affected thereby and the validity of the bill not thereby impaired. mortgaged or pledged.) It provides further that if one which has been issued by a carrier for goods in his possession and which have been sold. in breach of faith. pro. 34. endeavoring . duress. for upon both there is a division of opinion furnishing the very best reason why . ^^ aovercome irreconcilable coimict. . fraud. 4. demands and receives is payment of the debt for which it is security he not deemed to represent or warrant the genuineness goods it of the bill or the quantity or quality of the scribes. 35) ]-.314 QUASI-NEGOTIABLE INSTRUMENTS upon his warranty. or is wrongfully converted by the holder and afterward negotiated to a subsequent holder in good faith for value tiated and without notice. . 37. either as mortgagee of the goods it respresents or as pledgee. ^j(jgs ^i^^i if tije bill is obtained or nego- by accident.) One who indorses a liable for bill of lading is not liable for the failure of the carrier or any obligations of previous indorsers tions (Sec. be stated marked to be the law generally. and one who holds the ^g security. without notice of the previous sale of the goods. 30. The Bills of Lading Act.

) If however. 39. (Sec. will obtain a that the seller's to the bill and the goods.BILLS OF LADING either the rule favored 315 by the Act or that announced by those courts holding the contrary ought to be universally adopted for the sake of uniformity. the property would have seller passed to the buyer upon shipment of the goods. the thereby reserves his ownership of the goods unless. or if it is indorsed to him or bound . or who purchases the goods withwrongful good title out notice of their wrongful sale. deemed to the goods and the right is if buyer if the bill is is delivered (Sec. When lYdt'ef as ^°°^^to a bill is it issued which indicates that the goods represents are deliver- ownership of able by the carrier to the buyer or his order. and the one lading. or his own or his agent's order. deliverable to bill of lading provides that the goods are buyer or to his order. for value without notice of its negotiation. the buyer indorsed in blank by the seller consignee.) ^^hen the seller of goods draws upon buyer and transmits the draft topurpose gether with the bill of lading to the buyer for the buyer is of obtaining its acceptance or pajTuent. the Draft with he does to return the bill of lading to the seller if the not accept or pay the" draft. of lading attached.) But the bill retained by the seller or his agent he thereby reserves his right to possession of the goods and if they are deliverable to the seller or his agent. fails to return it but negotiates the bill of who takes it in good faith. or his agent. except for the form of the bill.) deemed to be only for the purpose of securing the performance by the buyer of his obligations under his will be contract with the seller. its issu-e be a transfer of the property in to their possession in the to him. 39. the bill (Sec. (Sec. In that event the seller's ownership of the goods 39. 39. notwithstanding .

bills are sometimes issued ^^^ when more than one negotiable bill is issued by the carrier for the same goods it is required that the word ''Duplicate" or some other word or words is indicating that the document not an original.) for mark any and every any damage caused by as if duplicate its be liable failure to do so to bill anyone not so who purchases marked. it is deemed that the seller. terms or legal effect payable on demand or at sight.) . either directly or through a bank or other agency. in the absence of an agreement to the contrary. (Sec. or not more than three days thereafter. shall be If the carrier fails bill it will stamped or written plainly upon the face of every one except the to so first one issued. 6. in the absence of a different express agreement or of instructions.316 QUASI-NEGOTIABLE INSTRUMENTS bill draft which the 39. Duplicate Duplicate bills.) accompanied was not honored. (Sec. of the goods to the holder of the original (Sec. as follows: assumed. payable at a time more than three days after demand. intended to require acceptance but not payment of the draft before the buyer should be entitled to receive or retain the bill of lading.) lading may be delivered to the buyer. 40. Upon the acceptance of the draft the bill of (Sec. it is deemed. and it must not be delivered up If the draft is buyer pays the draft. sight or presentation. even an original a duplicate the purchase be made after the delivery bill. What intention If the seller of goods draws on the buyer with bill of lading attached. the parties interested are justified in assum- That if the draft is by its ing that the seller intended to require payment to the of the draft before the buyer should be entitled to receive or retain the until he bill. 6.



«T. !f<t^^?!„'^+^^oT,io or noii-negotiable bill must be so



lading which

issued by a

carrier and which

not intended to be

negotiable is called a "Straight Bill" and must have plainly stamped or written upon it by the carrier the word ''Non-negotiable" or "Not negotiable", unless what purports to be the bill is a mere memorandum or acknowledgment of an informal
Penalties f fraud.

(Sec. 7.)



States provision



in the

laws upon

the subject of bills of lading

against fraud in their issue, and severe penalties are imposed upon any officer, agent, or servant of a carrier


issues, or aids in issuing, a false or fraudulent bill.

Severe penalties are also imposed upon



fraudulently alter or negotiate bills of lading, or procure
the transfer of the goods or the bill without

or with

intent to defraud, or w^rongfully procure the issue of a



by a


In substance, the foregoing
cipal provisions of the
bills of

an analysis of the prin-




Uniform Act upon the subject of effect in the States I have menall

tioned and, either by other statute or judicial interpretation of the
will be of


Merchant, in nearly

the others.


advantage to men engaged in business to know the substance of this Act and you will observe that in a great many respects, as, for example, upon the subjects of indorsement and transfer, warranties, and to
determine when and under what circumstances a holder
title to

the bill free

from imperfections, the pro-

visions of the Uniform Negotiable Instruments Act bear a close analogy to this one and are useful to a proper

understanding of the law upon this subject. References to the former are omitted from this analysis of the Bills of Lading Act but they readily suggest themselves in the



and I suggest that the reader consult the index freely and refer to the explanations to be found under appropriate sections of the Uniform Negotiable Instruments Act. He must bear in mind, however, that a bill of lading is merely a symbol
use of terms
to both


of the existence en route, in the custody of the carrier, of the

merchandise for which

it is

issued and that such

an instrument

not as fully negotiable as



representing transactions in

money rather than

goods, and that, being quasi negotiable, bills of lading are not wholly governed by the laws which govern com-

mercial paper and do not possess
negotiable instruments.

all of

the attributes of


the goods arrive at their destination, unless they

are immediately required for sale or consumption, they

are usually warehoused.

As an evidence

of their exist-

ence a receipt


issued and I shall next endeavor to

explain in what respects and to what extent this receipt is negotiable, and the rights, duties and liabilities of the
parties to a warehouse receipt.

(The references are
house Receipts Act.)


to sections of the

Uniform Ware-

_ ^ Warehouse

In fortv States and in the District of ,, ^ a Columbia, being all except Arizona,

Georgia, Indiana, Kentucky, Mississippi,

New Hamp-

shire, South Carolina and Texas, the Uniform Warehouse Eeceipts Act, prepared and recommended by the

Conference of the Commissioners on the Uniformity of State Laws, is in effect. It was enacted for the pur-



pose of making uniform the laws of all of the States upon this subject and very concisely and clearly states
the law which governs the issue and negotiation of receipts for the storage of goods with public warehouse-


warehouse receipt is a written ac,, x knowledgment by the warehouseman that warehouse receipts. ^le holds certain goods in store for the person to whom it is issued. It may be issued for goods deposited with the warehouseman by their owner and in many States for goods of which he is himself the owner. In the absence of any special agreement imposing other obligations upon the warehouseman, the doposit of goods
^ ^ Defimtion








with him for storage and his issue of a receipt for them establishes his relation to the owner of the goods as
that of a bailee and he


to exercise ordinary care

in keeping them, to afford the

owner reasonable opportunities of access to his goods and to deliver them upon the terms of the receipt which he issues as an evidence
that they are in his custody.

This receipt


not required to be in any

form but every warehouse rereceipt, ceipt must embody within its written or printed terms the location of the warehouse where the

goods are stored, the date of

its issue, its


number and a statement whether

the goods will be de-

livered to the bearer, to a specified person or to a speci-

person or his order.

(Sec. 2.)



also express the rate of storage charges, conit is

tain a description of the goods for which

issued or

the packages in which they are contained and

must be

signed by the warehouseman or his authorized agent.
(Sec. 2.)
If the receipt is issued for

goods of which the


the owner, either solely or jointly or



otiiers, these facts must be stated in and it must also contain a statement of any advances made, or liability incurred by him toward the goods stored for which he claims a lien. If the precise amount of his advances or liabilities incurred is unknown

common with

the receipt

to the

warehouseman, or

to his agent, at the time the


issued, his statement

upon the receipt that adincurred will be

vances have been made or
sufficient if


he states for what purpose they were


or incurred.


of the foregoing requirements are omitted

a negotiable receipt the warehouseman will be liable for

damages caused by their omission. (Sec. 2.) He may any other terms or conditions which express the terms upon which he receives the goods, provided they shall not be contrary to law or in any wise

insert in his receipt

impair his obligation to exercise that degree of care in
the safekeeping of the goods entrusted to

him which a

reasonably careful

man would

exercise in regard to sim-

goods of his own.

(Sec. 3.)


"^^^ receipts


may be

issued by the


warehouseman may be either non-negoor negotiable. One in which it is stated that the


describes will be delivered to the depositor, or

any other person, is a non-negotiable receipt. (Sec. 4.) Such a receipt must have plainly written or stamped on its face by the warehouseman issuing it the words ''Nonnegotiable" or "Not negotiable," and if he fails to mark it so anyone purchasing it for value, supposing it to be negotiable, may at his option treat it as imposing upon the warehouseman the same obligations as if it had been negotiable, unless what purports to be, or is claimed to be a warehouse receipt is a letter, or memorandum, or other written agreement of an informal character.

(Sec. 7.)



^ negotiable receipt must contain the statement that the goods received will be delivered to the bearer or to the order of any specified
(Sec. 5.)
If such a receipt contains in addiit is

tion a provision that

non-negotiable this additional



void and notwithstanding
(Sec. 5.)

the receipt is


to be negotiable.

When more

than one negotiable receipt

warehouseman for the same goods the word '* Duplicate" must be plainly written or stamped upon every one except the first one issued, and the warehouseman who fails to do so will be liable for any damage or loss suffered by anyone who purchased
issued by a
the subsequent receipt for value, supposing

to be




he purchased


after the delivery of the

goods by the warehouseman to the holder of the original

(Sec. 6.)



upon the face

of which the

word ''duplicate"
it is

plainly placed

considered to be

a representation and warranty by the warehouseman

an accurate copy of an original receipt properly issued and uncancelled at the date when the duplicate was issued, but it imposes upon him no other liability. (Sec.

In the absence of some lawful excuse
mus't'^divS^'' goods to holder

bound to deliver the goods represented by the receipt to




holder or to the depositor of the goods^

upon demand.

(Sec. 8.)

He must

require that the de-


shall be

accompanied by an

offer to satisfy his lien

for advances and charges, to surrender the receipt,
negotiable, with such indorsements as

would be neces-

sary for


negotiation into the possession of the person
in order to

making the demand,

to delivery of the goods, and that the person

show that he is entitled making the


shall sign


an acknowledgment that the goods
(Sec. 8.)

have been delivered.
Ligjj Qf

If a negotiable receipt is issued for the


goods the warehouseman will be entitled

to a lien uj^on them, or their proceeds if sold, only for

charges for storage of the goods for which the receipt is issued accruing from the date of the receipt, unless it
plainly specifies other charges for which a lien
(Sec. 30.)


In that case the warehouseman will be en-

titled to a lien

upon the goods or their proceeds for the charges enumerated in the receipt if they are lawful charges for the storage and preservation of the goods it






transportation, weighing, coopering and other reasonable charges

and expenses

in relation to them.

(Sec. 27.)



also entitled to a lien for charges


and advertisements of


and expenses for and for the sale of the


default has been
(Sec. 27.)


in satisfying his ordinary



warehouseman having a

valid lien against the per-

son demanding the goods


refuse to deliver them
(Sec. 31.)


until his lien is satisfied.


is en-

titled to

of the remedies provided by any law


favor of a creditor against his debtor for the collection

from the depositor

of the goods

of all charges


advances- which the depositor has expressly or impliedly
contracted with the warehouseman to pay, and

not re-

quired to have recourse


or alone to the goods in his
(Sec. 32.)

possession to collect his claim.

The warehouseman will lose his lien upon the goods by surrendering their possession without first requiring the payment of his lawful claims against them, or by refusing to comply with a lawful demand for their delivery. Such a de(Sec. 29.)

comjjly with


must, of course, be accompanied by an offer to

requirements which I have already

stated must be met, before the warehouseman can be compelled to deliver the goods to the depositor or holder
of the



He may
which the

on the goods will not be they are subsequently redeposited with him. enforce his lien again the goods deposited with
(Sec. 8.)


him belonging

to the debtor for the claims in

regard to

lien is asserted,

and may enforce


goods belonging to other persons deposited at any time by the person who is liable for his claims, provided the
person who deposited goods belonging to others had such possession of them that a pledge of them by him at the
time of their deposit to one


took the goods in good

would have been


(Sec. 28.)

Enforcement of

^^ order to enforce his lien for a claim

which has become due, the warehouseman must give written notice to the person for whose account the goods are held, and to any other person known to have a claim upon or an interest in them. (Sec. 33.) This notice must be given by delivery in person to the one to be notified, or sent by registered letter addressed to his


place of business or residence.

(Sec. 33.)





must contain an itemized

satisfy lien; what statement of the warehouseman's claim, must contain. showing the sum due at the time of the

and the date or dates when it became due, a brief description of the goods against which the lien exists and a demand that the amount of the claim as stated in the notice, and any additions as shall accrue, must be paid on or before a day mentioned. (Sec. 33.) The time within which payment is required by the notice must not be fixed at less than ten days from the date of the delivnotice

ery of the notice or the date



should reach its



destination in due course of post
(Sec, 33.)


sent by mail.




also contain a statement that

unless the claim

paid within the time specified, the

goods will be advertised and sold at public auction and the date, time and place of the sale must be specified.
(Sec. 33.)
Auction sale to
satisfy lian.

-^^ auction sale


then be held after





elapsed, in accordance with the terms

of the notice.

was acquired unless that place is unsuitable, when it must be held at the nearest suitable place. (Sec. 33.) The sale must be advertised by publication once a week for two consecutive weeks in a newspaper published in the place where the goods are to be offered for sale, or if no newspaper is published there, the advertisement must be posted at
must be held
in the place

where the

least ten days before the date


the sale


to be held,

in not less than six conspicuous places therein.

(Sec. 33.)

The advertisement must describe the goods to be sold, state the name of their owner or of the person for whose account they are to be sold and the time and the place
of the sale.
(Sec. 33.)
If at any time before the goods are so sold any person claiming a right of property or possession in them

pay the amount necessary to satisfy the lien and the reasonable expenses and liabilities incurred in serving notices and advertising and preparing for the sale up to the time of payment, the warehouseman must accept the proffer. He must then deliver the goods to the person making such payment, if he is a person who is entitled to their possession under the provisions of this Act. Otherwise he must retain possession of the
offers to

unsold portion of the goods according to the terms of the
original contract of deposit.
(Sec. 33.)

When the stored goods have been law- fully sold the warehouseman is not there- after liable for a failure to deliver them . including the reasonable expenses of the sale. Disposal of proceeds of sale. he is unable to sell them. leak- age. 34. and the balance. he (Sec. or by their odor. held by him and delivered upon demand to the person to whom he would have been justified in delivering the goods.WAREHOUSE RECEIPTS The remedy provided for eiit'orcing his lien 325 does not preclude the warehouseman from resorting to any other means provided by law for the enforcement from his debtor so of a lien against personal property. (Sec.) If the the warehouse within a specified time.) unsatisfied after the sale of the stored goods. or explosive nature will be liable to injure other property. The proceeds n^i^igt any sale of the goods be applied to pay the warehouseof man's lien.) If the goods are will separable he may not dispose of more of them than be necessary to satisfy his lawful claims which have accrued. inflammability. the warehouseman notice to the may in give such reasonable owner or the person whose name they are stored as is possible under the circumstances. requiring him to satisfy his charges and remove the goods from (Sec. 34. 34.) may proceed to dispose of them in any lawful liability manner without incurring any Obligation to deliver ceases gooJs^ by reason thereof. nor bar his right to recover much of his claim as may remain (Sec. persons so notified do not comply with the notice. the warehouseman may thereupon proceed to sell the goods at public or private sale without advertisement and if after a reasonable effort to do so. if any. ^ble the goods deposited are of a perish- nature or by keeping will deteriorate if greatly in value. If Sale of perishable goods. 35.

326 QUASI-NEGOTIABLE INSTRUMENTS to the depositor or to the holder of the receipt issued for them when they were (Sec.) fails i If the ^^ ^'^^ warehouseman j ± upon delivery i goods to take up and cancel a negoreceipt. or if he delivers the goods to one who is either himself entitled to delivery by the terms of a non-negotiable receipt or who presents written authority from the person so entitled to receive them. tiable receipt which he has issued for them. 10. or by his (Sec. he is requested by or on behalf of the person ately preceding lawfully entitled to a right of property or possession in the goods not to make such deliver}' delivery. 9. ^i^^j^ ^^ The obligation ^jjg of the warehouseman -r. or if he has inforis mation that the to -have about to be made not to one lawfully entitled to their possession. notwithstanding their deliver}^ to any one who pur- ± i . (Sec. (Sec.) . by the person to whom But or. he will not be deemed made a proper delivery and will continue to be liable to the real Liability for failure to cancel owner ^ xi of the goods. even if the receipt is negotiable. ° Proper and improper delivery deliver the of goods. if the warehouseman delivers the goods to one w^ho is not in fact lawfully entitled to their possession before delivering them as described in the immedi- paragraph to a person in possession of a negotiable receipt and appearing to be entitled to their possession.) is The delivery also properly made if the warehouse- surrenders the goods to a person in possession of a negotiable receipt by the terms of which the goods are deliverable to him or his order. if delivery is promised in the receipt. deposited. or one which man has been indorsed to him or in blank. 9. 36. or bearer. to goods is fulfilled if i v he delivers person lawfully entitled to their possession or to his agent. he will be liable.) mediate or immediate indorsee.

11. unless he title or the of the right directly or indirectly from the depositor goods at the time of or subsequent to their deposit with him for storage. if the warehouseman will not otherwise accept indemnity and deliver the goods. (Sec. or by reason of his warehouseman's lien. should the original The court may also at its discretion order the payment of the warehouseman's reasonable costs and counsel fees. 16. (Sec. for an order for their delivery to him and upon satisfactory proof of the loss or destruction of the receipt the court may order that the goods shall be delivered to him upon the execution of a bond with approved sureties harmless from any liability to hold the warehouseman or expense which he or any person injured may thereby sustain. (Sec.) A delivery of the goods even when made under an order of a court.) will not be The warehouseman excused from delivering the goods described in his receipt. lost a negotiable receipt may apply to a competent jurisdiction. because he claims acquired Tannt'Sr title in to the goods.) two or more persons claim title to the goods he may require them to bring an action of interpleader to deterIf . or from liability for title refusing to do so.WAREHOUSE RECEIPTS he ac(iuired 327 chases such receipt in good faith and for value whether title before or after such delivery and must the goods or their value. 14. or the right to their pos- himself. (Sec. session. will not relieve the warehouseman of liability to a person to whom the negotiable receipt has been negotiated for value without notice of the proceedings or of their delivery.) answer to him for One who has court of Logt receipt. outstanding receipt be presented. 14.

19. (Sec. a Liability of ^^'^^^ warehouseman ^^ liable to the holder of a receipt for • • warehouseman damages caused by the non-existence of . 18. no right or title of a third party. this if true. will be a defense to any action brought against the warehouseman by the depositor or the holder of the receipt to recover the stored goods. will relieve him of liability should they prove to be goods of a different kind or quality from that . or to the transaction by which the goods were acquired by the warehouseman. to contain goods of a certain kind. ) Aside from the penalties which are usually prescribed for the issue of a fraudulent receipt. their respective claims or he x may himself bring such a suit or set up their i adverse claims as a matter oi deiense i j • i? i? m in- any action brought against him for the recovery of the goods and require them to interplead. or the packages are said statement. (Sec. a stranger to the receipt. 17. i i. 20. when (Sec. scription in the receipt at the time of its issue. „ i i -i.) He may also refuse delivery if he has formation that some one other than the depositor claims an interest in the goods and pending a determination of the rights of the prospective adverse claimants. ^^^^ goods tor which it was issued or by or failure of goods to their failure to correspond with their de- description.) two or more persons claim under the receipt to own the stored goods. for non-existence ^.) But if the goods are described merely by a statement of marks or labels upon them or upon the packages in which they are contained. or if the receipt contains a statement that the goods are said to be. (Sec. he will be excused from making delivery during such reasonable time as he may require to investigate their claims or to bring legal proceedings to require them to interplead. But except as has been stated herein.328 QUASI-NEGOTIABLE INSTRUMENTS mine ^ Rieht to interplead adverse claimants to goods.

