Welcome to your Chapter 6 activity.

You must copy the content of this page and make a new page on
your Homework folder and name it 'Chapter 6 – Presentment of Payment'.  Your answers to the
following will be on that page. 

____ 

Explain or state briefly the rule or reason for your answers. 

(Note: Your score on this will be based on how you were able to understand the section supporting your
answer. You may elaborate or give specifics to add more substance to your answer in relation to the
instrument being tackled per item. Deadline: October 7, 2020) 

1. W, maker, X, payee, Y, 1st indorsee, and Z, 2nd indorsee and present holder.  A demand by Z
for payment of the promissory note presented to W was refused by W.  May Z immediately
sue X and Y to recover the amount of the note? Decide. 

Z cannot immediately sue both X and Y without further notice of dishonor. Under sec. 84, when
the instrument is dishonored by nonpayment, an immediate right of recourse to all parties
secondarily liable thereon accrues to the holder. Therefore, Y and X can be immediately asked to
pay the amount. But sec. 89 provides that notice of dishonor must be given to each indorser,
and any drawer or indorser to whom such notice is not given is discharged. X and Y cannot be
sue immediately given that there is no notice of dishonor presented.

2. Same problem as (1). The note which is payable on a fixed date at a bank requires
presentment to charge W.  Z made no presentment on maturity after which the bank
became insolvent.  Is W released from liability? 

No, since W’s liability is absolute. Section 70 states that presentment on payment is not
necessary in order to charge the person primarily liable on the instrument…, presentment of
payment is necessary in order to charge the drawer and indorsers. The demand for payment
must be first made upon the person primarily liable which in this case is W. Failure to make
presentment would not put W in default knowing that the instrument is overdue and not paid.

3. Same problem as (1).  The note is payable to order of X who indorsed it in blank to Y but was
stolen by Z who presented it to W for payment.  Will payment by W produce the effect of
discharging the note? 

It depends as to when the promissory note was made if it is made at or after the maturity of the
instrument to the holder. According section 50, payment before maturity does not discharge the
instrument. It would constitute a negotiation back to the primary party.
It depends also as to whether the payment is made in good faith and without notice that the
holder’s title is defective (sec 88). If W paid the instrument in good faith, his payment would
discharge the note.

4. W, drawer of a check payable on demand.  X, drawee bank, Y, Payee, and Z, indorsee and
present holder. The check was dishonored by X when presented at 2PM for lack of funds. W
made a deposit of enough funds only before close of banking hours at 3PM when Z had
already left the bank.  Has Z the right to consider that the check has been dishonored? 

No, When Z presented the instrument, the fund is not enough to pay it since W deposited it
when Z had already left the bank. Under section 75,if the person to make payment before the
close of such hours he deposits funds to the bank enough to pay the instrument, a demand
earlier in the day is premature. The instrument is not considered dishonored though payment
has been refused earlier. Thus, the demand made by Z earlier is premature.