UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW LIBRARY TREATISE ON BILLS OF EXCHANGE AXD ' PROMISSORY NOTES. SECOND EDITION. BY ISAAC EDWARDS. COUNSELLOR- AT-L AW. BANKS & BROTHERS, LAW PUBLISHER& NEW YORK, 111 NASSAU STREET. ALBANY, 475 BROADWAY. 18G3. Entered according to act of Congress, in the year one thousand eight hundred and fifty-seven By GOULD, BANKS erfonnance, while a well-written treatise may be safely trusted to speak for itself. Waiving, then, all words of ceremony, as either fruitless or unnecessary, I trust the following work will prove itself to have been prepared with diligence and fidelity. There was a time when a law-book, written in England and re-published in this country, with American notes, ex- hibited the true relation existing between the common law in its home, and that law as modified by statutes and judicial decisions in the states. The body of the work was then appropriately English, because drawn mainly from the Eng- lish reports ; and our own adjudications, few in number, conveniently enough fell into the form of notes. Fifty years, busy with manifold labors and achievements in every depart- ment of human thought and activity, have materially ad- vanced the science of the law, and wrought a great change in the relation between the English and American authori- ties. Much more numerous, our courts are as enlightened as those of England, and the questions arising here are as various and important as those presented for determination in any civilized community; and the decisions arrived at, and embodied in our reports, furnish a mine that deserves to be wrought on its own account. Rightly considered, therefore, a work on bills and notes prepared here does not come into competition with any VI PREFACE. English work on the subject ; and as there is no single American book embracing the same topics, this cannot be deemed a rival to any thing which has yet appeared. No; has there been any intention to make it such ; on the con- trary, the effort has been to ascertain the law, and state it in brief terms; with such illustrations as seemed calculated to develope and explain the reason on which it is founded — the public and judicial reason which has been declared superior to that of any private man. The order of arrangement has be^n chosen with care — with a design to bring the different phases of the subject into review, in the form and order in which they naturally pre- sent themselves — beginning with the capacity to make and indorse negotiable paper, and ending with the sum recover- able upon the instrument. For the sake of clearness and brevity, the statutes of the states in which the commercial law has not been fully adopted, are referred to in the notes ; and a brief statement of the facts, as well as the result of the decisions cited, is frequently given in the same form. The fullness of these notes has rendered the volume somewhat large, and it is believed much more useful. In those states where the statute makes promissory notes negotiable, and gives to them the same effect as inland bills of exchange, the decisions do not draw any material distinc- tion between notes and drafts ; and hence, it has been gene- rally deemed proper to treat them as constituting but one subject — that of negotiable paper ; embracing under that term, foreign and inland bills of exchange, checks drawn on banking associations and bankers, notes of hand, bank notes and certificates of deposit. These several instruments of commerce, used constantly in every variety of transaction, are of great and increasing interest — are, in short, the ma- chinery by which the affairs of business are carried forward, and the engagements of men reduced to form in the most concise and expressive language. The commercial, equally with other branches of the com- mon law, grew up out of general usages ; and the principle of growth or adaptation to the wants of society, remains PREFACE. Vll inherent in the system. A change passes over the modes of business, and the law promptly adapts itself to that change. Estimating the importance of the subject with reference to the amount of property afloat in the shape of bills and notes, there never has been a time when it called for greater accuracy and discrimination, or invited the attention of mer- chants and professional men with motives of equal urgency. Estimating it with reference to the established canon of judicial reasoning — that principle by which the latest deci- sion is always regarded as the highest authority — the present has an advantage over the past, not found to exist in an equal degree in any other department of human science. Availing myself of the vantage ground thus given, I have endeavored to render this treatise equal to the demands of the present time j and shall be highly gratified if it be found, on a fair trial, to meet the approval of the candid and severe judgment, to which works of this nature are addressed. Albany, September 15, 1857. ' ' CONTENTS. CHAPTER I. OF NEGOTIABLE PAPER. INTRODUCTION. MARGINAL PAGE. Definition and use of bills of exchange 41, 42 Origin and office of, 42 Theory of the bill, and its use, 43, 44 Misuse of, 45 Law merchant, 46 Bills, foreign and inland, 47 -49 foreign bill to be protested — not so inland bills, 50 .nland bills, 50, 51 Vomissory notes, their negotiability, 52 -54 vssignment, &c., 55 'urchaser in good faith, 56, 57 ank checks are bills of exchange, 57. 58 mks note, paper credit, 59, 60 rads payable to bearer and negotiable, 60, 61 CHAPTER II. PARTIES TO BILLS OF EXCHANGE AND PROMISSORY NOTES. ntract — legal capacity, 62 -62 ■n-sane persons, 62 -64 'ants, notes, , 57:; Porter v. Ciimmiugs, 680 v. Loback, 99 v. McClure, 97 v. Talcott, L95 Posey & Coffee v. The Decatur Bank, 50S Post v. Dart, 356 v. Kimb'-rly Ill Postmaster General v. Furber, 556 Poston v. Stanway, 123 Potter t. Tallmao, 148, 178, 313 Margina.. Potts v. Bell, 73 v. Reed, 540, 278 Poulton v. Lattimore, 334 Powell v. Henry, 85 v. Smith, 294 v. Waters, 310, 350 Powers v. Lynch, 264 Pownall v. Ferrand, 430 Prall v. 1 linchman 689 Pratt v. Adams, 312 V. Eads, 46, 528 v. Foote, 201, 506, 563 v. Gulick, 147, 313 Prentice v. Dauielson, 242 Prentiss v. Savage, 177 v. Sinclair, 115 Prestwick v. Marshall, 72 Price v. Instrabe, 124 v. Lyons Bank, 367 v. McClare, 674 v. McClave, 133 v. Mitchell, 147 v. Neal, _• • 433 v. Young, 456, 487 Prindle v. Caruthers, 125, 664 Pring v. Clarkson, 570 Prenssing v. Eng, 160 Prentiss v. Graves, 679 b , 691 Prescott Bank v. Caverly, 250, 389 Puckford v. Maxwell, 205 Puller v. Roe, 99 Pullum v. Withers 682 Pulslfer v. Hotchkiss, 336 Purchase v. Mattison, 320, 646 Purdy v. Phillips, 112 v. Vermilya, 665 Putnam v. Sullivan, 85, 93 v. Lewis, 197 Q- Quackenbush v. Leonard, 353 Quiniby v. Buzzell, 103 Quinby v. Burrell, 115 R. Ral.b v. Mudge, 99, 103 Raborg V.Peyton, 44, 415 Raigaul v. Ayliff, 143 Ramsdale v. Huton, 207 Randall v. Herren, 193 v. Rich, 310 v. Smith 451, 604 v. Van Vechten, 82 Randolph v. Parish, 114, 133 Ranger v. Carey 390 Rankin v. Blackweil 502 Ranu v. Hughes 325 Ransom v. Mack 459, 413 v. VTheeter, 524 Ropelye v. Anderson, 365 xliv TABLE OF CASES. Marginal. Raphael v. Bank of England, 432 Rateliff v. Planters Bank, 455 Rathbun v. Budlong, 81 Rawdon v. Redfield, 611 Rawlinson v. Stone, 80, 247 Rawson v. Curtis, 87, 89 Rea v. Dorrance, 524 Read v. Bank of Kentucky, 581 v. Cutts, 243 v. "Wilkinson, 213 v. Nash, 224 Reddington v. Gilhnan, 374 Reed v.' Batchelder, 66 v. Boardman, 554 v. Boshears, 66 v. Deere, 756, 757 v. Smith, 351 v. Warner, 321, 691 , Reemer v. Downer, 456, 472 Rees v. Marquis of Headford,. 131, 310 Reid v. Morrison, 486 v. Payne, 603 Remington v. Harrington, 603 Renner v. Bank of Columbia, 519 Renton v. Chaplin 122 Rew v. Barber, 195, 203 Rex v. Hawkeswood, 756, 757 Rey v. Simpson, 230, 274 Rex v. Hales, 91 v. Henry, 94 v. Randall, 132 v. Box, 251 Reynolds y. Ward, 572 . v. Doyle, 504 v. Douglass 241 v. Cleveland, 96 Rhet v. Poe, 221, 244 Rice v. Churchill, 216 v. Goddard, 328 v. Bull, 364 v. Peet, 63 v. Stearns, 81, 283 Richards v. Richards, 72, 125 v. Heather 123 v. Franklin 701 Richardson v. Lincoln 282 v. McFadden 331 Riehter v. Selin, 151 Ricketts v. Pendleton, 281, 467 Ridgeway et al. v. Day, 654 Riddle v." Gage, ". 336 Ridley v. Taylor, 104 Ridout v. Bristow, 171, 315 Riggs y. Lindsay, 239 v. Lindsay 737 v. McDonald, 249 y. Price, 217 Riley v. Gerisn, ... 230 Ripley v. Greenleaf, 514 Roach v. Ostler, 174, 417 Robb v. Bailey, 251 v Mudge 679 b Marginal. Robbins v. Richardson, 320, 353 Robert v. Garnie 554 Roberts v. Bradshaw, 697 v. Hardy, 74 y. Kilpatrick, 262 v. Mason, 498 v. Peake, 141 v. Short, 725 v. Sykes, 424 Robertson v. Smith, 293, 574 Robins v. Gibson, 646 Robinson v. Ames, 155, 384, 389 v. Bank of Darien, 299 v. Bland, 722 v. Crandall 247 y. Lyle, ..." 244 v. Gould 327 v. Howes, 88, 260 v. Reed, 204 v. Reynolds, 131, 312 Robison y. Lyle, 573, 534 Roby v. West 340 Rochester v. Taylor, 311, 317, 580, 678 Rockfeller v. Robinson, 666 Rockwell v. Charles, 341, 361, 370 Rogers v. Morton, 217 v. Reed, 254 v. Kneeland, 177 v. Stephens, 461 Rohan v. Hanson, 555 Roof v. Stafford 246 Root y. Goddard, 76 Roscoe v. Hardy, 448 Rose v. Bedell. 184 v. Dickson, 361 v. Teeple, 353 Roseboom v. Mosher, 257 Ross x- Bedell 3 1 0, 462, 667 y. Planters' Bank, 591 v. Sadgbeer, 343 Rossange v. Ross, 350 Rossiter y. Rossiter, 86, 90, 252 Rothschild v. Corney, 259 Rott v. Watson 302, 578 Rowan v. Odenheimcr, 591 Rowe v. Tipper 459, 475 v. Young, 383, 384, 426 Rowell y. Buck 180 Rowley v. Ball 295, 297 v. Stoddard, 436 Rucker v. Hiller, 450, 646 Ruckman v. Bryan, 369 Ruff v. Webb,... 140, 750, 757 Ruffin v. Armstrong, 353 Ruggles v. Ward, 574 V. Patten, 157, 481 Rumsey v. Leek, 312 Rush v. Gott, 369 Russell v. Croukhite, 633 v. Ball & Cook, 372 v. Hankey 506 v. Hesier, 212. 495 TABLE OF CASES. xlv Marginal. Russell v. Langstaffe 93, 253 v. Lytle 580 v. Rogers 345 v. Wiggin, 412. 414 "Rust v. Gott. 341 S. Sacketts Harbor Bank v. Codd, 78 Sackett v. Andross, 257 v. Palmer, 141 v. Spencer, 132 Saffe v. Gallagher, 196 Saffordv. Wyckoff, 59, 75, 347 Sage v. Sherman, S6 v. Wilcox, 240 Sainsbury v. Parkinson, 286 St. Albans' Bank v. Dillon 325 St. John v. Redmond, 89 v. Purdy, 580 Sally v. Hinde, 148 Salter v. Burt, 155, 512 Saltus v. Everett, 61 Sanborn v. Little, 261 Sanderson v. Bowes, 157 v. Oakey, 497 Saudford v. Mickles et al, 254 v. Miekies, 118 v. Norton, 230 Sargent v. Southgate 260 Sarsfield v. Witherly, 50 Satterwhite v. M'Kie, 713 Saundc-rs v. Bacon 147, 281 v. Wakefield, 22S Saunderson v. Judge, 147 v. Piper, 168 Savage v. King, 72 v. Marsh, 385 v. Medbury, '. . 377 Savings Bank of N. II. v. Bates, 525 Sawyer v. Haskell, 235 Sax ton v. Johnson, 421, 210 Sayer v. Bennett, 113 Scannel v. Taylor, 115 Schemerhorn v. Talman 726 Schield v. Kilpin, G76 Schmidt v. Limehouse, 713 Schofield v. Bayard, 392, 439 Bcholey v. Bamsbottom, 545 Sehollenborger v. Nahf, 230, 274 Schoonmaker v. lloosa, . . . 79. 170, 325 Schultz v Astley, 258 Scott v. Betts, 653 v.Bevan, 138, 728 v. Colmeenel • 107 v. Johnson, 377, 681 v. Lifford 436 621 v. Ocean Bank 322, 373 le .. Oanfield, 179 mer v. Fisher ! ■ 206 Bcudder v. Andrews, 336 Marginal. Seabury v. Hungerford, 272, 284 Seaeord v. Miller, 446 Seare v. Prentice, 522 Searing v. Tye, 327 Sears v. Brink, 227 Seaver v. Lincoln, 390 v. Phelps 63 Secor v. Keller 109 Seeley v. Engall, 148, 313, 673 v. Bowney, 374 Scixas v. Wood, 330 Seldea v. Pringle, 303 Selick v. Turnpike Go., 557 Seneca Co. Bank v. Neass, 457, 496, 606 v. Schermerhorn, . 362 Sentaace v. Poole, 63 Sergesou v. Seeley, 64 Serle v. Waterwath, 78 Sessions v. Moseley, 325 Sewall v. Russell, 616 v. Wright, 185 Sexton v. Fleet, 70 Seymour v. Minturn, 437, 571 v. Strong 352 v. Van Slyck, 168, 650 v. Sexton, 554 Sharp v. Bailey, 638 v. Ward, 524 Shaw v. Markham, 697 v. Wood, 151 Shaver v. Ehle, 176, 289, 703 Sheldon v. Benham, 602 Shelton v. Braithwaite, . . 472, 591, 597 v. Bruce, 141 Shed v. Brett, 507 Shenk v. Mingle, 339 Shepard v. Hall, 524 v. Hamilton, 355 Sherer v. Easton Bank, 478, 528 Sherman v. Smith, 281, 282 Sherwood v. Height, 554 Shirley v. Fellows, 639 Shiver v. Johnson 176 Shove v. Wiley 508, 696 Shoo & Leather Bank v. Camp, 313, 679 Shoemaker v. Benedict, 118 Shultz v. Dopuy, 396, 667 Shumway v. Stillman, 48 Shute v. Bobbins, 399 Sice v. Cunningham, .... 156, 387, 390 Sieckman v. Allen, 248 Sigerson v. Matthews, 478, 633 Siggers v. Nichols, 426 Sigouraey v. Lloyd 254, 278 Sigler v. Smith, 205 Simmons v. Parmenter, 44 Sims v. Smith, 121 Simeon v. Ingham, 556, 561 Sill v. Rood 326 Sissonv. Barrett,... 244, 293, 375, 534 Sizerv. Bei ok 294, 500, 570 SkiMing v. Warren, 312, 319 xlvi TABLE OF CASES. Marginal. Skinner v. Dayton, 112 Slade v. Halsted, 148, 327 Slasson v. Duff, 361 Slingerland v. Morse, 216 Slocum v. Hooker, 66 v. Pomery, 264 Sloo v. Roberts, 297 Small v. Jones 345 v. Sloan, 219 Small v. Smith, 312, 319, 432 Smalley v. Doughty, 327, 351 Smalhvood v. Vernon, 285 Smart v. Dean, 516 Smedes v. Bank of Utica, 403 v. Utica Bank, 456, 475 Smith v. Abbott, 420 v. Adams, 430 v. Argall, 108 v. Beckwith, 569 v. Bridges, 132 v. Brinkerhoff, 257 v. Dann, 238, 240 v. Dunham, 683 v. Fenand, 204 v. Gardner, 386 v. Gibson, 252 v. Hawkins, 571 v. Hiscock, 312 v. Hubbs 336 v. Hall, 253, 377 v. Haytwell, 679 b v. Ives, 233 v. James, 398 v. Jarvis, 133 v. Kendall, 167 v. Knox, 310 v. Little, 584 v. Little, 497 v. Lovd, 556 v. Maine 171, 325, 679* v. Martin, 688 v. Mercer, 433 v. McClure, 303 v. Nightingale, 140 v. Ralston,. . .' 468 v. Rockwell, 297, 305 v. Schanck, 673 V.Sinclair, 328 V. Smith, 169, 332, 385 v. Spinola, 179 v. Stranger, 89 v. Strong, 59, 347 v. Tarlton, 110 v. Thatcher, 646, 480 v. Walton, 704 v. Whiting, 80, 134 248, 591, 590 v. WyckolV, 286, 323 rimedberg v. Simpson, 352 Sneed v. White, 219 Snelling v. Boyd, 255 Snow v. Howard, 574 v. Peacock, 318 Marginal. Snyder v. Sponable, 96 Sohier v. Loring, 575 Solarte v. Palmer, 595 Solita v. Garrow, 706 Solomons v. Turner, 335 v. Bank of England, 308 Southall v. Rigg 327 Southwark Bank v. Gross, 95, 168 Southwick v. Sax, 193, 553 Spalding v. Vandercook, 333 Spangle v. McDaniel, 143 Sparks v. Garrigues, 358 Sparrow v. Chisman, 316, 431 Spear v. Pratt, 411, 415 v. Myers, 322 Rpeake v. Barrett, 114 Speckles v. Sax 134 Speelman v. Culbertson, 247 Spencer v. Ballou, 323, 473, 623 v. Harvey, 637 Spenlock v. Union Bank, 551 Spies v. Gilmore, 152, 159, 230 v. Newbery, 595 Spooner v. Gardner, 646 Sprigg v. Bank of Mt. Pleasant, 573 Spring v. Lovitt, 315 Springfield Bank v. Merrick. 1155 Sproat v. Matthews, ' 212 Stackpole v. Arnold, 81, 313 Stacy v. Baker, 185, 210 Stadt v. Sill 233 Stafford v. Bacon, 327 v. Yates, 474 Stainback v. The Bank of Va., 625 Stainer v. Tysen, 85, 80 Stalker v. McDonald. . 57, 93, 200, 310 Stam v. Kerr, 198, 445 Staney v. Amer. Life Ins. Co., 371 Stanton v. Allen, 344 Staples v. Gould 370 Starbuck v. Murray, 48 Stark v. Henderson, 328 Starr v. Starr 325 State Bauk v. Fearing, 192 v. Bowers, 744 v. Hurd, 66 v. Rodgers, 744 Steadman v. I rpuph, 197 Steele v. Jennings 119 v. Oswego Cotton Manufactu- ring Company, 209 Slcinhart v. Boker 309 Stephens v. McNeil 398 v. Thompson, 194 Steptoe v. Harvey, 364 Sterry v. Robinson 448 Stettheiteej v. Myer, 322 Steubprj Co, Bank v. Mathewson, .. 340 Stevens v. Strang; 129 v. Blunt 154 V. lynch 571 v. Jackson 67 TABLE OF CASES. xlvu Marginal. Btewart v. Anderson, 261 V. Allison 464 v. Lispenard, 62 v. Lord Kirkwall, 69 v. Mechanics' and Farmers' Bank, 361 v. Morrow, 215 v. Small, 322 Stocken v. Collins, • • • 616 Stockman v. Parr, 473, 591 Stockton v. Colin 5 °1 Stone v. Hayes, 407 v. Hubbard, <06 v. Metcalf, 1 Q1 v. De Pugh, 668 v. Ireland, 1-6 v. Peake, 336 v. Seymour, 554, 555 Stoner v. Ellis. 502 Stoney v. Amer. Life Ins. Co., '7 Storer v. Logan, 414 Storms v. Thorn 291 Story v. Atkins, 169 Straker v. Graham, 390 Strand v. Marshall, 63 Strange v. Lee, 562 v.Price 470, 597 Streater v. Bank of Cape Fear, 297 Strohecker v. Cohen, 415 Strong v. Foster, 535 v. Grannis, 325 v. Holmes, 572 v. Tompkins, 341 Strother v. Lucas, 7°5 Struthers v. Blake, 623 Stuckert v. Anderson 504 Sturges & Hale v. Williams, 95, 168 v. Bank of Circleville, . 88 v. Crowninshield, 679° Supervisors, Board of, v. Weed, 80 Sussex Bank v. Baldwin, 494 Sutton v. Toomer, f&6 Suvdam v. Barber, 178, 386 v. Bartle, •. 363 v. Westfall, 363, 374, 376, 293 Swan v. Steele^ 99, 103 Swasey v. Vanderheyden, 65 .rtwout v. Payne 354 Swears v. Wells 156, 757 Sweet v. Bradley, 106 v. Bodge, Ill v. Spence, 327 Sweeting v. Fowler et el, 125 ' v. Halse 435, 757 etland v. Creigh, ]_ :i ^ Sweetzer v. Lowell, • • • 107 Swift v. Brers, 16, 347, 354 v. Stevens, 301, 303 Swift v. Tyson, 67, 321 Bwingard v. Bowes, 241 zet v. Valentine, 1 1 ( _' Sylvester v. Downer 265 1 • Marginal. Taber v. Cannon, 252 Taft v. Brewster, 82 Tafts v. York, 83 Talbot v. Gray, 221 v. Bank of Rochester, 432 Tallmage v. Pell 16, 349 Tallmadge v. Wallis, 328 Tallock v. Harris, I 26 Tanner v. Bean, • • • G8 ° Tappan v. Ely, 281, 503 Tarleton v. Shingler, 158 Tate v. Wellings, 356 v. HUbert, 546 v. Welling, 364 v. Hulbert, 171 Taylor v. Allen, 569 v. Bank of Illinois, 468 v. Bullen, 234 v. Cottrell, 325 v. Croker, 67, 250 v. Fields, 123 v. Fletcher, 329 v. French, 637 v. Moseley, 502 v. Otis and Brown, 236 v.Ross 228 v. Snyder, 152, 399 v. Stringer, 466 Tebbits v. Dowd, 401, 455 Temple v. Sheaver, I 20 Templin v. Kralm 301 Ten Eyck v. Vanderpool, 79, 327 Terbush v. Bispharn. 63 Tercese v. Geray, 304 Terry v. Parker, 491 v. Fargo 88 Thackray v. Blackett, 306, 646 Thalimer v. Brinkerhoff, 336, 69S Thatcher v. Morris, 379, 669 v. Dinsmore, 19, 202 Thayer v. Brockett, 579 v. Denton, °59 Theed v. Lovell, 272 Thomas v. Bishop, °j? v. Cameron, -48 v. Dodd 59 v. Edwards, 339 v. Fenton, °46 v. Heathorn. 1 v. Hewes, 90 v. Roosa, 210 v. Shoemaker, 525 v. Woods, 234 Thompson v. Bank of the Slate,. . . 476 v. Brown, 559 v. Olubley 316 Thompson v. < iraham, 679*> v. Ketchum, H 8 v. Leach 63 V. Malislidd, 328 v. Morgan, 44 xlviii TABLE OF CASES. Marginal. Thompson v. Percival, 194 v. Powles, ISO v. Sloan, 41, 136 v. The Tioga R. R. Co., . 249 v. Wilson 248 Thornton v. Rankin 256 v. "Wynne, 333 Thurber v. Blackborne, 49 Tibbetts v. Ayer, 328 Tidmarsh v. Grover, 438 Tiernan v. Commercial Bank, 476 Tiernan's ex'rs v. Woodruff. 566 Timms v. Delisle, 662 Tindall v. Brown, 156 Tinson v. Francis, 371 Titcomb v. Thomas, 166 Titford v. Knott, 704 Tittle v. Thomas, 125 Tobey v. Lenning, 473 Tombekbee v. Dumell, 401 Tompkins v. Tiguer, 333 Tomlinson v. Gill, 224 Toosey v. Williams, 699 Torrey v. Hadley 193 v. Foss, .'. 297, 638 Toulmin v. Price, 304 Towie v. Stevenson, 88 Townsend v. Derby, 169 v. Riddle 573 Townsley v. Sumrali 184, 387, 444 Tracy v.' Tallmage, 75, 76 Trapp v. Spearman, 147 Treacher v. Hinton, 502 Treadway v. Nicks et al 487 Treadwell v. Stebbins. . . .' 691 TrenteU v. Baranden, 079 a Trett v. Adams, 100 Triggs v. Newman, 529 Trimble v. Thorne, 293 Trimliy v. Vignier, 665 Trotter v. Curtiss, 363 Trovinger v. M'Burney, 339 Troy City Bank v. Lauman, . . . 384, 632 v. MeSpedou, 329 True v. Fuller, 219 v. Harding, 241 Truman v Hurst, 67 Truacott v. Davis, 353 v. King 556 Tucker v. Welsh, .' . 425 v. Smith, 371 Tuokerman v. Hartwell, 497, 500 Tudor v. Goodhue, 355 Tuno v. Lague, 492 v. Sague, 458 Turk v. Richmond, 336 Turner v. Greenwood, 468 Turner v. Haydin, 479 Tuthill v. Davis, 352 Tut ile v. Love, 62 Ty v. Gwyntie, 334 Tylee v. Yates, 336, 347 Marginal. Tyler v. Binney, 220 v. Yates, 76 v. Young, 258 Tynn v. Stoops, 194 IT. Ulster Co Bank v. McFarlan, . . 411, 42',! 23?! Union Bank of Louisiana v. Ex'rs of Coster, 240 v. Coster, 239, 240 v. Coster's ex'rs, 225 v. Griffen, 506 v. Hyde 468, 584 v. emiser, 204 v. Warren, 297 v. Willis, 500 United States v. Barker, 448 v. Kirkpatrick, 556 v. White. . . 95, 131, 251 U. S. Bank v. Bank of Georgia, 190, 207 v. Binney, 107 v. Chapin, 709 v. Sill, 307 U. S. Trust Co. v. Harris, 326, 679 Upham v. Lefavour, 556 v. Prince, 220 Utica Ins. Co. v. Bloodgood, 360 v. Caldwell, 362 v. Tillman, 357 Uther v. Rich, 318 V. Yalk v. Simmons, 402, 450 Vallett v.Parker,.. 105, 326, 337, 370 Yan Allen v. Humphrey, 10 Yan Brunt v. Eoff 151 Vance v. Bloomer, 215 v. Ward, 407 v. Wells, 68 Ynnrlenburgh v. Hull, 97 Yanderheyden v. Mallory 70 Vanderveer v. "Wright, .'.' 171, 238, 325 Yandewall v. Tyrrell, . . . « 466 Yan Duzer v. Howe, 92, 365, 425 Yan Bpa v. Dillaye, 114 Yan Hoesen v. Van Alstvne, .. 156, 4S4 390 Yan Book v. Whitloek 386 Yan Keuren v. Parmelee, 118 Yan Ostrand v. Reed 96 Van Rensselaer v. Jewett, 357 v. Roberts, 554 Yan Schaick v. Edwards, 365 Van Steenburgh v. Hoffman, 68 Van Tine v. Crane, 293 Van Yechten v. Pruyn, 600 Van Wagner v. Territt 143, 212 Van Winkle v. Ketchum, 67 Yan Wart v. Woolley, . . . 403, 404, 445 TABLE OF CASES. xlix Marginal. Varner v. Nobleborough, 202 Vaughn v. Barrett, 248 Yeasey v. Reeves 154 Yeazie v. Willis, 233 Vere v. Ashley, •. 107 T.Lewis 126 Yernon v. The Manhattan Company, 116 Yerree v. Hughes, .' 723 Yiana v. Barclay, 88 Yickery v. Dickson, 327 Yilas v. Jones, 355 Yinal v. Burrill, 118 Vinson v. Piatt, 181 Violet v. Patten, 92, 262 Visscher v. Yates, 369 Vose v. Hurst, 273 Vreeland v. Blunt, 144, 379 v. Hyde, 390 w. Wadsworth v. Sharpsteen, 64 Waggener v. Colvin, 660 Wagger et al. v. Kenner, 515 "Wain v. Bailey, 197, 578 v. "Walters 223 Wainwright v. Straw, 232 "Wait v. Day, 339 "Walden v. Sherburne, 118 "Walker v. Atwood, 419 v. Bank of the State of New York, 378, 383, 428 v. Butler, 198 v. Forbes, 242 v. Maxwell, 49 v. Meek 725 v. State Bank, 629 Wallace v. Agry, 399, 414 v. McConnell, . . . 158, 295, 501 Walmsleyv. Child, 304 Walpole v. Pultner 435 Walrath v. Thompson 238, 244 Walrad v. Petrie, 664 Walrod v. Petrie, 125, 164 Walsh v. Bailey, 568 Walter v. Haines, 608 Walters v. Brown 602, 616 Waltermire v. Westover, 679c Walton v. Hastings, 758 Walwyn v. St. Quinton, 646 Wannell v. Adney, 238 Ward v. Allen, 409 v. Evans, 199, 551 v. Fryer 224 Wardell v. Haight, 116, 255 v.Howell, 321 v. Hughes 219, 681 Wardell v. Piuney, 133 Warden v. Tucker, 402 Warder v. Tucker, 452 Wardlaw v. Harrison 239 Warhus v. Bowery Savings Bank, . . 406 Edw. 7 Marginal. Waring v. Mason 330 Warner v. Beardsley, 244, 293 v. Chappell 373 v. Gouverneur's ex'rs, 354 v. Lee, 322 Warren v. Gilman, 600 v. Lynch, 165, 208 v. Mains 59, 137 Warrington v. Early, 438 v. Furbor, 241 Warwick v. Bruce, 68 v. Rogers, 434 Washburn v. Alden, 87 v. Picott, 336 Washington v. Planters' Bank, 710 Bank v. Prescott, 555 Watervliet Bank v. White, 249, 275, 283 Watkins v. Stevens, 66 Watson's ex'rs v. McLaren, . . . 220, 233 Watson v. Loring, 448 V. Randall, 223 Watten v. Bank of Montgomery Co., 295 Watterbury v. Sinclair, 274 Watts v. Kilburn, 702 v. Van Ness 346 Waydell v. Luer, 194 Weaver v. Marvel 274 Webb v. Plummer, 177 Webber v. Williams College, 255 Weed & Co. v. Asa Miller 727 v. Clark, 233, 240 Weeks v. Prior, 156, 390 Wegerstoffe v. Keene, 419 Weinholt v. Spitten, 325, 335 Welland Canal Co. v. Hathaway, ... 353' Weller v. Keys, 102 Wells v. Baldwin, 313 V. Brigham 426 v. Hopkins, 336 V. Whitehead, .. 47, 49, 152, 163 Welsh v. Barter, 329, 332 v. Mandeville, 55 Weems v. Farmers' Bank of Md., . . 488 Wendell v. Howell, 319 Wenman v. Mohawk Ins. Co., 712 v. The Mohawk Ins. Co.,. 512 679 e Werk v. Mad River Valley Bank, . . 398 West Branch Bank v. Morehead, ... 557 Western v. Genesee M. Ins. Co., . . . 181 Weston v. Barber, 213 Westfall et al. v. Bralcy, 206 Westminster Bank v. Whcaton 83 Wethey v. Andrews, 390 Wetumpka & Coosa R. v. Bingham, . 174 Wheeler v. Curtiss, 656 v. Guild, 310, 318 Wheeler v. Field, 486, 489 v. Newbold, 424 v. Wheeler, 80, 243 Whcelock v. Freeman, 146 Whitaker v. Cone, 336 1 TABLE OF CASES. Marginal, Whitbeck v. Van Ness, 193, 204 Whitcomb v. Whitney, 118 White v. Ambler, 397 v. Brown, 664 T. Case, ..' 234 v. Foster, 377 T. Haight, 139, 377 y. Heylman, 325 v. Howard, 553 v. Howland, 234 v. Joy, 670 v. Kebling, 372, 548 v. Low, 258 v. Richmond, 136 v. Skinner, 80 v. Springfield Bank, 322 v. Trumbull, 557 v. Union Insurance Co., .... 118 T. Wright 364 White's Bank of B. t. Ward, 679 c Whiteford v. Binkhymer, 693 Whitehead v. Tuckett, 87 v. Walker, 259 Whitewright v. Stimpson, 109 Whitlack v. Underwood, 1 54 Whitlock v. McKechnie 685 Whitney v. Lewis, 328 v. Abbott, 487 v. Goin, 196 v. Sterling, 98 Whittaker v. Brown 100, 106 Whittier v. Graffam, 486 Whitwell v. Bennett, 666 v. Brigham, 375 v. Johnson, 306, 508 Whitworth v. Hart, 710 Whipple v. Powers, 364 Widders v. Gorton, 197 Widgery v. Munroe, 485 Wiffin v. Roberts 323 Wigan v. Fowler, 77 Wiggin v. Push, 77, 346, 372 Wiggins v. Gans, 669 Wiggle v. Thompson 525 Wilber v. Selden 191, 697 Wilborn v. Turner, 684 Wilcox v. nowland 709 Wilde v. Sheridan, 386 Wilder v. Seelye 197, 299, 504 v. Keeler, 123 Wildes v. Savage, 414 Wilkerson v. Daniels, 712 Wilkie v. Roosevelt, 187, 349 Wilkins v. Jadis, 381, 399 v. Pearce, 101 Wilkinson v. Lutridge, 433 v. Johnson, 434, 542 Willets v. The Phamix Bank, . 125, 308 406 Williams v. Bank of U. S., 613 v. Babcock, 377 v. Basson 323 Marginal. Williams v. Drexal, 433 v. Germaine, 440 v. Getty, 87 v. Granger, 243 v. Griffith, ... 562 v. .Harrison, . 67 v. Hicks, 335 V.Matthews, .. 311, 258, 270 v. Sherman, 708 v. Smith,. 321, 369, 474, 622 v. Thomas et al., Ill v. Wade, 185, 262 v. Walbridge, 106, 317 v. Waring, 600 Williamson v. Bennett, 143 v.Walts, 67 Willison v. Pateson, 338 Wills v. Noot, 760 Willis v. Green, 256, 401, 455, 160 Willmarth v. Crawford, 371, 668 Willock v. Riddle, 468 Wilmot v. Williams, 427 Wilmouth v. Patten, 216 Wilson v. Allen, 257, 547 v. Barthrop, 91 v. Clement, 407 v. Codman, 257 v. Kilburn 364 v. Kirkland, 705 v. Little, 424, 482 ex parte, 646 v. Troup 177 v. Williams, 105 v. Ralph 650 v. Vysar 756 Wiltsie v. Nathan, 329 v. Northam 676 Winchell v. Bowman, 118 v. Hicks, 118 Windlo v. Andrews 462, 585 Windham Bank v. Norton et al., . . . 493 Wing v. Terry 43, 374, 379 Winn v. Wilkins, 430 Winno v. Page, 233 Winsor v. Kendall, 346 Winter v. Drury, 406 v. Livingston, 329 Wintermuto v. Post, 420 Winthrop v. Carleton, 713 v. Pepoon, 448 Wiseman v. Chiapella, 381, 496 Witherby v. Mann, 294 Wynn v. Alden, 473, 598 Wynne v. Raikcs 407, 409 Wolf v. Jowett 399 Wood v. Braddick 119 et al. v. Corl 721 v. Farm, and Mcchs. Bank, . . 744 v. Hitchcock, 677 v. Jefferson County Bank, . . . 56S v. Pugh, 441 v. Whiting, 669 TABLE OF CASKS. li Marginal. Wood v. Williams 437 V.Wood, 134, 254 Woodbridge v. Spooner, 171, 315 v. Brigham, 305 Woodbury v. Sackinder, 673 Woodford v. Darwin, 151, 188 Woodhull v. Holmes 317 Woodland v. Fear, 545 Woodman v. Thurston, 635 Woodruff v. The Merchants' Bank of New York,.. 510, 521 v. Sacrider, 582 v. Wicker, 687 Woodson v. Moody, . . . . .• 244 Woodthorpe v. Lawes 596 Woodward v. Elliott, 537 v. Genet, 165, 209 Woodworth v. Bank of America, . . 95 Woolcott v. Van Santvoord, . . 427, 473 Worcester Co. Institute for Savings v. Davis, 238 Worden v. Dodge 143 Work v. Case, 320 Worrall v. Munn 356 Worrall v. Gheen, 438 Wooster v. Jenkins, 322 Wrexham v. Huddleston, 113 Marginal. Wright v. Allen, 353 v. Butler , 665 v. Garlinghouse, 376, 535 v. Hooker, 416, 477 v. Hughes, 349 v. Johnson 244 V. Lainy, 559 v. Shawcross 459 v. Wright, 55 T. Yale v. Dederer, 70 Yancey v. Brown 239 Yandes v. Lefaveur, 119 Yates v. Boen, 64 v. McKee, 239 v. Nash, 125 Yeatman v. Cullen, 186 Young v. Adams, 135 v. Bryan, 584 v. Catlett, 695 v. Grote, 545 v. Hockley, 374 v.Ward, 95, 92 Youngs v. Lee, 322 BILLS OF EXCHANGE* *i AND PROMISSORY NOTES. CHAPTER I. OF NEGOTIABLE PAPER INTRODUCTION. The bill of exchange, popularly termed a draft, is written in the form of an open letter, directing the person to whom it is addressed to paj' the sum of money therein specified to a third person named in the instrument, on account of the writer or person by whom it is drawn. 1 It derives its name from the French billet de change, and has been denned to be a written order or request by one person to another, for the payment of money, absolutely and at all events.' No particular form of words is necessary to be used in drawing the bill; but it must be in effect an order addressed by one person to a second, desiring him to pay a sum of money to a third, or to any other to whom the third person shall order it to be paid ; or it may be payable to bearer. 8 The person who writes or draws the bill is called the draiver, and he to whom it is written the drawee ; and the third person or negotiator to whom it is payable, (whether specially named or the bearer generally,) is called the payee. The instrument was originally invented among the merchants as a security for the more easy remittance of money from one country to another. If A lives in Jamaica, and * owes ^ B, who lives in England, one thousand pounds, and C be 1 Morris v. Lea, Ld. Raym., 1397 ; Chitty on Bills, 130, 154. Tlio bill must be in substance a direction, an order for the payment of money. ' Cook v. Satterlee, 6 Cowen R., 108, 5 Id., 18G. It must bo payable in monry, Thompson v. Sloan, 23 Wend., 71. * Kyd on Bills, 8, 3d cd; Chitty on Bills. 