.. however. (Sec. that they may be at all times accessible to the depositor. that is the limit of his liability in that regard. 23..) He will be liable. 22.) The ware- houseman will be liable to each depositor for the care of and re-delivery of his part of the whole mass in the same manner and to the same extent as if the goods had been kept separate. ' . cording to its terms as originally issued. . If the receipt (Sec.) In that case the various depositors will own the mingled mass and each will be entitled to withdraw or dispose of such proportion thereof as the amount deposited by him shall bear to the whole. .) which the warehouseman has issued has been fraudulently altered it shall not excuse him from his liabilitv to keep and deliver the goods ac. he may mingle goods of a kind and grade with other goods of the same kind and grade.^ Alteration of receipt. for any loss or injury to the goods caused by his failure to exercise such care over them while they are in his charge as a reasonably careful owner of similar goods would exercise and. (Sec.. (Sec. to and capable (Sec. in the absence of an express agreement to the contrary. (Sec. which separate receipts have been issued.WAREHOUSE RECEIPTS indicated by the 329 marks or labels. 20.) He has no insurable interest in goods which are not wholly or partly his own and is under no obligation to the depositor to insure his custody.. or different from the kind or quality they were said to be by the depositor. them against destruction by fire while in A warehouseman must keep the goods of each depositor separate from the goods of others and from his own and ^^^^^ goods of the same depositor for Separation of goods.) If he is authorized do so by agreement or by custom. 21. 23. easily identified. 24. of separate re-delivery. as when grain or iron is warehoused. to such an extent at least.

in substance. 13. the goods are deliverable -to a specified person or to his order and he has indorsed 37). even to the person who so altered but it will excuse him from any other holder liability to that it person or a subsequent who took with notice of the alteration and any purchaser for value without notice acquires only such rights against ceipt him as he would have acquired if the rehad not been altered at the time of his purchase. by delivery merely when. of warehouseman from upon the ing to original effect and if authorized he course. (Sec.) The foregoing are. whereupon it can thereafter or that of the be negotiated only by his own indorsement person to whom the goods dorsement (Sec. or to any other specified person. 37). by ^^^^ terms of the receipt the warehouseNegotiation of receipt. it does not excuse receipt. 13. or when the receipt. accordwill. or to bearer. (Sec.) If the alteration is not a material alteration. the holder may indorse the same to himself. it is negotiable by indorsement and if a receipt originally requiring indorsement has been indorsed in blank. by its terms. declares that in blank or to bearer (Sec. become deliverable by his inThe negotiation may continue by .330 QUASI-NEGOTIABLE INSTRUMENTS it. The manner of its negotiation and how it obtains those qualities which make it akin to fully negotiable instruments are sions of the law in respect to the issue of the receipt next provided for. A negotiable receipt may be negotiated either by de- livery or by indorsement. or was the made without fraudulent liability its intent. nian undertakes to deliver the goods to bearer. the principal provi- and of and the rights and obligations of the warehouseman the depositor of the goods and his transferees. it When the goods are by the terms of the receipt de- liverable to bearer or to a specified person. be liable according to its altered effect. or his order.

for value. acquires title to the goods subject to the terms of any agreement with his transferor to him. or to a specified 331 person that it form cannot be negotiated may be transferred by the receipt which is A in such holder to a purchaser or as a gift to a donee. owner if. 41). 41). 42). 42). to bearer. Upon giving such notice he thereby obligates the warehouse- man to hold the goods for him according to the terms of If he neglect to give notice a sub- the receipt (Sec. sequent sale of the goods or a lien acquired by any . The negotiation may be by the owner or by the to iserson whom its possession or custody has been entrusted by ^^^^ By whom negotiable. the warehouse- nian has agreed to deliver the goods to if it is the order of such person. 37). but a nonnegotiable receipt cannot be negotiated and the indorse- ment of such a receipt confers no additional right upon the indorsee (Sec. If the receipt under which the receipt was transferred is non-negotiable he may notify the of its transfer to warehouseman him (Sec. indefinitely (See. He also acquires the direct obligation of the him as fully with him and the for his right to the warehouseman to hold the goods as though he had originally contracted right to sue in his own name to enforce goods (Sec. 40). The jjerson to whom a negotiable receipt has been neits gotiated acquires with Rights of holder. or at that time in such form that it is negotiable by delivery (Sec. One to whom a receipt has been transferred but not negotiated. and the and right to the goods which the depositor had to it whom was issued and had the good ability to convey to a purchaser in faith.WAREHOUSE RECEIPTS indorsement in blank. 39). by its terms. transfer whatever title it the person from the goods or whom he acquired ability to has in had the convey to full title the purchaser in good faith. for value (Sec.

valid negotiation. He fit also warrants that the goods are merchantable or for the purpose for which they are represented. that he has no knowledge of its any fact which would it impair validity or value and that he has a right to title to transfer the the goods which represents.332 QUASI-NEGOTIABLE INSTRUMENTS * creditor of liis transferor by attachment or execution upon the goods or other process of law. provided such warranties would have been implied if the contract had been to transfer without the receipt the actual it goods for which was issued (See. Warranty of transferor. whether negotiable or non-negotiable. One who indorses a Liability cf indorser. will have priority over his rights under the receipt and defeat his title and right to acquire the ol)ligation of the warehouseman to hold the goods for him (Sec. or jjy who assigns for value a claim secured is ^ receipt. One who negotiates or transfers a receipt by indorsement or delivery. When the receipt . or by notification to the warehouseman. If a negotiable receii:)t is transferred for value by de- livery and the indorsement of the transferor ^o its is essential Eight to require indorsement. its the transferee ^an compel it indorsement by the transit feror unless appear that was not intended that he should do The negotiation is considered as taking effect at the date when the indorsement of the transferor is obtained and in the meantime the rights of the so. receipt does not assume liability for any failure on the part of the warehouseman or previous indorsers to fulfil their respective obligations (Sec. 45). 43). 44). transferee are subject to intervening rights of other persons claiming an interest in or the goods Avhicli it title to the receipt or represents (Sec. that he has a legal right to negotiate or transfer it. warrants that the receipt genuine. 42).

. or having so disposed of the receipt. fraud. „ '^ Negotiation in xi breach of duty or part of the person negotiatmg it.or seller's lien will defeat the rights of a pur- chaser for value of the receipt to whom such receipt has been negotiated. duress or mistake (Sec. before or after notice to the warehouseman is of the claim of the seller of the goods to a lien. ^^i^ owner of the receipt was induced by The validity of . 46). a subsequent sale or other disposition of it by him will convey to a purchaser in previous disposition. the person so receiving payment is not deemed warrant the genuineness of the receipt or the quantity or quality of the goods it describes and for which it purports to have been issued to represent or (Sec. etc. session to the person so negotiating provided the to person to whom it was negotiated. or that by mistake. No right of stoppage in transitu. warehouseman obliged to deliver the goods to and no an un- .WAREHOUSE RECEIPTS is 333 is the subject of" a mortgage or a pledge. or mistake to entrust its custody or posit. If. 48). 47). having pledged. in good faith. as good a its title as though the first purchaser had authorized subse- quent disposition (Sec. mortgaged or sold goods which are in a warehouse and for which a negotiable receipt has been issued. paid value for it without notice of the breach of duty. without notice of its the disposition already made of the goods. or to the right of stoppage in transitu. fraud. or held as receives security by one Pled'^ee or mortgagee. any otherwise regular negotiation of the receipt will not be impaired by the fact that its negotiation was a breach of duty on the . who in good faith demands and payment of the debt which it secures. the person so disposing of the goods or the receipt continues in possession of the receipt. duress. ^. • i. or one whom it is subsequently negotiated. or good faith.

. As is the case with bills of lading having already been sufficiently explained in the treat- ment of the Uniform Negotiable Instruments Law. etc. rules of law and equity. sult freely the explanations given there. paid seller or justified in doing first unless the receipt is surrendered for cancellation (Sec. . and particularly the principles and rules of the law of agency govern in the interpreta. warranties.334 QUASI-NEGOTIABLE INSTRUMENTS so. . a forged signature or indorsement warehouse receipt. including the law merchant. etc. the explanations of terms common to both are to be applied to them with- in the limits prescribed by the law by which they are governed. ^.n %f ^ ^^ tion of the rights and duties oi parties to to warehouse receipts. you will doubtless have observed a striking similarity between the provisions of the law for the government of warehouse receipts and the law of negotiable instruments upon the subject of As in the case of bills of lading. 49). warehouse receipts when they are not in The • - conflict with laws specially enacted for their govern- and other ingoverned by the law struments partly negotiable and merchant. being inoperative and imposing no No special provision is made in this obligation whatever upon the person whose signature it purports to be. negotiation.-. . Laws apphcaWe . transfer. ture. as any forged signaPenalties for fraud.. terms are employed in the law relating to warehouse receipts which you will readily recognize as ment. Act upon the subof a ject of forgery. however. Conkeeping in mind. that although w^arehouse receipts very frequently accompany bills of exchange and promissory notes as collateral. and partake to a very great extent of many of their features of negotiability.

or one who fraudulently misrepresents the title to the goods stored or. goods which are subject to a mortgage . extreme penalties. are imposed by law upon any one who issues or procures to be issued. dis]ioses of stored lien. or aids in issuing a fraud- ulent receipt.WAREHOUSE RECEIPTS Ol)I)ortiinity for the practice of 335 fraud having developed from the issue of receipts. with intent to defraud. heavy fines and imprisonment.

is they are very much alike and that in their provision when it is not left to the corporation itself to determine the manner in which they may be transferred. as indeed tion it is in nearly all the States. In most States it is either now provided by statute. certificates of stock have been accorded by mercantile custom and by statute the quality of negotiability. are transferrable only upon the books of that shares of stock. the company. that this restriction is intended for the protection of the corpora- and its stockholder of record. vary in their provisions for incorporation that men about to associate themselves in business as a body corporate are offered a variety of tion laws more or less attractive corpora- from which all to choose. In one respect. but some writers contend that to term them quasi-iiegoti'dhle is misleading and confusing. even without a formal transfer on the books of . Corporations are creations of statute and in all States the laws which authorize incorporation either provide the manner in which their shares may be transferred or that the company itself may do so in its by-laws or reguTo such an extent do the statutes of the States lations. or as a rule of equity. certificates of stock would possess none of the qualities of negotiability. that a written as- signment of the the legal certificate accompanied by delivery vests it title to the shares represents in the trans- feree. If a provision to this effect were not interpreted to mean. however. judicial construction.336 QUASI-NEGOTIABLE INSTRUMENTS CEETl'FICATES OF STOCK. In a very restricted sense.

nevertheless are of importance to a general knowledge ject which. . S. (L. Forsvtli Bk. vs. 309. 27 L. 102 A. 120 Ga. Gemmell vs. . Maryland. R. using its language as freely as possible and employing the abbreviated title thus. >. S. in one form or another. Illinois. S. R. Walcott Min. 98 C. Davis. 1.. for reference. Massachusetts. 800. however. Louisiana. 75 Md. N. Tennessee and Wisconsin. S. Laflin. In sup])ort of those statements of the law upon this sub- though outside the scope of the Uniform Act. 303 U. Co.^ 337 This construction has been adopted for the sake of business convenience and by reason of it stock certificates obtain one of tiability. Ed.. 546. 115. I will cite the reader Avho may desire to pursue the subject more thoroughly to approved decisions by the aid of which a very complete understanding of the law may be obtained. 26 U. in twelve States.) 532. E. New York. 23 Atl. tlieir attributes of nego- r Tne Uniform „ Uniformity • in the statute is law govern^ Stock Transfer ^ ing stock transfers very much to be desired and an Act prepared by the Uniit is form Laws Commission by which plish that result necticut. Cullodeu Bk. S..TRANSFER OF CERTIFICATES OF STOCK the coi'iDoratioii. 220. 174 Fed. 200. A. C. Rhode Island. 48 S. Sec .Tohnson vs. O'Neil vs. 1032. it is applicable. T. 804. in Its provisions in re- spect to the transfer of shares are effective. A.. is hoped to accomCon- effective now Ohio. 527. Jersey. exists in nearly In this explanation of the law on the subject of the transfer of shares I will cite the provisions of that Act whenever U. New Pennsylvania. of the law governing the transfer of shares. it most of the other States so that it may be said to be declaratory of the law as all. A. 575.

. A. although a space is provided in the form on the back of the certificate for the insertion of his name. these two methods of accomplishing the transfer of the shares. whom he desires the new He need not designate the the actual transfer on the name of the person to make company's stock register. Sec. customary upon desiring an actual transfer upon the books of the corporation that the holder of the certificate. then. for a trans- may be procured by a separate power of attorney (U.338 QUASI-NEGOTIABLE INSTRUMENTS Methods of effecting transfer. The secretary of the company or its transfer clerk or agent usually inserts his own name and proceeds to make the transfer upon surrender of the certificate. Pending the actual transfer conflicting claims to the ownership of or an interest jn the stock frequently arise. transfer conveys legal title. it is all desirable to have the certificate continue to bear a blank indorsement. or the person authorized to do In each it is so by the separate power of attorney. Upon examination it of the blank ^^^ transfer which will form be found upon the observed that it back of every stock certificate will be provides for the appointment of someone to act as the attorney or agent of the person in whose tificate is name the cer- issued and gives him authority to transfer It is it the shares on the books of the corporation. T. not necessary that this form alone be used or that fer of the shares be executed in the negotiation of the certificate. There are. insert in the trans- fer the name of the person to stock certificate to issue. This not at is done for the reason that since is the immediate transfer of the shares often not con- templated. S. They usu- . and where shares are used as collateral to a loan or deposited as security for any other purpose a separate power of attorney is usually employed. lb).

438. N. 546. Co. Davis. 3b). 511. 1. 5. 127 N. Gemmell vs. S Idaho. Campbell. T. Co. as between himself has been transferred^ (U. 71 Pac. 44 Atl. 113 Fed. A. 412. E. Taylor. ' in the absence of statutory provision ^y\-^Q^(. 503. Rome Town Co. unless the company have valid. Guarantv Co. vs. S.. 398. .^ In that case.. the However. 23 S. 229. 740.. D. 1048. ^. 150.. Sec. Tr. Ry.TRANSFER OP CERTIFICATES OF STOCK ally 339 grow out of claims of creditors of the transferer. Del. S. and not for the creditors of the stockholder.) contrary. In those States in which the Unif oral Stock Transfer Act is in effect. 90 Md. pany's books as the owner of the shares and the company. A.. S. E. 25 S. vs.. 590. Liabihty of registered owner continues until . binding notice that the stockit holder of record has ceased to be the owner of the shares. 577. 23 Atl.. even though its regulations or the certificates themselves. Bird. 25 Hun (N. 523. 75 Md. Brisbane vs. 96 Ga.^. of N. (U. to the is person name registered on the com- registered. \V. be held liable for calls and assessments upon the shares^ and payment by the company to him of dividends will be a bar to a claim to them by the holder of the certificate to whom will. (See note one. 51 A.. if the transfer is refused or unduly delayed by the company. R. Co. 119. A. Sec. S. 1032. State Bank'g & Tr.). A. etc. An ordinary notice either verbal or in writing that one has acquired the shares of another in the company usually regarded as sufficient if it is is accompanied by an attempt to obtain their transfer upon the company's books. 32 A. 243. or the law of the State under which the company is incor- porated seems to require it. vs..) Such regulatory provision is intended as a protection to the corporation. American Alkali Co. the notice and attempt to trans2 3. and in nearly all others. R. Stanvod. Real Est. S. it is not requisite to the complete ownership of the shares that they must be transferred of record on the company's books. Mai)leton Bk. R. River. its members and its creditors. T. vs. 4. Y. 29 L. vs.

N. 737. the authorities are in fer has the conflict as to liability as a whether or not he shareholder/ too. vs.^ As to these. 52 Am. Rep. S. 27. 818. or its permitted him to vote the shares at meetings. 19 Colo. 788. S96. in the will be relieved of future The company absence of notice. Richmond vs. Cas. Hyde. W. 99 S. Nicol. T. 46 Oh.. Giesen vs. 79 S. Min. 8. vs. St. etc. Royal Cons. 110 Calif. 397. 628.. Man vs. imposed by statute for the protection of the creditors of the corporation. 830. 21 N. 1. 3 a.^ (U. 110 Pac.^*^ 6. 43 Pac. etc. 60 S. 584. 636.*^ company's creditors. 214. may recogits nize the exclusive right of the owner registered on books to vote the shares standing there in his name at the meetings of its stockholders. 157 Calif. 102 Fed. S. . Contra. Irons. 128 A. 124 Ky. R. A.. Sec. 123. Roval Cons. Stobart. A.. R. the stockholder whose name appears of record is is not relieved of this liability until the transfer actually recorded upon the transfer books of the cor- poration. 11 R. 7. 136. 10. if the vendor has requested the company to make the transfer and honestly believes he has done everything necessary to make the transfer effective that a prudent and careful business man would do. 632. E. Mines Co. S. 7 S. London. Bullock. Bovkin. Co.340 QUASI-NEGOTIABLE INSTRUMENTS same effect as an actual transfer as to the company and all except its creditors. his right to feree. C.) And when there is additional liability upon the stock. of course. Bracken vs. 121 U. 17. 637. preservreimbursement from his trans- He can only completely sever his connection with the corporation by insisting upon his right to have his transfer of the shares recorded upon the company's transfer book. Even if the corporation has recognized the new holder shareholder of the certificates and paid him dividends. 42 C. 920. C.. 10. R. Ct. 9. Visalia. S.. A. Co. E. Co. Harpold vs. the the shares will who appears of record to own continue to be liable to the ing. 515. S. Mi^. 757. 14 Am. Weber vs.

assign or transfer the certificate or the shares Sec. or made by one upon it certificate if there is a if it is accompanied by containing a written asdocument a properly executed signment or power of attorney to sell. Sec. Effect of indorsement of ^ ^-i duress or mistake to make the transfer. S. or unless the injured party has elected to waive the injury. the delivery of a certificate is effective to transfer title it is between the vendor and vendee when having possession of the ])roperly executed assignment. T.TRANSFER OF CERTIFICATES OF STOCK Subject to the right to reclaim havhig ^possession of certificates. T. S. or received no consideration for it. ^^'^^^ ^^^ :i41 it which afterward explained. dorsement of the certmcate certificate.. x ^--c the person by^i. T.one who is autransfer it from its owner. the poscertificate ulently ^procured " session of the as above may be j^^jj its transfer rescinded may be reclaimed it unless has been transferred to a purchaser for value. whether before or after the delivery of the certificate. or is not the perto be transferring the title to the cer- who appears tificate. appearing in it to be its owner is effectual even if the indorser or transferer was induced by fraud. 4. or has been guilty of neglect or .) In every such case. is not the person named son thorized to document or power as the. Sec. in good faith. however. the in.. or if he has al- ready revoked the delivery of the certificate or the au- thority given by the indorsement or delivery of the certificate.) tificate it represents. (U. 6. A. 5. subiect to the same right. A.) ' And. or has died. S. without notice of any facts making the transfer wrongful.. (U. This is so even if the person delivering the cer- has no right to in the its possession. A. (U. or become legally incapacitated after having made the indorsement.

to the "^^^^ afterward explain. Bank vs. 423. which it represents has already . (U. T. 12. will give this purchaser and subse- quent purchasers a right to the certificate and the shares it represents which nothing and nobody can defeat. 465. Field. But pending Transferee of certificate so • all of these remedies. No. A. as Transfer by agent of owner. Machinist's Natl.. 7. been rescmded.) its further transfer. Dunbar vs. Mandelbaum vs. 79 N. etc. S.. 9. Mining Co. without notice of any facts making the transfer wrongful. and he may require it to be surren- dered according to the court's order to be held impounded pending the determination of his action to reclaim it.^^ In this stock certificates obtain their second important char8. Sec. 4 Mich. T. Amer. even title. Cas. Co.) The injured person may have the aid from of a court of proper jurisdiction to enforce specifically his right to reclaim possession of his certificate one fer who if so obtained its delivery or to rescind its trans- the certificate has already been transferred on the company's books. The rule is otherwise. ^^ (U. or have an order enjoining T. . and . 224 111. who good faith.) acteristic of negotiability. a subsequent transfer of such certificate directly or indirectly to a purchaser for value in by him. Ainer. 57. representing part or all of the same takes shares.. S... if the transfer of the certificate or procured obtains ^j^g shares indefeasible . Sec. 8 Ann. E. Tel. 7. A. if the transferee has possession of the certificate or of a new^ certificate. A.342 QUASI-NEGOTIABLE INSTRUMENTS in undue delay endeavoring to enforce his rights. Sec. nevertheless. 33. 126 Mass. or set aside. when an indorsed I shall certificate has been lost or stolen. ^^^ ^^ agency apply indorsement and transfer of certificates of stock and since the principle upon which that law is based is that one can do by another anything ^^^^^^ ^^ *^^^ 11. 345.. however. (U. S..

or other unlawful means. vs. or upon which the indorsement was obtained by fraud. St. 15 Pae. 691. and the holder entitled to the transfer may invoke the aid of a court to secure it. St. 1177. or by implication. he may be compelled to execute the necessary transfer unless there is an agreement to the contrary. 1913 E. 14. 327. T. obtains an indefeasible the shares it represents.. Sec. 8. as between himself an innocent partj^ to the transaction. Penn R. however. 80. Rep. in that provision of the law under which I have just shown that one taking for value and without notice a certificate duly indorsed by its owner and obtained. of his right to the certificate is based upon the doctrine estoppel which imposes upon one with power to do an act not only because it who clothes another wrong in itself. duress or mistake. Tl » transfer. the principal brings himself fairly within its operation. is (U. likewise.) signature unauthorized the doctrine of ratification will apply by his express acts or conduct. A. S. 9.'s Appeal. the indorsement of the owner's the certificate by one acting under his au- name upon self thority will bind him as effectually as though he had himIf the made if the signature. 3 Am. See Note Ann. Elliott. 18. but wrong and violates a trust. Cas. 10 Colo. 333. agreement to transfer may. Co. Sec. . be specifically enforced and an attempted transfer without deliver}^ of the when 13. will take effect only at the date (U. who might otherwise suffer thereby.^'* If one who appears to be its owner de- compel indorse°^®"*' livers the certificate with intent to trans- fer it but without the indorsement necesit sary to transfer the shares represents. A.. T. 86 Pa. the duty to bear the loss. and negotiated by one appearing to be in lawful possession of title to it. Supply Ditch Co. 586.TRANSFER OF CERTIFICATES OF STOCK which lie 343 can himself do. ^^ And.) A valid it is actually made.

. 13. Sec. unless the contrary appears. Cas.) stock. Unless the certificate is surrendered in posif to the corporation or its transfer enjoined. A.) ^^^^ tracts. or as security in any other capacity. (U. S. 12. enforcement and collection of debts by which a lien or preference is secured by the creditor invoking its aid against the debtor's interest in the shares which the certificate represents.) The lia- upon this warranty of one who. \ warrants. Warranties by ^ansfer. T. and if was one who holds the certificate as mortgagee. 10.. Certificates of being property. T. . demands security and receives payment of the debt for Avhich it he is not deemed to warrant the genuineness tificate is of the cer- or the value of the shares it represents upon transfer of the pledged certificate. 11. the certificate is the equivalent of a obligation to perform which must be determined by the law governing the formation and performance of con(U.. 10 Ann. S. Attachment of certificate. 153. 168. who assigns for value ^ dami secured by a ^. Sec. A. A. T. S. An equitable proceeding in the Note 53 L. S.^^^ impair bility (U. (U. /. process of this kind served upon the corporation or anyone is session of the certificate officer not valid or effective the making the levy or serving seized physical the attachment has not actually possession of the certificate. cer- tificate as security will not exit ceed the amount of the claim to secure which pledged.. A. levy. pledgee.. Sec.) 15. R. transfers it.^ certificate. Sec. who. A. the levy of execution or other process of law for the w en va id.344 QUASI-NEGOTIABLE INSTRUMENTS promise to transfer. T. that he has a legal right to transfer and that he has no knowledge of any fact which would its validity. holding the for a claim. cate. including one *. transfers a certifi- Holder demanding payment not a guarantor. that the cer- tificate is it genuine. for value. are subject to attachment.