128. Euw. 6 42 OF NEGOTIABLE TAPER. going from England to Jamaica, he may pay B this one thousand pfounds, and take a bill of exchange drawn by B in England upon A in Jamaica, and receive it when he comes thither ; thus B receives his debt, at any distance of place, by transfering it to C, who carries over his money in paper credit, without danger of robbery or loss. 1 In the same way funds are constantly transmit- ted from country to country throughout the commercial world. Bills of exchange are of modern origin ; they are said to have been brought into general use by the Jews and Lombards, when banished from country to country, for their usury £ud other vices, in order to carry with them the more easily their effects. Others, again, assert that they grew into use on the coasts of the Mediter- ranean, in the earlier part of the fourteenth century ; and all authorities concur that that was about the period when they began to be generally employed as a convenient method of ex- change. But they were occasionally used at an earlier day ; and it is probable that the Jew, growing quick-witted under persecution, first brought them into public notice and demonstrated their utility in a conspicuous manner. In their origin, bills of exchange were used as a mode or means of transferring property from one place or country to another ; as now employed to facilitate the great operations of commerce, they serve the further purpose of increasing the circulation, and en- larging the nominal capital in trade. The negotiability of the instrument gives to it many of the peculiarities of money, so that it becomes a part of the commercial currency of the world. It passes from hand to hand by the simple act of indorsement and delivery, and is given and received as a representative of value. Unlike other choses in action, it is presumed to have been given for a good consideration ; * and is transfered by the holder with an engagement to pay it in case it is dishonored, by the easy device of writing his name across the back. Very often it passes through ^ many * hands, each of whom has guaranteed its payment, thus giving to it a credit equal to ready money in the market.' 1 2 Black. Comm., 4C7. 9 Chitty on Bills,69. 'Gibson v. Minet, 1 lien. Bla., G18. From testimony furnished by Mr. Loyd, Oi tho firm of Jones, Loyd & Co., London, it appears that the circulation of Manchcstei, England, consists of nine parts of bills of exchange, and the tenth part, gold and bank of England notes. Other bankers thought the proportion still larger, say twenty NATURE AND ORIGIN. 43 The theory always is that the drawer of the bill of exchange has funds in the hands of the person on whom he draws, equal to the amount which he orders paid; and consequently the drawee, as soon as he has accepted the bill, becomes primarily liable for its payment ; and the drawers and indorsers are from that moment liable only collaterally, as a sort of sureties. 1 So long as the fact corresponds with the theory, and none but business paper is put in circulation, no inconveniences are likely to arise from the use of this kind of paper ; each bill represents a debt of equal amount, and the debt has been contracted, we will suppose, on the sale of property worth the face of the bill. To this extent the use of bills is perfectly legitimate.' But bills of exchange are sometimes drawn upon a party who has no funds in his hands belonging to the drawer, and who in pursuance of a previous agreement, accepts the same for the drawer's accommo- dation. In this way bills are put in circulation solely on the credit of the parties making * or indorsing them ; they „ are not based upon a specific fund or debt due, but upon the general credit of the acceptors and indorsers, so that they no longer represent ready money, or capital invested in business. 3 When given in the ordinary course of business, a bill of exchange imports that a debt is due from the drawee to the drawer, which is assigned to the payee of the bill ; and if the drawee accepts, it is an acknowledgment on his part that he has funds of the drawer in his hands to the amount of the bill. The or even fifty to one. Mr. Loyd stated that he had seen bills of 101 with one hundred and twenty indorsements upon them. From an estimate made by Mr. Leatham, an old banker near London, by the aid of official returns, the amount of bills in circulation (as indicated by the stamps used,) was as follows : G. Britain. Irish. Foreign &c. Total. 1815.... £477,493,000 £79,582,000 £92, 815, OIK) £649,920,000 1824 232, 42!) ,000 38,738,000 45,195,000 816,863,000 1825 200,379,000 43,3'.)6,000 50,030,000 804,405,000 1826 207,347,000 34,537,000 40,318,000 389,233,000 1835 294,775,000 51,109,000 69,519,000 405,403,000 1836 355,289,000 59,155,000 71,499,000 485,948,000 1837 333,208,000 54, ISO, 000 67,63fi,000 455,084,000 1838.... 341,947,000 54,360,000 09,197,000 405, 501, IKK) 1839 394,203,000 55,015,000 78,073,000 528,493,000 It appeared that the average time of circulation was three mouths. According to official statements, it seems that the actual bank note circulation in Great Britain and Ireland, was less than forty millions of pounds sterling, or less than one third of the circulation of bills of exchange eighteen years ago. Vol. 29, Merchants' Magazine, 739. 1 Suydam v. Weatfall, 4 Hill R., 211; Wing v. Terry, 5 Hill, 160; G Bosvv., J.H. ■ Smith's Wealth of Nations, 126. • Griffith v. Reed, 21 Wend. R., 502. 44 OF NEGOTIABLE PAPER. presumption of funds in the bands of the acceptor is conclusive as between him and every bona fide holder of the paper ; and it is so strong in favor of the drawer, that when the bill is payable, as it is sometimes made, to his own order, he may, like any o\ker holder, maintain an action on the bill, against the acceptor. As drawer, his undertaking is that the bill shall be accepted and paid by the drawee ; and hence, after acceptance, his undertaking becomes collateral to that of the acceptor, who is then regarded aa the principal debtor ; and if the latter fail to pay the bill when it becomes due, the holder, having it duly protested, may call upor the maker and indorser for payment. 1 As between the drawer and indorsers of the bill, they are liable to the holder in the order in which they have become parties to the instrument. But the holder may, if he choose, demand and collect the bill of the last indorser, or the person from whom he received the bill by indorse- ment ; and he in turn may collect of the next indorsers, and he from the next, and so on till the first indorser has been paid by the drawer; or the holder may maintain his action against all the parties to the bill, who became such previously to himself.' No doubt bills are now very commonly drawn and accepted by way of accommodation, so that the original theory, which supposes ijj,.w funds in the hands of the drawee, is not true in respect* to them. 3 Both banks and individuals frequently make arrangements with other persons and moneyed institutions for the privilege of drawing on them to a certain amount and in a certain manner, with an agreement to put them in funds or balance the account with them at stated periods. In this way it sometimes happens that the currency is largely inflated by the use of bills of exchange, which circulate very much like money, and occasionally draw after them pernicious consequences. The practice of draw- ing and redrawing in order to meet the draft, creates an unreal credit, and is an abuse of the bill of exchange : it creates an increase of present capital, at the expense of paying compound interest for that which is so acquired. In fact the pernicious effects of a fabricated credit, by the undue use of accommodation bills of exchange, drawn out of the ordinary course of trade, have 1 Cruger v. Armstrong, 3 John. Cas., 5; Simmon3 v. Farminter, 1 Wils., 185; Vcro v. Lewis, 3 T. R., 182 ; Thompson v. Morgan, 3 Campb., 101; Rayborg v. Peyton, 2 Wheat., 385. •Chitfcy on Bills, 536; 4 T. R., 471 ; Britten v. Webb, 2 Barn, and Crea., 483. *21 Wend. R., 507; Pentum v. Pocock, 5 Taunt., 192. NATURE AND ORIGIN. 45 led many to ruin : and the use of tliem, where there is no real demand subsisting between the parties, nor an actual fund to resort to in case of need, is injurious to the public, as well as to the parties concerned in the negotiation. 1 Used legitimately, bills of exchange obviate to a great degree the necessity of transmitting specie from one country to another for the payment of debts. Dealers in the produce of the soil, export large quantities of corn from the city of New York, to Liverpool and London ; and dealers in cotton ship large amounts of that staple from New Orleans for the same destination ; thus accumulating demands against the purchasers in those foreign cities. On the other hand, our merchants import various kinds of goods, wares and merchandizes from England, thereby contract- ing debts to be discharged where they are made. Now, by the use of bills of exchange, these debts on both sides of the ocean are set off one against the other, so that comparatively but a small amount of specie is required to be transmitted from one nation to the other, in order to balance the account. Indeed, con- sidering the great commerce carried on between these two coun- tries, it is remarkable * how small is the quantity of gold and silver employed in effecting the exchanges. As with an individual, the nation that buys more than it sells, accumu- lates a debt againt itself; and this debt or this net balance of trade is the amount of specie requisite to close the financial year. The law-merchant is a part of the public law : it does not rest essentially for its character and authority on the positive institu- tions and local customs of any particular country, but consists of certain principles of equity and usages of trade, which general convenience and the common sense of justice have established, to regulate the dealings of merchants and mariners in all the com- mercial countries of the civilized world. 2 It is also a part of the common law, growing up as it did out of the necessities of business ;' being founded on what is termed, and was in fact the custom of merchants. We examine and study the system as it now stands developed by time and experience, and recorded in the reports of adjudged cases; but the system itself arose out of the general usages of trade, and has gradually expanded to meet the wants ' Kx parte Wilson, 11 Vos., 411; 21 Wend., 508. 1 3 Kent Comin., 2 ; Luke v. Lyde, 2 Burr., 822. • Pratt v. Eada > Blackf., 81. 46 OF NEGOTIABLE PAPER. of men engaged in commerce. 1 In this, as in other cases, the courts have felt themselves authorized and required to consult the interests of the community in favor of commerce ; and have in this manner methodized and affirmed the principles of equity and good faith, so imperatively demanded in all commercial transactions.' Hence, we sometimes find the lex mercatoria ranked under the head of the particular customs of England that go to make up the great body of the common law ; 3 and sometimes treated of as the general body of European usages in matters relative to commerce — usages and rules not peculiar to any one nation, but common in most respects to all. 4 Each mode of treating the subject is perfectly ^ accurate; but neither is by *itself full and satisfactory. The intercourse of nations can only be regulated by such principles as are recognized and enforced equally and uniformly in all ; and for this reason we find the laws of commerce gradually working themselves into the public or international code. At the same time each State has its own peculiar policy and mode of administering justice, and does not hesitate to modify the details of the system in conformity with its own views of general conve- nience and commercial utility. 5 Bills of exchange are either foreign or inland; foreign, when drawn by a person in one State or country upon a person in another State or country ; as for example, when drawn by a person in America upon a person resident in England, and payable by the latter, or vice versa; and inland, when both the drawer and the drawee reside in the same State or country, or when both drawn and payable in the same State or country, though accepted abroad.* This definition assumes that bills drawn in one of the several States of the Union upon persons resident in another, are to be regarded as foreign bills, on the ground that they answer all the purposes of remittances, and commercial facilities, equally with bills drawn upon other countries ; and the authorities are to the same effect. 1 1 Master v. Miller, 4 T. R., 342; 1 Bl. Comm., 75. • Chitty on Bills, 8. ' 1 Black. Com., 75. • Steph. Com. 54; 3 Kent Com., 2. 1 9th and 10th Will. 3, c. 17 ; 3d and 4th Anne, c. 9 ; 2 R. S. of New York, 3d ed., p. 52-55. • 2 Black. Comm., 467 ; Chitty on Bills, 10. The text is from Blackstone, as modified by subsequent decisions. T Buckncr v. Finley, 2 Peters U. S. R., 586. NATURE AND ORIGIN. 47 For all national purposes embraced by the federal constitution, the States and the citizens thereof are one, unite'd under the same sovereign authority and governed by the same laws. In all other respects the States are necessarily foreign to, and independent of each other. Their constitutions and forms of government are alike in one particular ; they are of a republican character ; but notwith- standing this feature or principle prevails in all of them alike, each State is, in its relation to the others, a separate sovereignty ; having its own executive and legislative government, and its own laws and municipal regulations. 1 *The powers of the general government, legislative, judicial v ,. _ and executive, are given and granted in express terms by the people of the United States ; those which are legislative are vested in Congress, and specifically enumerated ; those which are judicial are vested in the supreme court, in terms declaring their scope and extent ; and those which are executive are vested in the president, with a brief enumeration of his powers and duties. The States are in form and substance prohibited from exercising certain powers, in their nature likely to interfere with the action of the government thus cpnstituted ; and the powers not granted to the central gov- ernment are reserved to the several States, or to the people thereof. This written constitution, and the laws enacted under it, are declared the supreme law of the land. Among the incidental regulations of the relation subsisting between the States, is a provision that " full faith and credit shall be given in each State to the public acts, records and judicial proceedings of every other State." Under this provision, and laws passed in pursuance of it, judgments rendered in one State are not treated as foreign judg- ments, in the other States, 3 but are received with full faith and credit, as evidence of debt ; 3 the jurisdiction of the court rendering them remaining the only subject of inquiry. But for the clause in the constitution of the United States, quoted above, the judicial records and judgments of each State would be treated in the others as foreign judgments , for it is worthy of remark, in this connection, that notwithstanding the 1 2 Peters It., 58s ; Wells v. Whitehead, 15 Wend. R., 527. a Starbuck v. Murray. 5 Wend. R. 148 ; Holbrook v. Murray, id., 161, per Mr. Jus- tice Marcy. See art. 4, § 1, Constitution of U. S. * Bissell v. Briggs, 9 Mass. R., 462; Mills v. Duryee, 7 Cranch, 418; Hall v. Williams, 8 Pick., 232; Shumway v. Stillman, 4 Cowen R., 272; 2 Kernan, 156; 3 Wheat., 234 48 ' OF NEGOTIABLE PAPER. provisions referred to, it appears from some of the ealier cases., that a judgment rendered by a court of one State, was not con- sidered conclusive between the parties in the other states, in the same manner and to the same extent as judgments rendered in their own courts. It was declared prima facie evidence of debt, Bubject to be inquired into and disproved in an action upon it in another State. 1 By degrees, however, those * decisions have been so far modified that the only question now permitted to be raised upon a judgment recovered in another State, relates to the jurisdiction of the court rendering it" In other respects, they are to be treated as domestic judgments, and are. to be re- ceived with full faith and credit. So much as this, demanded by the express terms of the federal compact, is conceded to the authority of that instrument. The same analogy is found in another class of cases. Obeying the well established principle that courts do not ex officio take notice of foreign laws, it is adjudged that the courts of this state will not take judicial cognizance of the statute laws of sister states, at variance with common law.' In other words, each state in this instance treats the laws of neighboring states as, those of a foreign jurisdiction. But it seems that upon common law questions, the legal presumption is that the common law of a sister state is similar to our own ;* while the statutes must be pleaded and proved like those of foreign states. There are, especially in the earlier decisions of our courts, dicta to the effect that bills drawn in one state upon persons residing in another, are to be treated as inland bills. 4 But the later decisions hold a contrary doctrine, based upon the fact that each state has a separate and distinct municipal jurisprudence, framed by its own legislature, and within its proper sphere of action subject to no control.' The limited sovereignty delegated to the national gov- ernment, does not make the states, as such, at all dependent one 1 1 Caines' R., 4C0 ; 1 Mass. R., 401. 1 Borden v. Fitch, 15 John R., 121 ; Andrews v. Montgomery, 19 id., 162 : 4 Cowen R., 272 ; Thurber v. Blackborne, N. ITamp., 246 ; Benton v Bingot, 10 Serg. and Rawie, 240 ; Aldrich v. Henway, 4 Conn. R., 280 ; 2 Kern. 156 ; 22 Barb. R., 118 ; 1 Seld., 443 * Holmes v. Broughton, 10 Wend. St., 75 ; 1 Mass. R., 103 ; 2 East R.., 161. 4 Walker v. Maxwell, 1 Mass. R., 103; Pearsall v. D wight, 2 id., 34; Legg v tecrg, 8 id., 90 ; 10 Wend. R., 75; Monroo v. Douglass, 1 Selden, 448. 1 Miller v. Ilackley, 5 John R., 375. • 2 Peters R., 586 ; Wells v. Whitehead, 15 Wond. R., 527 ; Kalliday v. McDougall, 20 Wend. R., 81 ; 22 id., 264 ; Story on Bills, § 22, 23. NATURE AND ORIGIN. . 49 upon the other. Analogous to this, it is adj udged that a bill drawn in Ireland upon England, is to be considered a foreign and not an inland bill ; but it has been held under the English revenue laws * that a bill drawn in London, payable to the order of the drawer in the same city, upon a merchant residing at Brussels, and accepted by him, is an inland bill, and must be stamped as such. 1 At common law, if the drawee of a foreign bill of exchange refuse to accept, the bill must be protested by the holder, or by some other person, if he be ill or absent, and notice thereof given to the drawer. The protest is made by a notary public, and notice of the non-acceptance or non-payment should be immedi- ately sent to all the parties on whom the holder means to call for payment. " The inland bill stands upon a different footing : where there is no statute requiring it, it need not be protested for non- payment or non-acceptance ; but a notice of the dishonor should- be given to the drawer and indorsers.* For the convenience of trade and commerce, the certificate of the- notary who has protested a foreign bill, given under his seal of office, is made evidence of the protest in a foreign state, with- out any auxiliary support, and is so received in all courts, accord- ing to the usa«;e and custom of merchants. It should be borne in mind that the use of inland bills did not become frequent until some time after the law in respect to foreign bills had become well established. They were at first, like foreign bills, quite restricted in their operation ; and it was deemed essen- tial to their validity that they should be drawn between merchants, and that a special custom for the drawing and accepting them should exist between the towns in which the drawer and acceptor lived; or if they lived in the same town, that such a custom should exist therein.* Chief Justice Holt, expresses the opinion that they did not originate at a much earlier period than the reign of Charles the Second. 6 1 Chitty on Bills, 10. ■ Chitty on Bills, 334, 335. '3 Kent Com., 93, 109; 3 Campb., 33d; 10 Mass. R., 5; Wells v. Whitehead, 15 Wend. R., 527. 4 Halter v. Crips, G Mod. Tt., 29; Claxton v. Swift, 3 Mud. R., 8G; Bromwich v. Lloyd, 2 Lutw., 1586; Sarsfield v. Witherly, Garth., 82. 1 G Mod. R., 29. Tho use of foreign bills had grown quite common previous to tint time. Clarendon fjives an instanco of their uso worthy of mention. When Charles the Second, after an exilo of twelve year* from tho execution of hid Edw. 1 50 OF NEGOTIABLE PAPER. *51 *It is certain, however, that these local customs soon became general, and that the inland or domestic bill ha3 finally become as great a favorite with the community as its pre- father, was invited by the English people to return and take his seat on the vacant throne, the committees sent to him by the two houses of Parliament, carried with them a donation or present of fifty thousand pounds, and a committee from the city of London, bore with them a peace offering of ten thousand pounds. " It will hardly be believed." says the Chancellor, "that this money presented to the king by the Parliament and the city, and charged by bills of exchange upon the richest merchants of Amsterdam, who had vast estates, could not be received in many days, though some of the principal citizens of London who came to the king, went themselves to solicit it, and had credit among themselves for much greater sums, if they had brought over no bills of exchange. But this was not the first time (of which some- what hath been said before,) that it was evident to the king, that it is hot easy in that most opulent city, with the help of all the rich towns adjacent, and upon the greatest credit, to draw together a great sum of ready money. The custom of that country, which flourishes so much in trade, being to make their payments in paper by assignations ; they having very rarely occasion for a great sum in any one particu- lar place. And so at this time his majesty was compelled, that he might not defer the voyage he so impatiently longed to make, to take bills of exchange from Amster- dam upon their correspondents in London, for above thirty thousand pounds of tho money that was assigned; all which was paid in London as soon as demanded." This casual passage in the admirable story of the great rebellion, opens a door through which we can see the mode of transacting financial affairs that prevailed two hundred years ago, and shows among other things, the necessity for the allowance of days of grace. Clarendon's History of the Rebellion, at the close. The use of bills of exchange had become very common at a much earlier day ; had in fact grown up with the commerce of modern Europe. Mr. Prescott, in his history of Philip the Second, describing the prosperous condition of the Netherlands, and particularly the city of Antwerp, says: "A great traffic was carried on in bills of exchange. Antwerp, in short, became the banking house of Europe, and capital- ists, the Rothschilds of their day, whose dealings were with sovereign princes, fixed their abode in Antwerp, which was to the rest of Europe in the sixteenth century, what London is in the nineteenth — tho great heart of commercial circulation." Vol. 1, page 371. 6 Mod., 29, Bulter v. Crips. This case is worth transcribing as a piece of history. A note was in this form: "I promise to pay J. S-, or order, the sum of 1001, on account of wine had from him." J. S. indorses this note to another ; the indorsee brings an action against him that drew this note, and declares upon the custom of merchants, as upon a bill of exchange ; and a motion was mado in arrest of judg- ment upon the authority of Martin and Clerk's case. But Brotherick would distinguish this case from that, for thero tho party to whom the note was originally mado brought the action, but here it is tho indorsee ; and he that gave this note did, by the tenor thereof, make it assignable or negotiable by the words or order which amounts to a promise or undertaking to pay it to any whom he should appoint, and the indorsement is an appointment to the plaintiff. Ch. J. Holt. I remember when actions upon inland bills of exchange did first begin, and then they laid a particular custom between London and Bristol, and it was an action against the acceptor ; the defendant's counsel would put them to prove tho cua- NATURE AND ORIGIN. 51 decessor, the foreign bill. 1 Employed for a time as a conveniens device among the merchants in the transaction of business, this 1 2 Bla Com., 467. torn, at which Hale, who tried it, laughed and said " they had a hopeful case on 't " ; and in my lord North's time it was said that the custom in that case was part of the common law of England, and the actions since became frequent as the trade of the nation did increase, and all the difference between foreign and inland bills is that foreign bills must be protested before a public notary, before the drawer may be charged ; but inland bills need no protest. And the notes in question are only an invention of the goldsmiths in Lombard street, who had a mind to make a law to bind all those that did deal with them, and sure to allow such note to carry any lien with it were to turn a piece of paper, which is in law but evidence of a parcel con- tract, into a specialty ; and besides, it would empower one to assign that to another which he could not have himself. For since he to whom this note was made could not have this action, how can his assignee have it? And these notes are not in the nature of a bill of exchange; for the reason of the custom of bills of exchange is for the expedition of trade and its safety, and likewise it hinders exportation of money out of the realm. He said, if the indorsee had brought this action against the in- dorser, it might peradventure lie, for the indorsement may be said to be tantamount to drawing a new bill for so much as the note is for, upon the person that gave the note ; or he may sue the first drawer in the name of the indorser, and convert the money, when recovered, to his own use ; for the indorsement amounts at least to an agreement that the indorsee should sue for money in the name of the indorser, and receive it to his own use, and besides it is a good authority to the original drawer to pay the money to the indorsee." Mr. Justice Powell thou cited a similar case brought in the common pleas, making this remark, which shows how rare such actions must have been at that time, and also how little confidence the courts felt in their own knowledge of the subject: "At another day the chief justice declared that he had desired to speak with two of tht most famous merchants in London, to be informed of the mighty ill consequences that was pretended toould ensue by obstructing this course, and that they had told him it tuas very frequent with them to make such notes, and that they looked upon them as bills of ex- clmnge, and that they had been used for a matter of thirty years ; and that not only notes, butbonds for money were transferred frequently, and indorsed as bills of exchange." Claxton v. Swift, is a still earlier case. "The plaintiff being a merchant, brought an action upon a bill of exchange, setting forth the custom of merchants, etc., and that London and Worcester were ancient cities, and that there was a custom amongst merchants that if any person living in "Worcester draw a bill upon another in London and if this bill be accepted and indorsed, the first indorser is liable to the payment. That one Hughes drew a bill of 1002 upon Mr. Pardoo, payable to the defendant, or order. Mr. Swift indorsed this bill to Allen, or order, and Allen indorsed it to Claxton. The money not being paid Claxton brings his action against Hughes, and recovers, but did not take out execution. Afterwards he sued Mr. Swift, who was the first indorses, and ho pleads the first recovery against Hughes in bar to this action, and avers that it was for the same bill and that they were the same parties. To this plea the plaintiff demurred, and the defendant joined in demurrer. Mr. Pollexfen then argued that the plaintiff had his aotion against either of the indorsors or against tho drawer, but not against them all. Chief Justice. If tho plaintiff had accepted of a bond from tho first drawer, in 52 OF NEGOTIABLE PAPER. use became a local usage or custom of trade; by degrees this custom became general and assumed the uniformity and stability of recognized and common law. Found beneficial to men engaged in commerce, there was no longer any reason why it should be. confined among the merchants; and hence it became the common- nstrument of business, favored in the courts and improved by statutory enactments. 