S. that such a provision is intended as a protection to the stockholder itors and the corporation and its cred- and that. 90. by which the interest of a stockholder debtor may be reached without actual seizure of the certificate. will make to a transfer of the and valid the right title to a certificate. upon ^ shares repreit sented by a certificate which of issues and can impose no restriction upon their transfer by reason any by-law or otherwise. 99 P. and a owner of a certificate will be entitled to the aid of the court. 15.) You will remember. (U. except in those States where the courts yet hold contrary to the trend of usual authority. R. Mundt vs. 454. by injunction or otherwise. In most Corporation lien against its States lien the corporation will its j^^ve no valid snares. 1023. S. T. Sec.^*' holder can compel the transfer of the cer- 16. See Note 136 A. unless the right to the lien or the restriction upon its transfer is stated upon the certificate. . otherwise complete. Comnri Nat'I Bank. A.. S. T.TRANSFER OF CERTIFICATES OF STOCK nature of a creditor's bill is 345 provided by law. Sec. or transferred less effective by a transfer agent.) process of law.. however. to a vendee or pledgee of a stockholder. And upon compliance with the company's regula- tions the tificate. to satisfy his claim by whatever other extraordinary remedies in his favor ma}^ be provided by law for creditor whose debtor is the his l)enefit in it when the certificate or the debtor's interest or in the corporation cannot be reached by ordinary (U. or registered by a registrar. A. no restriction its or by-law of the corporation or provision in charter or articles of incorporation which provides that the shares represented by the certificate shall be transferable only on the books of the corporation. of course. 35 Utah. 14. as has already been stated.

voidable by him upon attaining full age or when the disability is removed. or shall be thereafter transferred for value. or expense which it or they may incur by reason of the original certificate remaining outstanding^ the court will usually order the new certificate to be issued.. T. without notice of the proceedings or of the issue of the new certificate. S. A corporation cannot. order the payment of the corporation's rea- sonable costs and counsel fees.. A. 17. A. Sec. His repudiation must be prompt upon attaining his ma- . or their cSadt^ purchase or sale by an infant. be compelled to issue a new one until the old certificate is . (U. like any other contract made during disability by is minority or incapacity except one by which the infant supplies himself with necessaries. Sec. (U. T. Where a certificate has been lost or destroyed a court of competent jurisdiction may order the issue of a new one upon notice to the corporation of the application therefor and reasonable notice to all in- terested persons by publication or in any other in manner which the court may direct notice of the application to be given. S.) The issue of a new certificate under an order of a court will not relieve the corporation from liability in dam- ages to a person to whom the original certificate has been before. T. (U..surrendered to it. S.346 QUASI-NEGOTIABLE INSTRUMENTS j^^ certificate. 17. A. (U. 17. S.) "^^^^ Transf h transfer of shares by or to a per- infant or person ^^ son wanting in full legal capacity.) The court may also. conditioned to protect the corporation or any person injured from any liability or loss by the issue of the new certificate. A. except where the certificate has been lost or destroyed. Sec. Sec.) Upon satisfactory proof of the loss or destruction of the certificate and upon giving bond with sufficient sureties to be approved by the court. in its discretion. T.. 17.

and most desir- I will presently explain this more by or Certificates of stock are not affected alteration whether fraudulently made it is not. and reclaim the shares.^ is not usually regulated by statute and as a rule they have power to transfer title without having first obtained express authority to do so from the court which controls their appointment and the administration of the estates which they serve. t o them I. Alteration of certificates. i. T. Smith vs. 54(5. It is made by the delivery of R. upon one who would acquire title from or through an executor.. ministrators. Co. administrator. to the shares originally represented by it. or a ratification register the transfer of shares by a The corporation may not refuse to minor if at the time of application for transfer it has had no notice of repudiation by him. S. adpresumed. however. The transfer of Sec. The immediate transfer of the certificate is not then contemplated. trustees or persons occupy- • • J. the shares of which the an altered certificate will convey to the tranferee a good title to the certificate and (U. W. 221.) Pledge of ^ °^ • When his debt a debtor delivers stock to his creditor to be held by it is him as security for the payment of a pledge..^"^ The power of guardians. for the debtor expects to discharge his obligation to his creditor 17. Nashville. A.TRANSFER OF CERTIFICATES OF STOCK will be -Ul jority or the removal of the disability. . i x ing other fiduciary relations toward the owners or shares. to dispose oi ^ . etc. fully. 91 Tenn. and the owner of the altered title to certificate is not there- by deprived of his evidence. guardian. . Transfer by guardians executors or administrators. It is incumbent. executors. 16. 18 S. trustee or other fiduciarj^ to carefully scrutinize his authority to sell able that he do so..

24 U. vs! Upton. of course. 96 U. N. Marshall Field & Co. Ledden. . State L. 814. 14 Pac. A. Sloan & Co. fer. .348 QUASI-NEGOTIABLE INSTRUMENTS more usually. 33 L. S. after its trans- be entitled to receive dividends on the shares during the continuance of the pledge of which he must. 106 Minn. and if this is done the pledgee will not ordinarily be liable as a stockholder. W. Nevada Bank. 19. Cas. W. agreement. 17 U. R. 54 A. Pullman See notes 10 Ann. R. is if it have notice that the stock held by the transferee merely as a pledge.^^ It is held in some States that the pledgee has not the is right to transfer the shares before the maturity of the debt which they secure^ ^ but where a transfer per- mitted it is proper for the corporation. 459. 272.. to describe the person to cate is whom the new certifi- issued as "pledgee" or to insert in the certificate after his name a statement that it is held as collateral.Johnson. the cer- the certificate indorsed in blank or. 45 Pae. (L. S. S. C. Cas. 98. 15 Oreg:on. surrender the certificate to the corporation for transfer and obtain a new one in in the his own name or is name of another. A. 1050 21 Ann. Smith. 18. Tieiney vs.55. 328. & T. 20. 143 la. S. and a description of the certificate and a statement of the fact that is pledged as security is incorporated in the memorandum. 105 and Note. A. . 465. account to the pledgor by proper dividends. or promissory note which is the evidence of the debt.. vs.. State vs. R. .^** Pledgee collect may The pledgee will then.). 118 N. . R. 249 and Note. 818. however. he will assume there all the habilities of a stockholder unless statutory provision to the contrary. Evans. 286 121 N. S. . to ^^^' franfferT/ certificate. 783. 113 Calif. 348. N. 19 L. but if he does.. Ed. tificate unindorsed is accompanied by the power of attor- ney previously described. Sprcckles vs. Co. 19 L. Pauly vs. S. S. 165 U. 329 S. 249. 85. The pledgee has the right. 606.

57 N. of N. require it to pay the dividends to him. Md. 535. Ann. in 121 A. 96 Ga. Berlin vs. 291. 23. 152 Pa. 86. N. 442. Rep. 24. He "^'^^ himself. French. 513. 355. St.Co. 10 ^Ventworth Co. Cas. he reciuire may to invoke the aid of a court of equity to him do so or to obtain authority to vote them pledgee must retain the stock during the continuance of the pledge. 351. 040. of N. ^^ Pledge must be retained. pledgor. the owner nec- of the shares. 511. 25 Atl. Co. 1912 A. 30 Oh. _. 25. 23 S.^^ He cannot separate the pledge 21. R. need not retain actual physical possession of the identical certificates pledged to him. 9 R.. 176 Mass. S.2^ and when his interests or the interests of the corporation are materially affected by the manner in which the shares tlie may be voted. Rep. Eddy. Buffum. 101 . 207. Guaranty Co. East Rome Town Co. 1 St. I. 35 Am. 426. Dalzell. Commercial Bk. vs. Am. A.. may require that the pledgee if vote them in accordance with his directions and. D. Hoppin Notes Atkins vs. . vs. Calif. Davis & vs. A... 33 Mo. 511.^Pledgee may c^ote pledged . 217. Rep. Guaranty Co. 347. from the 503. In re Arcus Printing. Gamble. 789. debt.TRANSFER OF CERTIFICATES OF STOCK credit 849 upon his dcl)t. 23 S.. or lawfully sell or repledge vs.^^ transfer of the stock Even if he has not secured a from the name of its registered owner the pledgee may. essary. vs. 42 Am. vs. 503. 282. vs. but he must have in his possession always the number of shares pledged. 196. by giving notice of the pledge to the corporation. Franklin Bk. E. 48 N. 434. Comni. E. Gemmcll & Sinclair 22. If he secures the transfer of the certifi- cate to himself the pledgee may vote the is ^ ^^®^' pledged shares unless the right to vote reserved by the ])ledgor. 11 W. since one share is the equivalent of another. 546. E.. 75 Co. • East Koine Town 96 Ga.

497. no power to pledge is thereby implied. 13 Minn. assign the principal it. S. Nat'l Broadwav Bk. Am. Dec. McNeil vs. from the pledgee without notice of the pledge will be fully protected. 139. Stanchfield. of the debt. 5 Calif. 97 A. Rep.). 46 N.341. 459. 205 Pa. 7 A in. 260. Van Eaman vs. 92 Pa. Maxwell. Dec. 694. Wood's Appeal.^' In that case the them only upon paying the re-pledgee the amount of his advancement on the stock even if this exceeds the amount for which the shares were originally pledged. pledge the shares one who takes the certificates. R. Patterson Fir^t Nat'l Bank vs. 7 Hill (N. 19. 379. 694. St. Cement Co. Y. 398. etc. R.. St. Am. debt and the pledge with in such a provided al- ways that he do manner that the pledgor will If he does reif not be deprived of his right to redeem. if it is not the paid. 26. sell shares pledged to secure He may 87. Shattuck vs. Hodges. . . 785. 27. Rep. Y. assigned. A trustee. 379. 37 Am. Dykers vs.-^ Upon maturitv Pledgee's remedies when debt is not paid. 156 N. 37 Am. has no implied power to pledge shares held in trust and even if the instrument creating the trust grants the power to sell. St. Lawrence vs. 677. Coit vs Humbei-t. 197. 63 Wood's Appeal. 42 L. ^"^ Pledge may be ^^ it ^^^Jy however. owner ^^^ executor or administrator has the power to pledge stock belonging to the estate Avhich he represents but one taking from an ex- ecutor or administrator for his own debt a pledge of stock which belongs to the estate he represents will ac- quire no right to hold of the shares it even if he has secured a transfer upon the company's books. Y. 51 N E. Allen.^^ of the shares can recover Pledge bv executor. A. Y. 54 Atl. 18 Fed.. Rep. 29. 128. they have been indorsed. the pledgee may proceed to it. 28. 683.350 QUASI-NEGOTIABLE INSTRUMENTS the shares during. Tenth Nat '1 Bank. Easton vs. 75.the continuance of the pledge to any one with notice. 42 Ann. however. 92 Pa. 53 N. 325. 735.

R. Note. a creditor of the pledgor and when it is reduced to judgment he may cause the pledge to be sold upon execution tention to sell the shares or attachment and apply the proceeds to the satisfaction of his claim. 205. (N. Note in 121 A.^^ The latter course is usually pursued but the pledgee need not do either and if he does not. 40 Barb. to bid is limited to its members. buy ^^^®' at authority In the absence of express ^ ^ may not from the pledgor the pledgee may not his own purchase the shares at his own sale under of procedure to sell the pledge. 204. ^^ ^^ determines to pursue the second sell method and the pledge without pro- ceedings in a court. R. Brass vs. 32. . waive notice of the sale. 200. 33. and the value of the securities pledged declines.^^ Pledgor entitled to notice of sale. Except by express agreement the sale may not be made upon any stock exchange at personal notice of his intention to sell which the right ^. this form This rule is based upon the principle that to permit the pledgee to do so would afford him an opportunity to use his position to his own advantage by so conducting the sale that he might be enabled to purchase the shares at a price 30.^^ -' Pledgee .) 648. R. 654. S. 121 A. he is not liable to their owner by reason of their depreciaHis third remedy is to proceed upon the debt as tion. S. Note 121 A. S.'^')1 either proceed in equity to foreclose his lien the pledge^" or he may give notice to the pledgor of his in- and proceed to sell without any judicial proceedings. Y. Worth. TRANSFER OF CERTIFICATES OF STOCK and sell . the pledgee must give the pledgor and of the time and place at which the pledge will be sold and the manner in which it will be offered.. It must be offered at public sale unless a private sale is expressly authorized by the By an express agreement the pledgor may pledgor. 31.

including one formed for trading in stocks. in the absence of express authority of the others but one partner in a trading co-partnership.^^ risk in "^^^^ The subject which I have been endeav- purchasing stock. 37. R. Griffiths. oring to explain is almost inexhaustible by reason of the varied complications Avhich may arise in the transfer of certificates of stock and by reason of conflicting laws and decisions interpreting their applicavalid tion. vs. can sell or pledge stock appearing to be in the partnership name. by the pledgee at his it is own sale is not void. 352 QUASI-NEGOTIABLE INSTRUMENTS below their real value. 203. . 34. voidable by the pledgor. not actively mislead the person from to whom he buys. L. 53 N. J. but those essentials to a negotiation which men purchasing and discussed as follows: selling validly issued stocks. Note 121 A. can be briefly „ Purchase from partners. Krumbhaar Prentiss.. 223. 656. 35. 36. the transaction cannot be attacked for fraud even though he may gain some advantage by rea^'^ son of his superior knowledge or position. - . 10 Colo. 51 Jackson. or dealing in them as pledges. Note 121 A. vs. The contrary in is the rule when the partners are associated together a non-trading co-partnership. knowledge of and information or value which he has by reason of his familiarity with the affairs of the company he represents will not affect the validity of the transaction and if he makes no misrepresentation to or does . 295. or whom he sells.^^ Such a sale will be very carefully scrutinized and though the purchase. either directly or indirectly. One sell of two or more joint owners cannot '' or pledge stock standing in their joint names. 203. Pac 94. 151 Pa. App. Moynahan Crowell vs. ought to know. R. St. S.^*' PiiToTiJi^G from A director or officer of a corporation • officer or director i^i^ij tleal in its stock its of corporation. S.

is exposed to the risk that the legal title to the shares may it be in another unless the I certifi- cates themselves are produced at the sale. McNeil vs. free from the claims of the pledgor and of creditors even if the transfer to the pledgee is not recorded on the company's books. 188 Pa.^® 38. have pointed out previously at tliat is under such circumstances and convict m' such sales that the between claimants to pledged but not transoccur. T. or a sale in bankruptcy. S. Tenth Nat. Humbert. 153 Pa..TRANSFER OF CERTIFICATES OF STOCK One who purchases stock the sheriff under sheriff. that they may have been al- ready pledged or sold by the assignor or bankrupt to another who would take a better title than the purchaser at such a sale. 260. German. St. St. 128. Coit vs. S. . 63 Ann. Dec. 46 N. 197. T. 13) much of the eliminated. 196 Pa. shares which have been sold ferred on the records of the company usually Since most courts now hold that shares are not held under attachment or execution by the sheriff unless he seize actual physical possession of the certificates. 630. 4. If one take 39. Bank. Sec. danger of purchasing at such sales has been An assignee or trustee in bankruptcy can title if convey a good he delivers the certificates to the is risk. Sec..liouse vs. ^^ But if the purchaser knows that the stock he purchases is held by his vendor merely as a pledge he will not be a sale of pledged stock i . unless he purchases at a sale made to satisfy the conditions of the pledge.) by the pledgee pledgee or taking conveys a good title 10 a bona fide purrepiedge.. 5 Calif. Ryman'vs. • The i /? 7 bona fide purchaser. German. qj. 325. or the laws of most States so provide. chaser for value. Bank. Gerlach. St. 249. Bank. Purchase from (U.. an assignee's sale. assignee or bankrupt sale. Westine. A. (U. Westino'house vs. Y. etc. if purchaser at his sale but there the certificates are not in his possession. A. etc. purchases at at a sale :}53 by execution or attachment.

the amount of his obligation upon the original pledge before becoming entitled to reThe rules which govern the transfer claim the shares. an executor or i . E.. The laws governing the administration of estates provide in what manner the personal property in the hands of the executor administrator must or may be sold and although it is asserted. 178. 51 N. 78 vs. 134 Mass.^ ^ of stock as they are given in this treatment of the subject are all applical)le to its transfer by one who holds it in pledge but one dealing with an agent or trustee knowing him to be employed to sell shares belonging to another cannot lawfully accept such shares in pledge from him. However. of the first duties of .. 398. 182. 475. . Chamberlain Greenleaf.^*^ The right to reclaim the stock exists in its owner in either of these cases if he could originally reclaim it from the one to whom he pledged it.'. 42. N. although a sale by the agent would convey the title. 156 N. 45. Brodie. that an order of court is unnecessary to empower an administrator or executor to sell shares be40. Patterson First Nat'l Bank vs. Renshaw.354 QUASI-NEGOTIABLE INSTRUMENTS from another as a pledge stock which he knows has been pledged to him by its owner he will not obtain its legal title but will hold it subject to the right of its owner to reclaim it. and rightly. vs. R. 41. 139. the owner would be obliged to pay the repledgee or the purchaser from the original pledgee. administrator oi a deceased person's ^^^g j^g i es- f^^ convert the personal property in his sell charge into money. Cas. Y. Md. A. 4 Abb. 42 L. One . Nat'l Broadway Bk. 459. He therefore has a right to shares of stock belonging to the estate wiiich he has been appointed to administer. Loring: vs. except where it may be otherwise provided by statute.*Purchase from executor or administrator. . Bk. Gorman Sav. purchasing with knowledge of the pledge.

^^ < without purchasing from a trustee stock trustee. S. Y. Eq. > Beacon Trust Co. Tilt. to accept a transfer As sale has been made after when proper authorization by only the the court which controls the administration of the estate which he serves. Wood's Appeal.. vs. See Note 45 L. G Leigh (Va. as a rule. 393. 48 N. S. '^^^^ Purchase from Guardian. duties of guardians in respect to the sale of shares belonging to their wards which and their right to sell and transfer the certificates is they hold in a representative capacity lated by statute. be regarded as a bona fide purchaser and entitled to its the trust. 1079. from a trators one purchasing tected and to assist in protecting the interests of the esin the case of executors tate. and order under which the to require the production of the and a certified copy of the appointment. Y. 190 Mass. in order to facilitate the transfer of tlie shares upon the books of the corporation. J. 92 Pa.TRANSFER OF CERTIFICATES OF STOCK 355 longing to his decedent's estate/^ the purchaser will exercise a wise precaution to insist that such authority and that he be provided with a certified copy of the order and the letters of appointment of the shall be obtained executor or administrator. Prall vs. likewise regu- and administo be fully proguardian. 27 N. 44. although there is ample and good authority to support the right of a guardian to sell sale is directed it.. St. . Gardner vs. ought. Patterson First Nat.). Lamar vs. Bk. Broadway Bk. N. 432. Leitch vs. R. Craig. 27. A. i 45. 475.. Micou. 499. 156 N.. which he knows the vendor holds as a part of the trust estate is obliged to ascertain whether the trustee is given power to sell by the instrument creating Purchase from ^^^^ In the absence of knowledge or notice that the stock offered is trust estate stock the buyer will. 112 U. however. 585. 379. 452. Wells. Bank of Virpnia vs.^^' 43. 399.

441. 558. R. 467.) In this respect certificates of stock lack one of the most marked out notice a paper for. A.-"^ identical certifi- (U. East Birmingham Land Co. 38 Atl..^^ in a trust capacity. had been Hushes vs. Co. etc. However. See Notes 45 L. Stark. and even if they are indorsed in blank. ^^ if a certificate 4(i. 206. 106 Fed. R. under value and withtaking for anyone similar circumstances. 643. etc. its own ^ protection. ' ' or if other words are used which indicate an ownership as notice. R. that quality of negotiability to certificates of stock not imparted and no purchaser.356 QUASI-NEGOTIABLE INSTRUMENTS Notice facts is transfer.^'^ actual knowledge of or a duty to know any which would cause an ordinarily prudent and intelligent man to make inquiry to learn whether the stock belongs to a trust estate. vs.. S. Co. C. 47. 15 L. 648. S. If there is more than one rule. 48 49. for . the trustee corporation will require that the instrument creating the trust shall It ought ^ to. Bk. note or check.) 1078. Farmers. etc.."*^ One purchasing lost lost or stolen certifi^ i cates acquires no right to their transfer if J^^ • j.. as a be exhibited.). 565. complete in every other respect except delivery. 684. vs. to sell is granted by the instr anient creating the is The fact that the certificate ' ' made out in the name of a person as trustee. Bayard vs. 20 A. S. 52 Pa. 72 Md. Bk. bearing a blank indorsement.. Dennis. 45 C. Sec. c they are unindorsed. could acquire title to the lost or stolen certificate. nor does any one who purchases from or acquires through him these cates. Drovers. .. 19 Atl. (N. R. (Md. Y. 53 L. 148 X. T. 7. 232. Purchase of or stolen certificates. But. Gevser-Marion Gold Min. Ehlen. 936. St. 85 Ala. qualities of negotiable bill. you see. A. A. Eden Mus. hich. Marbury vs. A. A. 467. even for value one has procured the transfer of without notice. would own and could enforce is it. and to learn whether a power trust.. will be re- garded all must sign the transfer and. Knox vs.

98 C. 54 A. Commercial Nat.TRANSFER OF CERTIFICATES OF STOCK lost or stolen. A. R. A. Co. Bond vs. 309. his translegal feree and subsequent transferees acquire the (U. Wolcott Min. some inquiry seems fitting into the duty of the corporation to make the transfer and to determine what are the rights of the in its company in respect to the changes membership by the barter and sale of its shares. rules for transfer. Co. vs. 97 Am. 49. T. has the right to require the corporation to transfer the shares its upon books. 35 L. S. Co. 7.) and indefeasible certificate.. as you have observed. A. and transfers this new certificate for value to a notice of the manner title to in bona fide transferee without which it was obtained. the corporation may not refuse transfer for the reason that a part of the subscription price remains unpaid or that a call for an assessment or part of the subscription due and has been made upon the shares and the payment called remains unpaid/''.. 200 and Note. 126 Mass. and the transferer likewise. C. R. but "^"-'^''^ it cannot justify a re- Corporation may ^^ ^^^^^ ^^^^ transfer on the ground that it has been requested to refuse transfer by a forof the shares.. Bk. Field. 113 Cal. Sec. unless these are con- trary to law. S. 10. North Am. 8. Mt. :Jo7 and receives a new certificate in its place. or some one who purchased from the finder or thief. 'Neil vs. A. 454. whether he be the finder or thief. 465. 35 Utah 90. 306 ... The corporation may refuse transfer except upon comits pliance with refuse transfer. 45 Pac. 99 Mass. Mundt vs. ^^ it is mer owner Unless its charter or the it statutes under which incorporated give that right. 316. 174 Fed. Min. 27 L.. 345.. Crai^: vs. 99 Pac. 4 Mich. R. A. Hesperia Land Etc.The transferer remains is 50. S. N. Dec. S.^" the shares represented in the new Since. Bk. Hope Iron Co. 505. the holder of certificates which have been assigned to him or to another whom he represents. 52. Mandelbaiim vs. 527. 1023. 136 R. 51. Machinists Nat.

R. Wells. to look into the necessity The corporation to sell is not required the shares in order to pay the debts of the decedent's estate^^ nor to look to the application to be made by the executor or administrator of the proceeds of their sale. 12 Mete.^'"' it had already been repudiated by Similarly. Y. it has also been held that the corporation must make the transfer upon an assignment of shares by an infant unless at the date of the application him. Bayard vs.. 275. may also refuse transfer to or by infants or per- sons under other legal disability unless made in the name of the duly appointed guardian. owner may be made to the executor or directly to it may be made him when his from purchased has who one administrator as such.) 421. 1031. S. a shareholder presents his . 52 Pa. accompanied by a certmed copy . 54. State Bank. St. Farmers Bk.^« 53. 55. 17 R. I. Nashville Etc. on the eve of insolvency. 221. R. 546.^* It liability to its creditors. 18 S. 91 Teun. liable upon those called afterward. 1030. 585.358 liable for QUASI-NEGOTIABLE INSTRUMENTS payments called before the transfer but is not. Co. but a sale by a minor not being void but voidable only. 232. Leiteli vs. and may Transfers to or require the application for transfer to be by infants or persons under disability. as a rule. W. It cannot require the pro- Note. 56. The transfer of the shares from the deceased Transfers by administrators and guardians. (Mass. Peck vs. Hutchins vs. 136 A. transfers by executors or administrators may be refused by the corporation unless accompanied by a certified copy of appointment. or qualification is shown. Providence Gas Co. . R.. „ „ oi the guardian's appointment. shares for transfer with a view to escape and may refuse transfer to protect itself from fraud.. 1033. Smith vs. 48 N. The corporation may refuse transfer of its shares if.

. 1078. N. 8. which they hold for their wards. 15 Fed. 59.. 1175 Fireman's Ins. . No. 576. A. K. since the proceeds of the shares might be required to pay the decedent's debts. it trator its If it never- theless permit the transfer will be liable to the estate If the executor for any loss it may sustain. 190 Mass. 359 for none is required. Lowry 8581. Cas. that its of- a breach of trust of misuse of the stock or is proceeds it is contemplated by the executor or adminisduty to refuse the transfer. Cas. and would authorize the corporation it to delay transfer for such reasonable time as may require to The foregoing applies equally to sales by guardians who. vs. Ann. is not complete. However. such knowledge might very specifically bequeathed it well be regarded as sufficient justification to require the production of an order of court for the sale or transfer of the shares and to excite the inquisitorial activities sometimes required of the corporation to investigate the authority to transfer when the rights of claimants seem to conflict. it knows that the transfer been executed by requires. E. {)43. Co. 58..^' apply for transfer of stock which the corporation knows has been must allow the transfer. ^^ It is the duty of the corporation to refuse transfer is by a trustee unless Transfer by trustees. Conuuercial & Farmers Bank.^"' all authorized trustees ^^7 ^^^^ instrument creating the trust and the If has it whose signatures of trust stock by one who has no right it permit the transfer to make it or whose right 57. the corporation w411 be liable to the vs. Note. 15 L. 45 L.TRANSFER OF CERTIFICATES OF STOCK duction of the order to sell. R. 53 Md. 27. Beacon Trust Co. But its if the corporation have actual knowledge through ficers. however. obtain and present authority of court for the sale of shares determine its duty in the matter. 1913. A. more frequently than do executors and administrators. 564. Stewart Gardner vs.

Am. dishonestly claiming to have lost or destroyed it the old one which 60. . 327.. etc. Co. 125.. S. A. 10 Colo.®^ negligence on the part of the corporation to alcertificate for low a transfer without a surrender of the CorForation surrender of certificate. Elliot. 17. and in- those of a subsequent bona fide purchaser of the lost or stolen certificate are usually protected by a bond of demnity ordinarily required by the court to be given by the person sviio invokes its aid to obtain a new certificate in place of one which has been lost. which has lia- been lost or stolen. R. (U.^° fore. the corporation not relieved of Its interests bility to the holder of the old certificate. E. the shares properly indorsed or accom- panied by proper authority to make the transfer. 62.. St. 128 N. T. Marine. 72 Md. 45 L. 61. 691. A. vs. 449.) And if one fraudulently procures the issue of a new cer- tificate. Factors Ins. 11 L. C. S. 149. Bayard vs. Rep. 15 Pac.. 128 Iiul. when in fact he has sold Note. R. Ann. require It should. 3 St. Ehlen. 1079. 19 Atl. 31 La.. etc. 166. 232. 119: 38 298. R. Co. there- always that the certificates presented for transfer be accompanied by the instrument creating the trust or that It is it be exhibited to the transfer officer. S. Wooten vs. replaces. vs. 648.360 QUASI-NEGOTIABLE INSTRUMENTS and may be compelled to replace the stock or damages when the transfer has been made by the trustee in breach of his trust. Sec. A. 52 Pa. 116. 26 N. Snpplv Ditch Co.. Citizens Bk. N. Marbiuy vs. vs. to one If this breach of its duty result in damage who is a bona if fide holder of the old cer- tificate it will be liable to him and obliged to respond to him for his loss. Robbins. and its negligence is the cause of any loss sustained by the person for whose trust estate in respond benefit the shares are held in trust. 206.^- Even issued under an order duly fide contest a new certificate has been made by a court after a bona to replace one is by the corporation. E. Farmers. Bank. Co.. Wilminoton & W.

Where there are rival claimants to a certificate the laws of all states provide that the corporation. etcc. S. then entitled to the transfer to him of the shares which he holds and the corporation is required to look to the bond for its indemnity. A corporation which undertakes to determine the rights of rival claimants without interpleader voluntarily assumes a responsibility it is not required to take.. Co. 94 N. 63. * +^o«e Effect of transfer on forged ignature. ^ fer has been ^^f Even if the transmade upon an assignment ^^^ shares to which the signature has been forged the new certificate does not replace the old one. etc. Brisbane Cleveland. vs. R. Ordinarily a court be obeyed. 204. Delaw. if it is unable to determine to whom the certificate ought ought to be transferred. Co. 483. R. may action of interpleader and an invoke the aid of a court in require the claimants to submit their contention to the court for adjudication if there is a reasonable doubt as to be issued. conveys no right to the certificate or the shares it ««.TRANSFER OF CERTIFICATES OF STOCK it. or by whom it to which one is entitled to the shares.^^ A court's decree in an action wherein it has the power to order the issue of a 'Py'o jicf OT" ijY new certificate or the cancellation of one issued order of court in other of course. A forged signature or one It made without authority inoperative. one w^ho is thereby injuriously affected may is compel it to respond in damages. vs. 35 0. '^^ses.Y. If by a mistaken con- clusion or opinion of the law its disposition of the rights of the contending claimants to the shares is not sustain- able in law. Robbins.. jjQ^ enter a decree by which the cor- poration may be exposed to the danger of loss or injury without providing at the same time for its adequate indemnity. y^j[\i by the corporation. 361 the owner of the old certificate. R.. i. represents. must. . is if he is without notice of the proceedings. R.

vs. from the holder who procured its transfer. 65 vs. as a rule... 123 Mass. R. Boston. if necessary. 135 Mass. Avithout notice. has been treated for the benefit of persons who are interested in obtaining a salutary knowledge of the important provisions of the law upon these business instruments. in good faith and for value.. 110. 369.*^^ He usually prays for alternative relief in damages. and it is damages. the corporation permits a registry upon a forged If. Telegraph Co. For a general understanding of the incidents of stock ownership and transfer the explanations I have given of the law will usually suffice for ordinary necessities. however. This subject. even requiring that it enter the market. R. Richardsdon. many vs. that the corporation is required to pay. K. not only does not deprive the real owner of his shares but it cannot cancel the registration of the new certificate if it has passed into the possession of a transfer it transferee mediately or immediately. Co. to free themselves from uneasy the certainty and safety of their possession Davenport. etc. 97 U.362 QUASI-NEGOTIABLE INSTRUMENTS is The corporation the signature of obliged to know the genuineness of if it is it its stockholders and is not certain that the signature presented genuine has the right to require the person applying for transfer to produce satisfactory proof that the signature is what it purports to be. and I hope the book will enable doubts upon 64. S.. and buy others if the original shares cannot be restored. Machinists Nat. Pratt vs. R. Pratt vs. 126 Mass. 345. Boston. like those which precede it.''^ notwithstanding this adequate means of protecting itself. 473. Fiekl. Bank . Bk. 126 Mass. 443. Co. etc. In that situation the owner of took it who the shares may require the corporation to replace those transferred upon his forged signature. Machinists Nat.

w^ith few exceptions. whenever there has been conflict between its provisions and prior judicial interpretation of the common law they have not hesitated to interpret it the Act without reference to the state of the law as was before its enactment. Now.TRANSFER OF CERTIFICATES OF STOCK and titles -363 to the business paper and securities which they hold. the writer expresses the will be of use to business hope that volume men getting a business education. gratuitously. It has been some of the States for nearly twenty years. The subtleties of the many questions which will con- tinue to arise to confound the business man. and to young Whatever may be the merit of the explanations which have been offered of these laws. this in conclusion. The courts have very generally recognized its intention to make uniform the law upon its subject and. men. Most of the needs of the business man for legal advice upon his commercial paper and most of his doubts concerning his rights and duties upon such contracts can be readily answered by reference to the Act itself and technical skill is not now so much as formerly required of the lawyer in giving advice upon this subject since the law has been so admirably written. During that time suggestions for its amendment were made at more than one annual Conference of the Commissioner on Uniform State Laws. and the . but the amendments proposed and freely discussed at these Conferences were not deemed desirable and were not made. made up now of representatives of nearly all of the States. The best legal talent was freely expended. that Act may be regarded as the most remarkable statute ever enacted and it ought to be familiar to every man. in in force in its preparation. particularly of the Uniform Negotiable Instruments Law.

to enable men who handle struments to better understand their nature and the principal provisions of the laws which govern their in- terpretation and the rights and liabilities of their parties. Warehouse Receipts or deal in these in- and the transfer of Certificates of Stock are designed. his knowledge of what to do in order to prevent loss upon his commercial paper and of when and how to do it will suffice for most of his lawyer as ordinary needs and dispense with much unsatisfactory conflict and litigation now so frequent from a lack of this knowledge. But if the book is used for frequent reieixnce to the law. will not allow that any volume upon the subject can or will be written which will provide a ready answer for every difficulty it may become necessary to meet. with which every business man ought xo make himself thoroughly familiar. . The brief analyses of the principles of the laws governing Bills of Lading.364 QUASI-NEGOTIABLE INSTRUMENTS well. likewise.

58. 4-9. The is last sentence relating to Saturday when not a holiday Sec. 85. omitted. omitted from the Act. The Act omits Arkansas. The last sentence." are substituted for "may he sent. In the last sentence the words. Sec. 98. Sec. is beginning with the words. "instruments falling due. At the end Sec." Sec. 85. Sec." The Act omits the word " suh sequent" beSec. 195. fore "indorser" near the end of the first sentence. Wherein Will Be Found the Changes in the Law Made BY Some of the States." ''for the purpose of transferring Sec. The words "said holder" are substituted for '' transfer er" at the end of the first sentence. "must he sent by mail. 61. beginning "instrmnents . title All of the last sentence between the words ''such" and "latter" are omitted from the second sentence of this section. Sec. 146.APPENDIX 365 APPENDIX. ApiZONA. The third sentence. Alabama. 49. accident or fraud. this section." Colorado. of the section these words are added: only. The Act adds these words to the first sen- tence. "if omitted hy mistake.

be presented for payment during reasonable hours of the part of such day which is not a holiday. The Act adds "under it this Act" after the last word of the first sentence. are omitted. stituted: The last sentence is is in omitted and this sub- "When any day part a holiday present- ment for acceptance may be made during reasonable hours of the part of such day which is not a holiday." Delawaee. 9. Sec.366 falling APPENDIX due" is omitted from the Act in this State and this substituted: ''instruments falling due on any day. at the option of the holder. 5. ." Idaho." Sec. except that su^h instruments payable on demand may. 6. 85. in any place where any part of such day is a holiday. also omits all of Sub-section 2 following the word "judgment. In Sub-section 3 the words "or of interest" Illinois. are to be presented for payment on the next succeeding business day." Sec. Sec. before the the beginning of Sub-section 5 ''Is payable in these are added: it currency or current funds: or" and omits the last section: The Act adds the following as additional bub"7. An instrumeyit payable to the estate of a to the order of deceased person shall be deemed payable his estate. Sec. 146. At word "designates" paragraph. 8." the administrator or executor of these Sub-sections 3 and 5 are omitted and Sec. The words "or becoming payable" are in- serted in parentheses near the beginning of the third sentence after the words "instruments falling due. 2. Sec.

Sub-section 2. whether the instrument is payable on demand or at a future time. 25." "5. 14." Sec. Sec. When it is payable person knotvn by the drawer or Quaker to non-existent." The words "ivithout receiving value thereSec. The last sentence has been changed to read or pre-existing claim. an as signature the additional effect of the Sec. "and in case a transfer after maturity was intended by the accommodating party notwithstanding such holder acquired title after maturity. The Act omits the words "of the person whose signature it purports to be" near the beginning of the first sentence. 31. "issued or. ginning of the last sentence of this section. at the end of the section these are added. unless otherivise expressly stated. The Act adds to Sub-section 2. 37. 23. any action against the indorser or prior party that a special indorsee ivould he entitled to bring. These words are added: "And the addition negative of ivords of assignment or guaranty shall not indorsement. it order of a be fictitious or is indorsed in blank by the payee or a 'subsequent indorsee. althouqh originally payable to order. When. 29." The Act inserts these words. or of a living person not intended to have any interest in it. Sec. constitutes value where an instrument taken either in satisfaction therefor or as security therefor. and is deemed such. "or except in the case of a restrictive indorsement specified in Section any $6.APPENDIX substituted: 367 to the "3. as follows: "An is antecedent ivhether for money or not." between the words "is" and "negotiated" near the beSec. for" are omitted from the first sentence." It also substitutes for the words ''/*/6' rights as such an indorsee" in Sub-section 3 the words "the i)fstrument" and at the end of the last paragraph adds the fol- .

The Act also inserts after party. respectively. In this section the Act inserts the after word "duress" holder." or indorsed Sec. 40. 49. Sub-sections 2 under the restrictive indorsement speciand 3. "indorser" near the end of the Sec. The Act inserts after the word "themselves" a reference to a statute making certain defenses real defenses." '^ Sec. able to the order of a third person. Sub-section the first indorsee and as title against the principal or cestui qui trust only the of fied in Section 36. "every . for the last "fraud" near the end of the section and two words." substitutes "such The Act omits the word "subsequent" before first sentence. he subsequent parties. or an accepted payable to the payee and all // the instripment is a note or unaccepted bill payable to the order of the maker or drawer. lowing: "Specified in Section 36. "the latter." It inserts "and four" and after the word in- "three" in Sub-section 1 substitutes." order of the draiver. accident or mistake. The last seven words of the first sentence following the word "right" are omitted and these substituted. 66. Sec.— 368 APPENDIX i. The words. Sub-sections 1 and 2 are omitted and these substituted: "1 If the instrument is a note or bill paybill." Sec." are omitted to and these substituted: "originally payable specially to bearer. payable to bearer. he is liable to all parties subsequent to the maker or drawer. or is payable to bearer. if omitted by accommodation of his transferer. "to enforce the instrument against one who signed for the to and the right have the indorsement of the transferer. 57. "not an accommodating Sec. 58. 64." Sec." "2 — is liable to the "indorser" at the beginning of the section the words. 61.

case of words "except in the bank notes" after the word "instrument" where The section adds the it is first used in the ' first sentence. 70. 69. This section Sec. The last sentence of this section is omitted and the following hle snl)stituted : "All parties jointly to lior- on a negotiable instrument are deemed liable." Sec. five per cent damages on bills in addition. and payable in the United States in case siiit has to be brought thereon and on bills payable without the United States with or without suit. "for accommodation.' APPENDIX 360 dorser" for "he" near the beginning of the last sentence after the words "in addition. all Sec. Whenever any bill of exchange drawn or indorsed within this State and payable without this Si ate >s duly protested for non-acceptance or non-payment. Sec. his The Act omits is following the words. 68. The following is added to this section: "Sec. the draiver or indorser thereof. due notice being given of such non-acceptance or non-payment. 120. 119." Sub-section 6 is numbered 5 in this State and changed . The Act omits Sub-section is 3 and Sub-section 4 of the Act given as Sub-section 3. 69a. together with the costs and charges of protest. Sub-section 5 then becomes Sub-section 4 in this State and contains these additional words: "or unless the principal debtor be an accommodating party. 80. 87. shall pay such bill at the current rate of exchange and with legal interest from the time such bill ought to have been paid imtil paid." Sec. omitted from the Act in this omitted from State. Sec. Sub-section -i is th(^ Act in this State." be jointly and severally Sec.

137. 186." loWA. The w^ords. the words "prior or subsequent" are inserted and at the end these words are added: "Or unless the principal debtor be an accommodating party. this Act." Sec. as to notice of non-payment. Sec." Sec. The words "to whom it is shown and" toward the end of the section are omitted. 85. near the beginning of the first sentence and after the word "altered" which follows it. 124. The following has been added to this section "A demand made on any one of the three days folloiving the day of maturity of the instrument. Sec. 134. This section is omitted from the Act." which occur at about the middle of the sub-section. 135. The words "or after" are inserted between the words "before" and "it is. In Sub-section 3 the words "or of interest" are omitted. The Act inserts the following after the words "its issue": "and notice of dishonor given to the drawer as provided for in the case of bills of exchange.: 370 in the following APPENDIX manner: The second word "any'' is changed to "an" and after "agreement" the words "in favor of the principal debtor" are inserted.y or a holiday. except on Sundo. shall be as effectual as though made on the day on which demand may be made under the provisions of this Act. Between the words "assent" and "of. 2." are inserted before "materially" where it first occurs. and the provisions of this Act. Sec. but the provisions of this section shall not be ." Sec. non-acceptance and as to protest shall be applicable with reference to such demand as though the demand were made in accordance with the terms of Sec. the Act inserts "by the holder. "fraudulently or.

The words "or becoming payable" are falling due. 70. "and Sec. Sec. omitted. 85. stituted: omitted and the following subof The signature any party may be made for by an agent duly authorized in ivriting. relating to Saturday when not a holiday. The words "merely oral" are omitted from Sec." Kansas. ''need not" near the beginning of the first sentence and substitutes "written" for "verbal" at the end of that sentence. Sec. 95." in- serted near the beginning of the third sentence. The Act omits . 192. 48. 19. The Act substitutes the word "must" for Sec. has funds there available for that purpose. The Act omits Sub-section This section "19. Sec. in the first sentence. 146. The Act omits the third sentence of this sec- Near the end of the first sentence after the word "maturity" the statute inserts these words. after the words "instruments Sec." Sec. Sec. The third sentence beginning with the words "instruments falling due" is omitted. this section. The is last sentence. 196. is 3. this State. 16. The last sentence is omitted from the Act in Kentucky. 5. Sec. tion. this section." The word " oimer" is substituted Sec. "holder" Sec. 96.APPENDIX 371 construed as authorizing demand on any day after the third day from that on which the instrument falls due according to its face. 85.

and the following provision "Provided also. The word "not" has been inserted between the word "is" and "equivalent" and the provision of Sec. Sec. Sec. 120. In the first sentence. of grace shall be alloived. contains this provision: "On all draffs and bills of exchange made payable within this commonwealth at sight. the last seven stituted: "To enforce the instrument against one who . words folsuband these lowing the word "right" are omitted Sec. three days Sec.section made ivitJi the assent of the party Massachusetts. '' unless The Act omits from Sub. 49." Minnesota." Missouri. on the subject of grace. 87.372 APPENDIX Maryland. 85. The last seven words of the first sentence. following the w^ord "right" are omitted and these substituted: "To enforce the instrument against one ivho signed for the accommodation of transferer." The Act. this section thus completely negatived." After the words "fall- ing due" near the beginning of the sentence the words "or payable" are inserted. that is added at the end of the section: the same shall be duly presented for payment or acceptance or collection on the next succeeding business day. the words secoridarihi liable. 49. unless there is an express stipulation therefor to the contrary. Mississippi. and the right to have the indorsement of the transferer if omitted by accident or mistake.

The words "or becoming payable" are falling due. Hampshir. the order to the bank is limited to the day of maturity only. 62. end of this The foUomng words have been added at the section: "But where the instrument is made payable at a fixed or determinable future time. This section is omitted from the Act in this New Sec.APPENDIX sigtu'd 373 his for to the accommodation of transferer." Sec." Nebraska. All of this section after the words "within its a reasonable time after Act. 87. a demand made at the expiration of sixty . 85. state. 71. omitted. words "during banking hours. and if have the indorsement of the transferer. 71. ceedings.ent in this state made any sum for attorney's fees or other costs not allowable in other cases." in- serted near the beginning of the third sentence after the words "instruments Sec. The Act adds after Sub-section 5: that nothing herein shall be construed to "Provided authorize any court to include in any judgment on am instrum. The word "then" before "capacity" is in sub- section 2 Sec. 2." The Act adds to Sub-section 3 the words "except when such discharge is had in bankruptcy proSec. 120. 75. Sec. issue" is omitted from the The Act omits all of the section following the Sec." Sec. 87. defining The Act adds the following provision a reasonable delay: "Upon a promissory note payable on demand. omitted by accident or mistake." the rif/Jit Sec.

70. 85." serted after the The words "or payahle" are inwords "instruments falling due" which begin the third sentence.374 APPENDIX days from the date thereof. the words "and has funds there available for that purpose" near the end of the first sentence between the words "maturity" and The statute inserts "such. neglect or other thing which hy the provisions of this Act is deemed equivalent to a pre- sentment and demand on a note payahle at a fixed time or which would dispense with such presentment and de- mand." in- serted near the beginning of the third sentence after the words "instruments Sec. or". three days of grace shall Sec. No presentment of the note to the promisor and demand for payment shall charge the indorser unless made on or hefore the last day of the sixty days. The act omits from Sub-section 6 the words "unless made with the assent of the party secondarily liable. unless there is an express stipulation there- for to the contrary. York. ivithout grace. he allowed." The Act contains this additional provision: "On all drafts and bills of exchange made payahlp unthin this commonwealth at sight. New Sec. The words "or becoming payahle" are falling due." Sec. if it occurs at or within the sixty days shall he a dishonor thereof. 85. and his neglect or refusal to pay the same. 120. and shall authorise the holder of the note to give notice of the dishonor to the indorser as upon presentment to the promisor. or at any time within that term shall he deemed to he made at a reasonahle time. . and any act.

The words ''accepting or" Sub-section 2 omitted. 70. that no days of grace shall be allowed on any bill of exchange. Upon the subject of days of grace. is The words ''or married woman" are inserted after the word "infant" in this section. 5. at sight. in the second sen- tence are omitted. words "and has funds there available for that purpose" near the end of the Sec. provided. 16. days of grace as the same are allowed by the customs of merchants in foreign bills of exchange. an and not othencise. by the change in Section 2 given above.APPENDIX North Carouna. 375 In Sub-section 3 the words "or of interest" is are omitted and the following section: added at the end of the "Nothing in this chapter shall authorize the enforcement of an authorization to confess judgment or a waiver of homestead and personal property/ exemptions or a provision to pay counsel fees for collection incorporated in any of the instruments jnentioned. promissory note or draft payable on demand. in ivhich there is express stipulation shall be entitled to to effect. Sec. the Act provides an exception as follows: that "All bills of exchange payable within the state." Sec. Sec. Sub-section 2 is atTected and qualified.in this chapter: hut the mention of ea-ch provision in such instruments shall not affect the other terms of such in- struments or the negotiability thereof. 85. 2. Sec. Sec." Sec. The Act inserts the . Ohio. The section is omitted in this state. payable at the expiration of a certain period after date or sight. 194. Sec. 17. 22.