1 x re) * Promissory notes in writing, made payable to the per sons to whom they were given, or order, were habitually employed in business some time before they acquired the sanction of law. The courts decided against the negotiability of the instru- ment, holding that the indorsment did not give to the indorsee a „ „ right of action in his own.name against the maker, * but that 53 ° .... the indorsee might bring his action in the name of the payee- and recover thereon the amount to his own use, the indorsement being an appointment or agreement to that effect ; or that he might, bring an action thereon against the person who indorsed it to him, such indorsement being equivalent to the drawing of a bill for the amount of the note. But the use of such negotiable notes having become general, they were at length by the statute of 3 & 4 Ann, c. 9, made assignable and indorsable in like manner as bills of exchange. So that in respect to promissory notes, their negotia- bility has a statutory origin ; whereas the negotiable property of bills of exchange rests upon what is everywhere termed the custom of merchants. 2 #54 * The payee, we may observe, either of a bill of exchange or satisfaction of his money, it had been a good bar to any action which might have- been brought against the other indorsers for the same ; and as this case is, the drawer is still liable, and if he fail in payment the first indorser is chargeable, because if he make indorsement upon a bad bill, 'tis equity and good conscience that the indorser may resort to him to make it good. But the other justices being aganst the opinion of the chief justice, judgment was given for the defendant; but it was afterwards reversed in the exchequer chamber. Lutw., 88, 2 b." This case was decided in 1G85, and is interesting as evidence of the law at that time, and as shewing the origin and growth of the law-merchant. 3 Alod., 86. Perhaps we should say in justice to the memory of an eminent judge, that Holt, referring to the reports called Modern, complained bitterly of his reporters, saying that the scimble-scambk s/w/ 1 which they published would " make posterity think ill of this understanding, and that of his brethren on the bench." The other reporters of the period were better scholars, aud particularly Lord Raymond; who was his pupil nnd became his successor. 1 9th and 10th Will. 3; cli. 17 ; 3d and 4th Anno, eh. 9. 1 2 a. S. of New-York ; 3d ed., p. 52-53. See post, note. 264 et seq. NATURE AND ORIGIN. 53 of a promissory note, has clearly a property vested in him, (not, indeed, in possession but in action,) by the express con- tract of the drawer in the case of a promissory note, and, in the case of a bill of exchange, by his implied contract, namely ; that provided the drawee does not pay the bill, the drawer will. 1 And this property, so vested, may be transferred and assigned from the payee to any other man, contrary to the general rules of the common law, that no chose in action is assignable, which assign- ment is the life of paper credit. In the first place, the payee or person to whom or to whose order such bill of exchange or promissory note is payable, may by indorsement, or writing his name in dorso, or on the back of it, assign over his whole property to the bearer, or else to another person by name, either of whom is then called the indorsee ; and he may assign the same to another, and so on in infinitum. And a promissory note, payable to A or bearer, is negotiable without any indorsement, and payment thereof may be demanded by any bearer of it. But whenever the bill or the note is past due and negotiated after that, the indorsee takes it subject to every defence which existed between the original parties at the time of the transfer to him. 2 *As we have said, it was the original doctrine of the v _ . oo common law that choses in action cannot be transferred to a stranger, " because, under color thereof, pretended titles might be granted to great men, whereby right might be trodden down and the weak oppressed, which the common law forbiddeth !" a The rule, as the reason given for it implies, originally had relation only to landed estates ; but it was afterwards made equally applicable to the assignment of a mere personal chattel not in possession, * and to all such interests in contracts as, in case of non-performance, can only be reduced into beneficial possession by an action or suit.* Bat the rule was never adopted in courts of equity; and it has been gradually modified in courts of law, so as to protect the rights of the assignee and defend him from the unconscientious conduct 1 2 Bla. Com., 4G8. * Havens v. Huntington, 1 Cowen R., 387 ; Brown v. Davis, 3 T. R., 80 ; Johnson V. Bloodgood, 1 John. Cas., 51; 2 Caincs' Cas. in Error, 303; 1 John. Cas., 331; 2 John., U. 30C; 5 id., 318; 8 id., 451, • Co. Litt, 14 a; Sooley v. Daniel, 2 Bos. k Pull., 541. 1 Patrldge v. .Strange, Howd., 88; Jones v. Roe, 1 lien. Bla., 30. * 2 Ula. Com., 442. • Wright v. Wright, 1 Vcs., 411,412. 54 OF NEGOTIABLE PAPER. of the assignor. 1 At a very early day, it was asserted by one of the judges, " that if an assignee of a chose in action have an equity, that equity shall be no exile to the courts of commou law." Though he has not a right of action in his own name, he haa an equitable right which the courts recognize and take care to protect : or example, they will not permit the assignor cf a judgment to enter satisfaction upon it ; they will not permit him to discontinue a suit brought in his own name on a bond which he has assigned ; and they will not even permit his declarations and admissions made subsequent to the assignment to be shown in evidence by way of defeating a recovery by his assignee. 8 And in this State, it is at length settled by statute, that the assignee or real party in interest may and must bring his action in his own name upon the thing assigned ; with this qualification, that no assignment of a thing in action *not arising out of contract shall be permitted, and that executors, administrators and trustees of express trusts, or persons expressly authorized by statute may sue without joining with them the persons for whose benefit the action is prosecuted.' So that with us, all choses or things in action arising out of contract are to be enforced in the name of the assignee ; though the assignment, like all other contracts, must be shown to have been made for a valuable consideration. On the -other hand, as to bills of exchange and negotiable promissory notes, a consideration is always implied in law, and the transfer by indorsement is held to vest in the indorsee, both the legal and equitable title ; and the presumption is that the person in possession of the note or bill is the legal holder.* For- merly it was usual in bills of exchange to express that the value thereof hath been received by the drawer ;' in order to show the 1 Welsh v. Mandeville, 1 Wheaton., 233 ; Andrews v. Beecher. 1 John. Cas., 411; 3 John. R., 426; Legh v. Legh, 1 Bos. & Pull., 447 ; Frear v. Evertsou, 20 John. R., 142. 3 2 John Cas., 121, 258 ; M'Cullen v. Coxe, 1 Dall., 139 ; JJacket v. Martin, 8 Greenl., 77 ; 20. John. R., 142; 1G Maine R., 49; 1 Mass. R., 117; 3 id., 558; 4 id., 508; 9 id. 337 ; 10 id., 316 ; 10 Wend., 675. In New York the declarations of the payee of a note, made while he was the owner, are not admissible in evidence against the party to whom he afterwards transfer* the note. Beach v. Wise, 1 Hill. 612; Paige v. Cagwin, 1 Hill, 361. A different rule is held in some of the States ; see llollister & Smith v. Reynor, 9 Ohio State, 1. 3 Code of Procedure, § 111, 112, 113. 4 Baker v. Arnold, 3 Cai. R., 279 ; Brennan v. Hess, 13 John. R., 52. * Bla. Com., 468. NATURE AND OKIGIN. 55 consideration, upon which the implied contract of repayment arises ; and promissory notes are very generally drawn so as to express the fact that they have been given for value received. But no such words are necessary to the validity of the instrument, and they are very frequently omitted. 1 Between the original parties the consideration may be inquired into ; but an innocent holder of negotiable paper who has received it in the usual course of trade, for a valuable consideration, though from a person having no title and no authority to transfer it, will be protected even as against the claim of the previous owner ; the rule is otherwise where it appears that the paper was received as security for an antecedent debt # due from the person who made the unauthorized transfer, and the holder neither parted with value on the credit of it, nor relinquished any previous security. In other words, the bona fide holder of negotiable paper who has paid value for it before its maturity, or who has relinquished some available security or valuable right on the credit thereof, is entitled to protection, and may recover thereon notwithstanding some of the previous holders procured the same by fraud or * diver- ^ ted it from its original purpose. But the fact that it has been received, not in the usual course of trade, but only as a collateral security for a pre-existing debt, lets in a defence to the plaintiff's title. 8 The law on this subject was lately stated by the supreme court of the United Spates in these terms : There is no doubt that a bona fide holder of a negotiable instrument for a valuable consideration, without any notice of facts, which impeach its validity between the antecedent partes, if he takes it under an indorsement before the same comes due, holds the title unaffected by these facts, and may recover thereon, although as between the antecedent parties the transaction may be without any legal validity. This is a doctrine so long and co well established, and so essential to the security of negotiable paper, that it is laid up among the funda- mentals of the law, and requires no authority or reasoning to be brought in its support.' But in the application of the principle thus stated, there is some diversity of opinion ; if the holder re- ceived the paper inpayment of a pre-existing debt, it is adjudged 1 Chitty o . Bills. 69 ; Casey v. Brabason, 10 Abbott, 3G8. 1 Coddinpton v. Bay, 20 John. It., C'57 ; Stalker v. M'Donald, 6 Hill R., 93 ; and tha cases there cited. * Swift v. Tyson, 1G Peters U. S. S. R., 1. 56 OP NEGOTIABLE PAPEK. by high authority that he may recover on it, notwithstanding the facts which implicate its validity as between the antecedent parties'; and it is adjudged that, though he received the paper in good faith as a pledge or security for a prior debt, he is not entitled to the same protection as if he had received it in the usual course of trade and given or parted with value for it. 1 Bank checks are in substance bills of exchange payable on demand. 2 They are sometimes said to resemble, or to be like bills of exchange ; but they are in truth a species of the bill, just # as a note on demand, or a banker's or a goldsmith's note *5s a species of promissory note. It is essential to a check, eo nomine, or bank draft, that it be payable on demand, and then days of grace do not attach, any more than to bills or notes payable on demand.' If drawn on a bank, pa}" able to the order of the payee at a future day, it is not properly a check, but a bill of exchange, entitled to days of grace. The circumstance that it is drawn on a bank does not determine its character ; for if it did, there could be no days of grace allowed on any draft drawn on banking associations. 4 It is generally made payable to bearer, but its character is not changed by the fact that it is made payable to the order of the person to whom it is given. 5 Being indorsed, the holder, if he would preserve his right to resort to the drawers 1 5 John. Oh. R., 51; 20 John. R., 637; 6 Hill R., 93 ; 3 Kent's Com., 81. The subject is considered more at length in a subsequent chapter. a Harker v. Auderson, 21 Wend. R., 372; Bochm v. Sterling, 7 Term R., 419, 426; Crugcr v. Armstrong; Merchants' Bank v. Spicer, G Wend., 443 ; Murray v. Judah, 6 Cowen, 4S4; Chapman v. White, 2 Seldeu R., 412. 1 Woodruff v. Merchants' Bank of the city of New York, 25 Wend., 672; 6 Hill R., 174. 4 Brown v. Newatt, 4 Selden R., 190. The law-merchant is stated in the text. " An act in relation to commercial paper," passed April 17, 1857, provides that checks and drafts, appearing on their fare to be drawn upton banks, banking associations or indi- vidual bankers, carrying on business under the act to authorize the business of banking, payable on any specified day or in any number of days after the date or sight thereof, shall become due and payable without any days of grace being allowed; and that it shall not be rie'cessaTy to protest the same for non-acceptance. And the same act declares that drafts drawn payable at sight, at any place within this state, shall be deemed due and payable on presentation, without any days of grace being allowed thereon. Session Laws of New York. Under this statute it will become important to determine the meaning of the terms it shall not be necessary to protest the same for non-acceptance. Do these words mean that it shall not be necessary to give the drawer and iudorser notice of non-acceptance ? * Mohawk Bank v. Broderick, 10 Wend. R., 301. NATURE AND ORIGIN. 57 and indorsers, must use the same diligence in presenting it for payment and in giving notice of the drawee's default, that would be required of bim as the holder of an inland hill. 1 It must he presented for payment within a reasonahle time ; and it is asserted that the holder is required to use even greater diligence in pre- senting it for payment than is necessary in presenting common inland hills of exchange. 3 Though the drawer have no funds in the bank on which he gives his check, yet in order to charge the indorser it is essential that the check * be presented within a # reasonable time, and protested for non-payment. 3 The maker or drawer's undertaking is, not that he will pay the amount but that the bank will pay it on presentment. But as between the drawer and the holder there are many circumstances that will excuse a delay or failure to demand payment ; as if he have no funds in the bank on which he draws, or having funds there withdraws them to his own use/ Bank notes, as we have just now remarked, are a species of promissory note ; 6 they are drawn payable to the bearer on demand, and are for many purposes considered and treated as cash. Being payable on demand and issued by a responsible association, they are not regarded as mere securities for debts, but are by general consent used as money in the ordinary course and transaction of business. The business of banking being regulated by law, and carried on under such conditions and restrictions as are deemed necessary for the protection of the community, a certain credit attaches to the notes of a bank that gives them currency, and ren- ders them a convenient substitute for mono}'. Hence the practice is to use them as such in the payment of debts, though they are not a legal. tender, and are strictly only promissory notes. 7 Being assignable by delivery, well secured, and payable in specie on demand, they are habitually spoken of and given and received as cash ; so that in popular language, bank notes issued by authority 1 c Wad It., 4-45. * Gotigli v. Slttats, 13 Wend. R., 549 ; 10 id., 304; 4 Ducr R., 122. •21 Wend. R., 375. 4 G Cowen R., 484; post, 39G-398. * A forged or counterfeit bank bill is correctly described in an indictment for uttei tag it, as a promissory note; Commonwealth v. Simonds, 14 Gray (Mass.), 59. •Smith v. Strong, 2 Hill R., 241; Saflbrd v. WyckofT, 1 Hill R., 13. T Jefr.r^-'.n County Bank v. Chapman, 19 John. R., 115; Thomas v. Dodd, 6 Hill R., 340; Warren v. Mains, 7 John. R., 47G. Eow. 8 58 OF NEGOTIABLE PAPER. and payable at any time in coin, are called money, and are said to represent coin, for which they are used as a substitute. For this reason they pass under a will as money, on the presumption that the testator employed the language used by him in its ordinary meaning. 1 The value of bank bills depends upon the fact that they are „„„ redeemable at any moment, and are not a mere creation of *60 ... . * authority ; for it is impossible to create money by an arbitrary act of legislation. An English statesman, towards the close of the last century, reviewing the course of the French revo- lution, and the financial expedients to which its leaders had been compelled to resort, makes these pertinent and pithy remarks: " At present the state of their treasury sinks every day more and more in cash, and swells more and more in fictitious representation. "When so little within or without is now found but paper, the repre- sentative, not of opulence but of want, the creature not of credit but of power, they imagine that our nourishing state in England is owing to that bank paper, and not the bank paper to the flourish- ing condition of our commerce, to the solidity of our credit, and to the total exclusion of all idea of power from any part of the transaction. They forget that in England, not one shilling of paper money of any description is received but of choice, that the whole has had its origin in cash actually deposited, and that it is convertible, at pleasure, in an instant, and without the smallest loss, into cash again." a The same is true in this country ; the legal character of a bank bill is that of a promissory note, and its currency depends upon the credit of the bank issuing it ; while the credit of the bank depends in part upon its management, and in part upon the secu- rity which it has deposited, under the law of the state, for the redemption of its notes. There is still another species of negotiable paper, namely, bonds issued by states or corporations under authority of law, and drawn in negotiable form. The title to these instruments, which are frequently made payable to bearer, passes by mere delivery ; and they are therefore, in some respects, treated as negotiable paper. One who purchases them without notice of any defect in the title of the vendor has been held to acquire a valid title, free from the 1 Cliitty on Bills, 523. • 3d vol. of Burke'a Works, 266. NATURE AND ORIGIN. 59 equities existing between prior parties. 1 The form, design and nature of the instrument show that it is intended for negotiation and sale, like a ^negotiable note or bill of exchange. It is „„„ itself an absolute contract for the payment of a certain sum of money to the bearer ; and the common usage is to sell such bonds in the market, and transfer them by delivery. A certificate of stock, which is not a contract for the payment of money and is not in terms negotiable, is an entirely different instrument, and is not placed upon the footing of commercial paper ; and consequently the lender, taking it in good faith as a security for a loan of money, does not thereby acquire such a right as against the corporation issuing it, as will entitle him to compensa- tion notwithstanding the certificate was fraudulently issued by the agent of the corporation. 2 In other words, certificates of stock in a banking association, or in a railroad company are not securities for the payment of money, that may be transfered, subject to the rules applicable to negotiable paper ; on the contrary, they are simply the muniments and evidence of the holder's title to a given share in the franchises of the corporation of which he is a member. 1 Fisher v. The Morris Canal and Banking Company, 3 Am. Law Reg., 423 ; 4 Duer R., 539, 582 ; Delaiield v. State of Illinois, 2 Hill R., 157, 177. Railroad bonds payable to bearer with coupons attached for the interest, are nego- tiable instruments ; so that the party taking them by purchase or in pledge acquires the 6ame title and interest in them as if they were negotiable bills and notes : Culver & al. v. Benedict & al., 13 Gray, 7; and the holder who indorses them over to another party, is liable thereon as an indorser of negotiable paper; Hodges v. Shuler, 24 Barb., G8; S. C, 22 N. Y. R., 114. The same is true of bonds issued with autho- rity, in a negotiable form, by a village or city corporation. Bank of Rome v. Village of Rome, 19 N. Y. R., 20. a Mechanic's Bank v. New- York and New Haven Railroad Company, 4 Duer R., 480 ; S. C, 3 Kernan R., 599. A bill of lading may be transferred by indorsement and delivery, and possesses a negotiable quality, though it is not in the full sense of thp term a negotiable instrument. Saltus v. Everett, 15 Wend., 475; 20 id., 257; Gurney v. Behrend, 3 Ellis and Black., 622; 4 Denio, 323; 14 Mees. and W., 402; 2 Sand, G8; 15 Barb. R., 50G; 2 Term R., 03; 2 Smith, 325. Certificates of stock, which by the charter of the bank, or its articles of association, the bank has a lien on for the payment of the notes of the holder, can only be transferred subject to such lien. In other words, the certificates are not negotiable, and the assignee can acquire no better title or interest than the assignor had to convey , McCrearcsB Asrn promissory notes. of infancy when that is interposed by the infant. This form of pleading results naturally from the nature of his contract, and the relation in which he stands towards the party with whom he has made the agreement ; unless he chooses to avoid it, the contract is valid. 1 His new promise is, therefore, logically treated as an affirmance or ratification of the note. 1 At the same time, " it results from the fact of the original contract not being binding on the infant, that the new promise must possess all the ingredients of a complete agreement, to enable the plaintiff to recover against the infant. Hence, as no agreement is complete until the minds of the contracting parties meet, the new promise, to be binding on the infant, must be made to the creditor in person, or to his agent. The new promise creates a new contract ; and the old debt supplies the consideration." 3 In the same manner, a debt barred by the statute of limitations is a good consideration for a new and valid promise to pay it* Where an infant loans money upon an usurious contract, which the law declares absolutely void, he may on coming of age, reco- ver the money lent and for which he has received promissory notes, as money had and received. 5 The rule that he is not bound by his contracts, with the one exception already named, runs through all the cases, and no other principle is allowed to arrest its operation. Though he accept a * bill of exchange, he is not answerable as acceptor : 6 though he state an account, his act will not preclude him from afterwards disputing and inves- tigating the items. 7 He is not estopped by his own representations, nor can he in any case be deprived of the protection which the law allows him.* 'Slocura v. Hooker, 13 Barb., 536. 9 18 Barb. R., 320. Per Welles, J., and case3 there cited. The infant need not do any act, on coming of age, to disaffirm his note. Buzzell V. Bennett, 2 Cal., 101. It remains voidable until he gives it validity by a new pro- mise. Dunlap v. Hales, 2 Jones' Law (N. C), 381. 'Hodges v. Hunt, 22 Barb. R.. 150. Per Paige, J. An executed contract, a mortgage given by an infant, is valid until he does some fcct to avoid it. Palmer V. Miller, 25 Barb.. 399 ; but an executory agreement must be expressly ratified or renewed. Reed v. Boshears, 4 Sneed (Tenn.), 118. 4 Watkins v. Stevens, 4 Barb. R., 168. 1 19 Wend. R., 301 ; Corpe v. Overton, 10 Bing., 252. • Williamson v. Watts, 1 Camp. 552. 1 Truman v. Hurst, 1 Term R., 40; Ingledew v. Douglas, 2 Stark., 36. • Cannan v. Farmer, 3 Exch. Rep., 598 ; Williams v. Harrison and others, Carth., 160; 3 Salk., 197. A note given by a party in custody on a charge of being the father of a bastard PARTIES. 65 It is sometimes said that the infant cannot accept a bill of ex- change : the meaning is that he cannot by his acceptance waive his right to disaffirm the contract; for it is no doubt true, that having accepted a bill he may afterwards render it valid by a new promise to pay it. 1 That is to say, his privilege prevails over the rales and presumptions attaching to negotiable paper.* Though he carry on trade as an adult, he is not liable on his notes or bills given in the course of it during his infancy." But he is liable on a bill drawn on him during his infancy and accepted by him after he comes to full age ; 4 for this is an engagement entered into after acquiring full capacity to contract. Wlien an infant indorses negotiable notes or bills, he does not pass any interest in them as against himself ; his act is voidable, but neither the acceptor nor subsequent indorsers can allege his infancy to evade their liability/ Nor can the drawer of a bill set up the infancy of a payee and indorser, as a defence to an action thereon against himself. 4 In other words, the act stands good and valid until the infant inter- poses and, by giving notice to the antecedent parties, intercepts the payment to his indorsee. 7 The parties contracting* with him assume all the inconveniences incident to the pro- tection which the law allows him ; and this protection is complete and ample against all his liabilities arising on contract. On the other hand, an infant may certainly sue on a bill of ex- change in his favor. 8 But he sues by his guardian, and payment should accordingly be made to him. After coming of age, he may 1 10 John R., 33 ; Hunt v. Massey, 5 Bar. and Adol., 902 ; 3 Nov. and M., 109 ; 17 Fend., 419 ; 3 Wend., 479 ; 1 Mete, 559. 8 Nightengale v. Withington, 15 Mass., 272. • Van Winkle v. Ketcham, 3 Caines, 323. 4 Stevens v. Jackson, 4 Camp., 164. • Taylor v. Croker, 4 Esp. R., 187 ; Hardy v. Waters, 38 Maine, 450. • Where two partners accept a bill, one of whom is an infant, the holder may sue the adult partner alone, and if he plead non-joinder, plaintiff may reply the infancy of his partner; but it must appear that the infant claims his defence as such. 4 Taunt., 458 ; Chitty on Bills, 20, 200 ; 15 Mass., 272. 1 6tory on Promissory Notes, § 80. ■Warwick v. Bruce, 2 Maulo and S., 205; Teed v. Elworth, 14 East, 210; 6 Taunt., 118. child, as a compromise of the prosecution, and for the support of the child, is valid Maxwell v. Campbell, 8 Ohio State, 2G5, though given to the mother's father; Cutler v. Collins, 12 Cush. Mass., 233; so is a like note given by an infant father; Gavin v. Burton, 8 Ind., <)'.). Edw. 9 66 BILLS OF EXCHANGE AXD PROMISSORY NOTES. bring an action in his own name, and there is nothing to pi event his recovering on any contract into which he has entered during his minority. 1 At common law, a married woman has no power to bind herself by contract ; and hence her negotiable promissory note is abso- lutely void. 5 Indeed, the principle is well settled, that a married woman can in no case be sued upon a mere personal contract made during the coverture, whether joined with her husband or not, unless the husband be civiliter mortuus, or banished or trans- ported. 3 But where her husband is legally dead, or where he has been absent and not heard from for seven years, so that the law presumes him to be dead, she may make contracts that will bind her at law/ In Massachusetts the exception is carried still further, and it is held that where the husband was never within the com- monwealth, or has left it and wholly renounced his marital rights and duties, and deserted his wife, she may make contracts and sue and be sued in her own name as a feme sole.' It is adj udged in equity that a married woman having a separate estate, is chargeable in respect of it for debts incurred by her for its improvement or on the credit of such estate.' Thus, where a feme covert borrowed money on the faith of, and promised that it should be repaid out of her separate estate, * giving her promissory note for the amount, and a bill was filed against herself, her husband and trustees, setting forth the facts, a decree was made directing the payment of the note out of the rents and profits of her separate property. 7 The same decision was made in a similar case, but differing in this respect, that she gave the note jointly with her husband and as security for his debt.' Living 1 When an infant purchases personal property, giving notes therefor, and after- wards seeks by an action to rescind the contract, he must restore the property and pay for the depreciation caused by his use of it ; Gray v. Lessington, 2 Bosw., 257. 3 Van Steenburg v. Hoffman, 15 Barb. S. C. R., 28; Marshall v. Butter, 8 T. R., 54G ; Vance v. Wells, 6 Ala. R., G37 ; Moses v. Fogarte, 2 Hill (S. C.) R., 335. * 2 Saund., 180, n, 9. 'LordRaym., 147; 1 Bos. and Pull., 358; 2 Campb., 113, 273. The wife may bind herself on a contract, where her husband being an alien, was never in the country; so held in England. 