137. By amendment the following has been added "Provided. The following provision is substituted for Sub"Provided that nothing herein contained section 5. 14. Sec. that the mere retention of such bill by the drawee. 103. Sec. will not amount to an acceptance." Rhode Sec." Sec.376 first APPENDIX sentence between the words ''maturity" and "such. 16. South Dakota. omitted and these substituted: "ten o'clock in the evening of the day folloiving". 2." Pennsylvania. following substituted: self a from the Act and the One who makes himto be negotiable. after the The words "except sight drafts" are added words "every negotiable instrument" in the In Sub-section 2 the last nine words are first sentence. unless its return has been demanded." Sec. for the purpose of filling afterwards. is liable upon the instruynent to an indorser thereof in due course. The sentence beginning with the word "hit" . 85. Island. shall be construed to authorize any court to include in any judgment on an instrument made in this state any Sec. and provided further thai the provisions of this section shall not apply to this section: to checks. The to section is omitted ''Sec. party an instrument intended but which is left ivholly or partly blank. sum by for attorney's fees or other costs not now taxable laiv. in whatever manner and at whatever time it may be filled so long as it remains negotiable in form. 14.

" . 124. acquires an absolute title thereto. or on demand. 134. ten days after its date. omitted. it with ordinary diligence. Sec. is: bears interest. The words "the indorsement of" before the words "the bank" near the end of the section. 192 A. The apparent maturity of a change payable on sight. of exdate. Sec. payable at sight. See under Sec. The words. six months after its date. The act contains the following additional sections upon this subject bill "Sec. notwithstandit ing any provision of latv making able. note. 193 below. one year after its If it date. or. or on 1. 87. If it does not bear interest. one year after its or." Sec. 2. of this section. 192B. section as enacted in this state. generally void or voidin the title of the and notwithstanding any defect person from whom he acquired it. If it does not bear interest. in addition to the time which ivould suffice.: APPENDIX 377 and ending with the word ''presumed" has been omitted and the following substituted: "An indorsee of a negotiable in^rument in due course. are omitted. 71. The apparent maturity of a promissory demand. Sec. to forward for acceptance. The words "by the holder" are inserted after the words "materially altered" in the first sentence Sec. so that it is valid in his hands. Sec. "to ivhom This section is it is shoum" are omit- ted from the 137. is: 1. Sec. The section is omitted. 42. Sec. If it bears interest. 193. 2.

" Sec. negotiable custom of merchants in whatever form they may be drawn or made. 20. Sec. and no obligation nor instrument made by any such corporation or any officer thereof. though payable before then on a contingency. village or school district.378 APPENDIX Vermont. The Act adds after sub-section 5 ^^biit no order drawn upon or accepted by the treasurer of any county^ toivn. city. 118." Virginia. stituted: The "4 —At a fixed period after the date last paragraph is omitted and this subor sight. unless expressly authorized by law to be made negotiable shall be. Sec. 4. printed or stamped. whether drawn by any officer thereof or any other person. 71. Warehouse according to the receipts. Sec. After the w^ord "capacity" in this section the act inserts the words "tvitliout disclosing his princi- pal" Wisconsin. 1. An instrument payable upon a contingency is not negotiable. The following provision has been added to this section: "But this provision shall not be held to dispense with demand and notice of dishonor as provided by sections 71 and 90. and in Sections 4194 and 4425 of these statutes. as the sa^ne have been construed by the supreme court. The words ''its issue in order to charge the last negotiation there- Draiver" are substituted for 'Uhe of" at the end of the section. Sec. shall be negotiable as provided in Sections 1676 of the Wisconsin Statutes of 1878. and . or shall be deemed to be. bills of lading 'Qce and railroad receipts upon the of which the words 'not negotiable' shall not be plainly written.

made at the time of delivery. The Act adds to this section upon the face or hack of the ^'memoranda instrument. or there . are part of the instrument is admissible to and parol evidence show the circumstances under which they inserts the were made. 41." Sec. 49. material to the contract. tence these words are inserted "discharged extin- guished or extended" and these are added to the section. intended to accomplish the same object they may be construed as one and the same instrument as to all parties — having notice thereof." After the word "debt" in the second senSec. does not con- stitute value. 25." Sec. This sentence is added "when was an the indorsement was omitted by mistake. without other consideration." Section 17. "illegal. ''or authorize the waiver of exemptions from exe- cution.'' these." Sec. The Act words ''prior filling" to nego- tiation" before the words the first sentence. and not in pursuance of an agree- ment at the time of delivery by the maker. An additional sub-section is added as follows: "8 Where several writings are executed at about the same time. 10. 379 the happening of the event does not cure the defect ex- The Act adds after the last word. "But the indorsement or delivery of negotiable paper as collateral security for a pre-existing debt." Sec. 14. whether signed if or not." See. The Act inserts the word "joint" before to the section the word indorsees. "hy near the end of The words "a prima facie" near the end of the second sentence are omitted and it reads *' operates as an authority. as parts of the same transactions.APPENDIX cept as herein provided. 5.

70." Sec. 58." iSec. indorsement." Sec. the same are applied to other purposes.380 APPENDIX made at the time of the transfer. relating to insura^ice premiums. when made relates back to the time of to agreement the indorse the transfer. and also on cases ivhere the is title of the person negotiating such instrument void under the provisions of Sec. as follows: in the usual course of business. there being in the holder* s hands or within means of complete or partial satisfaction." the Where word "assent" occurs at about the middle . person who did not knoiv the nature of the instrument and could not have obtained such knowledge by the use of ordinary care. omitted from the Act. as follows: "4a. or. 57. By giving or applying to other purposes colhis control the lateral security applicable to the debt." The Act adds this provision: "But this Sec. 55. 85. In this section the Act inserts the word ''duress" after ''fraud" near the end of the section and for the last two words "the latter" substitutes "such holder. All of the first sentence after the is words "on the instrument" Sec." Sec. 117." That Act adds the following to this section: ''And the title of such person is absolutely void ivhen such instrument or signature was so procured from a Sec. "5 — That he Another sub-section took it is added. The Act omits the last sentence beginning with the words "instruments falling due. The following is added to this section: ^'Ex- cept as provided in Sections 1944 and 1945 of these statutes." Sec. 52. 120. shall not be construed to revive any liability discharged by such omission. 55 of this Act. A new up sub-section is added.

146. on due notice and demand thereof. 1682. hut within some State or Territory of the United States. Whenever any hill of exchange drawn or indorsed within this State and payahle without the limits of the United States shall he duly protested for non-acceptance or non-payment. 1683. 183. omitted. due notice heing given of such non-acceptance or non-pay- ment shall pay said hill with legal interest according to . as follows: "Sec. together with interest on the said contents to he computed from the date of the protest. charges and expenses. 130. 128. The Act contains two additional sections here. "Mere retention of the hill not acceptance. Sec. the drawer or indorser thereof. Sec. If any hill of exchange drawn upon any person or corporation out of this State." See. and said amount of contents. The is last sentence." Sec. for the payment of money shall he dull/ presented for acceptance or payment and protested for non-acceptance or non-payment. ^^ prior or subsequent" and at the end of this sub-section adds '^'or unless he is fully indemnified. which the Act inserts there. relating to Saturday when not a holiday. damages and interest shall he in fidl of all damages. pay the same at the current rate of ex- change at the time of the demand and damages at the rate of five per cent upon the contents thereof. 124. Sec." Sec.APPENDIX the words 381 of Sub-section 6 the Act inserts. "Where the word '^assented" occurs near the first end of the *' sentence it is followed by the words orally or in ivriting" Sec. The words "or person" which precede the The Act adds: words is "iiot capacity" are omitted. immediately following it. 137. the party liable for the contents of such hill shall. The Act omits the last three words "or in succession.

The words "or of interest" The in sub-section 3 are omitted. . 18. Sec. The word "made" words "to he" and "payable" Sec. Wyoming.382 its APPENDIX tenor and five per cent damages. yvoid'^ expressly" in the first sentence is omitted. 34. together with costs and charges of protest/' Sec. first is inserted between the in the first clause of the sentence of this section. 2.

. Bailie v. 158 94 Amer. Exchg. 92 Bambridge v. Campbell. St. & Merch. Louis Argus Printing Co. v. Bk :i81.. 148 149 96 51 100.. of Commerce v. v. Beer v. v. Alabama Coal Mining Bk. Wright Smith 162 75 zens Tr. Hazelrigg 105 Allen V. Adams Adams v. Bk Bk. Acoam Belch V. In re 47 Bayard v. Robinson. Bk 297 15 Baker v. 157. of Commerce v. Smith Waydell 78. v. Agricultural Bk. Clifton Bedford Bk. Miller Friar v. of Evansville 142. Nat. FOutham. Roberts Benson v. Gamble 349 Aurora St. Co 207 Baldwin's Bk. Lehman. 187 v. Hamilton. Alkali Co. Dean. Durr & 16. Bk. of Commerce v.TABLE OF CASES. 358. v. v. Farrell 189 27 349 Armstrong Pomeroy Bk 60 Atkins V. v. . Baker Lehman etc. Rightmire Alley V. V. Rogers & 71 . v. Stone Co. 366 Bk Beardsley Hill 19 56. v. v. Augusta Savgs. 349 20 64 Auten Auten V. 64 Amer. First Nat. Bk. Co 71.356. v. v. Looney Hale Bk Agnew V. Co. 167. Boiler Co. White Battle Creek Nat'l Bk. Bankers St. Mfr's. v. v. Farm. of West106 minster 279 Blake v. v. tan v. 272 . of Amer. . Frothingham. 58. son Stephen. Metropoli291 Bk Batcheller v. The references are to pages. Citi- Adam v. Farmers v. 151. M'cCaskill Aebi V. First Nat'l Bk. Walden v. Rogers 208 Anderson v. Fertilizer Co. Union Tr. Manistee Nat. 66 Co. Bk.114 Amer. Bk 57 Baldinger. v.101 110 164 288 Brainard 49 Albany Tr. 219 Aetna Nt. Mason Hand 143 Lathe Co 251 Baring v. 148 140 91 Eddy v. v. . 58 Barton Savings Bk. Bank Bank Bank Bank v.339 Amsinck v. 19 Amer. Beem v.. Bk. Clark 74 Barkley v. Muller 70 Barnet v. Natl.. Bk. Bk 290 273 Beyerque Crahan Bingham Bingham San Francisco Kimball v. Haynes Fames El. 92 v..166 Albers v.. v. Craig 231 81 Rogers 281 American Bk. Suydam Allen V. Co. Co 296 355 of Virginia v. Bk 60 Arch. 101 Adrian v. 188 v. etc. Fourth Nat. Mfg. Louisville v. Black V. Bk. Macondrey. 148 68 Bank Bank v. Brayles. Ice Co 96 Alexander v. . 28. Bk. Young Bartlett v. Bk. Reddy 186 B. Bk v. Dundee St. Abbott Berlin v. Merch. Hoffman 36 Albany Co. Dening Blackman Co v.

City of Adrian Nat. Peoples Sav.. R. v. V. Worth Breese v. 44 ardson Boston Steel & Iron Co. 357 291 Butchers bell & Drovers Tobin C. v. Hub78 R. Burt Cedar Rapids Nat. R. 186 57 122 Yeatman Bk. Y. Furniss Thalmann Carlisle v. Bk Whitney Cntr. v. Co Brannin v. 155 217 339. Lambeck Builders L. Bartlett Burgess v.. Browning v. Stever 39 Boyd V. Citiz. Bank of Toledo Bracken v. Walton Citizens Bk. Press 105 v. 153 107 56 224 v. Huntington Burton v. v. v. Bk 290 108 188 189 188 Chemical Nat. 187 Sullivan b4 Champion Champion v. v. v. v. Beckler Burson v. Burdette v.. Hooks Carpenter v. v.. Robbins v. New Amster136 Burns Lbr. 45. Butchers & Drovers 15 Heskett Chelsea Exch'g Bk. McMillan Bush V. Mininger Boston. Bk. v. etc. Bk. 144 340 153 R. Offield Brill V. TABLE OF CASES Cutter 282 Bond V. Brown v. Cowles Crittenden Rec. 273 213 351 49 68 Cabot Bk. 23 Carter v. Bk.. City Bank 52 . v. Buildg. Brown v. dorf Cantrell v. Gosnell Brunnagin v. Eastman Bouck v. 78 2/2 32. Greenleaf ' .384 Bliss V. v. Co. . Pettingill Canajoharie Natl. 88 Chicago First Nat. Bk. Ch v. Bk. shara Chamberlain v. Chapin Burgettstown Nat. Nat'l. 272 96 & Loan Ass'n v. v..l43 224 43 43 Citiz. v. Bk. Reno Co. Kellogg. Hope Min'g Co Borup V. v. Bk. First U.. v. 118 v. Mt. 208 218 Ba87 354 205 man Brooklyn Union Bk. Bank N. 360 Nill. 107 97 102 City Dep. Bk Title. Gordon etc. Defen104 90.. v. Winnie Chemical Nat. v. R.Co Broadway v. 143 22. F'dry. Tallant Bryant v. Nicol Brailsfbrd . v. Rowan Johnson Brownell v. Williams N. Farmsworth Caras v. etc. 361 Brinkman Brisbane R. Long Casco Nat'l Bk. Etc. Rich362 Buzell V. Green 102 Lauman 222 . v. Bk. v. Chicago Brady 116 51 86 119 Chipman Churchill Citizens Citiz. Clark Casker v. Co. Brainerd v. Snyder Brenneman Brewster Brewster Bright V. Heffer- Carter v. v. P. Carpenter Campbell v. Weimer 108. Butler v. Warner Cagle V. 87 Bk Brown Brown Brown v. Cent. Co. Bk. Co. Jefferson Bk Riv. 101 v. V. Doyle Burr v. Co. Hunter Delaw.V. 265. Bk. 269 McArdle Schrader 35 67 17. Lane Camp V. Henderson Davidson 260 224 51 89 64 51 Brass v. Brown dam Bk v. City Bk. etc. Kuhne Case V. Bk. Foster & C. v.

v. Amer. Arm- Dalrymple v. v. Bk. V. v. Dingman 60 213 81 man 127 V. First Nat. Foote. Baldwin Wolfendale v.278 Dykman v. Co. Wombles Bk . v. Crocker v. Codman DeWitt V. v.. V. Chicago. Henninger. Co. Co. Rhodes 49 Corwith First St.. Beem 187 352 cell 77 Tr. etc. V. 189 Columbia Finance Co. 214 224 81 216.l66 Dykers v. Zimmer. 222 209 R. 101 94 49 Humbert Bowen. v. Varnum. Thompson Myers N. . V. Craig 361 15 52 V. R. Pratt 143 Cornerstone Bk. Rech. Birmingham Land nis v. v. 349 Commonwealth Commonwealth Commonwealth Comstock V. Co. Neale Coit V. etc. R. Nat. Den- 356 v. McGuire. 284 R. Gore Cutts V. v. St. Walton 33 47 49 69 Commercial Commerical Commercial Commercial Bk. 136. Bk. Cons. .. 177 51 Heil- man Converse v. Second Bk. v. 58 Debebian v. Davidson Cushing V. 64 56 353 27 v. Tel. Bk :^30 215 . v. v. etc. Sherwin v. Kress 131 Dove V. Forsyth Curren v. Reffitt 102 Continental Nat. v. etc. Coolidge Payson Corner v. . Count Cover V. 297 Boettcher 224 298 D. v. v. Neeley 92 Dresser v.Johnson 26 Cook Cook v. Bk. v. 73 68 Wathen 106. V. Smith 85 Dunbar v. . Howard Palo Alto Stock Farm.TABLE OF CASES Clark Clark V. 56 Eastman Eakin Buffalo Marine Bk 273 Thurman citizens St. Colwell Crosby v. Buckley Bk. v.342 Dupont Powder Co.. Hesperia Robbins Closson V. R. Bk Land. . 215 Gordon Staunton etc. v.. Cobb V. Crowe v. Amsinck Dodge V. Creteau Cribbs Critten v. Wright 119 276 Columbia Dist.187. Dawson v.187 Bk.. v. Fansler 191 Downes & Co. Co. Rooney. 129. 385 159 Cook. E. Williams Cottle V. . Perkins V. E. Wyker Davis V. . Cummings Commercial Bk. Co... Heron Coburn v. v. ..242 Nat. v.. strong of Pa. Co Commercial Nat'l Bk. Miller 136 Columbia Colo. 106 Clemens v. 296. v. Comm Dalzell v. Bank Donovan v. Butterick. v. Gala Dennett v. Crowell V. 138 357 Cleveland. Bk. Pur28. Flynn Doom v. Northbridge 243 . . Witter Curtis 337 272 122 278 36 Columbia Knickerbocker V. Y. v. Nat.148 Bk. Mo. Glass Co.Jackson Culloden Bk. R. 217 Corbett Fetzer Dorsey v. Co. 79 178 Crawford v. Wolff 18 Doubleday v. Allen 350 Dykers v. . Church 268 Downing v. Stearns Coaling Co. Cox Co V. 99 Drexler v. Sowle Chemical Bk Colt Barnard Columbian Bkg. Gore 64 30 63 Commercial Bk. Moore Craig V. Leather Mfrs. v. .

209 95 First Nat. 339. Y. 359 Home Ins. 297 Ex parte Goldberg F. S. v.. v. Hall Ellicott V. 349 Georgia Nat. 75 54 68 103 295 177 64 23 Freese v. Greenwood. Bk. Bk 224 Ford V. 87 102 66 Hix v. Milliman. Comm'l Bk 128 Frazer v. v. v. Flath Bk. v.v. Co. 213 First Nat. 97 First Bk. Safety Bkg. Schenuit. v. Chicago Bk. Bk. Beacon Tr. . Physic Gemmell v. Co. Hodges Edgerton v. 291 Bk.136 .. First Nat. Stallo 63 First Nat. Tube Wks. Bk 281. Netter Fillebrown v. Ensign v. Foster v. First Nat. L. (N. Bk. Schmidt. Co 360 v. 73 Farley Nat. 355.. . Davis 337. Hubbard 81 102 Fountain v. Bk. Gate City Nat. & Tr. v.. of Elgin sell Rus23 84 92. Fourth Nat. Comm'l Sav. Bk. 289 German-Amer. 183 Gallo First Nat. Fourth Nat. Bk Gansevobrt v. Bk. Lynn Erwin v. First Nat. V.214 Fowler Paper Co. Bk. Hull First Nat. Martin Elliott V. Sav. v. Karste Findlay v. Bk. of Barnesville. (U. Renshaw. Cap. 58 Bk Third Nat.) First Nat. ClarK 213 Ffrst Nat. First v. Bk 215 German German Nat. v. 386 Easton v. Foreman. v.148 . 113 76 Nor'west'n Nat. 92 158 85 First Nat. N. . Phenix Nat.. 81 191 Flynn v. 78 First Nat. Farmers' etc. Bk. v. 58 85 Harris 102. Brownell . Barney Froth V. Co V.. TABLE OF CASES 350 32 First Nat. v. Co Ferguson v. Armstrong 253. 41 Garrard v. Bk. Newland 283 Farmers' Nat. v. 74 48 . City St. Smith Fire Ins. 303 Gazzan v. Williams Gardner v. Fowler First Nat. v. of Nashville. 295 v. Davis Ferguson v.. Bk Freeman's Bk. Co. Farmers' Bk Finley v. v. v. Fanshaw Peet 225 17 Flagg V. Thrush Fulton V. Bk. Bk. v. v. Bk. Gee Exchg. 285.272 131 Foss V. Loughlin •G. Bigham 143 Fowler v. Bk. Fogg Erwin v. Co. v. of 297 Whittier First Nat. v. Bk. Bk. First Nat. Hadden Gate City Nat. v. Angelrodt Forest v. Bk. Collner 48 Bank 118 Farmers' Tr.. v. v. 286. Bank of Cincinnati. of Murfreesboro V. Norris Farmers' Bk. Bk. Bk. Bk. Henderson . v. Factors' Ins.. Boyd 220 Foley V..120 First Nat'l. Y. of Belmont v. v. Howard 160 Foland v. Pollock 283 Fassin v. . Brooklyn Sav. Bk. Bk. v. . Life Ins. Trognitz 213 First Nat. Jones Sales 131 Bk. . Bk. 78 Fawcett v. 263 15 Geary v. Co 278 Franklin Bk. Preston Elgin Bkg. Co. School Dist Fitchburg Bk. Freeman 66 Franklyn Bk. Roberts 349 Franklyn Bk.354 .57. Bk. Nat. Bk. Nat. Evans v.) v. Sav. Bk. v. Bk 273 89 First Nat. Cowles Fink V. Bk. Co. Muskogee Pipe 215 v. v. Marine Ins. Hayward Finch V. Bk. Scotten Espy V. Fleming Fowler v. Nat.. French v. Co Nat. Bk.

Assn.. Hilsinger v. 47. In Hoppin v. Hall 34 . London. Co. 98. Bk. Blum Goldberg. 56 63 etc. Co. 190 Harvesting Mach. Foster Iowa St. Wallace 48. Moon Hughes V. 98 133 63 79. 86 63 358 Ilsley V. Gale 220 38 . Dres- Geyser-Marion Gold Min'g Co.340 Gilley v. Holmes v. Hemma Hudson V. of Lou- Graham Houston Bk. V. Wm. 188 37 isville Haddock Blanchard & 116 dock 214 Haines v. 18. Claypool Ironclad Mfg. Breslin. Orthwine 69 Holdsworth v. Sackin. Robbins 116 180 77 41 Grain Co Gross V. V. Bk 166 Hazlett V. Miles 135. Chamberlain. v. 356 Stark Giesen v. State Bk I. Stobart 153 Harrison v. Gray 118 273 15 57 41 Hogg V. 81 26 Hatch V. Stewart Huntington v. Milner Greenfield Bk. Hughitt V. v. Drovers. Wetherald Irwin V. Hunter Holland Tr.134 260 290 65 . Mason Hostetter v.. East 339. Rome Town Site Co H.. 217 V. Grayson 188 Handsacker v. Bk 340 Harpold v.101 Hodge V. Bragdon V Smedes Ingram v. Citizens Bk . v. Yank288 Bk Hatcher v.. Guaranty Co. Harvesting Mach. Merchants Bk Hinsdale v.44.100 Hall V. v.. Co. Steel Globe Mut. 100 Hodgens v. Harrell Hewins ser 187 22 Hibernia Bk... v. Bk. Co. v. V. Had- Racket v. .. Goldman Goodman Goodnow Goodsell v. Ruscoe 39 Hartington Bk. Bk. V. Trumper Hopper-Morgan Co. First Nat. Chambersburg Bk. 249 51 Hitchcock V. v. v. Co. v. Buff um Horan v. 102 Hodge V. Simonds Warren McElroy Bros Wallace ". v... etc. A. Waddell. v. Smith 17. v.. 75 Co. 155 108 74 . Hovorka v. . Bk. of N. Bk 296 56 Hefner Dawson Cargill Tr. Irving V. 387 Connell Mariner. 64 Holbart Lauretson 94 267 Greenway v. 90 81 Hogan Goolrick 224 Gordon v. Thurman v. v. ton Sav. v. Holmes Hood V. Blair. D. . Jennings v. Venice Gray v. v. Irvine Gould V.356 24 . Adams Iowa Barb. Dolan 1 uayer v. v. v. Emerson 23 v.117. Tiffin Nat. Pedersen 52 Harper v. . & Hill V. Jones 213 23 Ilsley 189. Day V. Shute Hutchins v. 144 Ex parte Goldman v.101 Lee Hunt V. 44 Oilman Gilpin v.. Buchanan 42.TABLE OF CASES Germania Nat. Goldberger 122 45 Hinkley v. First Nat. Nance 100 Hale V. Trickett Bk 273 Hilsinger 283 Ginn Gleason Glidden v. Johnson Hurst V. 103 159 Hodges Hodges V. Biug. 349 Holmes v. Mfg. . V.. Crafts Greenfield Sav. Berry Savage. Reeves Pulley Co Israel v. re 104 349 106 24 Wilson Houck 41 Co. Co. Georgia R. Bk. 51 Hazlett V..

Nutting Linn v. 216 112 Wilson Jefferson Bk. Lovell V. 178 187 McBroom County v. Laudenback Klotz V. Kavanagh v. Hingham Nat. 274 . Treas. v. Barnett Keidan v. Lebanon 29 Krumbhaar v. Co.. 355 224 102 Lampman Lampman James Jarvis v. 356 Lowell V. Laflln 337 260 104 32. Asher Knapp Knight V. Co. v. Bk. TABLE OF OASES L. Knox V. Bk Loring v.. Byrne Lord V. Sedway Wells 163 Kansas Cobb City. Co. Pierce Liesemer v. Gruner Lenox v. 101 95 23 34 Kellogg Curtis Kennedy Kerr v. . Maxwell Leask v. v. Comm'l & Farmer's 104 Bk Lytle v. Lansing . Raymond Standafer Johnson v. v. & Tr. v. 70 Lamar Lamon v. v. Siple 177 140 113 . v. . Silvers Kirby v. Smith 166 Lankofsky v. Bayard Korkemas v. v. Lombard v.. Kester Tolbert Kimbro v.. Chapman Jensen v. Roach Lindeman's Bxtr. V. Bk 267 Lang V. Ruegamer Kitchen v. Guildin. v. G. Bk. Winegar Keller v. Lindsay v. Beard Land Title & Tr. Pendleton Lightner v. Lowell Tr. Miners' Bk Jordon v. Co. V. Cowell Braswell Eden Musee. v. 118 186 Levy V. In re 70 101 Johnson Johnson Johnson v. Edwards 272 90 59 107 Lamson v. Lytle King V. 49 Schnabaum Jones V. Jones V.. Consolidated Butter. 263 Leonard v. v.104 118 Lennon v.159 74 42 154 158 190 51 144 63 Kingan & Co. Wilself 45 Jerman Jett V.. v. v. v. etc. Shontz Lowrey v. Co.388 J. Tilton 108 27 Johnson V. 358 56 77 Lehnhard Leitch V. . Long Jurgens v. Griggs Kester Kiefer 177 90 95 Libby v. Wickman K. etc. Co Lawrence v. Dew Leather Mfrs. 153 350 183 Morgan. Way Home Furn. v. Louisville Bkg. v. The Kent & Stanley 32 Co 52 51 Liberty Tr. Micou French v. v. v. Broderick Smith v. R. North61 western Nat. Griffiths 352 McCaughey v. Macksoud Krouskop V. Co. Clark Law 217 v. Price Linick v. Williams Bickford v. 115 259 M. 295 354 286. Co. Bk. Leverett 254. Arons Lewisohn v. 59 215 355. v. Kayton v. Co Konig V. of America. 290 104 Brodie Silver 135 68 26 etc. Burg Life Ins. Jackson Jacobus Hudson Jamestown Mantel Lyon Co 252 Co. Horton Lititz Nat. Stewart Lawrence. Miller Lawrence v. Draper 117. Smith 189 . 52 93 Pratt 166 359 Knoxville Bk. v. Mer121i shon Kohn V. E. R. Co.

110 216 22 18 Miller v. Baring 246 35 v. 69 Morris Co. Ehlen Marion Nat. Bk. Clark Merch. Prentiss Mundt V. Dousey Mason v. v. In re McCorkle v. V. etc.. Santa Maria Sug. Gibbs Madison v. 357 88. 106 Tenth Nat.. Jarvis Maxwell v. Austin Miller v. Follett. Comm'l. 360 Bk v. Manussier v. 283 of Oswego Mnfrs. 342. Bk.352 .260 Smelting Co Mitchell V. Sloan Co v.. 348 245 90 177 v. McMurray McNeil V. Continental 78 Miners. Bailey Morrison v. Bk. St. Williams Phenix Nat. Claussen. Brown Martz V. 96 146 Moore v. v. Agnew Mayer & Bros.' R. 54 Hay Union Nat. Austin 205 Morrison v. 240 96 Miller v. v.. Nat. Bk Mason v.. Barrett McKnight v. Meuer Meyer v. v. Luckenbach McDonald v. Wright Mapleton Bk. Fishell Mount Morris. Mclaughlin McHenry v. Belt McDonald v. Gorham. Kilcourse Massachusetts Nat. 340 342. Citizens 243 19 Mason v. Mng. 357 Marks 66 Mandelbaum Mankey v. Bk v. Br. Snow 45 21 66 Massie v. Stanrod Marbury v. Bk. Werges Merritt Metallic Specialty Co. Bk. Rogers 85 Moorhead v. Ryan Monongahela Nat. Bk. v. Johnson.. Norton Milwaukee Nat. Mommensen Marshall Field & Co. v. City Bk. 112 56 Machinists Nat.urchison Nat. A. 148 Murray Third Natl Bk 140 . Miller McCormick v. Michigan Bk. Nat. Bk. Mackintosh v.. 81 148 Montgomery Montgomery Crossthwait Evans. Amer. Bk. Bk. Bk McKenzie v. Pav. Bk 26 McCune v. Louis 61 Bk . Meader v. In re 27 189 178 51 Ill 96 Metcalfe v. 94 Mobley v. 208. Casey Markley v. v. v.. Thompson. Nat. 65 v. 357 Dunn Oil Bk. v. . Nat. Scheuerman 283 Morris v. 245 v. Bk 216 Matson v. Gardner Love. Bk. 140 30 60^ Co 95 v. Mnfrs.TABLE OF CASES McCord. Gilmore 70 19 (2 15^ 389 Dollar Savg. v. Stevens v. Russell Markey v. v. Rosenheim Mexican Asph. .. Bk. etc. Boykin N.. Bk. Eckland McCoy V. Franklin 234 246 239. Harriman 188 Melton V. 353 v. Hoyt v. Bk. 47 18 Co Miller v. Hannibal. S Morgantown Bk. 148 122 138 130 v. v.345. Field. Cabelek 303 Duncan Magruder v. Gilmore Martin v. Nat.350. R. Union Bk Maddox Mallon v. Man Co V. v. Morelahd's Assignee Savings Bk Morgan v. Nat. Bk. Montgomery City Bk. 49 Mutrs. v. Appeal Mechanics & Traders' Seitz 186 272 144 Moynahan v. U. v. Co. Kyle Miller v. Belford Matlock V. Co. Corey Marling v. Bk. Ely Miller v. Pensacola Bk 51 Merch. Mills v. Bk. St. Parsons MIcMurray v. Todd Mersman v. Nat. Schwald Montrose Sav. & Merch. City Albany 218 18 94 17 Bk v. "'0 65 Mehlinger v. First 296 339 356.

v. 42 Ogden v. Co. State Nat. 283 Hoboken City Bk. Nat. Blackburn Owen & Co. Planters Plate V. Huie 209 Porthouse v. Co. Fant Ocean Nat. Bk Nat. Westcott 41 Exchg. Nat. San Jacinto Lbr. Weil Neal V. Raymond Yung Walcott Min. Bk. 59 v. Kidder 45 Northwestern Nat. Exchg. 41 Bk Overman v. Amer. 40.236 94 Philpot's Est. 284 . Loring Nutting V.. R.. Broadway Bk Patton Pauley V. Brooke Peoples and Drovers Bk. v. 120 27 Nat.. Kansas City Bk. Providence Gas Co 100 Peden v. 59 Phillips V. Commerce Hyde 120 46 52 28 mour Pkg. Y. of v. Nat. Co. Smith Newton v. City Bk. Fairman 225 Mach. Smith 47 135 242 214 52 19 Nance v.. Bk Nat. IS v. Oakley v. V. 1. 36 1^3 v. Kanawha Valley Bk. v. Nat. 343 188 239. Nat. of 73 Perry v.. Bk. Bk etc. Co. v. 214 222. Co. 187 v. Myers Standart O'Brien v. Struthers 34 Pilmer v. 187 Niagara Dist. Bk.57. V. 112 Merch. Bk. of Commerce Amer. Craig 80. St. 348 153 Payne v. 245 v. Parker 355 Prall V. Lary v. Clarke 88 157 230 Plover Sav. Beeman S. Noyes v. Bk. Bk. Nat. Bk Pinkney v. v. v. Bk Otis Elevator Co. Commerce Commerce v. Corp. Bk Mfg. Burked O. North v. V. v. v. Williams O'Donnell v..l29. 209 Penn. First Nat. 30 . Bramlett 243 Bk. Nassano Nat. Bk. Bk. 357 Oppenheimer Farmers v.. Co.337. TABLE OF CASES Edwards N. Bk. Sprague 70 Noble v. v. Melton Peoples Bk.. Little 183. v. Bk.390 Murrell v. 158. v. Comm. 298 Merch. Storms Owsley V... City Bk.. Bk. Mercantile Co. Branch of St. Bkrs' Tr. Moodie.. Nashville Bk. Nat. v. Carr v. Nat. Henderson 134 Ohm V. Saitta Park Bk. Nelson Wood v.. Tool Co 44 Niblock v. v. Twelfth Ward Bk 89 Porter v. Life Ins. of Lafayette v. Bk. Co.'s Appeal Pensacola Bk. Bk. v. Bray Pettyjohn v.218 34 70 57 Ex. & 18 Nat. Co. State Life & Tr. Bk. v. v. Phillips P. Nat. Bk Natl. York. 225 v. 355 59. Mercantile Nat. v. 354. Seaboard Bk. Kirby. Cushman 70 Porter v.. & Co North Car. Tilt . In re Pierce v. Contr. Lester 181 Park Bk. Bk. Passmore v. . Owen V. O'Neil . Young Ocean Nat.295 Pitt v. Tuolumne Weston Co. etc. of Nat. of N. o6 Patterson First Nat. 188 51 77 New New York. v. Meyer Martindale 209 Z60 N. Bk 272 133 Pierce v. v.. Merch. Bk. Bk. R. v. Co. Patrick 358 Peck V. Amer. 350. Birkle Pelton V. Ar291 Norwich Bk. Selma Savgs. & Farmers Bk Northampton Nat. Co Reynolds Oakdale Mfg. Koehler 230 Park Bk. 35. v. Co. New 89 Haven Pulp & Board Co Newport v. 276 279 Poess V. 143 248 New Haven First Nat.

v. Boston Iron Co. Faulkner v. 295 Nat. 79 19 254 214 178 R. Cummings. Granger Richards v. v. McDaniel 171 Sabine Payne Sampson v. R. of Alma. Warring . v. Nat. etc. Gerlach S. 297 Bk Real Est. Mines Co Ruiz V. v. Caro & Brown 27. etc. Murphy Roark Spear 23 15 137. Marsh Schimmelpennick v. Co. R. 219 Smith V. Nat. Merch. Barnett Ross V. Bowling Green First Rice V. Carroll Rousch V. First Nat. Bk. Bk. Bk. White 88 Smith V. Bk. v. Ragsdale v. Renauld Ryman v. Co Ins. Co. v. Crymes Q. Y Shipsey v. 112 Smith V. Ledyard 216 Smith V. Dunham 64 Proctor V. Bk 21 Preston v. Bk. Hawkes 46 Woodhall Webb Robertson v.251 Schlessinger Schlessinger v. R.. . v. O'Connell 41 Rallo Nat. Irons Riddle v. Bk v. Nat. Vahey Shelmerdine v. 225 20 20 Second Second Second Second Nat..TABLE OF CASES Prather 260 v. Shaw 26 Shea V. 358 '. Barringer Schwartzman v.ll2 Randolph Nat. McKinnon 107 Carpenter 103 66 Shinew v. Boston.. In- 86 Pegg Schmittler v. Bk 32 Soaps V. Co 347... 291. Gresham Railroad Co. Marsack 110.. v. Cowell 112 49 232 71 Scotland Co. Austin Roach Roads V. Day Richards v.. . 107 Spangler v. Upton 391 Sanford v. Bk. 87 Smith V. etc. v. 29 v. Post Schuchardt v. v. Corn Exchg.163 Smith V.. 340 275 181 55 20 Shoe. . Bird 339 Sharp V. Lehmeier. 155 115 191 57 32 Regester's Sons v. Tr. Cairo City Nat. Hohn Scotland Co. Bk Shisler v. v. 168 155 220 v. Bk. Hurd Rosson V. Rowland 151. Bk.l87 217 Saulsbury v. v. Melton 233 Smith V. 183 Quincy Mut. 72 38 20 Nat.284 181 Nat. Tr. 182. v. Hale Schmidt v. Bayard. v. Bk.. Nashville. V. Duffy Sheridan v. Smith 46 Snyder v. Amer. 105 155 . Reea Reilly v.350 . Drew 232 Shattuck V. R. Bk Shipman v. 362 362 Pratt V. v. Bk. Eichberg 188 So. Co. Darst Richards v. Bayer 79 Smith V. Cons. Royal 340 217 353 Matthews 144 Simpson v. Bk. 138 Shaw V. Cole 348 Pullman v. v.. Bk. Bayard Schwartz v. Min. Middleton Buffalo v. Turney v. Nat. Poillon Smith V. of N. Hornblow279 er Ray Read Reed Reed Reed V. Kelly 105 105 20. Blandy 44 Schaefer v. Graham . Fire ternal. Hairgrove Pratt V. Bk. Putnam Qulmby v. Duff Royal Cons.. Simon bchofield V. of Montreal Rilbe V. Wood Shreyer Sigerson v. . Nat. 132 143 144. Brown. Mach. Crane Robinson v. Varnum 92. Bowery Nat. Co. Cement Co. Van Dyke 291 57 68 Richmond v. Raymond v.

Winter Talapoosa Co. Johnson 103 Union Nat. Co. v. 143 Farm. La Barge Visalia. Bk State Bkg. 102 251 White Usher v. v. TABLE OF CASES Nevada Bk Hanover Nat. Tabpr 191 30 68 Valequette Min. Co 104 McKinley 214 Thompson v. Co. Bk. Exchg. Sargent 18 Stoneman v. Nat. Ledden Tischer v. . Uhler V. Co v. Bk. Bk. Elliott. v. Massingale 28 Stover V. 59 Munger Jameson 47 186 Hyde. v. etc.181 Fund '. Louisville Bkg. Jacques Sulzbacher v. 177 18 Louis & W. of Chicago State 348 v. 360 Tyler Tyler v.. v.392 Spreckles v.. V. 131 Bk 59 McKinley Stern v. Co. v. Bk 288 Union Bk.. First Nat. S. Br. Stewart v. Tucker Utica Nat. Clark Bros Coal 50 97 . Parlln. Empire Tr. Davenport. Co. v. State Bk Union Tr. Neill 49 Union Br. 60 Hinton State V. S. Hamilton Strickland v. Simmons Vanarsdale v. 18 63 Star Mills v. . v. Bissell 57. v. 207 Am. Charles Sav. Stanley Townsend v. Bk.. Smith State Bk. Perrine 153 Stanton v. Toole v. . v. Amer. Merea Tisdale Lbr. Bk. Co. Co. v. 348 . Py\e 222 Stotesburg v. 19 Terry Terry Tharp v. Tombeckbe Bk. Sylvester Sylvester Downer Staples T. 77 222 152. Eden 214 56 Traders Nat.. Y. Auld dy States V. R. 297 S. . v. of Charleston li.. Bk 220 James St. Kenne- Tower v. R. 339 State of N. Nicholas Bk. Carr Ross v. Jones. Bk.. . of Montrose " v. 236 Supply Ditch Co. Co Stewart v. Bk U. v. of Amer. Co. Hyde Walker U.. 59 122 Trego v. Nat. Bk 120 28 36 177 U. State Bk Tolman v. Stanford Cloth'g Co. v. V. v. Stanchfield Vette V. Hax Vanderford v. Bailey State v.3. Lewis Turnbull Tuttle v. etc. v. Smith V.340 . I. Taylor. Greenfield First Nat..343. v. Nat. First Nat. 274 Maddox . Bk.. Wynn Tapee v. v. v. In re Utica Bk. 108 39 Stone V. 5» Thompson Houston El Capitol El. v. v. Valk v.. v. Farley Telegraph Co. 168 51 Bk St. Lange Co. Rogers. Nat. Cunningham Trust Co. . Co. Firemans' Ins. 359 St. Third Nat.. 58 167. Bk. Edwards. Ry... & Tr. Steele v. Exchg. Stratton First 5^ Crafts 181 167 39 164 Nat. v.362 176 350 18. "75 Tierney v. 153. Co. Piquet 348 95 22 222 Todd V. Preston Nat. Bk Van Eaman v. Hamilton Bk Trustees of the I. Co.. hi re Steele v. 171 89 etc. Nat. v. v. Farmers' Nat. Farmers'. Swear Swope v. Bk. Blossom Stapleton v. Bk. 101 30 Sturtevant v. 57. 30 91 274 Springs v. Bk. 154 Traders' Nat. v. v. 153 v. New Bedford Tainter v. v.

Bak. etc. 164 Peck Senier V. German. Wiley 38 Weyerhauser v. Potter Waverly First Nat. Nat. Webster Whilden v. 220 v. Halsell. V. v. v. Scott Washington Nat. olds 251 65 132 20 v. v. v. Chiapella 232 Weare Weber Weber Welch v. . Wagner Wallace Wallace v. West River Bk. R. Merch.. Bk Bullock Orton V. v. V. 218. Bk. 215 Woodward Co Wooten Co Worley Wright v. 257 . Wilson Wilson Wilson Wilson Ackerman V. Johnson 144 279 Westinghouse v. 155 Nat. Xander v. Carlinville Nat. Walsh V. Rowland Fond du Lac Nat. Williams Ward V. 360 v. 149 132 For18 52 son Wisconsin Y'rly Meet'g. Dunn 160 Wheeler v. 216 v. 142 290. B. . Bk 353 189 Weston V. Frazier Co. v. McCarthy X. Wilmington. Co v. City Tr. 393 v. Babbler v. 340 91 Wood Wood V. Co Waring v. v.. syth v. v. Griffith-Marshall Wentworth Co. Guaranty Tr. Union Tel. 214 Wheeler v. Yocum Young Young Young Bk Wicker Jones Wilkesbarre 1st Nat. Blatchford Walton V. Colony Bk 58 140.214 Whitcombe v. Bk v. Comm Y. 103 Bar188 Zollner v. Taylor Co Wells V.. 154. v. Co 34. Kenner Jewell 35 Williams Williams Keyes Paintsville Nat. Co 220 260 252. V. num Moffitt 157. 180 Chicago Lbr.183 110 White V. Gove First Nat. Exchg. 73. 355 Pugh 140 Wood's Appeal Woods V. Douglas Williamson. 263 350. Nat. 102 115 162. Bk. Maillott 16. Bk. "V^Tiittle V. Hendee V. C. Fourth 58 41 38 142.TABLE OF CASES w. 349 French Taylor. Westberg v.. R. V.. 191 v. V. West. Watson V. Wyman Watt V. 23 Wiseman Wisner v.. Thompetc. 149 160 188 224 268 16. Bk. Lowry Z. Reyn138 297 15 Windsor Cement Co. V. v. Bk. 186 Yatesville Bnkg. Betts Warren v.. Bk. Smith Baker Exchange Bk 17 186. etc. Co..

when deemed an 135 acceptance refused. the references are to the Section numbers of the Uniform Negotiable Instruments Act. entitled to have 138 acceptance dated as of day of first presentation 138 But it may be given any other different date 13 inserted may be date When 187 Certification of check by bank is 181 Of bills in a set 139. when Promise to accept bill. 133 By By 133 may treat bill as dishonored 134 separate instrument 134 separate instrument does not bind acceptor. 141 Qualified acceptance. A. what is 140 Acceptance to pay at a particular place. holder Promise to accept bill must be unconditional and in writing. in absence of any different agreement. what is 139. 133 How made Must be signed by drawee Holder entitled to on face of instrument How and where to be made on bill Must be in writing If 132 133 133 132. 140 General acceptance. 150 ored 136 Dates as of day of presentation if given later return to refuses he bill if accepted have Drawee deemed to 137 the bill within 24 hours or destroys it 138 Bill may be accepted while incomplete or unsigned 138 Or when overdue 138 dishonor by non-payment Holder. what is 141 Conditional acceptance. Except where otherwise stated. virtual acceptance. is general when after Or Or after previous refusal to accept 138 .INDEX. 191 When incomplete May not express performance by any means other than the payment of money 132 132. 136. 135 135 Promise to accept bill is implied when 136 Time allowed drawee to accept bill If not given within 24 hours bill must be treated as dishon. Section Acceptance (See also "Acceptor")— 127 accepts it and until he unless bill on liable not Drawee 132 What it is and what promise it implies 191 Meaning of term 16.