3 Campb., 123. 'Gregory v. Pierce, 4 Mete. R., 478; Gregory v. Paul, 15 Mass., 31. "North American Coal Co. v. Dyett, 7 Paige, 9; S. C, 20 Wend., 570; 18 N. Y Rep., 273. 7 Bullfin v. Clarke, 17 Vcs., 3G6; Gardner v. Gardner, 22 Wend., 62G. e Hulme v. Tenant, 1 Bro C. C, 1G; 9 Ves., 180, 48G; 11 id., 209. TARTIES. 67 separate from her husband and having a separate maintenance, she was held answerable in the same manner as the acceptor of a bill of exchange ;' and that notwithstanding the bill was drawn for the benefit of a third person." But in these cases her liability was established in equity, and on considerations that did not re- cognize her legal obligation as arising out of the contract. On the contrary, it was placed upon the fact that the credit was given or the debt contracted on the faith of her separate estate, to be paid out of it, and that by the terms of the settlement her power of disposition and control was not restrained. 3 Before the Eevised Statutes, the doctrine was established in this state, as it is in England, that where real or personal property is settled to the separate use of a married woman, her power of disposition and control is subject to no other limitation or restraint than such as the terms of the settlement directly and plainly impose. She might therefore charge it with the payment of debts, and when, with her assent, credit was given to her on the faith of such estate, the creditor acquired a lien which equity would enforce. But where, under our Revised Statutes, real estate is settled to her separate use, the legal estate is not in her, and she has no power to incur any debt chargeable on the same or payable out of the rents and profits thereof; nor is she in such a case liable personally for debts, or for counsel fees and services rendered in defending the estate. 4 * The recent statutes of this state permitting a married woman to hold her property, real and personal, as a separate estate, free from the control and disposal of her husband, as if she were a single female, does not authorise her to enter into contracts 1 Stewart v. Lord Kirkwall ct al., 3 Mad., 387 ; Heatby v. Thomas, 15 Ves., 59S. 1 Bingham v. Jones, Chitty on Bills, 21 ; Owens v. Dickenson, Craig & Phil., 48. ' Noyes v. Blakeman, 3 Sand. S. C. R, 531. Mr. Duer, J., reviews the law on the subject in this case, holding the doctrine as settled in England, with such qualifications as have been made by statute, S. C, 2 Seld R., 567. * 3 Sand. S. C. R., 535, and the cases there cited; 2 Seldcn R., 5G7; see contra, Murray v. Barlee, 3 My]. & K., 209. Where the property is vested in trustees, and the settlement is declared expressly not to be subject to the debts or contracts of the husband, it is hold the wife canno bind her separate estate by guarantying or indorsing for him : Kempton v. Ilallowell, 21 Geo., 52 ; Tlicks v. Johnson, id., 194 The wife has in such a case no power to convey or change her estate. Noyes v. Blakeman, 2 Sold., 5G7. There being no limitation in the act of settlement, sho has tho jus diiponendi and may charge it: Cooke v. Husbands, 11 Md., 492; Baker v. Gregory, 28 Ala., 514. 88 THTU3 OF EXOnAMUB AHT rKUJttlSSOlt IT -NOTJSS. in the same manner as if she were unmarried. 1 - But she may convey the same by deed, and her husband need not join with her in executing it. 3 The act, however, does not in terms, abrogate the common law rule, that she cannot bind herself by contract ; and hence it is held that, though she may make an appointment barging her estate, she cannot enter into contracts binding upon ner in law.* Even where she has a separate estate, it will not bo charged with debts incurred by her, unless they are incurred with that understanding.* There must be an intention to charge her separate estate ; otherwise the debt will not affect it. The act of signing and delivering, with her husband, a joint and several promissory note for personal property purchased by him, does not charge her separate estate ; for the law will not infer or imply an intention on her part to make the charge, from the mere fact that she executed the instrument* The intention to make the charge must be declared in the contract itself: if that he in writing, the intention cannot be shown by parol, outside of the written engagement ; 6 while, as to her separate debts, .contracted expressly on her own account, the inference is that she intends to make the charge. 7 In brief, a debt contracted either for the benefit of the separate estate of the wife, or for her own benefit upon the credit of her separate estate, may be collected out of her separate property. 8 It is not material in practice whether a married woman has a separate estate in equity or a separate estate in law, under our recent statutes : In either case the estate can only be reached by a court of equity ; as a married woman, she cannot be sued at 4 See statutes of 1848 and 1S49. * Blood v. Humphrey, 17 Barb. S. C. R., 6C0. 3 Switzer v. Valentine, 10 Howard Pr. R., 109 ; Dickerman v. Abrams, per Harris, Justice, 21 Barb. R., 551 ; Willard's Equity Jurisprudence, 650, 654; Coon v. Brook, 21 Barb., 546. * 1 Comst. R., 462, Vandcrheyden v. Mallory; 15 Barb., 555, Van Allen v. Humphrey. 6 Yale v. Dederer, 18 N. Y. Rep., 265; reversing S. C, in Supreme Court. 21 Barb., 286. •S. C, 22 X. Y. Rep., 450; reversing S. C, 31 Barb., 525. 'Gardner v. Gardner, 7 Paige Ch., 112; S. C, 22 Wend.. 528: lier husband boiug insolvent; Colvin v. Currier, 22 Barb., 371; see also Dickerman v. Abrahams, 21 id., 551. * 18 N. Y. Rep., 265, 277, 282; Converse v. Converse, 9 Rich. F.q., 53gj 7 Paige, 112; 22 Wend., 371; Goodall v. McAdam and wife, 14 How. Pr. R., 385; 22 Wend., 628. An action to charge her separate estate should set forth the nature of it, and the facts showing that it ought to be charged. Lester v. Fleet, 2 Hilt., 477. PARTIES. 69 *law. If a building be erected upon her separate estate, . at her request as well as that of her husband, and the latter be insolvent so that the builder can have a remedy only against the estate, the estate is chargeable. 1 A married woman cannot bind herself by covenant during cover- ture, nor is she estopped by her covenant from setting -up a subse- quently acquired interest in lands conveyed by her jointly with her husband. 2 To hold her estopped from asserting her title would be equivalent to holding her bound by the covenant. Nor is a married woman estopped by her representations that she is a feme sole.* At common law, where a promissory note is made to a feme sole, and she afterwards marries, being possessed of the note, the title vests in the husband, and he alone Can indorse it. 4 And so, where a note is made payable to a married woman, the legal inte- rest in it vests in her husband.' Such negotiable paper, being part of her personal estate, payable to her order, is in legal effect pay- able to her husband. 5 But a feme covert may make a valid, indorsement of a note, given to her before marriage, by a name different from that of her husband, if the circumstances of the case be such as to warrant the presumption that the indorsement was made with the assent of the husband. And such indorsement will be valid, notwithstanding that by an ante-nuptial contract she had assigned the note to a trustee for her benefit ; the indorsement being made with the knowledge and assent of the trustee/ The husband may authorise his wife to indorse bills of exchange or promissory notes ; and where he permits her to carry on business and * pass under an assumed name, such an au- 'Colvin v. Currier, 22 Barb. R., 371, E. Darwin Smith, J. "A separate estate belonging to a married woman should be considered the separate estate recognized by a court of equity, however acquired." A note indorsed over to a married woman, rests in her as a separato property ; Dilh^e v. Parks, 31 Barb., 132. a Jackson v. Vanderheyden, 17 John. R., 167 ; 3 Blaekf., 201 ; 13 La. An., 536, 626. 1 Canam v. Farmer, 3 Ex. Rep., 698. 'Conner v. Martin, 1 Stra., 516; 3 Wils., 5; Legg v. Legg, 9 Mass., 99. » Barlow v. Bishop, 1 East, 432 ; 3 Esp., 266. e 10 Mod., 245; 4 T. R., 301 ; 2 Burr., 1776. 7 Miller v. Delamater, 12 Wend., 433. The bdorser of a note, in an action against him as such, is not allowed to show 'that the makers of it were married women, or that the payee and first indorser was a married woman, incapable of QODtmefiag; his indorsement is an implied guaranty of their capacity to contract. Erwin v. Downs, 15 N. Y. Hep., 575; Ogdcn V. Bly- denburgh, 1 Uilt., 182. 70 BILLS OF EXCHANGE AND FKOMISSOKY NOTEb. thority may be presumed. 1 If he permits her to carry on business in her own name, and she indorses a note made payable to her in the course of her business, using the name of her husband, it seems the circumstances may be left to the jury to presume or infer an authority from him to indorse. 3 So, where she drew a bill of exchange payable to her own order, and indorsed it with the assent of her husband, it was held that this indorsement carried the title to her indorsee, so as to enable him to recover thereon against the acceptor.* But where no authority is shown, her act is a nullity, and her indorsement transfers no property in the bill or note. 1 Unless she acts as the agent of her husband, her act will not bind him ; and if authorised to give a note in his name, she cannot give one in her own name so as to bind him. 6 A promissory note is not a personal chattel in possession, but a chose in action ; and the common law rule is that when a chose in action, such as a bond or note, is given to a feme covert, the hus- band may elect to let his wife have the benefit of it, or he may take it himself and reduce it into possession at any time during the coverture.* But if he omit to do this, it will survive to her after the death of her husband. Being negotiable, he may reduce it into possession by indorsing and transferring it ; not being negotiable, he must reduce it into possession by a suit at law, like any other thing in action. If he omits to do this, and- he survives her, the action must be brought in the name of her personal representatives. 7 1 Coles v. Davis, 1 Campb., 485. ■ 1 East, 432. 3 Prestwick v. Marshall, 5 Car. and P., 594; 4 M. and P., 513. 4 Savage v. King, 17 Maine, 301. 6 Minard v. Mead, 7 Wend. It., 63. Where a married woman, the wife of a farmer, has the principal management of his business, buying and selling in the course of it, and purchases a pair of horses and gives her note for them, the horses being used on the farm, it is in an action against the husband, a question of fact for the jury, whether the wife did not act as his agent. Gates v. Brower, 5 Seld., 205. Galers v. Maderley, 6 Mees. and Welsb. R., 422 ; Richards v. Richards, 2 Barn, and Adol., 447; Betts v. Kimpton, 2 id., 273. ' G Mees. and Welsb. R., 422. In New York, a married woman may now sell and transfer her separate personai property, make bargains and carry on any trade or business; she may sue and be sued in her own name; and judgments maybe recovered against her, and executions collected against her separate estate in the same manner as if she were sole. Tho powers given to her are so comprehensive that they seem to imply a general power to contract ; see contra, 22 N. Y. Rep., 460 ; Laws of 1860, p. 157 ; and Laws of 1862 page 343, amending the statute of 1860. A note given by a married woman for goods purchased by her in her business as a grocer is valid; Barton v. Beers, 21 How. Pr., 309. PARTIES. 71 Alien Enemies. A state of war operates to suspend and inter- dict all intercourse and correspondence with the enemy ; it prohibits all commerce and contracts between the citizens and subjects of the belligerent nations, and renders them ^unlawful and ^^^ void. The theory is that every man is a party to the acts of his own government : and when one government declares or enters upon war against another, the two nations become enemies, and all the subjects of the one are enemies to all the subjects of the other. Formerly, when it was customary to announce the beginning of a war by an open declaration, it was common to include in it, by way of monition to the subject, a clause prohibit- ing all correspondence and commerce with the enemy. But this prohibition was only declaratory of the laws of war, and by no means necessary to render unlawful all trade between the subjects of the parties at war. 1 Hence, contracts made with an enemy are void ; and contracts entered into between subjects of the belligerent parties before the war began, are suspended in their operation until the restoration of peace. 2 The effect of the law is to bind up the interests of every individual in those of his nation, and thus constrain every part of the state to lend its utmost energy in support of the com- mon cause, and withdraw from the enemy every aid and assistance. And certainly nothing can be more reasonable ; for it is impossible that a part of the people should claim to be at peace while the residue are involved in the calamities of war. 3 It follows as a consequence of what has been said, that debts due to an enemy, though contracted prior to the breaking out of hostilities, cannot be collected nor lawfully paid pending the war; and that bills of exchange used for the remittance of money from one country to the other, between the subjects of the belligerent parties, are void. 4 And the rule applies, not only to citizens and native born subjects, but *to all persons voluntarily 1 Griswold v. Waddington, 15 John. R., 57; samo case, 16 John. R., 438, and the cases and authorities there cited by Chancellor Kent. 'East India Co. v. Sandys, 2 Show., 3G6; Gist v. Mason, 1 Term R.. 84; Potts v. Bell, 8 Term R., 584; Brandon v. fresbit, G Term R., 23, 35; Furtado v. Rogers, 3 Bos. and Pull., 191; ex parto Boussmakcr, 13 Vesey, 71; Antoiuo v. Morsheud, 6 Taunt, 237; 7 id., 439. 'The Julia, 8 Craneh, 181 4 Hoare v. Allen, 2 Dall., 102; 1G John. R., 484. 72 BILLS OF EXCHANGE AND PROMISSORY NOTES. domiciled in either country. 1 But where two British subjects were detained prisoners in France, and one of them drew a bill in favor of the other on a third British subject, resident in England, and such payee indorsed the same in France to an alien enemy, it was decided that the alien s right of action was only suspended during the war, so that on the return of peace he might recover the amount from the acceptor ; and the decision was placed on the ground that otherwise such persons would sustain greater priva- tions during their detention. 3 The place of the transaction does not make it illegal ; the material question is, whether it renders assistance to an alien enemy in the time of war. Thus, it is held in England that an action may be sustained there by a neutral on a promissory note given to him by a British subject in an enemy's country for goods sold there. 3 If the contract be in favor or for the benefit of an alien enemy not domiciled in the country, it is void both at law and in equity: -but it is not void where it is made for the benefit of a neutral; and it seems that although a bill be drawn by an alien enemy, it may be valid in the hands of a neutral who received the same without any previous under- standing or knowledge of any intended illegal use to be made of it. 4 So, doubtless a bill drawn for the payment of ransom money is legal and valid, though payable to an alien enemy ; for this is such a contract as the laws of war permit, and it stands on the same principle as a convention for the exchange of prisoners. 6 In like manner bills of exchange, and promissory notes drawn or made for repairs done to a cartel ship, used for the transmission of propositions to an enemy or for carrying into effect such agree- v . 7 ~ ments as arc '''frequently entered into between states at war, are lawful and binding upon the parties to them." Corporations and associations organized under the general bank- ing law, can only exercise the powers and cany on the business which the statute under which the}* are created has authorised them 'M'Connelv. Hector, 3 Bos. and P, 113; 5 Rob. Adm. R., 90; 1 Campb., 432; Roberts v. Hardy, 3 Maulo and S., 533. 3 Antoine v. Morshead, G Taunt., 237 ; G id., 332, ■Honrict v. Morris, 3 Campb., 803; Cowp., 163. 4 Story on Bills, §§ 103, 10'4. Mr, John. R., 433; Cormo v. Blackburne, 2 Doug. R., Gil ; id., G-19 ; Yates v. Hall, 1 Term R., 73. " 8 Term R., 518; Story on Notes, § 97; Story on Bills, § 102. The language used by Mr. Justice Story, is the same in both of these works, with slight modifications. PARTIES. 73 to exercise and carry on, either in terms or by necessary implication. They are not like natural persons, in respect to whom the presumption is, that they have the right to carry on all business and perform any act which the law does not expressly prohibit. Being creations of the state, organized for specified objects, they are held to acquire certain rights as incidental to the general powers conferred on them by statute ; and these incidents are to be ascertained by considering the policy of the state in their creation, and the general law controlling and regulating the business in which they are engaged. 1 Though they can do no act which they are expressly prohibited from doing, they may do 1 many acts which they are not in terms authorized to perform. Thus, a corporation authorized by its charter to employ its stock solely in advancing money upon goods and in the sale thereof upon commission, may lawfully accept bills drawn on account of future consignments or deposits of goods. The acceptance of a bill is an engagement to pay money, and the company or corporate body may agree to pay or advance money, at a future day, and they may engage to do this by the acceptance of a bill.' It is not material whether a prohibition is incorporated into the charter of a body corporate, or embodied in a general law to which it is subject. In this state the business of banking is now regu- lated by a general statute ; and banking associations are prohibited by law from issuing or putting in circulation any bill or note, unless the same is payable on ^demand and without interest;' and it is adjudged that this prohibition is not confined to bills and notes capable of circulation as money. 4 Consequently, our banking associations, organized under the general law, cannot issue negotiable promissory notes, payable at a future day with interest ; nor are such notes valid, though given on account of a previous liability.' The intention with which such notes are made, does not relieve them from the interdict under which they are ' Safford v. Wykoff, 1 Hill R., 11 ; 4 id., 442; Mechanics' Bank v. Bunk of Columbia, 6 Wheat. R., 320; Tracey v. Tallraage, 18 Barb. R., 456, post 76. 1 Munn v. Commission Co., 15 John. R., 44. No seal is required in the execution of such an act; an agent may do it. * Statutes of 1840, p. 306. * Leavitt v. Palmer, 3 Comst. R., 19; see 1 Smith, 9. * 3 Comst. R., 19; Swift v. Beers, 3 Denio R., 70; Tyler v. Yates, 3 Barb. S. C. R., 222; Root v. Goddard, 3 McLean, 102, 276; Ontario Bank v. Schcrmcrlu>rn, 10 Paige, 113 ; 18 Barb. R., 456;. see 1 Smith, 9. Eow. 10 74 BILLS OF EXCHANGE AND PROMISSORY NOTES. placed ; though it is no doubt true that the design of the state is to prevent such paper from being issued and circulated as money. 1 The law confers the capacity to contract, and regulates the transaction of the business. Any departure from the sphere of business prescribed to them is unlawful, Had their engagements made in the prosecution of an unlawful business, are void. In short, banking associations in this state possess only authority to carry on the business of banking in the manner and with the powers specified and implied in the statutes ; they have no power, for example, to purchase state or other stocks for the purpose of selling them for profit, or as a means of raising money, except when such stocks have been received in good faith, and as security for a loan made by, or a debt due to such association, or when taken in payment, in whole or in part of such loan or debt. 2 And therefore promissory notes, payable at a future day, given on the purchase of state stocks, and made for the purpose of raising money, are void for two reasons ; first, because they are payable at a future time, and second, because the act is a departure from the legiti- mate business of banking. In the absence of any prohibitory statute, a corporation may give a promissory note for a debt contracted in the course of * its legitimate business, though not specially authorized to do so by statute.' When there is nothing on the face of the note or bill to show that it was issued contraiy to law, or upon an illegal consideration, or to raise a suspicion that it was drawn for an illegal purpose, the presumption is that it was given 1 1 Hill R., 11 ; 4 id., 412 ; 3 Comst. R., 33 ; 3 Smith, 521. The party receiving such notes and bills and giving value for them, is not in pari delicto in the usual sense of that maxim; 14 N. Y. Rep., 162; 15 id., 95-99; and it is adjudged by the Court of Appeals that he may recover back tho money or property given therefor, in the proper action, on an implied promise or undertaking; Tracey v. Talmage, 14 N. Y. Rep., 162 ; The Oneida Bank v. The Ontario Bank; 21 id., 490 ; Curtis v. Leavitt, 15 id., 9. It is doubted, per Comstock, J., whether such a draft is void in the hands of the party who paid value for it; 21 N. Y. Rep., 490. An instrument in the form of a bond, payable on a subsequent day named, with interest at six per cent payable semi-annually in London, with coupons for the interest attached; the security containing a provision that tho holder should, on complying with certain conditions, become entitled to a certain amount of the capital stock of tho association issuing it, is not a negotiable note or bill within the prohibition : Leavitt v. Blatchford, 17 N. Y. Rep., 521, 540, 545; but it is negotiable; Hodges v. Shuler, 22 N Y. Rep., 114. ' Talmage v. Pell, 3 Selden R., 328 ; id., 364 ; Tho Bank Commissioners v. St Lawrenco Bank, 3 id., 513. See Session Laws of 1862, p. 1 Barker v. Mechanics' Ins. Co., 3 Wend., 94 ; Mott v. Hicks, 1 Cowen R., 51» PARTIES. 75 for a lawful purpose. 1 On the other hand, when it appears upon the face of the instrument that it was issued contrary to law, or where there is sufficient to create a suspicion of its illegality and to put the party who takes it upon inquiry, he is not a bona fide holder, and cannot recover on it as such. 2 In England, as in this country, banking business is regulated by statute, and various restrictions in favor of the Bank of Eng- land and the East India company, are imposed with respect to the description of bills and notes which corporations and associations in the nature of banks may make, accept and negotiate ; such as those payable on demand or within a brief period and circulated as cash. But it is agreed that these prohibitory acts do not pre- vent corporations and companies from making promissory notes and accepting bills of exchange in the payment of debts and liabili- ties incurred in their legitimate business. 3 And it deserves to be remarked that corporations are mentioned in the statute of Anne, as persons who may make and indorse notes, and have the like remedy in the collection thereof which is given to other persons.* The result of the authorities seems to be, that corporations carry- ing on business under no restraining act may make promissory- notes and draw bills of exchange, where these are the usual and proper means to accomplish the purposes of their organization ; that such notes and bills are to be presumed legal and valid, where they are not prohibited by law, * and are received in good faith ; and that they are invalid when given in viola- tion of law, or when given for purposes wholly foreign to those for which the corporation was created.' 1 3 Wend. R., 94 ; 4 Hill R., 444, 445 ; 6 Wend. R., 615. The note is valid in the hands of a bona fide holder, without notice, though illegally issued. Stoney v. Amer. Life Ins. Co., 11 Paige, 635 ; 4 Hill, 442 ; 16 N. Y. Rep., 129 ; 3 Kern., 309; 1 Bos., 202 ; 5 Bos., 429. a 4 Broughton v. The Manchester Water Works Co., 3 Barn, and Aid., 1 ; Wiggin V. Bush, 12 John. R., 306. ' Wigan v. Fowler, 1 Stark. R, 459 ; Harvey v. Kay. 9 B. and C, 361 ; 3 Barn, and Aid. R., 1. * See a collection of English statutes on the subject, in the appendix to Byles' Work oc Bills. •Pitman v. Kintner, 5 Blackf., 250 ; 1 Ohio, 31 ; 1 B. Monroe, 14 ; 15 John. R., 44, Attorney General v. Life and Fire Ins. Co., 9 Paige, 470; 2 Hill, 2G5 ; 9 Ohio R. 291; 10 Gill and John., 290; 8 Wend. R., 94. In what cases the bona lido holder may recover on them, will bo considered hereafter, 337, 340, 317. 360, 312, 370. No action can be maintained on a note given by a banker for iineiirrcnt money paid cut by him on an agreement in violation of a statute iniuo^in^ a |*-ually for such 76 BILLS OF EXCHANGE AND PROMISSORY NOTES. A negotiable promissory note imports a consideration, and it is unnecessary to state any in pleading, or to prove any upon the trial in the first instance. When given by an executor or admin- istrator, it is prima facie evidence of assets, because they are the legal consideration upon which such a promise ought be, and is presumed to be founded. It is but prima facie evidence, however, between the original parties, and the defendant may show that in fact there was a deficiency of assets, and of course no consideration to support the note. The onus probandi in such a case rests on him. 1 But if an executor or administrator make a negotiable promissory note, or accept a bill of exchange, and the same be transferred before it becomes due, he is held to a personal liability thereon : because here he makes a positive promise to pay, and executes it in the form of a negotiable instrument.' Acting en autre droit and having no power in that manner to bind the estate of the deceased, his unqualified promise to pay is held to bind him to a personal responsibility ; especially where the promise is made in a form that imports or implies a sufficient consideration. He does not, it seems, limit his liability by describing himself as executor, unless he expressly confine his stipulation to pay out of the estate. 8 And where he does that, the instrument is no longer negotiable as a bill or promissory note. The rule is the same in respect to trustees and guardians, who act as agents of the estate or fund intrusted to them. Thus, where one executed a negotiable note as a guardian of an * insane person, but did not restrict his promise to pay out of the estate intrusted to him, he was adjudged liable in his indi- vidual capacity. 4 And it was so held in a similar case where the note was not negotiable, it appearing that the payee had relin- quished a valuable right in consideration for the note.* But it deserves to be mentioned that the courts of Massachusetts have 1 Bank of Troy v. Topping, 13 Wend. R., 557. 5 9 Wend. R., 273; 13 id., 557. •Child v. Monins, 2 B. and B., 460; King v. Thorn, 1 Term R., 439; Serle t. Waterworth, 4 Mees. and Wels., 9; Kirkman v. Bcnham, 28 Ala.. 501. * Thatcher v. Dinsmore, 5 Mass. R., 299. • Forstcr v. Fuller, 6 Mass. R., 58. violation, if the defence be properly interposed; Codd v. Rathbone, 19 N. Y. Rep., 37 ; nor on a draft given in the execution of a contract in violation of the statute which forbids the uttering of foreign bank notes for circulation in the State ; The Backetta Harbor Bank v. Codd, 18 N. Y. Rep., 240; but such note or draft is valid when not given in the execution of an illegal agreement. PARTIES. 77 frequently held that the giving of a negotiable promissory note for a simple contract debt is to be deemed a payment, as if the same had been made in cash ;' which is contrary to the doctrine of the common law, as generally held in the American courts.* In this state the giving of a note is not payment, and consequently as between the original parties the consideration may be inquired into, and where that fails no recovery can be had on a note executed by a trustee or administrator : the effect of his giving a promissory note in his representative character, which is not negotiable or not transferred, is to cast upon him the burden of showing that he has no funds out of which to pay.' If such a note shows on its face that it is made for value received by the heirs of the intestate, it does not raise even a presumption against the administrator.