142 drawer and indorsers are 142 to assent to quali- When drawer released unless then assent and indorsers are deemed 142 fied acceptance Acceptance by Banks (See introduction to Title II) Acceptance. Presentment for (See Presentment for Acceptance) 161-170 Acceptance for Honor 161 When may be made 161. is qualified.. and by whom Must be in writing Must be signed by acceptor for honor Is deemed to be made for honor of drawer unless states for whose honor it is made 162 162 it expressly 163 When payable after sight matures if accepted for honor. Delay in making presentment to acceptor for honor excused. bill 166 167 165 165 169 when Protest upon failure or refusal of acceptor for honor to pay.. Acceptance by one of several drawees Acceptance to pay upon fulfillment of a condition therein stated. Liability of acceptor for honor 164.INDEX Acceptance to pay only at a particular place is qualified Acceptance to pay part only of amount of bill. is 395 Section 141 141 141 145 qualified to take qualified acceptance is 141 142 treat bill as Holder may refuse When Where unqualified acceptance refused he may dishonored qualified acceptance is taken. Protest of bill accepted for honor 164. 170 165 Acceptor for honor discharged... 162 By whom may be made 161 For whose honor may be made 161 May be made for more than one party 161 May be made for whole bill or part only 161 May be more than one acceptance for honor — — Can only be made after protest 161 161. Bill Liability of 62 62 Admits that drawer exists and has capacity and authority to draw the instrument Admits that payee exists and has capacity and authority to indorse the instrument 62 Cannot afterward admits deny the things which his acceptance 62 . when How presentment for payment must be made to acceptor for 168 honor and when must be protested upon dishonor by acceptor for honor. Acceptance which is qualified as to time 141. Admissions of and promise implied from acceptance. 162 How made. Agreement of acceptance for honor. 170 62 Acceptor.

(See "War60. 145 98 Admissions ranty") implied from signatures of parties. 44 Presentment Notice to to 76. 62 Agent Signature by Authority of. . 19 when implied 19 19. 23 Ratification of signature by principal Authority need not be in writing When principal's failure to repudiate act 19 agent's unauthorized 19 Liability of persons signing . Drawee) Accomodation Indorser (See also "Irregular Indorser") . when Administrator or Executor Signature by 84. Action (See Indorser) — 29 Meaning of term 191 191 Includes counterclaim and setoff 51 Holder may bring in his own name Holder may proceed by. . Engages to 62 62 62 when Presentment for payment not necessary to charge acceptor. 61. 70 70 "^0 — Liability of 29 Accommodation Instrument 119 Discharged when paid by party accommodated 121 May not be re-issued when paid by accommodated party 29 Liability of accommodation party Accommodation party deemed such even though he is paid for use of his name 29 29 Accommodation party is liable only to holder for value And is liable to him notwithstanding at the time of taking the instrument he knew him to be only an accommodation party. may 20 20. 69 21 . be deemed a ratification by agent Not exempted from personal liability. Not released from liability by holder's failure to present instrument for payment Is a primary party (See also Acceptance. when Liability of agent when principal's name not disclosed Effect of signataure "by procuration" . 69 20. 151 124 20. . against secondary parties immediately upon dishonor of instrument Addition of parties or words Is material alteration.— — —— INDEX Section 396 pay the instrument according to the tenor of his acceptance Liable to holder in due course for amount of his acceptance even though amount of bill raised Bank certifying raised check is liable for amount certified.

127 Check is not. ment Bank. unauthorized Liability of. not. Liability of person signing in Attorney's Fee 2 Negotiable instrument may contain provision for payment of. by Indorsement by. acceptance by. constitutes value is Antedated or Post-Dated Instrument.— INDEX Agent signing "by procuration" must have written authority from principal And must act within the actual limits of his authority or principal not bound A signature "by procuration" is notice to everybody that agent has only limited authority Indorsement. bill is not. spoliation What alterations are material 37 124. authority or "for collection" Notice of dishonor by (See Notice of Dishonor). . how construed 125 125 Amount. 2 When What valid there is discrepancy between words and figures. Such a provision enforceable unless. an assignment of drawer's funds. what are . 128 8 Alternative Payees. 189 18 Assumed Name. Alteration of Instrument Effect of material Effect of material upon rights of holder in due course Effect of alteration by stranger. when Payment made by mistake on altered instrument may be re125 covered Alternative Drawees. is negotiated by agent without 36. an assignment of drawer's funds. of itself. certainty as to 1. Instrument may be so payable 17 Ambiguous Instrument. bill may not be drawn upon one or another. illegal 2 it In that event does not effect negotiable character of instru2 B. words 17 25 25 is control Antecedent Debt. for that reason in- 12 12 Of what date holder acquires title 12 Time of maturity not postponed 12 May be negotiated at any time after its delivery Assignment. of itself. 125 124 124 125 125 Physical alterations in instrument itself are meant Fraudulent intent presumed. it is made . when instrument 397 Section 21 21 21 ^^ (See Forgery). by other laws. . (See Introduction to Title III) — 191 75 Meaning of Banking hours.127.

payable to Instrument originally payable to order becomes payable to 34 bearer by blank indorsement. under indorsement "for collection" Certifying check is liable for amount certified Is liable. defined. Commonly known Bill as "draft" bill 126 17 Ambiguous instrument may be treated as or note payable to drawer's own order may be treated as a promisISO sory note 129 Inland bill defined 129 Foreign bill defined 127 Is not. 130 When may be treated as promissory note 126-131 General Provisions as to form and interpretation 132-142 General provisions as to acceptance 143-151 General provisions as to presentment for acceptance General provisions as to protest 152-160 . meaning of to early 127. (Historical reference be found in the Introduction to Title I) "Bill" in act. bill may be protested for. when Instrument originally payable to. meaning of to 72 145 101 • 191 9 Instrument is payable to. may be transferred by deliv40 ery even though specially indorsed 158 Better Security. 17. 191 1. when Bill. an assignment of drawer's funds Protest of (See Protest). operates as assignment of drawer's 189 funds. 191 Bill of Exchange. though check has been raised Making instrument payable at. (See Checks: Collection of Checks) II) "75 Bankers' Bills (See Introduction to Title Banking hours. is equivalent to an order on bank to pay it Duty of bank to pay such an instrument and liability for fail- Indorsement to or 36 66 62 62 87 87 ure Presentment of instrument payable at 75 52 75 75 When deposit constitutes bank holder for value Presentment of instrument payable at branch bank Time when instrument Certification of check is so payable must be presented 187 equivalent to an acceptance by 189 Not liable on check unless it accepts or certifies it Certification of check by. when 30 Negotiation of instrument payable to 40 Effect of special indorsement of instrument. of itself. what are Bankrupt or Insolvent presentment For acceptance Notice of dishonor to Bearer.— INDEX Section 398 by "for collection" Warranty by. means bill of exchange use will 126 127.

admissions By drawer maker ^^ . liability of. signed. 183 Payment of one part of set Liability of acceptor who pays one part without requiring 182 surrender of part bearing his acceptance 181 Acceptance must be written on one part only 181 Liability of acceptor if more than one part accepted who indorses two or more parts Rights of holders where different parts are negotiated Discharge by material alteration of one part Bills of Lading (See Quasi-Negotiable Instruments). (See Agent) Business Day. what is Instrument must be presented on. at reasonable hour Business Hours. 184 Bonds. what are. may be converted into a negotiable strument. Omissions) And 14 1^ 6 — Blank Indorsement (See Indorsement) 6. Unintential. are negotiable Persons negotiating bonds of public or private corporations. what may be filled in and by whom When true date may be inserted Instrument is 13 13 is avoided if holder inserts wrong date if Effect of insertion of wrong date instrument in hands 13 in- of a holder in due course Blank paper. are negotiable 6 Interest coupons of. effect of is is inoperative inoperative is By mistake Capacity Without authority inoperative as to by 123 60 To indorse. do not warrant certain things 69 Broker. what are ^'^^ ^'^^ Constitute one bill 179 Rights of holders when different parts negotiated 183 set of part one of discharge Effect of 182. 194 72 75 Cancellation. Liability of holder 180 179 183 13. by 65 delivery. when 1^ But must be done strictly in accordance with the authority given by party making the signature it 14 within a reasonable time Rights of holder in due course in such case if authority not properly exercised Omissions may be supplied (See Alteration. negotiating instrument. as discharge of instrument Must be by holder in his own right 119 119 120 123 123 Of signature. Incomplete Instrument. at bank C.— — INDEX 399 Section Bills in a set. 14 Blanks.

36 Collection of Checks.. what constitutes Drawee must be named or described with Certificate of Deposit. 39 Holder takes instrument. of itself.. a statement of the law of collections and duties of banks and collecting agents will be found at. payable to bank or corporation of which he is officer 42 42 Certainty As to sum. holder may. prima facie. operate as assignment of any part of 189 drawer's funds 189 Certification of check does so operate Liability of bank upon certification or payment of forged or is Bank raised check Collateral Securities — . . subject to rights of 39 person making Indorsement of — .—— — 400 INDEX Section acceptor Warranty as to (See Warranty). . 23. etc. "Cash" instrument drawn payable to. by restrictive indorsement. 280-299 14 Complete. or its proceeds. By 62 is payable to bearer 9 Cashier How instrument payable to may be negotiated Instrument payable to. like proceedings must be had as upon a of exchange of. 62 Negotiable instrument may contain provision for sale of Holder making presentment for payment must be prepared to deliver up .. and banks and collecting agents will be 280-299 subject to all provisions of this Act applicable to bills of 185 25 for exchange payable on demand Exchange of checks as consideration Within what time must be presented Effect of Upon bill its 186 payment 186 unreasonable delay to present for payment '^'°" dishonor. is deemed. etc.. 5 Collection — 74 Provision in instrument for costs of. does not render sum 2 uncertain instrument for. as negotiable instruments Certification (See 2 1 184 Check) of the Check (A statement found at Is of the principal duties of law of collection of checks. until it accepts or certifies Does not. by filling up blanks in instrument 16 When contract on instrument is deemed not 52 When instrument is complete and regular Conditional Acceptance (See Qualified Acceptance) 39 Conditional Indorsement. may be made But may be disregarded by party required to pay instrument. is 185 equivalent to acceptance Effect of certification procured by holder Certification 187 188 189 not liable upon.

included in designation "person" Officer of. 25 Consideration. person to whom instrument is delivered acquires title as of date of delivery From which interest is calculated if not specified in instruIf 13 11 45 12 17 125 ment Alteration of . negotiable instrument may contain provi5 sion authorizing Conflict in terms of instrument or discrepancy between words and figures. rule as to 17 24-29 24. Date. instrument payable on is not negotiable Even if contingency does happen Corporation. how instrument negotiable by and to whom payable Warranties implied by negotiation not applicable to bonds of. how instrument payable to may be negotiated Fiscal officer of. as payee.INDEX 401 Section Confession of Judgment. Countermand of Payment by drawer dispenses with notice to him of dishonor of instrument Withdrawal of funds as Current Money or Funds negotiable instrument may designate kind in which it is payable Custom. 25 4 4 191 22 42 65 137 137 6 193 60 — D. presumption as to Of indorsement. omission of does not affect negotiability 6 Omission of may be supplied Of instrument is prima facie true date Instrument may be antedated or post-dated True date may be inserted . and usage of business or trade to be regarded in determining what is or is not a reasonable time And usage of business as affecting interpretation of language of instrument Custom of Merchants (See Law Merchant) . generally What What is Presumption as to 24 25 25 28 constitutes of checks as absence or failure of is a defense Partial failure is a defense "pro tanto" What consideration sufficient to support instrument Exchange When 28 25 27 When lien constitutes value Antecedent debt as value (See Value). Contingency. 13 11 12 13 Effect of insertion of wrong date Of instrument. presumption as to antedated or post-dated.

193 191 16 16 16 Delivery. (exceptions in certain Death of Party. 16 16 16 presumed. is. 7 When instrument payable on. 53. when Of bill for acceptance Effect of its destruction by drawee 40 65 34 137 137 137 . nevertheless. wlien instrument subject to original In hands of transferee without indorsement Not available against holder in due course Or one who derives title through a holder in due course 59 (See Equities). effect on presentment and notice of dishonor Defect. . is negotiated an unreasonable length of time after issue.16. . 98. Is 15 when and as to whom. 193 . to what Effect of delay for an unreasonable time to acceptance For unreasonable time to demand payment of able on demand. 76. 191 74 Of instrument upon payment 49 Of instrument without indorsement. Or of his refusal to return it Holder must call for it and demand its acceptance or return. when excused When cause of is removed.402 INDEX Section states) 85 Days of Grace. effect of in be made extent present 81 113 186 bill for 144 instrument pay. Definitions. presentment must In giving notice of dishonor. when instrument payable on 1. 71.7. 148 55 56 58 49 58 what in title of person negotiating instrument What constitutes notice of Defenses. 137 Acceptance not complete without delivery or notification. 71. meaning of Necessary to complete every contract upon a negotiable instrument When effectual and -when presumed Every instrument incomplete and revocable without Effect of negotiation of instrument incomplete for want of delivery Valid delivery conclusively presumed. be negotiated by Warranty of person negotiating instrument by Instrument payable to order may be negotiated by.. how excused In presenting check releases drawer. of terms used in the Act 191 81 Delay presentment for payment.7. effect of Demand. . 53. there are none. effect 53 Effect on such an instrument of unreasonable delay. when When conditional delivery may be shown Is necessary to complete negotiation of instrument payable to order 30 30 in- Instrument payable to bearer is negotiable by Instrument payable to bearer which has been specially dorsed may. 145.

or without authority... Protest) . See "Alteration" Of one of a set of bills. does not Party claiming mistake has burden of proof Instrument is discharged by material alteration unless made with assent of all parties. 71. Payment for Honor. 53. intentional. except as against those making. (See also Drawer. by principal debtor 119 By payment by party accommodated 119 By cancellation of instrument by the holder 119 By any act which will discharge a simple contract for pay- ment of money becomes owner after maturity 119 119 124 When principal debtor By material alteration By renunciation by holder 122 120 120 120 discharge of a prior party tender of payment made by prior party release of principal debtor agreement to extend time of payment Rights of party who discharges instrument Right to re-negotiate instrument Unintentional cancellation. when considered acceptance. 137 Protest of lost or destroyed bill 160 lieterminable Future Time. Acceptance after dishonor of Engagement 84 84 By non-acceptance Duty of holder upon Rights of holder upon 138 149 150 151 Presentment for payment unnecessary.. 193 Discharge of Instrument and Parties 119-125 By payment. when 15t (See also Protest. Acceptance for Honor) . instrument may be payable at 1 What is 4 Diligence required in making presentment for acceptance 144 Required in making demand for payment of instrument payable on demand 7. Indorser) Dishonor of Instrument (See also Notice of Dishonor.— INDEX When presentment and demand for payment of instrument payable on demand must be made 403 Section 71 Destruction of Bill. authorizing or assenting. By By By By By By Of party secondarily liable discharge of the instrument intentional cancellation of his signature 120 120 120 120 121 121 123 123 124 183 83 By non-payment Liability of parties secondarily liable upon 84 61 drawer upon Rights of holder upon Effect of dishonor by non-payment Protest upon (See Protest). or one made by mistake.

presentment for payment is necessary to charge presentment for payment is not necessary to charge. promissory note 130 130 to 130 What time allowed to accept Refusal to surrender or destruction of an acceptance 136 bill by. upon acceptance And drawer same person Bill may then be treated as a promissory note When is fictitious person or person not having capacity contract. is considered 137 to sur- Mere retention of bill by. effect (See also Acceptance.. or described with reasonable certainty Instrument may be payable to May be payee Not liable on bill unless he accepts May be two or more. liability of. 12S 128 62 Admissions by. Acceptor). or one not having capacnotice of dishonor to may ity to contract 130 Existence of and authority of to draw admitted by acceptance. 189 128 Or in succession.— 404 INDEX Section ^ Drawee. holder may treat bill as.. 193 70 79 151 . how made Must sign acceptance Acceptance by one or more. 71. is not an acceptance Acceptance by. 114 . But not in alternative 1 8 ° 127. 62 143 When presentment for acceptance is necessary to charge 144 When failure to present for acceptance releases When failure to negotiate bill within a reasonable time discharges When When 144. when When not entitled to notice of dishonor 89 114 When Bill 112 is dispensed with be treated as promissory note when drawer and 130 drawee are same person Or when drawee is fictitious person. Time when accrues When notice of dishonor required to charge When not Liability upon dishonor by non-acceptance When protest necessary to charge When failure to present check discharges 150 151 152 186 112. 89. and see 7. unaccompanied by refusal render. 137 132 132 of 141 Drawer Bill may be payable to What signature of admits 8 61 61 61 Liability of May limit his liability to holder Entitled to notice of dishonor. 84. meaning of Must be named. 53.

. title 193 55 82. meaning of (See Holder in Due Course).. who is is 130 9 Instrument knowingly made payable to payable to bearer. signature by 20. 98. nature of instrument.. 148 Exhibition of Instrument. effect of provision In bill giving holder 5 17. Election. F. Notice of dishonor need not be given indorser if aware of fictitious character of drawee Figures.— TNDEX To what extent Discharged when holder procures certification of check 405 Section 186 188 Due Course. . instrument must be exhibited when pay- may ment is demanded And upon payment. what is Effect on title when instrument 53 — 55 or signature obtained by. 145. how instrument may be negotiated or indorsed by Force. instrument or signature obtained by.. and trade usages and customs to be regarded in determining reasonable or unreasonable time Failure of Consideration (See Consideration) Fear. Facts. bill may be treated as a promissory note. when instrument subject to bill or note 130 58 56 54 2 What tice constitutes notice of Rights of holder of when part of consideration paid before no- (See Defenses). meaning of Instrument may contain provision for payment Bill of 2 prescribe rate of 2 Executor or Administrator. 44 Presentment and notice to 76. Right to treat instrument as either Equities. of bank or corporation. effect on title Foreign Bill. words in instrument govern when there is conflict or ambiguity Fiscal Officer. effect on Fictitious Person. instrument or signature obtained by. . effect of granting. as release of secondary parties 74 74 120 (See Discharge of Instrument and Parties). what is When drawee 130 82 114 115 17 42 55 129 . must be delivered up Extension of Time. Assumed or trade name is not name of 18 is. Due Diligence (See Diligence) Duress. 55 E. Exchange. Presentment dispensed with when drawee is Notice of dishonor need not be given drawer when drawee is.

of instrument payable on demand 53 . Effect of refusal by.. where negotiated by delivery or qualified indorsement Warranty as to. of instrument. 125 55 1-23 66. prima facie. to accept payment "supra protest" 176 26.. discharges instrument Cancellation of instrument by Unintentional cancellation by. of certain instruments 53. Holder. 152 23 65. wliat is 118.. 67. warranty of. effect upon Interpretation of Negotiable Instruments G. upon dishonor by non-payment 84 Rights of upon dishonor by non-acceptance 151 Duty of demand payment within reasonable time. meaning of Rights of. 119 119 . is inoperative 191 51-59 51. 59 Rights of. Grace. by parties who negotiate instrument Fraud. in general Payment to. . Genuineness. 59 Payee as 59 When holder not. liability of (See Indorser). 71 . who is of lien held (See Value). 123 51 51 May sue in his own name to Even though instrument does not belong Effect of release of principal debtor by him 120 May renounce his rights when and effect of 122 124 Alteration of instrument by May fill up and convert signed blank piece of paper into a negotiable instrument 14 May May fill up blanks in instrument 14 13 insert true date in instrument or acceptance Effect of insertion of When When wrong date by 13 incomplete instrument not valid contract in hands of 15 instrument subject to equities in hands of 58 Every holder deemed. by general indorser Of signature of drawer. days of. a holder in due course. 66 55 55..406 INDEX Section Must be protested Forgery of Signature. acceptor admits (See Warranty).. title When presumed Form and Instrument or signature obtained by. 27 Holder for Value... General Indorser. none allowed 68 65 66 62 85 H. Holder in Due Course. effect of Warranties as to. who To extent 27 is 52.

Complete). "I" construed as "we" Illegal Stipulation. meaning of 138 41. Indorsees. fraudulent. how affects title of person negotiating instrument Effect on title of subsequent holders. on instrument filled up or negotiated without authority 14 16 8 When Holder delivery presumed as to described when named as payee. Referee in Case of Need). prima facie. I. 66 Warranties of parties in favor of 124 Rights of. of consideration. and right was defective Person who became party and was bound prior to defect in 59 title cannot take advantage of it against 65. to be How proved when it is shown that title of any prior holder Title of. How instrument negotiated or indorsed when payee is cashier or fiscal officer of a bank or corporation Holiday. what blanks may be filled Not valid contract if not delivered —when 17 5 55 58 16 23 14 15 Acceptance of (See Blanks. how must be 42 85 194 be done Honor. not validated by section affecting additional provisions in instrument Illegality.. (See Acceptance for Honor. delivery necessary as to Impersonator. maturity of instrument falling due on Wlien day on which act is required to be done is. Payment for Honor. Joint. effect of Transferee has right to require 49 49 . when must of Office. indorsement by Indorsement. on altered instrument Rights of. if instrument obtained through fraud or Immediate Parties. 68 191 64 Anomalous Note payable to maker's own order not complete without 184 22 30 By corporation or infant Necessary to negotiation of instrument payable to order Transfer of instrument without.INDEX When for only part of amount of consideration paid How determined when instrument transferred without ment 407 Section 54 indorse^^ 55 When What title of transferrer defective to enforce constitutes notice of defect 56 57 58 59 59 instrument Rights of one not such a holder but who claims under a Every holder deemed. Incomplete Instrument. determination of responsibility for loss when instrument issued or paid to 13.

Warranty). effect of Restrictive. what is what is In blank. 122. Indorser.. 120... 36 36 37 37 what is 38 38 38 Qualified.. how made Conditional. by positive act of another party. when. Negotiation.39 When upon instrument payable to bearer instrument payable to two or more separate persons or instrument drawn or payable to a person as cashier or 40 41 42 43 43 44 45 as partners When other fiscal officer Where name is misspelled. 31 31 33 Must be upon instrument. In blank. when instrument negotiated by dorsement Liability 65 of general 66 . etc Where indorsee or payee is wrongly designated By person in representative capacity (See Agent. makes instrument payable to bearer 9 In blank. Broker). By failure to negotiate or present bill for acceptance By failure to make protest By failure of holder to receive payment for honor By discharge of one of a set of bills When holder procures certification of check Irregular. 63 Anomalous or irregular 64 Discharged. rights of indorsee under Qualified. right of party required to pay instrument to dis- regard condition Effect of special. or upon attached piece How made Kinds of Must be of entire instrument or entire unpaid part 32 34 34 Special indorsement. effect of Qualified. what is Restrictive. without 49 of paper. . 124 By By failure to make presentment for payment 70 89 failure to give notice of dishonor When holder takes qualified acceptance without his assent. effect of (See Indorser..408 INDEX Time at I Section which negotiation takes effect when obtained after transfer. Presumption as to time of Presumption as to place of Striking out. 46 48 when person signing instrument deemed to be 17. or accommodation Liability of irregular or 142 144 152 176 183 188 64 64 accommodation qualified in- Warranty of. how changed to special indorsement Restrictive.

Installments. in instrument (See Title). Issue. what is 129 Protest not required 118 Insolvency. effect of 121 When discharged by renunciation by holder 122 Discharged by alteration of instrument 124 \\Tien discharged if holder takes qualified acceptance 142 When discharged by failure of holder to negotiate or present bill for acceptance 144 "V\nien discharged by failure to protest bill 152 Presentment for payment When Liability of. . upon dishonor of instrument 84. (See Accommodation Indorser). interpretation of . of parts of bills in a set 180 22 10 indorsement by Infirmity. 115 Waiver of notice by 109 Payment of instrument by. is payable after maturity 2 Alteration of instrument as to 125 Irregular Indorser.. Informal Instrument. interpretation of Infant. who is and liability of 64 . meaning of 191 . 17 Sum not uncertain when instrument payable with 2 May be payable in installments 2 Holder who takes after default in payment of installment not holder in due course 2 Default in payment of may hasten maturity of instrument 2 When not reserved in instrument. when instrument ambiguous. 151 When notice of dishonor required to charge 89 When notice of dishonor not required to charge 112.INDEX Liability of person tiable 409 Section nego67 who indorses an instrument which is Order in by delivery which indorsers are held 68 68 Liability of joint indorsers is necessary to charge 70 not necessary 80 Released if instrument payable on demand is not presented within reasonable time 73 Liability of. protesting instrument for better security 158 is negotiable Holder who takes with notice after default in payment of not holder in due course Separate demand must be made at maturity of each Instrument. effect of Inland Bill. how presentment must be made and notice of dishonor given in case of 101. instrument payable in 2 is 2. 52 71 10 Meaning of 191 Nature of to be regarded in determining reasonable or unreasonable time 193 Interest. 145 Of drawer or acceptor. date from which it runs.

who is May be payee 1 8 . parties reside in Maker. notice of dishonor given by Within what time notice must be given by may be 96 103. how must indorse Joint Debtors. govern in any case not provided for in Act Laws... 160 M. 410 Section 17 68 Joint and Several Parties. Mail. presentment to Notice of dishonor to L. 104 When When same place 103 party giving and parties to receive notice reside in different places 104 When sender deemed to have given due notice by 105 ElTect of miscarriage of 105 Deposit in post office. ambiguity Need not follow Act in. 17 10 Law Merchant. what is.— INDEX J. who are As indorsers Payees. definition and brief history of codification of rules in regard to Negotiable Instruments will be found in IntroducI tion to Title Rules of.. rules for construction. 41 78 100 Language of Instrument. in conflict with Act are superceded Liabilities of Parties 196 191 60-69 Of Of Of Of maker drawer acceptor irregular or to be 60 61 62 64 63 accommodation indorser Indorser may indicate in what other capacity he intends bound Warrant by delivery or qualified indorsement Warranty of general indorser Of person who indorses paper negotiable by delivery Order in which indorsers are liable Of agent or broker Of person signing in trade or assumed name (See Signature. Warranty). protest and notice when instrulien When ment lost 74. how may be made and effect of 141 Lost Instruments. 65 66 67 68 69 18 Lien. what constitutes 106 (See Notice). presentment. what is 27 on instrument constitutes holder for value 27 Lien of bank on customer's deposits and securities 27 Local Acceptance.

indorsement 17 1 186 43 1. provisions of Federal Reserve Act concerning acceptance by. 5. 4. effect to be given to. . 6 Effect of omission of words of. 125 to 5 6. brief history of. when of. instrument may be written or printed upon any kind of. when they conflict with words Material. continues until paid 47 or restrictively indorsed 191 Negotiable Instrument. time of. payable out of particular fund. 18 persons signing in trade or assumed 43 Indorsement where misspelled National Banks. meaning of. 4. Material Alteration. will be found in the Introduction to Title II. 6. how computed Instrument may be payable "on or before" a fixed or determinable future time Not affected by post-dating or ante-dating instrument 85 4 12 N. is given in introduction to Title I what provisions in instrument impair or destroy 3. where name wrongly spelled Money. instrument must be payable in Instrument may designate paj'ment in particular kind Effect of alteration of 132 6 sum payable 124. from indorsement 34. Negotiability.— INDEX Joint. 17 note paj'able to order incomplete until indorsed 184 60 Admissions and liabilities of Not discharged by failure to present instrument for payment. Memorandum Check. (See Alteration). meaning of term 1-23 General provisions as to Form and Interpretation 24-29 General provisions as to Consideration 30-50 General provisions as to Negotiation 50-59 General provisions as to Rights of Holder 60-69 General provisions as to Liabilities of Parties 61-88 General provisions as to Presentment for Payment 89-118 General provisions as to Notice of Dishonor. negotiability of 184 65 3 Liability of persons negotiating Municipal Warrants. 36 Of instrument. in introduction to Name. 3. liability of Title I— known by 190 Title . 411 Section deemed joint and several. 70 89 Not entitled to notice of dishonor Marginal Figures. 5 what provisions do not affect 2. Instrument may contain provision giving holder election require something in lieu of payment in Municipal Securities. what it is and effect of Misspelling. Maturity. negotiable in its origin. of 119-125 General provisions as to Discharge of Negotiable Instruments Law. not negotiable.

signature "by procuration"" authority of agent so signing of itself notice of limited 21 What constitutes notice of defect in instrument or title 56 89-118 . 49 50 121 179 3 154 meaning of 191 is (See Promissory Note).412 INDEX Does not apply to instruments made and Section delivered prior to 195 the taking effect thereof Rule for interpretation and application of Negotiation 191 30-50 What constitutes 30 Transfer without indorsement When prior party may negotiate instrument After payment by party secondarily liable Of different parts of a set of bills. Notice of Dishonor To whom must be given 89 By whom. Non-existing Person. oral Form of May be in writing or merely May be delivered personally To whom may be given 96 96 96 97 or by mail How How How How given to partners 99 given where party dead 98 given to persons jointly liable 100 given to bankrupt or insolvent 101 Time within which must be given 102 Time within which must be given. rights of holder (See Indorsement. . 94 92 93 94 to Agent may give notice to his principal Principal has then same time from its receipt himself give notice to other parties 94 95 95 95 When notice sufficient Effect of misdescription of instrument Written notice may be supplemented by verbal communication. Note. protest by (See Protest). where parties reside in same place 103 parties reside in differ- Time within which must be given when ent places 104 105 When What sender deemed to have given due notice Effect of miscarriage in the mails constitutes deposit in post office 105 106 . Indorser). distinguished Notary Public. . Notice. given Given by agent Effect of notice given on behalf of holder Effect where given by party entitled thereto 90 91. Non-Negotiable Instruments. (See Fictitious Person).

when instrument payable to 8 . tion instrument may be payable to holder of. Office. effect of Of date. what constitutes Rights of holder when part consideration paid before Noting for Protest. of be made 8 bank or corporation. without designaby name Instrument payable to holder of.) is and effect of 155 O. is payable to order How such an instrument negotiable and to whom payment 8 8 may Officer. 130 1. to require payment "on or before" 42 6 7 17 14 4 Or election by holder to require something to be done in lieu of payment in money. treat instrument as bill or note 17. what (See Protest.. Option.INDEX Within what time party receiving notice must give notice to prior parties 413 Section 107 108 108 108 place Where Where Where Where must be sent must be sent if address added to signature must be sent if no address given must be sent if party live in one place and has be sent if of business at another 108 is Where must Is sufficient party sojourning at temporary place 108 108 of residence wherever sent if actually received by party within time specified in Act May be waived 82. 114. Omissions. When waiver implied Waiver of protest includes When dispensed with 112. presumption in that case Right to fill in blanks (See Blanks). 110 82 Ill 115 113 114 115 When delay in giving excused When need not be given drawer When need not be given indorser When need not be given after instrument by non-acceptance has been dishonored 116 117 56 54 Effect of omission to give notice of non-acceptance Notice of Equities. what and when do not affect validity and negotiable character of instrument Of time at which payable. 52 To Order. negotiation and indorsement by. instrument may contain such a provision 5 To declare instrument due on stallment failure to pay interest or in2.

how may be made and effect of 141 (See Acceptance). 60 Partial Acceptance. what is Discharge by gO 61 62 68 64 86 88 51. Alteration of instrument by change in (See Alteration of Instrument). 52 52. effect of 119. 173 How made To whom preference must Rights of person making be given when more than one 174 175. 171 172. 125 41 77. how computed In due course. 183 Of (See Alteration of Instruments). is. 193 what is. to instrument 1. Particular Facts. 144. upon stallment When demand instrument is payment 7.414 INDEX Section default in Overdue. party. of in2. by signature of drawer Same. indorsement of instrument by number or relation of. 71. by signature of acceptor Presumption when instrument is indorsed by joint payees Liability of accommodation indorser to Payment. Payment 171-177 What when. bill in a set (See Presentment for Payment). Partners. 121 discharges person secondarily liable 120 Effect of alteration of medium of 125 182. Liabilities of 60-69 (See Liabilities of Parties). 41 maker Same. time of maturity. who may be As holder in due course Must be named or described with certainty When holder of oflBce. by whom and for whom it may be made offer. when instrument is. 119 By accommodated Tender of. 53. and nature of instrument to be regarded in determining what is reasonable or unreasonable time 193 Parties. 177 . Presentment to persons liable as 145 99 8 Notice to Payee. and capacity to indorse admitted by signature of . for Honor. negotiation by Effect of Effect 59 8 8 making instrument payable of to fictitious or non-ex9 isting person when name payee does not purport to be name of any 9 How person instrument must be indorsed when two or more are named who are not partners Existence of.

presumption as to Of presentment for payment Of presentment for acceptance Alteration which changes. liability of 70. 141 12 12 12 12 12. omission to specify where drawn or payable. does not affect validity or negotiability 6 6 Presumption in that case Of indorsement. what 25 25 7 payable on demand Presentment for Acceptance. 145. who is. when instrument dishonored Discharge of Recourse against 84. instrument payable on. (See Notice of Dishonor). when instrument payable at special Effect of acceptance to pay at a particular Post-Dated or Antedated Instrument. bill may be treated as promissory note. presentment 192 70 70 192 84 120 151 for payment to 76 98 Notice of dishonor to Presentment for acceptance to 144 Place. or antecedent debt. 143-151 143 144 144 When failure to negotiate bill or present it releases drawer 145 146 147 148 and indorsers How made On what days may be made When When time is insufficient excused . as drawee. 56 what constitutes deposit in 106 105 is Effect of miscarriage of mails Pre-Existing. Personal Representative. who is Liability of. is not invalid Of what date holder acquires title Time of maturity not postponed May be negotiated at any time after delivery Not notice of irregularity or fraud Post Office. 46 72. 73 143.INDEX Effect on subsequent parties Effect of refusal to receive 415 Section 175 176 191 Person. is material Demand. meaning of 9 Fictitious or non-existing as payee Fictitious. Person Primarily Liable. who is Presentment for payment not necessary to charge Exception Person Secondarily Liable. 130 67 Indorsing instrument negotiable by delivery. provisions respecting When must be made When failure to present releases drawer and indorsers is Constitutes value Presentation. 147 125 70 140. of deceased person.

19 Primary Party.416 INDEX Section 70-88 Presentment for Payment. effect of failure to 184 186 make 186 To what extent drawer is released by failure to Presumption. within what time must be made Of check. 86 How made honor 168 169 When delay in presenting to acceptor for honor excused Of certificate of deposit Of check. at what time. Sunday or a holiday When When When 79 80 81 81 82 85 Time of. signature of may be made by authorized agent Authority of agent.. What is reasonable time within which to make No distinction between demand instruments payable with or 70 71 71 71 71 When without interest instrument payable in installments to 71 72 What constitutes sufficient By whom where. provisions respecting Effect of failure to make demand on principal debtor Whien must be made if instrument is payable on demand and wlien not payable on demand When must be made of bill of exchange payable on demand. how shown (See Agent). how computed to acceptor for . Liability of persons signing by agent 19 20 . (See Persons Primarily Liable). and What is proper place for Instrimient must be exhibited whom must be made. 72 73 74 Of instrument payable at a bank Where principal debtor is dead 75 76 77 78 To persons To liable as partners joint debtors not required to charge drawer not required to charge indorsers delay in making is excused Must be made promptly when cause of delay is removed When dispensed with When to be made if instrument matures on Saturday. of consideration. (See Consideration) As As As As As As As As As to date — make 186 H fill to right to to delivery to to up blanks 14 16 time when indorsement was made 45 45 negotiation to place of indorsement to holder in 46 59 liable due course to order in which indorsers are 68 to arrival of notice of dishonor duly addressed ited in post office and depos105 18. Principal.

191 Payable to makers own order not complete until indorsed by him 184 bill of When Protest exchange may be treated as 17. Certificates of Stock) — Bills of Lading. and effect of (See Agent).— INDEX Signature by "procuration. 130 118 152-160 When In need not be made what cases must be made 118. Negotiation by indorsement or delivery 308 308 negotiable Duplicate bills must be plainly stamped "Duplicate". how may be made and effect of 141 38 65 (See Acceptance). ambiguity or conflict construction govern Q. what includes HI 167 accepted for honor Upon dishonor by acceptor for honor Provisions of Instrument. destroyed or wrongly detained 155 156 157 158 159 160 Waiver Of bill of. ceipts. 152 How made What must specify By whom made If 153 153 154 made by person other than witnesses to be a notary must be attested by 154 When made Where to be made May be made both for non-acceptance and non-payment When may be made for better security When delay in making excused How made where instrument is lost. 170 in. Promissory Note. Procuration. excepting to Alaska. signature by. what is. what rules of 17 what is.. 316 316 Liability of carrier for failure to so mark them 309 When carrier bound to deliver goods When . Qualified Acceptance. defined ^ 417 Section 21 21 184. how made and effect of Warranty of person negotiating instrument by Quasi-Negotiable Instruments. to Warehouse Re- Bills of (The References Here Are Lading Pages) Negotiable Bill of Lading— Page 305 306 307 Definition and form of What must May not be contain issued in sets." effect of (See Agent). Qualified Indorsement.

as grain. 327 Right to interplead adverse claimants warehouseman for non-existence of goods or failure to correspond to description Duty to keep goods of each depositor separate iron.— — 418 INDEX Page Carrier not required to deliver unless bill Is sur- rendered Liability of carrier for wrongful delivery Duty of carrier to take up and cancel bill 309 309 310 310 when only partial delivery Delivery... 319 must be so marked Definition of warehouse receipt Negotiable and non-negotiable receipts 320.. how obtained when bill lost Duty of carrier when rival claimants to goods Liability of carrier when negotiable bill issued Duty of carrier 310 311 withcoi-- out receipt of goods or for failure of goods to respond to description in bill Exception when "shipper's load and count" 311 312 312 Transfer of BillTitle acquired by transfer Right to require indorsement Warranty of indorser implied by indorsement Indorser not. etc 329 329 329 Except fungible goods. etc What bill indicates as to ownership of goods Draft with Bill of Lading Attached "When bill must be surrendered Non-negotiable or "straight Warehouse Receipts bill" 314 315 315 317 318. liable for obligations of previous dorser 313 313 in- 314 Rights of holder without notice of fraud... effect of Negotiation of receipt By whom negotiable 330 331 . 325 325 325 326 326 327 328 328 Lost receipt Warehouseman cannot claim Liability of title to goods in himself. Alteration of receipt. 321 Duplicate receipts must be so marked Duty of warehouseman to deliver goods 321 321 322 Lien of warehouseman Loss of lien 322 323 to satisfy lien Enforcement of lien Demand and notice of intention 323 324 Auction sale of goods to satisfy lien Disposal of proceeds of sale Sale of perishable goods Obligation to deliver ceases upon sale of goods Proper and improper delivery of goods Liability of warehouseman for failure to cancel receipt.

Remedies of pledgee when debt unpaid Sale of pledge Pledgor entitled to notice of sale Pledgee may not buy at own sale Risk in purchasing stock. etc. 342 owner of Transfer by agent 343 Right of purchaser to compel indorsement 344 transfer Warranties implied from Attachment of certificate.— INDEX Rights of holder Right to require indorsement of transferer Liability of indorser. Right of pledgee to obtain transfer Right of pledgee to collect dividends 348 348 Duty to retain pledge Right of pledgee to vote shares Right to assign pledge Pledge by executor. 341 ^^^ 342 Title obtained by transferee of certificate so procured. administrator or guardian 346 347 347 347 Alteration of certificate Pledge of Stock. when valid 344 345 Lien of corporation on shares 346 Lost certificate disability under person other or infant Transfer by or wanting in capacity Transfer by executor. nature of . purchase from co-partners Purchase from officer or director of corporation 349 349 350 350 350 351 351 351 352 352 353 Purchase at sheriff. assignee or bankrupt sale Purchase from pledgee or taking re-pledge Purchase from executor. 355 Purchase from trustee 355 . levy of execution. or dian 353 guar354. Methods 338 338 Unregistered transfer conveys legal Liability of registered Transfer of certificate 341 Effect of indorsement of certificate Right of owner to reclaim certificate fraudulently procured • 339 owner after sale of shares by anyone having possession. pledgee or mortgagee Negotiation in breach of duty or by mistake 419 Page ^^^ 332 Warranty 332 333 333 By what laws interpretation governed Penalties Certificates of for of warehouse receipts are 004 334 fraud Stockof effecting transfer title Transfer .. administrator.

re-issue upon 50 121 By secondary party who pays instrument Release of Parties. 358 358 359 360 361 361 (The References are again Reasonable Diligence. 71. right to refuse Refusal of transfers to or from infants or other persons under disability Refusal of transfers by executors. Transfer by order of court Transfer on forged signature R. of rights by holder. Holder may disregard reference Refusal. what constitutes and how determined. . 120. etc Refusals of transfers by trustees May refuse transfer unless certificate surrendered. is to Section Numbers) Section 19... and purpose of reference Bill obtaining reference 193 193 "71 71 144 71 186 53 38 65 151 131 167 131 137 50 must be protested before presenting to. how made and effect of 36 Rights acquired by indorsee under Destroys negotiable character of instrument. 47 . indorsement "without recourse" Warranty of person negotiating instrument by qualified indorsement 84. 122 what is.53. ment Restrictive Indorsement.420 INDEX Page Purchase of transfer lost or stolen certificates 356 357 Refusal of corporation. Holder's right of. what (See Diligence). 119.. when party may Instrument is not enforceable against certain parties.. . how made and effect of 122 When does not affect rights of holder in due course Must be in writing or instrument must be delivered to person 122 primarily liable thereon upon parties secondarily liable upon instruEffect of. defined. 122 Renunciation. Ratification of Unauthorized Signature 23 ''6 Reasonable Time. to return bill. (See Discharge). effect of Re-issue and Re-negotiation of Instrument. upon dishonor of instrument Referee in Case of Need. to transfer shares. when 37 37. As affected by usage of trade No fixed rule given For presentment of demand note Effect of failure to make presentment within For presentment of bill of exchange For presentment of check Effect of delay to present or negotiate instrument payable upon demand beyond Recourse.

of instrument. effect of Made without authority. Sunday or Holiday.. .. effect of Sum. effect of (For Warranties and admissions implied by Signature. instrument 121 2 W^hen instrument falling made on due on must be presented 52 for pay- ment Presentment for acceptance on How time computed when last day for doing any act T. negotiation other than bills and notes Bonds and interest coupons are negotiable Seal. falls on.. . acceptance upon. 18 18 18 By trade or assumed name. 421 Section Saturday. or in representative capacity (See Agent. 194 instrument may bear Secondary Parties. who are (See Person Secondarily Liable)." effect of Of person as agent.INDEX S. how shown of person so signing 18 19 Liability of persons signing by agent How By interpreted when effect uncertain 17 21 "procuration. liability By agent Authority of agent. Procuration). effect of alteration by stranger 125 48. -. warranty as to public or corporation. indorsement. if issued. fore being presented for must be presented payment for acceptance be- 143 it Signature. certainty as to. is valid Indorsement written upon must be attached to instrument. as to whom payable after sight must be presented for acceptance to 7 143 fix maturity Instrument payable elsewhere than residence or usual place of business of drawee.. 20 22 23 23 Of infant or corporation Forged. no person liable upon instrument unless bears his. 184 134 Separate Paper. 65 6. under Warranty).. what is valid As discharge of party secondarily liable 120 120 70 When as ability and willingness to pay at a special place operates . negotiable 6 192 of. 85 146 194 Tender. instrument is payable on demand if payable at Instrument is payable at. when instrument falling due on must 85 be presented for payment 146 Presentment for acceptance on How time computed when last day for doing any act falls on. 31 7 Sight. Saturday or Holiday.. see . Striking Out. Securities. accepted or indorsed when Bill overdue. what constitutes Sunday. Spoliation.

instrument requiring indorsement fered without indorsement when passes if is trans- 49 55 54. liability of person signing by 49 Transfer. will be Unconditional. Uniform Negotiable Instruments Law. or trade. Notice of defect before full amount paid Rights of holder in due course when title defective Of person who acquires through holder in due course Burden of proof when title of any person is shown to be defec. 3 20 found in Introduction to Title I. brief history of. 37 190 Of Act 18 Trade Name. effect of 65. presumption as to Of negotiation. of indorsement. without indorsement. when promise or order is Undisclosed Principal. effect of restrictive indorsement creating Trustee. liability of agent who signs without disclosing name of (See Agent). meaning of 191 Instrument need not contain words "value" or ceived" '• "value re- 6 What constitutes 25 . presumption as to Of maturitj% provisions as to 45 85 86 How computed When Act takes able effect and instruments to which it is applic- 195 Title. to be regarded in determining what 193 is or is not reasonable time V. Usage of Business. without indorsement. Notice). effect of refusal to receive Terms of Instrument. liability of broker (See Delivery. 69 By broker. Validity of Instrument. and language used. need not follow act Informal instruments are negotiable. 36 8 Notice of trust capacity officer of corporation carried by instrument payable to 42 U. Trust. 56 When What defective constitutes notice of defect in (See Equities. Indorser). when Time. provisions which do not affect 6 Value. instrument payable to not commercial paper .422 INDEX Section 176 10 10 45 Of payment for honor. 54 57 58 59 tive 59 Exception Acquired by subsequent indorsees after restrictive indorsement.

423 Section 25 26 for. payable out of particular fund not negotiable instrument 3 Warranty. (See Quasi-Negotiable Instruments). . Municipal. Waiver. binds him only 82." effect of such indorsement and how made 38 Writing. unless instrument surrendered Acceptance must be in Written Parts.. 110 Of protest deemed to be waiver of presentment and notice of dishonor also Ill Warehouse Receipts. binds all parties Written above signature of indorser. Warrant. what includes 191 122 Renunciation must be in. of instrument prevail over printed parts if there conflict 132 is 17 . what constitutes Holder who has a lien upon instrument deemed holder Accommodation party liable although he receives no (See Consideration). 27 29 W. of benefit of any law for protection of obligor does not 5 impair validity or negotiability of instrument 82 Presentment for payment dispensed with by 82 How expressed 109 Of notice of dishonor Time of 109 110 Contained in instrument.. where instrument negotiated by delivery or qualified indorsement 65 Upon sale of securities of public or private corporation 65 66 67 69 Of general indorser And liability of person indorsing an instrument which is negotiable by delivery Engaged in by broker or agent who negotiates without indorse- ment "Without Recourse.INDEX Antecedent or pre-existing debt as Holder for.









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