* But where the note is negotiable, and contains an unqualified promise to pay, though signed with the addition of the words "as administrator," the note will be valid in the hands of a bona fide holder. Such words are merely descriptive of the person, and do not limit the maker's liability on the note. 6 It appears to be well settled, that if a man appoint several exe- cutors, they are esteemed in law but one person representing the testator ; and that acts done by one of them which relate to the delivery, sale or release of the testator's goods, are *deemed the acts of all. Thus, one of two executors may assign a note belonging to the estate of their testator as collateral security for the payment of a judgment recovered against the estate; a term of years passes by the assignment of one ; and if one of them releases a debt, the release is valid, and binds the other. And this rule applies as well to securities given to executors as such after the death of their testator, as to those given to him in his life-time, provided the money, when recovered, would be assets.' It has been held that a note drawn, payable to two executors as such, cannot be transferred by the indorsement of one ; ' made payable to the deceased, either of them may indorse and transfer it ; and 1 Mancly v. Magee, G Mass. R., 145 ; 7 Mass. R., 43 ; 11 Mass. R, 3G2 ; 4 Pick., 229. 1 Pintard v. Taekington, 10 John. R, 104; 5 id., G8; 8 id., 304; 9 id., 210; 6 Crunch, 253; 17 John. R., 340; 3 Serg. and Rawle, 233. *9 Wend. R., 273; McSorley v. Leary, 1 N. Y. Leg. Obs., 410. 'Ten Eyck v. Vanderpoel, 8 John. R., 121; Schoonmakor v. Roosa, 17 John., 301. 1 2 Brod. and Bing. R., 4G0; I Term R, 487. In this state, quero, 9 Barb., 528. * Wheeler v. Wheeler, 9 Cowen R., 34. * Bogert v. Hertcll, 4 Hill R., 492. •Smith v. Whiting 9 Mass. R., 334; overruled here, 4 Hill, 492. 78 BILLS OF EXCHANGE AND PROMISSORY NOTES. if he indorse it without qualification, he becomes chargeable there on like any other indorser. 1 In like manner, it is a general rule, that those who make pro- missory notes or accept bills of exchange in a special character, are liable personally, whenever they fail to bind the persons for whom they assume to act. J If a person assume to act as agent, without disclosing the name of his principal, and makes a purchase of goods and accepts- a bill of exchange therefor, signing it in his own name with the simple addition of the word " agent " to his name, he makes himself personally liable. 3 If he intends to act really as an agent, he must either sign the name of the principal to the bill, or it must appear on the face of the bill itself, in some way, that it was in fact drawn for him, or the principal will not be bound. No person in making a contract is considered to be the agent of another, unless he stipulates for his principal by name, stating his agency in the instrument which he signs ; *the precise form of execution is not material, provided it be substan- tially done in the name of the principal.* The rule is not as strict with reference to negotiable paper as it is when applied to sealed instruments ; but there is a strong analogy between them. And it is adjudged that a charter party, purporting to be made between the master of a vessel of the first part, " and M. P. (agent for S. C. & M. S.) of the second part," and 1 Rawlinson v. Stone, 3 Wils., 1 ; 2 Stra., 1 260. 8 Pentz v. Stanton, 10 Wend. R, 271 ; White v. Skinner, 13 John. R., 307 ; 1 Cow., 53G; 9 Barb. R., 528; 12 id., 27, 54; 5 Seld., 570. 3 5 Taunt., 749; 5 East, 113; 1 Bos. and Pull., 368; 1 Term R., 181; De Witt v. Walton, 9 N. Y. R., 570. A draft in the usual form, drawn by a committee of a Board of Supervisors upon the County Treasurer in pursuance of a resolution of the Board, is not commercial paper ; it is not a negotiable draft. Board of S. of Rensselaer Co. v. Weed, 35 Barb., 1:56. Neither is such a draft drawn by all tho members of the Board to be so regarded. Chomung Canal Bank v. The Supervisors of Chemung, 5 Donio, 517. 4 Rathbun v. Budlong, 15 John. R., 1 ; 1 East, 434; 2 id., 142; 3 Esp., 266; 2 Strange, 705; 1 Campb., 485; 6 Term R., 176; Stackpolo v. Arnold, 11 Mass. R., 27 ; 12 id., 173. So where a party describes himself in a covenant as agent, but in reality si^ns tho contract in his own name, he renders himself personally liable. 1 Cowen R., 51.;; 9 John. R., 334. Though the agent make the contract in his own name, without disclosing his principal, tho latter may maintain an action upon it in bis own name. Ford v. Williams, 21 How. U. S., 287; 2 Met., 319; but not on a bill; Bank of B. N. A. v. Hooper, 5 Gray, 567. PARTIES. 79 signed and sealed by the master and by M. P., with the addition of "agent" is the deed of the party signing it 1 As to the pro- missory notes and bills, the rnle is clearly much less stringent ; for it was held in this state many years ago, that where the agent of a manufacturing company indorsed a note, signed by its presi- dent, adding to his name the word "agent" and the note was indorsed to a person acquainted with his relation to the company, he did not become personally liable thereon. 8 And the rule has been recently confirmed by the judgment of the court of appeals, announced in these terms :' " The indorsement of a promissory note or bill of exchange effects two different and distinct purposes. It is a present transfer and assignment of the paper to the indorsee, and an executory contract by which the indorser agrees, upon cer- tain conditions, to pay the amount of the note or bill himself There can be no regular indorsement which does not ipso facto transfer the paper; but it is not absolutely essential that it should also contain the collateral contract* The defendant in this case indorsed the note in question by writing his name upon it, and adding the *word treasurer, and the note itself was payable to him with the addition of the usual abbreviation of the same word. The answer shows that the defendant when he made the indorsement was the treasurer of a manufacturing corporation, and that this was known to the plaintiffs, who received the note thus indorsed on account of a demand which they had against the corporation. The question is whether this was a qualified indorse- ment, passing, as it clearly did, the interest in the note, but with- out any other contract on the part of the defendant. This question was decided against the plaintiff in the supreme court more than thirty years ago, and has since been acquiesced in by the profes- sion, and has been extensively acted on by business men." The reasoning of the court assumes that in the hands of a bona fide holder who took the same without notice of the relation in which the indorser stood to the company for whom he acted as agent, the note would valid as against the indorser ; and this cor- 1 Piatt v. Cottrell, 3 Denio, 604. 'Mott v. Hicks, 1 Cowen R., 513. ' Babcock v. Bcman, 1 Keruan R . 200. Tho note in question was drawn in these words: Four months after dato wo promise to pay to the order of R. Bcman, Treas., five hundred dollars, value received. Signed Adam Smith & Co., and indorsed " K Bcman, Treasurer," he being known to the indorsee as tho agent of a manufacturing company. 12 Barb., 27. 4 Rice v. Stearns, 3 Mass. R., 225. 80 BILLS OF EXCHANGE AND PROMISSORY NOTES. responds with other authorities that hold the question of agency, in such cases, material and issuable, and also the fact that the party taking the note received it with notice. 1 So, it has been held that an indorsement of a note to the cashier of a moneyed corporation, by adding the word cashier to his name in the indorse- ment, is a transfer to the corporation, where that was the design of the transaction as shown by the pleadings and proof' There is some conflict in the authorities on the subject, and it is not easy to deduce from them a rule applicable in all cases. Between the original parties to a note or bill of exchange the facts may be inquired into, and the general principle applies, that an agent is not liable to be sued upon contracts made by him on behalf of his principal, if the name of his principal is disclosed and made # known to the person ^contracted with, at the time of enter- ing into the contract.* But as between the makers or indorsers of promissory notes, or the parties to a bill of exchange and the bona fide holder who has received the same in the usual course of business, it is necessary that the instrument show on its face by whom it was legally made ; otherwise it will bind the parties executing it to a personal responsibility.* In England the addition of the word cashier in the body of the bill does not relieve the acceptor from personal liability ; it is necessary that he should state on the face of the bill that he accepts it for another.* When a person has authority, as agent, to draw, accept or in- dorse a bill for another, he should do it in such a manner as to show that it is the act of his principal ; as by signing it A. B., by C. D., his agent* The most explicit and regular course is to sign ^rockway v. Allen, 17 "Wend. K., 40;' Randall v. Yan Yechten, 19 John. R., 60; Taft v. Brewster, 9 id., 334; White v. Skinner, 13 John R., 307. * The Watervliet Bank v. White, 1 Denio R., 608. The indorsement in this case was in these words: "Pay to E. O., Cashier or order," held a transfer to the bank of which E. O. was the cashier. The holder may overwrite the indorsement with the name of the bank. Pr. Denio, J., 3 Kern., 309 ; see also 4 Hill, 442. A draft stamped in the margin " Pompton Iron Works," which concludes with the direction to place the same to account of Pompton Iron Works, and is signed W. B., agent, with authority, binds the party doing business in that name. Fuller v. Hoaper, 3 Gray (Mass.), 334. * Rathbun v. Budlong, 15 John R., 1 ; Owen v. Gooch, 2 Esp. R., 567; 17 Wend. R, 40, and the cases there cited; 1 Kernan R., 200 ; 1 Denio, 608. ♦Hills v. Bannister, 8 Cowen R., 31 ; 10 Wend. R, 271 ; Loadbitter v. Farrow, 5 M. Sel., 345; 7 Taunt., 160; 2 Stra., 955; 9 Barb., 528. • Byles on Bills, 26, and the cases there cited. •Thomas v. Bishop, 2 Stra., 155; Westminster Bk. v. Wheaton, 4 R. I., 30. PARTIES. 81 the name of the principal first and then immediately under it add per procuration C. D., preceding his own name with words that express the fact that he signs for another. 1 In other words, he should sign so that it will appear to be the act of his principal through his ministry. 1 Chitty on Bills, 33. As illustration : a note given "for" another whose name is disclosed, and signed with the addition of the word "agent" binds the party for whom it is given. 15 John R., 1. A note in these words : " For value received I promise to pay Mr. Edward J. Long, or order, on demand, three hundred and one dollars, with interest after four months ; signed Pro. William Gill, — J. S. Colburn," — is the note of Gill. 11 Mass. R., 97. A note in this form : " The President and Directors of the Woodstock Glass Com- pany, promise to pay, &c, signed W. H., President," is the note of the Company. 1 Cowen, 515. But a note in this form: "I, John Franklin, President of the Mechanics' Fire Insurance Company, promise, kc." is the note of Franklin, and not that of the Co.; 3 Wend. R., 94. So a note signed by two persons with the addition, " Trustees of Union Religious Society, Phelps," is the individual note of the persons subscribing it. The addition is mere descriptio personarum ; 8 Cowen, 31. The addition of the word " agent," no principal being mentioned, does not prevent the note from being treated as that of the person signing it. 10 Wend., 271; but see Rockaway v. Allen, 17 Wend., 40, as to a note made by " trustees ;" and also Horton v. Garrison, 23 Barb., (N. Y.) 176. Adding the word agent to the drawer's signature, when he has authority to bind another party, is lately held, notice that he does not intend to bind himself; and drafts so drawn do not bind him, personally, in favor of a party taking the paper with knowledge; Hicks v. Hinds, 9 Barb., 528; Conro v. Port Henry Iron Co., 12 id., 28. Not so if he fails to bind his principal ; De Witt v. Walton, 5 Seld., 571. And a note signed B, agent for A, by which A promises in the body of the note to pay, does not bind B., though signed without authority, it being given under a mutual misappre- hension; Tafts v. York, 10 Cush. (Mass.), 392 ; 12 id., 196. A note in this form: "I, the subscriber, Treasurer of the Dorchester Turnpike Corporation," signed, " G. L. C, Treasurer," is not his individual note. 9 Mass., 335. So, a note in this form : u I promise to pay for the Providence Hat Manufacturing Company," is the note of the company. 12 Mass., 237. A note signed with this addition to the name of the person subscribing it, "agent for D. P." is the note of D. P., if the person signing was properly authorized. 16 Mass., 461. So a note beginning " we jointly and severally promise to pay," and signed " Patten and Johuson, for Ira Gove," is the note of Gove, it being shown that P. and G. were authorized to make it for him. 22 Pick., 158. An action was brought on a draft or bill of exchange in these words : At thirty days' sight pay to G. S., or order, 2002, value received of him, and placo tho same to account of the York Buildings Company, as per advice from Charles Mildmay ; to Mr. Humphrey Bishop, Cashier of the York Buildings Company, at their house in Winchester street, London. Accepted, per EL Bishop. Held, that this was tho per- Bonal acceptance of Mr. Bishop ; 2 Stra., 955. It did not bind tho company, and therefore it was held to bind the person who accepted it. Edw. 11 82 BILLS OF EXCHANGE AND PROMISSORY NOTES. A special authority to sign another man's name to a note specifying the amount for which it is to be given, and the time when it is to become payable, must be strictly pursued, or it will not bind the person giving it ; thus, if it be to sign a note payable in six months, it will be void if made payable in sixty days. 1 The distinction between a general and particular agent is very broadly marked. A general agent, as a factor for a merchant residing abroad, binds his principal by his acts; but an agent _ constituted for a particular purpose, and * under a limited and circumscribed authority, cannot bind the principal by any act in which he exceeds his authority. 3 If a husband give3 to his wife authority to make notes, and she execute and deliver them in her own name, making no reference or mention in them that she acts as the agent of, or on behalf of her husband, the notes will not bind him, unless she is authorized to make them in that manner : for the presumption is, where one person gives to another an authority to do a given act, that the act is to be done in the name of the principal. 3 To render it binding upon the principal, the contract of an agent must be within the authority conferred ; and if conferred by a written instrument, made known to the party with whom the contract is made, it cannot be enlarged by evidence of usage. 4 And whenever a person contracts with one who appears as the agent of another, he is bound to inspect the power when it is in writing, and is holden to understand its 1 Batly v. Carswell, 2 John. R., 48. The agent must always follow his authority, 5 John. R., 58. 5 3 Term R., T57 ; 1 Esp. R., Ill; Beals v. Allen, 18 John. R, 363. 3 Minard v. Mead, 7 Wend. R., 68; see Gates v. Brown, 5 Seld., 205. ♦Delafield v. The State of Illinois, 26 Wend. R, 192; 6 Term R., 591; Hogg v. Smith, 1 Taunt. R., 349; 2 John. Ch. R., 244. A contract purporting to be made "in behalf of" another, whose name is mentioned, binds the principal and not the agent. Key v. Parnham, 6 llarr. and John., 418. The fact that the payee of a bill knows that the drawer acts as an agent does not relieve him from personal liability, where he draws in his own name, notwithstanding the contents are ordered to be charged to the principal. 11 Mass., 54. A. B. and C. make their note in this manner: "We, the subscribers, jointly and severally promise to pay D., or order, for the Boston Glass Manufactory, Ac." and signed it without any addition to their names ; held that they were personally bound, and not the company. 16 Pick., 347. A draft is addressed to J R. L., President of Rosendale Mining Company, and accepted by him, signing his name with that addition ; and as it was not shown that J. R. L. was authorized to bind the Company, he was held liable personally. Moss V. Livingston, 4 Comst. R., 208; 15 N. Y. Rep., 337. PARTIES. 83 legal effect, and must see, at his peril, that the attorney or agent does not transgress the prescribed boundary in acting under it But he is not bound to know or ascertain the truth of what the agent says in the execution of the trust : he has a right to rely upon the veracity of the person who appears clothed with authority to act for another, in respect to the business intrusted to him. 1 That is to say, the declarations of one holding a letter of attorney, made in the course of his dealings under it with a third person, are a part of the res gesta, and bind his principal equally with the acts to which they relate. The ground on which this principle is based is this: that where an agent acts fraudulently, and some one must be the loser by his deceit or incompetency, it is just that he who employs and puts a trust and confidence in the de- ceiver, should be the loser, rather than a stranger.' *A power " to draw all checks or drafts upon any of the # banks in the city of New York, for all moneys deposited in my name, to indorse any promissory note or notes, bills of exchange or drafts, to accept all bills of exchange or drafts, or in my name to draw any note or notes, &c," concluding in the usual form, is by intendment of law, limited to notes and bills, drawn, made or indorsed in the proper business of the person executing the authority. There is nothing in the nature or effect of such a power that authorizes the attorney to use it for his own benefit or for the benefit of any one excepting the principal.' Where it is a naked power to act for and in the name of his principal, it negatives all authority to act for the benefit of any one besides the principal ; and persons dealing with the attorney, as such, are bound to notice this limitation. 4 Though a power of attorney contain general words of authority, it is a rule of construction that they are to be read and understood with reference to the object for which the agency is created. 5 An 1 North River Bank v. Aymar, 3 Hill R., 262 ; Powell v. Henry, 27 Ala., 612. The decision in The North River Bank v. Aymar was reversed on appeal; see Stainer v. Tyson, 3 Hill, 279, and Exchange Bank v. Montoath, 24 Barb., 371. But the original decision cited in the text is good law still, having been recently recognized and approved in the Court of Appeals, Farmers' . s. iT, •Canal Bank v. Hank of Albany, l Hill R., 287. 92 BILLS OF EXCHANGE AND PKOMISSOKY NOTES. amount blank, it carries with it an authority to the maker to fill it up with the sum for which it was intended to be made, and this intention is a fact to be shown by testimony. 1 If no amount has been specified or agreed upon between the parties, the maker may fill it up for what sum he pleases. Anv material alteration made in a note after its execution or indorsement, such as inserting words of negotiability or altering the time or place of payment, discharges the previous parties to it.' But where a blank is left in it, there is an implied authority to the holder to fill up the instrument, and make it in fact what it was designed to be. 3 If made payable to blank, the person to whom it is negotiated may fill it up by inserting his own name ;* if made payable to the order of the person who shall thereafter indorse it, it is negotiable without any alteration, and may be trans- ferred by indorsement. 6 So, if a person sign his name upon a blank paper and deliver it to another to draw above the signature, he is considered as by that act authorizing it to be filled up for any amount.' The office of an agent is merely ministerial : and therefore in the somewhat antiquated language of the old books, infants, feme coverts, persons attainted, outlawed, excommunicated, aliens and others, though incapable of contracting on their own account so as to bind themselves, may act as agents. 7 The principal is alone in- terested in the choice of those whom * he employs to act in his name, and may appoint whom he pleases. As to the manner of making the appointment, it should be in writing, under seal, in order to authorize the agent to make a conveyance of lands ■." but in other cases where the intention only is to clothe 'Boyd v. Brotherson, 10 Wend. R., 93. The note as made and indorsed was iu tins form : "Six months after date I promise to pay to the order of Philip Brotherson, eight , for value received, at the Mohawk Bank, Schenectady, May 1, 1829." And the evidence showed that it was intended to be given for eight hundred dollars. Held, that the maker had the right to insert the right amount. 3 Woodworth v. Bank of America, 19 John. R., 391; Clute v. Small, 17 Wend. R., 238; Nazro v. Fuller, 24 Wend. R., 374; Bunco v. Westcott, 3 Barb., 374; South- wark Bank v. Gross, 35 Penn. State, 80 ; Sturgcs & Hale v. Williams, 9 Ohio State, 443 ; Fitch v. Jones, 85 ; Eng. Com. L., 238. "17 Wend., 238; 7 Cowen, 33G; 10 Wend., 93; 21 N". Y. R., 531. * Crutchley v. Clarence, 3 Maule and S., 90 ; 31 Barb., 100. * United States v. White, 2 Hill R., 59. "Collis v. Emmett, 1 Hen. Bla., 313; Young v. Ward, 21 111., 223. T Co. Litfe, 52 a. A bank may act as an agent to collect notes. 4 Cowen, 567. * V.i a Ostrand v. Reed, 1 Wend. R., 424. An authority to execute a deed must bo given by deed, to render the deed valid. 5 Hill, 107. K 96 PARTIES. 93 him with the power to make notes, to draw, indorse and accept bills of exchange, the appointment may be made by parol.'' If the authority be to execute a deed, it must be delegated by deed; if it be to enter into a parol contract, it may be by parol ; and even corporations may appoint an agent without seal, where they are at liberty to contract in that manner.' Capacity to do an act, generally implies the right to do it through the intervention of an agent : but those who are incapa- ble of contracting, being persons not suijwis, cannot, as a general rule, appoint an agent or attorney ; certainly they cannot do by another what they cannot do in person.' There is another large class of cases where one person is held bound by the acts of another or others, associated with him in business and acting under an implied agency ; as where one of several partners makes a contract within the scope of the partner- ship business. A partnership exists where two or more persons enter into a joint undertaking, with an agreement to share in the profits and losses of the business ; 4 as where two persons make a joint pur- chase for a particular adventure, upon an agreement to share jointly in the ultimate profit and loss ; 6 or where persons become joint proprietors of property and funds, and * engage in a ^ „ business upon a contract to share the profits and losses. 8 A community of interest in land does not make men partners, nor does a community of interest in personal property. There must be some joint adventure, and an agreement to share in the profit and loss of the undertaking. 7 As between the parties themselves, in order to constitute a partnership, there must be a joint owner- ship of the partnership funds, according to the intention of the parties ; and an agreement, either express or implied, to partici- pate in the profits and losses of the business, either ratably or in 1 Lawrence v. Taylor, 5 Hill, 107 ; Ilanford v. M'Nair, 9 "Wend., 54, C8. ■ 1 Cowen, 613 ; 4 id., G4.5; Eno v. Crooke, 6 Seld., 60 ; 15 N. Y. R, 48. 'Snyder v. Sponable, 1 Hill, 568. See Mechanics' Bank v. Now York and Now Haven Railroad Co., 3 Kernan R., 599. It seems an agent cannot bind a corporation by an act which the corporation itself cannot legally do; e. g., ho cannot bind tho corporation by making a fraudulent issue of certificates of stock, when tho new issue is not authorized by law. 4 Reynolds v. Cleveland, 4 Cowen, 283 ; Champion v. Bostwick, 18 Wend. R., 175. 'Curnpston v. M'Xair, 1 Wend., 457. •Chase v. Barrett, 4 Paige, 148. 'Porter v. McClure, 15 Wend., 187; 9 John. R., 503. * 98 94 BILLS OF EXCHANGE AXD PROMISSORY NOTES. some other proportion agreed upon. 1 To constitute a person a partner in a firm in this sense, he must have an interest iD the stock, with the right of control, and thus have a right to the profits as the results of capital and industry in "which he and the others concerned are all interested, and must be liable for losses ; for a mere participation in the profits of a business by way of pay- ment for his labor and services, without having any interest in the capital stock or right to control the business, does not make him a partner. 2 He is not a partner where he is employed as an agent in con- ducting the business of a firm at an annual salary, with a stipula- tion that he is to receive in addition thereto one-third of the profits of the business, not being liable for losses.* And the law is well settled, that a mere agent or servant who is bound to obey orders and has no interest in the capital stock, is not rendered a partner even as to third persons, * merely because he is to be com- pensated for his services by receiving a share of the profits which may arise from the business in which he is employed.* The general doctrine has been stated thus : " traders become part- ners between themselves by a mutual participation of profit and loss ; but as to third persons, they are partners if they share the profits of a concern ; for he who receives a share of the profits, re- ceives a part of that fund upon which the creditors of the concern have a right to rely for payment, and is therefore to be made liable for losses, although he may have expressly stipulated for exemp- tion from them." 6 But this rule is not universal ; and the excep- tion which will best reconcile the cases, is least liable to abuse, and is so distinctly marked that it can be easily administered, is that adopted in this state which allows one man to employ another as a subordinate in his business, and agree to pay him out of 1 4 Paige Ch. R., 148. If one party furnishes the largest part of the capital, a store and a clerk, and the other carries on a business, and by the agreement between them there is to be a division of the profits, this is a partnership. Cushman v. Bailey, 1 Hill It., 526. So, if one party furnishes the capital and the other carries on the busi- ness of manufacturing, under an agreement between them that the first is to receive back his capital and a certain portion of the profits made, this is a partnership. Everett v. Cox, 5 Denio, 180. "Ogden v. Astor, 4 Sand. R., 311. 'Vandenburgh v. Hull, 20 Wend. R., 70; 5 Taunt., 74; 2 II. Black., 590; 4 Maule »nd Sclw., 240. 4 Burckle v. Eckhart, 1 Denio, 337 ; S. C, 3 Comst. R., 132. 6 Dob v. Halsey, 16 John. R., 40; 12 East., 421 ; 4 East., 144. I PARTIES. 95 profits, if any shall arise, .without giving the party employed the rights or subjecting him to the liabilities of a partner. 1 As to- third persons dealing with a firm, the test question is, not whether a person receives a portion of the profits, but whether he has acted as a partner, and held himself out to the world as such.' If he has knowingly permitted another to carry on business in his name, or acknowledged himself by act or word as a member of the firm, he is liable as such to all persons who have been thereby induced to enter into contracts with the firm.' The gen- eral principle, and the reason on which it is founded, are thus stated by Tindal, C. J. : "By the general rule of law relating to partnerships in trade, each member of it is liable to the debts and engagements of the whole company, contracted in the course of the trade. This is a consequence not confined to the law of this country, but extending generally throughout Europe ; * and it is founded partly on the desire to favor commerce, that merchants in partnership may obtain more credit in the world, and more especially on the principle that members of trading partnerships are constituted agents, the one for the other, for en- tering into contracts connected with the business and concerns of the partnership, so that by the contracts of the agent all his prin- cipals are bound. But to subject a person to responsibility as a partner, for the acts of another, done without his express concur- rence, he must stand in one or the other of these two situations ; first, he must at the time of making the contract, whether bill, note, or other instrument, have been actually a partner in the joint concern ; or, secondly, admitting that he was not, he must have represented or j^ermitted himself to be represented as such, before or at the time of making the contract, either generally to all the world or to several individuals, or to the plaintiff in par- ticular, or to some person througli whom he claims." * It is only a fair and reasonable inference from the principle just stated, that when one of a firm makes a note or indorses or ac- cepts a bill of exchange in the name of the concern, and appa- rently in the due course of its business, the act shall be deemed 1 Per Ch. J. Broxsox, 1 Penio, 337 ; 25 Barb., 13. 3 Whitney v. Starling, 14 John. R., 215 ; 2 Ilea. Bla., 2-17 ; Mclver v. Humble, 1G East., 174; Fisher v. Bowles, 20 111., 396. 1 14 John., 216; Harvey v. Kay, 9 B. and C, 35G ; 2 Bosw., 188. 1 Fox v. Clifton, G Bing., 791; Poubleday v. Muskett, 7 Biiiy., 117; Torter v. Lebach, 2 Bosw., 188. 96 BILLS OF EXCHANGE AND PROMISSORY NOTES. that of the partnership ; especially when the bill or note has passed into the hands of a bona fide holder. 1 The person, who, acting in good faith, receives a bill or note by indorsement from one of several partners, is- not bound to apply to each of the others to ascertain if he assented to such indorsement ; in the absence of all fraud on the part of the indorsee, the act will bind the firm.' Nor is the rule changed by the fact that the partner making the indorsement, accepting the bill or giving the note, overstepped the line of authority prescribed to him by the articles of copartnership existing between them ; unless the party to whom the indorse- ment was made, the note delivered, or in whose favor the bill was aocepted, knew that the same was done in fraud of the firm.' „ . nn ^Knowing that, he cannot recover against the other partners *100 i • • Neither can he recover on a bill against partners in a con- cern, where the acceptance is contrary to agreement between them, and by one of the partners in fraud of the rest, though he be ignorant of the fraud, unless he shows that he gave value for it. 4 Presumptively, a note given by one partner in the name of the firm, is evidence of the existence of a partnership debt, on the ground that the admissions of each in relation to matters in which the partners have a community of interest is binding upon all. And hence the note of a firm is deemed in the commercial com- munity, prima facie, to have been given in the fair legitimate course of the partnership business ; 6 and, consequently, the part- ner objecting to be made liable is bound to make out a case, which will exonerate him. If he objects that the note was given in payment of the individual debt of one of the members of the firm, he must prove it' If he objects that the money for which the note was given was never brought into the partnership busi- ness, he must not only prove it, but he must prove also, that the person to whom the note was given, knew that the money was borrowed for the individual use of the partner borrowing, and not for the firm. 7 If he objects that the money was borrowed by one of the firm, and upon the responsibility of the partner borrowing, he must prove it ; and proving it the firm is not liable, unless it 1 Swan v. Steele, 1 East., 210. * Per Lord Ellexborougii, in the same case , Clark v. Dearborn, 6 Duer, 309. * Puller v. Roe, Peake, 197 ; Robb v. Mudge, 14 Gray, 534; 33 Barb., 458. 4 Cliitty on Bills, 42, 43; 1 Duer R., 319; 4 Seld., 408; 14 Gray, 534. •Doty v. Bates. 11 John. R., 544; Abpt v. Miller, 5 Jones Law, 32. •Hickman v. Kunkle, 27 Mis., 6 Jones, 401. * Tutt v. Adams, 24 Mis., 3 Jones, 186. *101 PARTIES. 97 be shown by the opposite party, that the money was in fact used in the partnership business with the knowledge and consent of the partners, 1 or that he is a bona fide holder. 1 By the act of entering into a copartnership, a trading firm, each of its members becomes clothed with full power to make any and every contract within the scope and limits of the copartnership business. This power is incident to the copartnership relation, and therefore the contract of one of them binds them * all, though one of them expressly dissents from or objects to the execution of the agreement. 5 Outside of the business, to carry on which the copartnership is formed, neither partner can bind the firm. If two persons are engaged in partnership in the business of farming, one of them cannot, like a partner in trade, bind his associate by the accept- ance of a bill of exchange. 4 Still it is held in this state that where one of two partners, engaged in the business of farming and coopering, makes a promissory note and signs the individual name of each to it, there being no evidence of the firm name, it is to be presumed, in the absence of all proof to the contrary, to have been given for a partnership transaction. 6 The rule is that partners in trade, or partners in occupation or employment, may bind a copartner in matters which, according to the usual course of dealing, have reference to the business trans- acted by the firm/ On the contrary, if a person deals with a partner in a matter not within the scope of their business, the intendment of law will be that he deals with him on his private account, notwithstanding the partnership name be used. 7 Thus, where two persons entered into partnership in the sugar refining business and published a notice to that effect, in two newspapers, mentioning the name of the firm, and one of them afterwards 1 Whittaker v. Brown, 16 Wend. R., 445; 6 Cowen, 502. 3 Gildersleeve v. Mahoncy, 5 Duer (N. Y.), 383. 1 Wilkins v. Pearce, 5 Denio, 541. The agreement in this case was mado by ono of three partners to guaranty Pearce against a bill accepted by him for tho accommo- dation of the firm ; and one of the three expressly dissented from tho agreement. Held that the same was valid, though it was known to have been BO executed ; not so it seems if one of a firm of two dissents. Johnson v. Dutton, 27 Ala., 215. *Greenslade v. Dower and another, 7 Barn, and C, G.:."> ; Kimbro v. Bullitt, 22 How. U. S., 256. ' McGregor v. Cleveland, 5 Wend. R., 475. •Dobb v. Halsey 16 John. R., 34; Gray v. Ward, 13 111., -32. 'Livingston v. Rosevelt, 4 John. 11., 251. Euw. 18 98 BILLS OF EXCHANGE AND PROMISSORY NOTES. bought a quantity of brandy for shipment to the West Indies, gave his own note for the same, payable to the firm, and indorsed it in the firm name, it was held that the partnership was not liable as indorsers of the note. 1 So, when one partner delivers part- #1 n nership * property to a third person, who receives it in payment of his individual debt, knowing that it is partner- ship property, it is adjudged that the firm may recover back the property, or its value ; 2 and the principle is the same with respect to the making and indorsement of notes; if one of a concern gives a note of the firm for his own private debt to a person who knows the circumstances, that third person cannot recover on it against the other partners. 3 Partners in the practice of physic may mutually bind each other for all things properly belonging or necessary to be used by them in their vocation, such as medicines, surgical instruments, and things of that kind; but they cannot bind each other by drawing bills, or making, indorsing and issuing notes for other purposes, or for raising money, that not being an article for which the firm has any direct use. 4 Neither can attorneys in partnership bind each other, as by a contract made by one of them in the firm name to indemnify a sheriff for making an arrest; but the part- nership may be proved by way of showing circumstantially, in connection with other facts, that the other partner assented to the agreement.* If the partnership is limited by the articles, to a par- ticular business, and one of the partners executes a note in the name of the firm for the purchase of property for other purposes than those for which the partnership was formed, such as the purchase of real estate, it is incumbent on the person taking such note and suing on it to prove affirmatively that the other partner consented to the purchase ;' and this he may do by showing their subse- quent contract, or by proving that they enlarged their business l 4 John R., 251. If one of the partners is accustomed to make notes and indorse them in the name of the firm, it is a question of fact whether the party to whom ho gives or indorses a note knows that it is made or indorsed for an individual debt; if he knew that fact, the firm is not bound. a Dobb v. Halsey, 16 John. R., 34; 14 Gray, 534. "Livingston v. Ilostie, 2 Caines, 246; Lansing v. Gaine, 2 John. R., 300; 4 id., 251; 13 East., 175; 19 John. R., 154; G Wend. R., 529; 14 Gray, 534. * Crosthwait v. Ross, 1 Hump. (Tenn.) R., 23. ' Marsh v. Gould, 2 Pi<'k. R., 285 ; One attorney may bind his partner within tha Bcope of the business, as by an agreement to collect; Brent v. Davis, 9 Md., 217 ■ Weller v. Keyes, 6 Verm., 257. PARTIES. 99 and used the property purchased in carrying it on. But in order to make such a contract binding on the firm, the assent of the other partner must be proved, it will not be presumed. 1 * Thouorh a note be made by one of the concern in the firm name, out of the usual course of business, yet if it be signed by them, or being made payable to them or order, it be indorsed by one of them in the name of the firm, and then discounted or transferred to a bona fide holder, all the partners are responsible on the note. 2 In the hands of the person who receives such a note from the partner making or indorsing it, with knowledge that it is given or indorsed for his private debt, or in a transaction uncon- nected with the partnership business, it is not binding on the film.' Having been transferred before maturity, in the usual course of business, and the firm becomes liable ; this is on the principle that being negotiable paper, and having been made or indorsed by one who prima facie had the authority to do the act, a recovery thereon is not to be defeated, when the action is brought in the name of the holder who has received the same for value, and in good faith. 4 In other words, the law merchant, in order to preserve the negotiability of the instrument, holds the members of a firm, who have the best means of knowing whether their as- sociates be trustworthy, responsible for each other. The rule is general that one member of a partnership cannot bind his copartners by signing notes, accepting bills or indorsing them in the firm name as surety, or for the accommodation of others. No authority of that kind arises out of the partnership relation. If the word surety be added to the signature, the pre- sumption is that it does not bind the other partners ; 6 for the law does not presume lending notes and making accommodation in- dorsements to be within the scope * of ordinary partner- ships. 8 Beyond the limits of the legitimate business of 1 Mcrcien v. Andrews, 10 Wend., 461; Com. Bank of B. v. Warren, 15 N. Y. Rep., 577. a Gansevoort v. Williams, 14 Wend. R., 133 ; Catskill Bank v. Stall, 15 Wend., 364; 8. 0., 18 Wend., 4GG; 17 Wend., 524. * 11 John. R., 544; 10 id., 34; 19 id., 154; 13 Wend., 419; 5 id., 223 ; G id., 619; 7 id., 158, 310; Robb v. Mudge, 14 Gray (Mass.), 534. 4 Swan v. Steele, 7 East., 210. Though founded partly on public policy, the rule is supported by justice and good sonse ; if one or two innocent parties must suffer tho burden should fall on the negligent, * Boyd v. Plumb, 7 Wend., 309. * Austin v. Vandermark, 4 Hill R., 259. 100 BILLS OF EXCHANGE AND PROMISSORY NOTES. the concern, and outside of their usual course of dealing, Lis con- tract in the name of the firm does not place his associates under any obligation to fulfill it : it is his contract, and not theirs ; this is the broad principle running through all the cases, and the de- partures from it are made for the convenience and safety of com- mercial business. 1 If a partner subscribes the name of his firm to a note as surety for another, and the transaction is made known to the person to whom the note is transferred, it cannot be enforced against the firm, unless it is shown that the other partner con- sented to, or ratified the act.' It is not paper such as he has a right to sign and issue in the name of the firm ; and the rule pro- hibiting partnership security from being pledged to third persons, without the consent of all the partners, is just and salutary, and strictly enforced. 3 When such an act is done privately, with the knowledge of the person to whom the partnership responsibility is pledged, it is a fraud on the firm, and is so regarded in the Eng- lish courts, where they put the defence of the copartner in such a case upon the distinct ground of fraud, committed upon him by his associate and the holder ; holding as a corollary to that princi- ple, that the signature of the firm is prima facie binding upon all the partners. 4 With us, the defence is placed upon the ground of a want of authority ; and it is enough in the first instance for the firm to show that the instrument was given and received as accommodation paper.* The order in which the burden of proof passes from one side to the other, may illustrate the principle of which we * are speaking. The holder suing on a note signed by one of a concern in the firm name, proves first the existence of the copart- nership and that the signature is in the handwriting of one of the partners; if nothing further is shown the plaintiff is entitled to recover.' But if the defendants here take up the case and prove that the note was signed and delivered to the holder as accommo- 1 7 Wend., 310. "Bank of Rochester v. Bowen, 7 Wend., 158; 1 Wend., 529; 3 id., 415; 14 id., 133, 146; 4Seld., 408. •Foot v. Sabin, 19 John. R., 154; 6 Cowen, 147; 9 id., 208; 4 id., 282; 5 id., 688. * Hope v. Cust, 1 East, 52; 8 Ves., 544; 1 East., 48; Ridley v. Taylor, 13 East., 175; Green v. Deakin, 2 Starkie, 347. 6 14 Wend., 138; 11 John. R., 544; 1G id., 34; 19 id., 154; 3 Wond., 419; 5 id 223; 6 id., G19;-7 id., 15S. 310. • 14 Wend., 138; Vallett v. Parker, 6 id., 615. PARTIES. 101 dation paper, they establish a defence to the note; 1 and the plain- tiff, in order to recover, must then show that the note was exe- cuted with the consent of the other members of the concern, or that he is a bona fide holder of the note. 3 The consent must be proved ;' but if it appear that the house was in the habit of indors- ing at the bank or elsewhere for others, such general course o. dealing will be evidence from which the jury may find an autho i-ity so to bind the firm. 4 Evidence that each of two partners have repeatedly, with the knowledge and assent of the other, indorsed accommodation notes in the firm name, is not sufficient proof that they are respectively authorized to sign the firm name to a lent note, as maker and surety : 5 an indorsement is a different contract from that entered into by the maker of a note. Notice to the clerk or agent of the party receiving a note signed by one of a firm as surety for another, is notice to his principal ; and hence when a bank discounts such a note, the fact of surety- ship being made known to the cashier, it cannot recover against the firm without showing the consent of the other partners, or a subsequent ratification of the act." And so if the party receiving the note knows that it is given for the private debt of one of the firm, as if it be given in renewal *of his individual note, #in „ he is chargeable with notice, and cannot recover on it as a bona fide holder. 7 When a note or other negotiable paper is made or indorsed in the name of the firm for the accommodation of other parties, and negotiated or transferred to one who has no knowledge of the cir- cumstances, it is as we have said no defence for the other partner to allege that it was made or indorsed out of the usual course 1 11 John. R., 544; 7 Wend. R., 158. 1 7 East., 210, and the cases above cited. Though given for the private account of one of the firm, its note or indorsement will bind the firm if it be shown that th« other partners subsequently assented to the indorsement or giving of the note; and thcro need be no new consideration for the assent. The assent is an adoption of tho note, though already in the hands of a party that took it with notice : Com. Bank of Buffalo v. Warren, 13 X. Y. Rep., 577. • 10 Wend., 4G1 ; 19 John. R., 151. 4 Duncan v. Lowndes & Bateman, 3 Campb., 478; 14 Wend., 139; 1 TTill R., 501: 6 id, 12; Butler v. Stocking, 4 Sold., 408. ' Uarly v. Reed, C Hill R., 12; Wilson v. Williams, 14 Wend., 14G. * Bunk of Rochester v. Bowen, 7 Wend., 158. ' 14 Wend, 133; Williams v. Walbridge, 3 Wend., 415; 3 Pick., 5; Mccutchin v. Kennedy, 3 Dutch. (N. J.) 230 102 BILLS OF EXCHANGE AND PROMISSORY NOTES. of business, or without authority. 1 But the rule is subject to this qualification ; if the firm proves that it was made or indorsed as accommodation paper, the holder will then be required to show that he received it bona fide, and for a valuable consideration. 2 Eeceiving it as security is not, but receiving it in discharge of a Precedent debt, is receiving it for value.' To borrow money, and to negotiate bills and notes, are inci- dental to, and usual and necessary in many special as well as in general partnerships. 4 While engaged in business of this sort the authority of the individual partner to bind the company is the same in both ; and therefore if he borrow money professedly for the concern, and give a note therefor signed in the firm name, it is binding upon all the partners. 5 And in this case it is a matter of no moment whether the money borrowed actually goes into the partnership business, or is misapplied by the partner borrowing ;" provided the lender is not aware of any intention to misapply the funds. So, where the partnership business is conducted in the name of one of its members, and he indorses notes and bills in x* /y, his own name, * the firm is liable thereon if he procures them to be discounted as the paper of the concern ; and his representations, as well as his acts, are binding upon his co- partners. 7 But in such a case the notes signed by him prima facie bind only himself, especially where he also carries on business on his own account 8 The general rule is that a dormant or secret partner, whose name does not appear, is bound by notes made or bills drawn, accepted or indorsed by one of the partners in the name of tho 1 Bank of Rochester v. Monteath, 1 Denio, 402 ; Livingston v. Roosevelt, 4 John. R., 251; 15 Wend., 3G4; 20 id., 251; 4 Hill, 259; 14 Ohio, 592. a Bank of St. Albans v. Gilliland, 23 Wend., 311 ; G Duer, 309; 5 id., 383. s 23 Wend., 313, and the cases cited in the opinion of the court. If it is shown that tho note in suit was made for the accommodation of the payee, and obtained from him by fraud, the plaintiff must then prove that it was transferred to him for value before maturity. Hart v. Potter, 4 Duer R., 458. 4 4 John. R., 267. 6 Whitaker v. Brown, 1G Wend. R., 505; Sweet v. Bradley, 24 Barb., 549. 8 Onondaga County Bank v. De Buy, 17 Wend., 47 ; 1 5 Mass. R., 75, 331 ; 5 Cowen, 710. The general partner has authority to bind his linn in such matters. Church v. Sparrow, 5 Wend., 223. 7 U. S. Bank v. Binney, 5 Mason, 176; 1 Denio, -105. -171, 4S1; 6 Dill, 322; Mifflin V. Smith, 17 Serg. and R., 165; 5 Pick, 11; 9 id., 272. * Manufacturers' &c, Bank v. Winship, 5 Pick., 1 1 ; Scott v. Colmesnil, 7 J. J. Marsh, 416; Mercantile Bank v. Cox, 38 Maine, 500. PARTIES. 103 firm ; both when they are negotiated for the benefit of the firm, and when given under such circumstances as to bind the firm. 1 But under our law of limited partnerships, an individual, called a special partner, is allowed to have an interest in the profits of a particular business, without incurring any ether hazard than that of losing the sum which he has contributed to the common stock. To secure this immunity, the partnership must be formed and pub- lished in a particular manner, and the special partner must con- tribute in cash some portion of the capital stock, must observe the requirements of the statute, and must not engage personally in the business. 2 *By engaging in the business of the firm, te „ . . . *108 he violates one of the conditions on which his exemption from liability depends, and from that moment he becomes a gen- eral partner by his own voluntary act. And, it seems, that every 1 Yere v. Ashly, 10 Barn, and Ores., 288; 7 East, 210. 3 2R.S. of New York, 3d ed., 49-52. See Session Laws of 1S57, p. 83G. By the amendment of 1857, "every alteration which shall be made in the names of the partners, in the nature of the business, or in the capital or shares thereof, or in any other matter specified in the original certificate, and the death of any partner, whether general or special, shall be deemed a dissolution of the partnership, and every such partnership which shall in any manner be carried on after any such altera- tion shall have been made, or such death shall have occurred, shall be deemed a gen- eral partnership in respect to all business transacted after such alteration or death, unless renewed as special partnership, according to the provisions of the last section." The above takes its place in the Revised Statutes as section twelve, and section seventeen is amended so as to read as follows : " A special partner may from time to time examine into the state and progress of the partnership concerns, and may advise as to their management; he may also loan money to, and advance and pay money for the partnership, and may take and hold the notes, drafts, acceptances and bonds of or belonging to the partnership, as secu- rity for the repayment of such moneys and interest, and may use and lend his name and credit as security for the partnership in any business thereof, and shall have tlio same rights and remedies in these respects as any other creditor might have. Ho may also negotiate sales, purchases and other business for the partnership; but no business so negotiated shall be binding upon tho partnership until approved by a general partner. Excepting as herein mentioned, he shall not transact anj' business on account of the partnership, nor be employed for that purpose, as agent, attorney or otherwise. If he shall interfere contrary to these provisions ho shall be deemed a general partner." Tho following takes the place of section twenty-three. " In case of tho insolvency or bankruptcy of tho partnership, no special partner Bhall, except for claims contracted pursuant to section seventeen, under any circum- stances, be allowed to claim as a creditor, until the claims of all tho other creditors of the partnership shall be satisfied." The above amendment!! apply to existing as well as to subsequently formed part- nerships. See amendment in Session Laws of 18G2, p. 880, and of 1858, p. PROMISSORY NOTES. By the statute law of this state every acceptance of a bill of exchange is required to be made in writing. 1 But a promise in writing to accept, when acted upon, is deemed an acceptance ; and a letter of credit authorizing the person addressed to draw bills upon the writer, is to be regarded as an unconditional promise to accept, within the meaning of the statute. 11 Under such a letter, which is generally limited to a specified amount and is in many respects conditional, it is important that the person authorized to draw should follow exactly the terms of his authority, for if he depart from them, the drawee is not bound to honor the bill. 1 In England a contemporaneous writing or indorsement beneath or on the back of a promissory note, and sometimes even on a detached paper, has been considered part of the note itself, so as to render it conditional and therefore not negotiable under the statute. As between the original parties, such a memorandum indorsed on the back of the instrument, becomes a part of tho agreement, and prevents it from being enforced as a valid note. 4 In other words, the terms of. such a writing are to be read in con- nection with the body of the note, and the whole to be construed as one contract. 5 Being written on a separate piece of paper, though it does not vitiate the instrument, it is admissible in evidence between the original parties and their representatives, and qualifies the liability of the makers and indorsers ; but is of no force as against an * indorsee who has received the paper without any knowledge of the secret agreement. 6 In Massachusetts it is settled that any memorandum annexed to a note of hand is part of such note, and enters into the con- struction of the contract, and controls or explains it. 7 And there- fore, where such a writing alters the nature of the instrument, aa 1 R S., 3d ed., p. 53. *5 Hill R., 432; id., 635; 2 Denio R., 375; 3 id., 553. * See 3 Denio, 553 ; 5 Hill R, 432 ; 2 Denio, 375. Tho statute makes an uncondi- tional promise in -writing to accept, an actual acceptance in favor of bona fide holders who have received the bill on the faith thereof. 4 Leeds v. Lancashire, 2 Campb., 205. * Hartley v. Wilkinson, 4 M. & S., 25; 4 Campb., 127. * Bowerbank v. Monteiro, 4 Taunt., 844; id., 227 ; Gibbon v. Scott, 2 Stark. R, 286. 7 Jones v. Fales, 4 Mass., 245; Coolidgo v. Inglce, 13 id., 32 ; Springfield Bank v. Merrick, 14 id., 322; Haywood v. Pern n, and Makepeace v. Harvard College, 10 Pick., 228, 298 ; Wheelock v. Freeman, 13 id., 168; Barnard v. Gushing, 4 Met, 230; 8 id., 226. REQUISITES OF. 139 by making it payable in something else besides money, 1 or by making the engagement to pay conditional upon an uncertain event, 2 it destroys the negotiability of the note. In one of the cases referred to, tlie words " foreign bills " were written under- neath the note ; in another the word " facilities " was inserted in the margin ; and in another still, these terms were added at the bottom of a note to become due on demand, " one-half to be paid in twelve months and the balance to be paid in twenty-four months ;" and the court considered them as entering into and forming part of the contract, the same as if written in the body of the instrument. The same rule of construction prevails in Vermont, where the added words qualify the contract in any material particular. 3 In this state, words inserted in the margin or added at the bottom of the note, at or before its delivery, not changing its character as a promissory note, but altering its terms, are con- sidered a part of the instrument ; as where a note is made payable generally, and indorsed for the accommodation of the maker, and he afterwards, without the knowledge of the indorser, adds words making it pa}-able at a particular bank. 4 On the other hand, the English decisions hold the place of payment a material part of the note only when it is embodied *in the instrument. 6 If the alteration be written in the margin, or inserted at the bottom, so as to make it evidently a part of the contract, it is unquestionably to be construed as entering into the body of the note.* But a separate memorandum, whether at the foot or on the back of a promissory note, is not in this state considered or treated as forming a part of the instrument; and its only effect is to show the consideration, and to operate as a notice to any person who may purchase or receive the note. T Though a written cotemporaneous agreement between the par- ties, as for renewal, is valid between them, 8 it is clearly not to be 1 4 Mass., 245 ; 14 Mass., 322. 5 13 Mass., 32. 'Fletcher v. Blodget, Iff Verm. R., 26. 4 Bank of America v. Wood worth, 18 John. R., 315, arid samo case in error, 19 John. R., 302. 1 Saunderson and others v. Judge, 2 II. BL, 500; Price v. Mitchell, 4 Campb. K P. K., 200; Trapp v. Spearman. 3 E"sp. R., 57; Parker v. Gordon, 7 East, 3S5; 1 Campb., .12); 1 I foil N T . P. It., 303. ' Hatt v. Smith. I I John, ft., 3 OS ; -I Mass., 245. Zanders v. P.won. 8 John. P., -1S5 ; Tappan v. Ely, 15 Wend. R., 3ff2. e 4 Taunt., 811; 9 B. k <",'., 758 ; 4 Man. &. RyL, 591. 140 BILLS OF EXCHANGE AND PROMISSORY NOTES. considered a part of the contract, when made subsequent to the execution and delivery of the note ;' nor is even a cotempora- neous agreement to be so considered, where the parties to it are different from the parties to the note. 1 It is settled in England and in this country that promissory notes and bills of exchange, as well as other contracts in writing, cannot be defeated or modified by parol evidence of a verbal agreement, to vary the terms of the written instrument' This rule applies to the case of a verbal agreement to renew a note, at maturity. The indorsee brings an action against an indorser of a promissory note : the defense set up is that the defendant refused to indorse it, unless the plaintiff would agree that it should be renewed when it became due, and that he did so agree : Lord Ellexborough ; " The parol condition is quite inconsistent with the written instrument. The condition for a renewal entiiely con- „, ^ trad icts the instrument * which the defendant has signed. 148 . . . There may, after a bill is drawn, be a binding promise for a valuable consideration, to renew it when due. But if the promise is cotemporaneous with the drawing of the bill, the law will not enforce it This would be incorporating with a written contract, an incongruous parol condition, which is contrary to first principles." * On the same principle, it is not admissible to show, by way of defeating a recovery on a note, that it was executed subject to a condition ;• or that it was not to be paid in a certain event ; or that the time or place of payment was changed or made different from that expressed in the writing. 6 In a court of law such evi- dence is not admissible to show even a mistake in the time of '4 Campb., 217; 1 Stark. R., 53. 5 Webb v. Spice, 19 L. J., 34 Q. B., on error in exchequer chamber. s Iloarc v. Graham, 3 Campb., 57 ; Free v. Hawkins, 8 Taunt, 92 ; "Woodbridge v. Spooner, 3 B. & Aid., 233; Moseley v. Ilanford, 10 B. & 0., 729; 7 Mass. R., 518 ; 11 id., 27 ; 8 John. R., 292 ; Erwin v. Saunders, 1 (Jo wen, 249; Payne v. La- due, 1 Hill R., 116; Pratt v. Gulick, 13 Barb. R., 297. 4 3 Campb.. 57. So as to an agreement by indorser to bo bound without demand or notice; Bank of Albion v. Smith, 27 Barb., 489. 6 1 Cowen R., 249; Farnham v. Ingham, 5 Verm., 114, 152. • Fitzhugh v. Runyon, 8 John. R., 375 ; Thompson v. Ketchum, 8 id., 190. It cannot be shown by parol that a certificate of deposit, by its terms payable in Iowa, was in fact payable in this state. Potter v. Tallman, 35 Barb., 182. Nor can it be shown that a note executed in form by an individual, was in fact given in some other capacity. Iliatt v. Simpson, 8 Ind., 256, or that a condition was annexed to tho note ; Allen v. Furbish, 4 Gray, 504 REQUISITES OF. 141 payment ;' and though there be no time specified, parol evidence will not be admitted ; for the time of payment is part of the con- tract, and if no time be expressed, the law adjudges that the money is payable immediately, and presumes that the parties con- tracted with knowledge of the law on the subject. 2 Notwithstanding the general rule that bills and notes cannot be contradicted, nor controlled in their legal effect by oral evidence, it is well settled that they may, between the original parties, be impeached for illegality ; for a failure of consideration; 3 for fraud ; for want of consideration ; or by showing a subsequent agreement vaiying the original contract, or waiving a portion of it* * Parts and particular requisites. "149 It is scarcely necessary to say that bills of exchange and pro- missory notes must be made in writing ; indeed, neither of these instruments can be defined without including this among the requisites of the contract. 6 By this, it is not meant that the whole instrument must be written, for it is equally safe and very com- mon to use printed forms, leaving the dates and amounts to be filled up as circumstances may require. But it must of course be signed in writing by the party executing it or by his agent, acting for him or in his name. The mode of writing does not appear to be material ; it may be 1 8 John. R., 375 ; see also Wells v. Baldwin, 18 John. R., 45. The pleadings may be so framed as to admit the evidence : Seeley v. Engell, 3 Kernan R., 542. Tor Kent, C. J, 8 John. R., 192; Sacket v. Spencer, 29 Barb., 180, a due bill. It seems that the purpose for which a promissory note, payable to an insurance company, was given, may be shown by parol, though such evidence be in conflict with the terms of the note. Dana v. Munson, 23 N. Y. R., 564. And it is adjudged that though a draft purports to have been drawn for value received, it may be shown by parol to have been indorsed and accepted as accommodation paper ; Clark v. Sis- Bon, 22 X. Y. R., 312; that the acceptor accepted for the drawee's accommodation, or as collateral ; Atlantic Fire & Marine Ius. Co. v. Boies, 6 Duer, 583 ; that the note or draft was usurious, though in conflict with the terms of either; ^o*7, 356-3GG; ami it may be shown that the delivery of a check, was conditional, and that the con- dition not having been fulfilled, it should have been returned: Bombard v. Brcnnan, 4 Bosw., 528 •Solly v. Hindc, 2 C. k M., 51 C; Payne v. Ladue, 1 Hill, 11G. 4 1 Cowon, 250 ; Slado v. Halstead, 7 Cowen, 322 ; Garlock v. Geortner, 7 Wend., 98. The note in this case was made and delivered, and afterwards left by the payee in the hands of the maker until a certain act was done, and he subsequently refused to deliver it; and held that the payee in an action on the note might prove the cir- cumstances an an excuse for not producing the note. •2 Bl. Com., 4G0; 5 Barn. & Cres., 234. 142 BILLS OF EXCHANGE AND TKOMISSOEY NOTES. in pencil or in ink; on paper or on parchment, or on any other convenient substitute for paper. 1 "Where a question arose upon an indorsement on a promissory note written with a pencil, Abbott, C. J., observed : " There being no authority to show that a con- tract which the law requires to be in writing should be written in any particular mode, or with any specific material, and the law of merchants requiring only that an indorsement of bills of exchange should be in writing, without specifying the manner in which the writing is to be made, I am of opinion that the indorse- ment in this case was a sufficient indorsement in writing within the meaning of the law of merchants, and that the property in the bill passed by it to the plaintiff." And Bayley, J., remarked: I cannot see any reason why, when the law requires a contract to be in writing, that contract shall be void if it be written in pencil. If the character of the handwriting were thereby wholly destroyed, so as to be incapable of proof, there might be something in the objection : but it is not thereby destroyed, for, when the writing is in pencil, proof of the character of the handwriting may still be given. I think, therefore, that this is a valid writing at com- mon law, and also that it is an indorsement according to the usage and custom of merchants ; for that usage only requires that the indorsement should be in * writing, and not that thsx\ writing should be made with any specific materials.' And it is not necessary that a party should sign or write his name upon or under a note or bill, in order to make a valid exe- cution or indorsement of the paper. He may execute an instru- ment and bind himself as effectually by his initials as by writing his name in full. 3 And he may use figures or a mark in lieu of his proper name. 4 In respect to the date, it is usual to superscribe the note or bill with the name of the place where, and the time when, it is made. In France, where the bill is required to be drawn at one place upon another, the place of drawing must be correctly stated.* According to the common law, no place is necessary to be stated 1 Chitty on Bills. 127 ; Byles on Bills, 5G. 'Geary v. Physic, 5 Barn. & Cres., 234. The rule is the. same with us; Brown V. The Butchers' and Drovers' liank, G Hill, 443. •The Merchants' Bank v. Spieer, 6 Wend., 443; 1 Denio, 471. *G Hill, -It::; George v. Surrey, 1 Mood. & Malk., 510; Bank v. Flanders, 4 N, Hamp. R., 239, 247. * Chitty on Bills, 147, 11 ed. ; Story on Bills, § 40, 41. KEQUISITES OF. 143 in the date of either a note or bill. Indeed, no date whatever is essential to the validity of a bill or note ; for where they have no date, the time, if necessary, may be inquired into, and will be computed from the day they were issued. 1 And so when delivered after the time mentioned in the date, they are valid only from the day of delivery, and are to be considered as drawn on that day. It was so held, where a note, signed in the name of a firm, bore date before, but was issued after the publishing of a notice that the partnership had been dissolved. 3 As a matter of convenience, the date is doubtless very important, for in many cases they are made payable so many months or days after date. And where this is the form of the instrument, it is leaving it in a very imper- fect shape to leave it without a date. But even in this case the want or absence of a date does not invalidate the *bill, for 151 it will be intended that it was dated on the day it was made.* However, where the date is inserted it is so far a material part of the instrument that it cannot be altered without the consent of all the parties.* If delivered, having a blank left for the day of the month, it may be filled up, as we have seen, without affect- ing its validity, and a mistake in the date may also be corrected.' It is common to date bills and notes on the day they are made ; but there is no legal objection, either to ante-dating or post-dating them ; nor is the fact that a note post-dated is negotiated before the day of its date a legal ground of suspicion, so as to put the indorsee upon inquiry, and subject him to the equities existing between the original parties. 7 It is true, a note cannot be ante- dated for the purpose of evading a statute, 8 or in order to effect a fraudulent design.* But if it be honestly done, it may be dated as of a day antecedent to that on which it was put in circulation ; and 1 Mechanics' and Farmers' Bank v. Schuyler, 7 Cowen, 337 ; Michigan Ins. Co. v. Leavenworth, 30 Vt, 11. 'Lansing v. Gaine and Ten Eyck, 2 John. R., 301. 'Abel v. Sutton, 3 Esp. Cas., 108; 2 John. R., 301. * Giles v. Bourne, 6 Maulo and S., 73; Do La Courtier v. Bellamy, 2 Show., 422. * Martin v. Miller, 4 T. R., 320. The alteration of the date by the maker's agent, the latter supposing himself autho- rized to do SO, will not avoid the note. Van Brunt v. Eoff, 35 Barb., 501. • 7 Cowen R., 337, c. 2 ; Brutt v. Picard, Ryl. : ton v. Page, 2 N. Hamp. R., 42; Thompson v Bowles, 2 Simons R., 194; Cutler v. Wright, 22 X. Y. Rep., 4T2. EdW. 22 1.70 BILLS OF EXCHANGE AND PROMISSORY NOTES. order to evade the law, the question is not which law is to govern in executing the contract, but which is to decide the fate of a secu- rity taken upon a usurious agreeement, which neither will exe- cute. It may be void in both places, but the same consequences do not follow in both ; in this state the whole sum becomes forfeited, while in another only the interest is lost. If the security be given on a usurious loan of money, and declared void for usury, the lender has, in this state, no means of recovering the actual sum lent ; but in several of the states the law does not subject him to any forfeiture. Hence the importance of determining by what law the contract is to be passed upon, a question which is answered by Ch. J. Taney in these words : " Unquestionably it must be the law of the state where the agreement was made, and the instrument taken to secure its performance. A contract of this kind cannot stand on the same principles with a bona fide agreement made in one place, to be executed in another. In the last mentioned cases the agreements were permitted by the lex loci contractus ; and *will even be enforced there, if the party is found within its juris- diction. But the same rule cannot be applied to contracts forbidden by its laws and designed to evade them. In such cases, the legal consequences of such an agreement must be decided by the law of the place where the contract was made. If void there, it is void everywhere." 1 Where a contract is made in one country, to be executed in another, as where a promissory note is made in Lower Canada for the payment of money in England, with interest till paid, the rate of interest at the place of payment is payable thereon. 8 This assumes that the law of the place of performance is the criterion by which the contract is to be interpreted ; and it is conceded that the parties may stipulate for a higher rate of interest than that allowed at the place where the contract is made, not exceed- ing the rate of interest permitted in the state where it is to be carried into execution.' The true theory is that contracts made in one state to be per- formed in another, are to be upheld or invalidated according to the law of the place where they are to be fulfilled : if made in 1 13 Peters' R., 78; Story's Conflict of Laws, 203; De Wolf v. Johnson, 10 Wheat., 383; 3 Term R., 425 ; Mix v. Madison Ins. Co., 11 Ind., 117. 'Schofield v. Day, 20 John. R., 102 ; Vinson v. Piatt, 21 Geo., 135. 'Fanning v. Consequa, 17 John. R., 511; Harvey v. Archibald, 1 Ryaa & Mood R., 184 ; Potter v. Tallman, 35 Barb., 182 ; 22 N. Y. Rep., 472. CONSTRUCTION OF. 171 New York, to be performed in Illinois, they are to be carried into effect, according to the terms of the agreement, provided they do not come into conflict with any law of that state, and are not void at the place where they are made. Mr. Justice Harris, in a recent case decided in our Court of Appeals, states the doctrine thus :* " It is a general rule of international law, that the rights of the parties to a contract, as distinguished from their remedies, are to be determined by the law of the place where the contract is to be performed. If a contract be * made in one state or country, and it appears upon its face that it is to be performed in another, it will be presumed that the contract was entered into with reference to the laws of the latter, and these laws will be resorted to in ascertaining the validity, obligation and effect of the contract. This general rule, however, has its exceptions ; one of which is, that where a contract is declared void by the law of the state or country where it is made, it cannot be enforced as a valid contract in any other though by its terms it was to have been performed there. Thus, assuming that the contracts in ques- tion had been made in Ohio, and that by the laws of that state such contracts are declared void, the courts of this state would be bound also to declare them void, though by their terms they were to have been performed here, and though if made here they would have been valid contracts. This exception is required by that just comity and public convenience upon which all international law is founded." 2 It is not material on a question of usury, where the contract, note or other security is dated or signed ; for the place where they are delivered is the place of execution. This is the general rule; but the mere fact that notes made in New York, where the trans- action took place, are sent to the payee and received by him in Connecticut, does not bring them under the laws of that state. The true question appears to be, where was the contract entered into ? If the facts and circumstances show clearly that it was a 1 Hyde v. Goodnow, 3 Comst. R., 2G6. The action was on two notes signed in Ohio, and expressed to be for value received, in two policies of insurance; the notes, which were void by the laws of that state, being delivered in this state, where tho insurance was made upon and after their delivery. The case was decided in 1850, and was made to turn upon the fact that the contract was made bere, and not in Ohio. Bee, to the same effect, Western v. Genesee M. Ins. Co., 2 Kern. 258. ' A security which is usurious according to tho law of the place of contract and of pel for I nan OP, is held to be governed by the law of the place whore made. Mix .-. Madison Ins. Co., 11 Ind., 117; but see Fardin v. Burns, 5 Cray (Mass.), 590. 172 BILLS OF EXCHANGE AND PROMISSORY NOTES. Connecticut transaction, tlie courts of this state will give effect to the contract according to the laws of that state; though it be- for the renewal of an invalid contract 1 But this new contract must be such as the law of the state where it wa3 made will support ; for, " usury is a moral taint wherever it exists, and no subterfuge will be permitted to conceal it from the eye of the law : this * is the substance of all the cases, and they only vary as they follow the detours through which they have had to pursue the unconscientious money-lender." a Neverthless courts of law do not eagerly snuff up the taint of usury, nor do they in any case seize upon it as a pretext for pro- nouncing on the offender a judgment of forfeiture. On the contrary, in so far as the law acts vindictively it is to be construed like a penal statute. Mr. Robertson, a resident of this state, applies to Mr. Chapman residing in England, for a loan of money to be secured by liis bond and mortgage on a lot of land in the city of Hudson ; the agreement for the loan is made in England, the securities are executed here, bearing an interest of seven per cent per annum^ and transmitted to Mr. C. who thereupon deposits the money loaned, to the credit of the borrower in London, according to the previous arrangement between them ; and it is held in this state that the contract is valid, though made in England, and by con- struction payable there, where the legal rate of interest is less than that for which the parties stipulated. 3 This decision corresponds with the law as settled in Louisiana ; where it is adjudged that a note given at New Orleans, upon a loan of money made there, the creditor may stipulate for the highest legal rate of conventional interest allowed by the law3 of that state, although the rate of interest thus agreed to be paid is higher than that which can be taken on a loan, by the laws of the state where such note is made payable. 4 1 Jacks v. Nichols, 3 Sand. Ch. R., 313; S. C, 5 Barb. R., 38; 1 Seidell R, 173. Tl io contract in this case was made, and the notes which were delivered in Connecticut, were dated in Now York ; some of them payable generally and othora payable there ; held that the contract must bo considered an entire thing and as having boon made in the state of New York. Le Wolf v. Jolmson, 10 Whcaton R, 3G7. ■ Per Mr. J. Joi-Dfsos, 10 Wheaton, 367. • Chapman v. Robertson, 6 Paige Ch. R., 627. The case arose on a bill to foreclose the mortgage filed in this state. Contra, Lockwood v. Mitchell, 7 Ohio (N. S)., 387. 4 Depean v. Humphreys, 20 Martin's Rep., 1. When anoto is made payable gene- raliv. i| can only bear, under the law of Louisiana, the rate of interest allowed by tho State where it is made. Hawley v. Sloo, 12 La. Ann., 815. CONSTRUCTION OF. 173 Mr. Justice Story, in his commentary on the Conflict of Laws, leans to the opinion, that the mere taking of a security upon lands in another state or country, on a loan at a higher rate of interest than is allowed by the laws of the place where such loan is made- and the security given, will not so change the locality of the con- tract as to protect it from the operation of the usury laws of the place where such loan is made, unless * there is a further • *184 agreement, either express or implied, that the money shall be repaid at a place where the rate of interest reserved upon the loan is allowed by law. 1 The English decisions are to the same effect, especially where both of the parties to the contract reside in England, and the agreement is made there, though the security be upon lands in the colonies." But no doubt appears to have been entertained there as to the validity of a loan upon a bond and mortgage actually executed in Ireland or the Colonies, although the loan itself, was made in England, and was made payable there or to a mortgagee who resided there. 3 Indeed, the precise question decided in this state does not appear to have arisen in England ; nor is it easy to see why a security made in this state, such as a mortgage, which is required to be executed according to the lex situs or local law of the place where the property is situated, should not be enforced here. For, though the negotiation is commenced and finished in England, the loan is in fact made upon the faith of an act done here, and recognized as valid by the laws of our state." The protest of a foreign bill is required by the law mer- chant, and is properly made at the time, in the manner, and by the persons prescribed in the place where the bill is protested.' Its authentication should be .under the notary's seal of office.' But a bill drawn in this state on a person residing in Boston must be presented for acceptance, or for payment ; and the notice of 1 Story's Conflict of Laws, 238, § 287. ' Dcwar v. Span, 3 Term R., 425 ; Staplcton v. Conway, 3 Atk. Rep., 727. * Paige R., C32 ; 4 Geo. Ill, ch. 79. 4 C Paige Ch. R., G27; 20 Martin R., 1 ; The Commonwealth of Kentucky v. Bass- ford, G Hill R., !52G, discusses the question as to how far the laws of another state are to be adopted here when the contract is rendered invalid by tho statute of this state. ' Cliitty on Bills, 11th anon., id., p. 45G; Story on Bills, §§ 170, 278; Ellis v. Com. Bank, 7 How., Miss., 201 ; Carter v. Union Bank, 7 Humph., 548; Grafton Bank v. Moore, 14 N. Harnp., 142; Rose v. Bedel, 5 Dner, 4G2 ; post, 585, 58G. * Bank of Rochester v. Gray, 2 Hill H., 227; Tickner v. Roberts, 1 1 Leen given for value received, it is a special contract ; and if no consideration appear upon the face of it, and none be alleged, it cannot be given in evi- dence under a count for money, nor can the real consideration be proved. 3 But where an action was brought on a note payable in money, which, on account of a contingency as to the person to #9-1 -1 whom the payment was to be * made was not a promissory note within the statute, it was held that being given for value received it was admissible in proof under the money counts.' 1 Notes payable in chattels, goods or choses in action, not being promissory notes within the statute, are to be construed and en- forced in the same manner as other parol contracts. So, also, an order for a given sum, payable in goods or in the proceeds thereof, is not a bill of exchange ; and therefore where the drawee has accepted such a bill, the payee cannot recover on it unless he avers and proves that the acceptor has in his hands either goods 1 Jackson v. Alexander, 3 John. R., 484 ; Jerome v. Whitney, 7 John. R., 321. They are, however, assignable. A complaint in an action on notes payable in mer- chandise, which avers the making of them, that they were duly indorsed to the plaintiff who is the owner and holder of them, and that payment of them was duly demanded before suit and that no part of them has been paid, is held sufficient to sustain a recovery ; Brown v. Richardson, 1 Bosw., 402 ; a verbal assignment is suf- ficient; S. C, 20 N. Y. Rep., 472. 2 7 John. R., 321 ; Knill v. Williams, 10 East. R., 431. 3 Saxton v. Johnson, 10 John. R., 418. * Walrad and Bowman v. Petrie, 4 Wend. R., 575. The note in this case was pay- able to P. Walrad or Robert Bowman, and it was stated to have been drawn for value received. See a like case, Prindle v. Caruthers, 15 N. Y. Rep., 425. NOTES AND DRAFTS NOT NEGOTIABLE. 199 or the proceeds of them, such as are described in the order, suffi- cient for the payment. 1 But if the order be so drawn as to imply that the drawee has a fund in his hands sufficient to meet the draft, the acceptance of it, though it be not a bill of exchange, is deemed an admission which will support an action for money had and received. 11 So the acceptance of a draft drawn on a present fund in the hands of the drawee, is prima facie evidence of the suffi- ciency of that fund. 3 In like manner where the owner of a quan- tity of flour sells, and delivers to the vendee an order on his wharfinger for twenty sacks, and the order is accepted in general terms, the title passes and the vendee may bring his action directly against the bailee for the flour. Bayley, B. : " This was an order to deliver twenty sacks of flour, not out of a larger quantity, but twenty sacks specifically, and when the defendants accept that order without restriction, they admit that they have twenty sacks which they will appropriate to that order, and they have no right afterwards to say that they have not twenty sacks unappro- priated." 4 Having accepted the order, he is estopped from deny- ing that he has the property called for by the order. 6 * William Watts drew a bill on Massias, his factor, for one __ . n hundred and ninety-five pounds, payable out of the pro- duce of goods in his hands, after discharging prior acceptances ; and the drawer accepted in these words, " I agree to conform to this order." The bill was transferred to the plaintiff, who brought an action thereon against the acceptor. Per Curiam: " The ques- tion is, whether the defendant had in his hands £195 for the use of the plaintiff. He is proved to have had goods to the amount of £1,657, and that his acceptances, in the common and technical sense of the words, as applied to bills of exchange, together with certain other indorsements by which he had engaged himself to pay money for Watts, left a balance in his hands more than suffi- cient to pay the plaintiff; if we exclude the balance of £870 due to Massias himself. This balance, then unliquidated, could never be meant to be provided for ; nor was the bill, or its acceptance, meant to be subject to it ; for then there would have been fraud 1 Atkinson v. Manks, 1 Cowen It., 691. 5 Maber v. Massias, 2 Bl. Rep., 1072; Lent v. Hodgman, 15 Barb., 274. a Hunk, ftc., v. Sanders, 3 Marsh, 184; Varner v. Nobleborough, 2 Greoiil., 123; 11 R., 145. 4 Gfflett v. Hill, 4 Tyr., 290; 2 C. & M., 530, S. C. * Chapman v. Searle, 3 Pick. R., 38 200 BILLS OF EXCHANGE AND PROMISSORY NOTES. in the drawer, and also in the acceptor ; for both knew or must, be supposed to know, at least Massias knew, how the balance then stood. If he meant to have reserved his own balance, he should have made a special acceptance. But having accepted it generally in the terms of the draft, that is, subject only to prior acceptances, he shall not shelter himself by this concealed balance due to him- self in the course of a running account." ' A conditional acceptance becomes absolute as soon as the con- dition is fulfilled. 1 But in order to recover on it, it must be declared on specially, with an averment that the condition has happened or has been performed. 3 Thus, where the drawee accepts the bill " to pay when in funds " or " when certain goods are sold," and the holder is contented to receive such an undertaking, the contract of the acceptor binds him to pay only when the event takes place." And in an action on such an acceptance, the holder must of course show that it *has taken place ; since that is one of the facts constituting his cause of action. 5 'o In all action on a draft payable to the order of Kellogg or Mellor, out of the proceeds of certain carriages when sold, it is necessary to allege the original consideration of the order and acceptance ; and where the suit is brought in the name of the assignee of the order, it is incumbent upon him to allege and prove the consid- eration of the assignment, that same was made by both of the persons to whose order the draft was made payable, that the carriages were sold for a sum sufficient to answer the draft, and that the acceptor promised to pay the same. 8 Not being negotia- ble, such a draft is in legal effect the same as if the word order had been omitted ; and therefore the assignee must derive his title to the instrument independent of these negotiable terms. So, an order for the payment of rents to accrue, drawn by a landlord on his tenant, payable to a third person, is, when accepted or assented 1 2 Bl Rep., 1072. s Sproat v. Matthews, 1 Term R., 182. 3 Langston v. Corney, 4 Campb., 176; 1 Marsh, 176. An order by a builder on the party for whom ho builds to pay out of a certain in- stallment falling due under the building contract, accepted generally, binds the ac- ceptor to pay only out of and when that installment falls due. Van Wagoner v. Tar- rett, 27 Barb., 181. 4 Julian v. Showbrooke, 2 Wlla., 9 ; Smith v. Abbott, Stra., 1152. 6 Read v. Wilkinson, 2 Wash. C. C, 514; 1 Peters, 264; Brown v. Colt, 1 M'Cord, 408. * De Forest v. Frary, 6 Cowen R., 151. NOTES AND DRAFTS NOT NEGOTIABLE. 201 to, an equitable assignment; and the payee thereof may recover thereon. 1 In like manner, where the owners of certain securities assign them, in trust, to discharge certain specified debts, "the balance to be held subject to their order," and the assignees accept the trust, and the assignors afterwards give an order on them for the balance, of which they are properly notified, it is held that the payee of the order may recover against them the balance in their hands, though they have not formally accepted the order; the acceptance of the trust is in effect a promise to the payee of the order.* Orders for goods in the hands of the drawee are evidence of goods sold to the drawer, and delivered to the payee at his request. In this respect they differ from orders for the payment of money, which are presumed to be drawn, nothing appearing to the con- trary, upon funds in the hands of the * drawee ; and if paid, give no cause of action against the drawer, unless the presumption is rebutted by other evidence. 3 In an action for money lent, and for money paid, laid out and expended for the use of the defendant, the plaintiff on an issue of non-assumpsit introduced in evidence a note for forty pounds, expressed to have been given for value received, payaWe in lands at nine shillings per acre, and then proved that the defendant had acknowledged the note and said it was a just debt, and that he had been deceived in regard to the lands and was not able to give a good title to them according to the terms of the note ; and it was held that the note was properly received in evidence, and that the plaintiff was entitled to recover the face of the note. 4 In actions on notes payable in specific articles, and on contracts for the delivery of chattels, it is essential to ascertain in the first place, the true construction of tbd agreement, in order to determine what allegations and proof are necessary to be made to entitle the person in whose favor the instrument is executed to recover on it As a general rule, the party bound to render a service or make a payment by a given day, must seek the party to whom the debt or duty is due. 6 Is the place of performing the contract changed 1 Morton v. Xaylor, 1 Jf ill R., 583, and cases there cited. 1 Weston v. Barker. 12 John. R., 27G. 1 Alvonl v. Bakei; Wend. R., 323. 4 Smith v. Smith, 2 John. R, 235; see Newcom'b v. Crane, 9 Barb. R., 402. 1 Edwards on Baflmenfs, 181, and cases there citod. Edw. 26 202 BILLS OF EXCHANGE AND PR03IISS0EY NOTES. by substituting a commodity for money? The implied place of performance is sometimes changed by the nature of the article to be delivered. If a merchant or manufacturer engages to pay on demand in the articles of his trade, and no place is specified in the contract, the store of the merchant, or the workshop or place of deposit of the fabrics of the manufacturer, is the place where pay- ment must be demanded before an action accrues for non-payment of the contract; 1 because, from the peculiar circumstances and course of business of the promisors, the inference is that the articles should be delivered at the promisors' usual place of making and - delivering the articles sold by them. When the engage- *915 . . . ment is that the articles shall be delivered on demand, this seems to imply that the creditor must go to the debtor to make the demand, before the latter can be in default : and when payable in farm produce, without specifying any time or place of pajmient, the note is payable on demand at the. farm of the debtor. 2 But where a note of hand is given, payable at a fixed time, in cattle, grain, or other portable articles, and no place of payment is designated in the note, the creditor's place of residence is the place of payment ; for in this case there is nothing to rebut the usual presumption that the debtor or party bound, must seek his credi- tor and discharge his obligation within the time limited. 3 Thus, one who contracts to pay a given sum in salt, on or before a day named, must go to the residence of his creditor and make his pay- ment there. There is some diversity in the decisions in regard to the place where a contract for the delivery of specific articles is to be per- formed ; but this diversity avises out of the difference of circum- stances attending the contract Thus, the want of time in the contract renders it payable on demand ; and the fact that it is payable in farm produce, draws aftor it the inference that the farm is the place of payment. 4 So, when a merchant gives a due bill for goods, or a mechanic for work, without mentioning any time or place for payment, the natural and irresistible inference is, that 1 Clap, on Cont., 28, 29. As to the amount recoverable on such notes, see post, ?23, "25. 2 Lobdell v. Hopkins, 5 Cowen R., 51G ; 7 "Wend., 312 ; Campbell v. Clark, 1 Hemp G7. 3 Goodwin v. Holbrook, 4 Wend. R. 377; Stewart v. Morrow, 1 Grant's CaseB (Penn.), 20 1; Musselman v. Stoner,*31 Penn. State, 2G5. * 5 Cowen R., 51G ; 2 Bibb's Kentucky R., 280 ; 16 Mass. R., 453. NOTES AND DRAFTS NOT NEGOTIABLE. 203 the merchant agrees to pay at liis store and the mechanic at his shop.' It is held in Kentucky, that on contracts for the delivery of property, where no place is expressed, the usual residence of the obligor is the place of performance ; and that when the property is to be delivered on request, a special request at the *obli- gor's residence must be averred. 2 The action was on a contract for the payment of two hundred dollars, in a negro, upon request, and it was adjudged on demurrer that the plaintiff must aver in his declaration, a demand of the chattel at the residence of the vendor, or show circumstances justifying a departure. The law judges the place according to the nature and subject matter of the thing to be performed ; presuming, in such a case, that the contract is to be executed at the place where it is made. 3 The maker of a note, payable in ponderous articles by a day named, is bound to seek the payee and learn from him where he will receive them, and make the delivery according to his direc- tion ; provided the place named is reasonable, and within the pro- bable contemplation of the parties when the note was given. 4 But where a person assumes the custody of cumbersome goods that have been distrained for rent, and gives a receipt therefor promis- ing to deliver the same in six days, after demand, the promisor is not bound to transport the goods to a different place from that where he received them ; it is enough if he offer to deliver them when demanded at the place of deposit. 5 So, where the owner of a saw-mill gives his note payable in lumber at cash prices when '.•ailed for, the payee must go to the maker's residence or mill and call for the lumber ; but he is not bound to go more than once, ' Chipra. Tr., 28, 49. A due bill payable in ready made clothing, must be de- manded at the maker's store, and it may bo demanded in parcels at different times; but the holder cannot demand an article made for a customer. Vance v. Bloomer, 20 Wend., 19G. If the due bill of a merchant bo payable in goods at his store at a place named, and the payee neglects to demand them within a reasonable time, ho is bound after- wards to receive them if the merchant removes, at any other reasonablj'- conve- nient place. Buck v. Burk, 18 N. Y. R., 337 ; see also Haskell v. Matthews, 37 Maine, Ml. 3 Wihnouth v. Patten, 2 Bibb R., 280. 1 Chambers v. Winn, Prin. Dec., Kentucky, 192 ; Mason v. Briggs, 16 Mass. B., 453*; Durkee v. Marshall, 7 Wend. R., 312. * Barns v. Gtraham, 4 Cowcn R., 462. • Slingcrland v. Morse, 8 John. R., 474; 7 id., 4C3. 20-i BILLS OF EXCHANGE A> T D PROMISSORY NOTES. nor is he obliged to remain for any length of time ; it is sufficient if he makes a demand at the place at a reasonable time. 1 The possession of a promissory note, not negotiable, is not prima facie evidence of a transfer to the plaintiff before the maturity of the note, or before the commencement of the action;* and an indorsement thereon made by the cashier of the bank, which was the payee of the note, does not raise any presumption of title in the plaintiff; the cashier having no power to assign the paper without authority from the board of directors. 2 Under the former practice, when a person made a promissory note, not negotiable, for the payment of a given sum of money, and a suit was brought upon it in the name of the payee, it was prima facie a good defense to show that the note was made for the accommodation of the plaintiff; but if it was then proved on the part of the prosecution that the action was, in fact, brought for benefit of an assignee of the note, and that it had been transferred to him for value, the action was sustained. 3 Not being negotiable, the assignee of the note takes it subject to all the equities existing between the original parties ; this is the general rule, 4 founded upon the supposed intention of the parties that such notes are not made for circulation like commercial paper.' When made for the accommodation of the payee, the right of the latter to transfer it is necessarily a part of the contract ; and it would be a destruction of the security to allow the same defense after as before the transfer. 8 A promissory note may be within the statute, though not drawn in a negotiable form ; and in such a case it is not necessary for the payee suing upon it, to aver or prove in the first instance the con- sideration for which it was given. 7 But the indorsee must aver and prove the consideration of the transfer to him. 8 The same rules 1 Eice v. Churchill, 2 Denio It., 1-45: Higgins v. Emmons, 5 Conn. R., 76; Barker v. Jones, 8 X. Hamp. R., 413. The promisor must be ready to perform his contract at all reasonable hours. 2 Barrick v. Austin, 21 Barb. R. 241. 3 Lee v. Swift, 1 Denio R., 565; Rogers v. Morton, 12 Wend., 484. * Chamberlain v. Gorhara, 20 John. R., 144; Moore v. Weir, 3 Sneed (Tenn.), 46. 9 21 Wend., 241. ' Lee v. Swift, supra ; Bank of Rutland v. Buck, 5 Wend., 66. 7 Goshen Turnpike Co. v. Hurtin, 9 John. R., 217 ; 6 Term R., 123; Ld. Raym., 1 545 ; 9 Wend., 273 ; 13 id., 657. See the terms of the statute, 2 R. S., 52, 3d ed. 8 Barrick v. Austin, 21 Barb. R., 241. See Brown v. Richardson, 1 Bosw., 402 Rigga v. Price, 3 Iowa, 334. A draft in the usual form, payable in furniture, thoug not negotiable, passes in equity by indorsement. Long v. Gansen, 18 How. Pr.,265 NOTES AND DKAITS NOT NEGOTIABLE. 205 of pleading prevail under * the code ; the payee of an ' instrument given for the payment of money only, need not aver the consideration for which it was given; 1 though the assignee or indorsee must aver and prove a valid transfer.* GUARANTY OF NOTES AND BILLS. The engagement of the surety is accessory to the agreement of the principal ; and it is a general rule of law, that whatever dis- charges the contract of the principal discharges also that of the surety.' The gOod sense and justice of this rule are very manifest. If the principal contract be for the payment of money, or for the performance of a given act, and the money be paid, or the act performed, the undertaking of the surety terminates with the ful- fillment of the agreement. Pothier states the principle with great clearness : " It results from the definition of a surety's en- gagement, as being accessory to a principal obligation, that the extinction of the principal obligation necessarily induces that of the surety, it being of the nature of an accessory obligation, that it cannot exist without its principal ; therefore, whenever the prin- cipal is discharged, in whatever manner it may be, not only by actual payment or a compensation, but also by a release, the surety is discharged likewise ; for the essence of the obligation being that the surety is only obliged on behalf of the principal debtor, he there- fore is no longer obliged when there is no longer any principal debtor for whom he is obliged. In like manner the surety is dis- charged by the novation of the debt; for he can no longer be bound for the first debt for which he was a surety, since it no longer subsists, having been extinguished by the novation ; neither can he be bound for the new debt, into*which the first has v _„ -x-9 1 (j been converted, since this new debt was not the debt to which he acceded" * A. person who guarantees a note is in no sense a party to the Barb. R., CC2 ; 2 Selden R., 209; 2 Duer, C29. 1 Van Santvoord's Pleadings, 22G-232. The indorsee of negotiable paper proves an indorsement for value by proving the indorsement; the law presumes the indorse- ment made for value. a Kdwards on Bailments, 225, 22G, 234, 237, 204; Story on Con., §§ 8GC, 8G8. * On Obligations, p. 2, c. G, § 1, 5th corollary ; Chitty on Contracts, 528 ; Sneed v. White, 3 J. J. Marsh, 527 ; Brown v. Wright, 7 Monroe, 398; Norton v. Roberts, 4 id., 494; Miller v. Stewart, 9 Whcaton, C80; Wright v. Johnson, 8 Wend., 512. 206 BILLS OF EXCHANGE AND PROMISSORY NOTES. note :' his contract is special and must be specially declared on. a Accordingly, where it appears upon the face of the instrument that one of the makers signs as surety, no recovery can be had thereon against him, without declaring specially on the contract. 9 In the common case of a suit against the makers of a promissory note, the instrument might, under the former practice, be given in evidence under the money counts, for the reason that the note is evidence of money lent to, or had and received by the maker to the plaintiff's use. But when one of them signs as surety for the other, and that fact appears on the face of the instrument, the note fur- nishes no evidence that he received the whole or any part of the consideration. Indeed, it proves the contrary ; for the principal debtor must have received the whole consideration. As the note does not prove that both of the makers have received money, the holder cannot recover without declaring on the contract. 4 A contract of guaranty, though indorsed upon a negotiable note and drawn in general terms warranting its collection, is not of itself negotiable : because the statute making promissory notes negotia- ble is not extended ■ to any other instrument relating to the note ; nor can such a guaranty be filled up on the trial with the name of the holder of the note, as may be clone in the case of a blank * n indorsement. 5 "When a person * makes a general guaranty of payment, on a separate paper, describing a note, without naming any person as the party guaranteed, the party to whom the note is transferred on the faith of the guaranty, acquires a right to recover on it in his own name ; the guaranty being an open pro- position, made on a valuable consideration, to any person that might accept the same. But such a collateral instrument is not negotia- 1 Ellis v. Brown, G Barb. S. C. R., 282 ; 5 Wend., 307 ; 2 Hill, 190. 2 1 Chitty PL, 339 ; Allen v. Fosgatc, 11 How. Pr. Rep., 218. 3 Butler v. Rawson, 1 Denio R., 105. The note was in this form : " One year after date, for value received, we jointly and severally promise to pay James Butler, or bearer, six hundred dollars with use Webster, November 1, 1842. Wm. Butler. Joseph Rawson, surety." Post, note 6G5. The party signing the note in that manner is liable thereon as a surety-maker; Cobb v. Titus, 10 N. Y. Rep., 198. * Per Broxson, Ch. J, 1 Denio, 10G. The rule is the same under the Code, 11 How. Pr. Rep., 218. 6 Lamouricux v. Hewit, 5 Wend. R., 307 : True v. Fuller, 20 Pick. R., 140. But the indorsee could always acquire the benefit of the contract of guaranty; 19 Wend., 557 ; and lie may under tho Code recover thereon in his own name ; Small v. Sloan 1 Bosw., 352. • Watson's Executors v. McLaren, 19 Wend., 557 ; S. C, 26 Wend., 425. GUARANTY OF NOTES AND BILLS. 207 ble, and cannot at common law be transferred so as to vest a risiht of action in a subsequent indorsee of the note. 1 There is a class of cases in which a guaranty of payment in- dorsed on the back of a note for a good consideration, has been held equivalent to a new note ; 2 and in these cases where the con- tract of guaranty contains words of negotiability, it has been treated as a full negotiable note, and the subsequent holder has been allowed to maintain an action thereon in his own name.' Indeed, it has been asserted, and there are cases to that effect, that a person may stand in the double relation of an express guarantor and an implied indorser ; being treated as the former by his immediate guarantee, and as the latter by a remote transferree. 4 But it is settled in this state that one who signs a guaranty indorsed upon the back of a note, cannot be rendered liable as an indorser, and is not entitled to set up the want of demand and notice. 6 The con- tract, such as the parties have made it, must be enforced ; it cannot be made by construction something different from what its language plainly imports. 8 In several of the states it is held that in order to charge the guarantor of a note or bill, it is necessary that he should "- have notice of its dishonor. 7 But the same promptness is not necessary in making the demand, and in giving notice of non- payment to the guarantor, as is required to charge an indorser. 8 The guaranty being a collateral contract, the strict rule requiring notice as between the parties to a bill does not apply. 9 And in this state a guarantee of payment is not regarded as a conditional engagement, and no notice is required for the purpose of fixing the liability of the guarantor. 10 1 Tyler v. Binney, 7 Mass. R., 479, and authorities above cited, ante, note 219. Under the Code the transfer of a note having a guaranty of payment indorsed on it, must vest tho rights of action thereon in the assignee or indorsee of the note. Small v. Sloan, 1 Bosw., 352 ; Code, §§ 311, 312; Cooper v, Dedrich, 22 Barb., 510. 1 Ketchell v. Burns, 24 Wend. R., 45G ; Allen v. Rightmere, 20 John. R., 305. * 24 Wend. R., 450; 2 Hill R., 192. Per Bronson, J. 4 Upham v. Prince, 12 Mass. R., 14 ; Manrow v. Durham, 3 Hill R., 584, and cases there cited. ' Brown v. Curtiss, 2 Comst. R., 225. 8 Curtiss v. Brown, 2 Barb. R, 51 ; S. C, 2 Comst. R., 225. T Foot v. Brown. 2 M'Lean, 209; Lewis v. Brewster, id., 21 ; Oxford Bank v. Hayncs, 8 Pick., 423; Talbot v. Gray, 18 id., 534; Gamago v. Ilutehins, 23 Maine R., 505; GKbba v. Cannon, 9 Serg. k R., 198; Isett v. Iloge, 2 Watts, 123 ; 2 Comst. R., 223. • IS Pick. R., 534; 21 id., 2:>0. 9 Rhett v. Poe, 2 How. U. 8., 457. 10 20 John. R., 3GS ; 2 Comst. R, 225. 208 BILLS OF EXCHANGE AND PEOMISSOEY NOTES. An adjudged case may illustrate the principle. An action is brought upon a special guaranty indorsed on a note in these words : " For value received, I sell, assign and guaranty the payment of the within note to John Allen, or bearer." By the court, Spencer, Ch. J. : " It is the dutv of the debtor to seek the creditor, and pay his debt on the very day it becomes due. As regards the maker of the note, and to render him liable, no demand is neces- sary. A demand of payment is necessary only to fix an indorser or a surety whose undertaking is conditional. An indorser does not absolutely engage to pay. It is a conditional undertaking to pay, if the maker of the note does not, upon being required to do so, when the note falls due, and upon the further condition that the indorser shall be notified of such default The defendant insists that he stands in the situation of an indorser merely ; but such is not the fact. The undertaking here is not conditional ; it is absolute, that the maker shall pay the note when due, or that the defendant will himself pay it" 1 In legal effect this form of guaranty is a new note for the pay- ment of the money; and it has been so treated by the * decisions in this state. 3 The obligation is more perfect than that which is created by an indorsement, because it is an unconditional contract. 3 When a third person is privy to the original consideration, and at the time the note is given indorses an absolute undertaking on the back to pay it at maturity, he may be treated as a joint and several promisor with the party who signs on the face of the note. 4 This is upon the principle that two instruments of the same gene- ral nature, both executed at the same time, and relating to the same subject matter, are to be construed together as forming but one agreement. As he who signs on the face and he who indorses his name upon the back, both promise to do the very same thing, to wit : to pay the money at the specified time, it has been held that they may, without doing any violence to the contract, be regarded as joint makers. 8 1 Allen v. Rightmere, 20 John. R., 3G5. J Ketchell v. Burns, 24 Wend., 45G. The guaranty In this case was in this form : " For and in consideration of thirty-one dollars and fifty cents, received of B. F. Spen- cer, I hereby guarantee the payment and collection of the within note to him or oearer." * 2 Comst., 225. 4 Hough v. Gray, 19 Wend., 202; 1 Hill R., 25G; 4 id., 420; query as to the effect tf the subsequent decisions. 4 Seldcn R., 207. • Dean v. Hall, 17 Wend. R., 214 ; 19 Wend. R., 202 ; 3 Hill R., 584. GUARANTY OF NOTES AND BILLS. 209 Under the statute of frauds, every special promise to answer for the debt, default or miscarriage of another person, is void; unless such agreement, or some note or memorandum thereof expressing the con- sideration, be made in luriting and subscribed by the party to be charged therewith. 1 The application of this statute, which is very plain in its terms, has given rise to a great variety of conflicting opinions. In an early case decided in this state, Chief Justice Kent specifies three distinct classes of cases on the subject, which require to be dis- criminated. " 1. Cases in which the guaranty or promise is colla- teral to the principal contract, but is made at the same time, and becomes an essential ground of the * credit given to the # 09Q principal or direct debtor. Here, as we have already seen, is not, nor need be, any other consideration than that moving between the creditor and original debtor. 2. Cases in which the collateral undertaking is subsequent to the creation of the debt, and was not the inducement to it, though the subsisting liability is the ground of the promise, without any distinct and unconnected inducement Here must be some further consideration shown, having an immediate respect to such liability ; for the consideration for the original debt will not attach to this subsequent promise." 3. A third class of cases, is when the promise to pay the debt of another arises out of some new and original consideration of bene- fit or harm moving between the newly contracting parties. 3 The case then under consideration may be taken as a sample of the first of these classes. Johnson applied to Leonard for the purchase of a quantity of goods, on a credit, and he declined to sell without previous security for the payment ; upon which Johnson made and signed his promissory note for the amount, for value received ; and Vrendenburgh, the defendant in the action, wrote and signed under the note, " I guaranty the above," and Johnson thereupon delivered the note and received the goods, and the con- tract of guaranty was held valid.* 1 2 R. S., 195, 3d ed. These are the very words of the statute, and they are a tran- script from the English statute, which has been generally adopted in this country. *Fisk v. ITutchinson, 2 Wils., 9-t; Charter v. Beckett, 1 Term R., 201; Wain v. Walters, 5 East, 10, arc quoted as samples of this class. * Leonard v. Vrendenburgh, 8 John. R., 29; decided at May term, 1811. 4 Same case: ''Tho writing imported, upon the face of it, one original and entire transaction ; for a guaranty of a contract implies, ex vi termini, that it was a concur- rent act, and part of the original agreement." Leonard v. Vrendenburgh, is commented on and upheld in Brewster v. Silcnco, 4 EDW. 27 210 BILLS OF EXCHANGE AND PROMISSORY NOTES. The common case of a third person's promising to pay a debt, in consideration of a valid agreement to forbear bringing an action thereon, will illustrate the second class of cases. 1 Being clearly within the statute, the contract of guaranty must be in writing and a consideration must appear upon the face of the instrument. 2 * The third class of cases, where the promise to pay the debt of another arises out of some new and original consid- eration of benefit or harm moving between the newly contracting parties, is not within the statute ; for wherever the consideration of the promise takes its root in a transaction distinct from the original liability, the case is not within the statute. 3 The true distinction is between an original and a collateral promise. To support the promise as an original undertaking, it is not necessary that the consideration should move directly from the promisee to the promisor ; 4 nor that it should be expensive to the promisee, it being a benefit to the promisor. 5 If it be a new and independent contract it is valid, though it operate to pay the debt of another person. 6 1 Watson v. Randall. 20 Wend., 201. 2 Wain v. Walters, 5 East, 10; 3 John. R., 310; 8 id., 37; King v. Wilson, 2 Str., 874; Fish v. Hutchinson, 2 Wend., 94; Kirkham v. Martyr, 2 Barn. & Aid., G13; 20 Wend., 201. 3 Tomlinson v. Gill, Ambler, 330 ; Read v. Nash, 1 Wilson, 305 ; Chapin v. Merrill, 4 Wend., 657 ; Ward v. Fryer, 19 Wend., 494. 4 Farley v. Cleveland, 4 Cowen R., 432 ; S. C, 9 Cowen, 639 ; 2 Denio, 45. 6 Gardner v. Hopkins, 5 Wend. R., 23. Plaintiff had printed a book for Wiley, and Wiley had failed just before the last pages were finished, and assigned the book to the defendant ; and the defendant, in order to get the last pages, promised to pay plaintiff his demand for the whole work. Held a valid promise. See Mallory v. Gillett, 21 N. Y. Rep., 412. A parol promise by the owner of land to pay for materials furnished to the builder, who has a contract for tho premises, is not valid; Loomis v. Hogan, 5 Sold., 435; nor is a promise to pay for work performed for the contractor. Lanson v. Wyman, 14 Wend., 246; Payne v. Baldwin, 14 Barb., 570. But if the contractor abandons the contract, and the owner steps in and promises to pay the contract price, the promise is original and valid. King v. Despard, 5 Wend., 277. And it has been held that when a party refuses to deliver materials to the contractor, and the owner then promises to pay for them, and he thereupon delivers them, tho promise is valid. Darlington v. McCunn, 2 E. D. Smith, 411. An acceptance is not within tho statute. O'Donnell v. Smith, 2 E. D. Smith, 124; 1 Wend., 522; nor is an indorsement; Dellweger v. Caffee, 5 Duer, 87; nor is a note though used as a guaranty. Agawam Bank v. Strever, 18 N. Y. Rep., 502. 8 Ellwood v. Monk, 5 Wend., 235. Seld., 207 ; and this classification is still referred to as strictly correct, as giving the landmarks of the law for forty years. Mallory v. Gillett, 21 N. Y. Rep., 417. GUAI^LNTY OP NOTES AND BIIXS. 211 "WTiether tlie new promise by a third person is to be regarded as an original or merely a collateral undertaking, does not depend upon the question whether the debt remains a subsisting demand against the original debtor. 1 The controlling question is, did the engagement of the third person arise out of a new and original transaction ? It is immaterial whether the new consideration move to the promisor from the original debtor or from the promisee ; it is enough that it be sufficient to sustain the new contract. 2 A delivery of property by the original debtor to the promisor, and a surrender of property taken on execution in favor of the promi- see, are respectively good considerations for a new promise of payment 1 In a late case, Curtis brought an action against Brown upon a guaranty indorsed upon a promissory note in these words : * " I guaranty the payment of the within ;" the plaintiff proved that the note was transferred to him by the defendant, in exchange for a note which he held against the defendant for bor- rowed money, and that the transfer and guaranty were made a day or two after the note had been given by the maker ; and it was held that the guaranty was valid, being a distinct and inde- pendent agreement founded upon a new consideration. 4 Although in form this is a promise to answer for the debt or default of another, in substance it is an engagement to pay tlie guarantor's own debt, in a particular way. He does not undertake as a mere surety for the maker, but on his own account, and for a considera- tion which has its root in a transaction entirely distinct from the liability of the maker. The defendant was a debtor to the plaintiff, and gave the note, with the guaranty, to satisfy that debt. This, therefore, belongs to the third class of cases mentioned by Chief Justice Kext ; there was a new and distinct consideration inde- pendent of the debt of the maker, and one moving between the parties to the new promise. In such cases, where the party undertakes, for Iris own benefit, and upon a full consideration received by himself, the promise is not within the statute. 6 1 4 Cowen R., 432; 9 id., 639; Watson v. Randall, 20 Wend., 201. s Gold v. Phillips, 10 John. R, 412 ; Olmstoad v. Greenly, 18 John. R., 12; and the- authorities reviewed by Ch. J. Savacjk, in Farley v. Cloveland, 4 Cowen R., 432. 1 18 John. R., 12; Merecin v. Andrews, 10 Wend., 401 ; 5 id., 2:55. 4 Curtis v. Brown, 2 Barb. R., 51; S. C. in the Court of Appeals, 2 Comstock It., 225. A verbal promise would bo good. Cardell v. McNeil, 21 N. Y. R., 336. 6 Per BBOySQB, J.. 2 Cnmst., 221). Mr. Justice Harris, in delivering the opinion of the Supremo Court, yi. Lis to the authority of Munrow v. Durham (3 Hill R, 584), 212 BILLS OF EXCHANGE AND PROMISSORY NOTES. A still later case overrules many of the previous decisions of our courts. The reporter states the effect of the decision in these words : i: A contract to guaranty the debt of a third person must be in writing and express the consideration upon which it is made, or it will be void. The consideration cannot be supplied by parol proof" ' The opinion recognizes the * decision in Brown v. Curtis as good law ; and the action there was on the guaranty, the consideration was proved on the trial by parol testi- mony, and the decision of the Supreme Court, which was sustained 1 Brewster against Silence, 4 Seld. E., 207. The action was upon a guaranty writ- ten under a promissory note. The note and guaranty were as follows : $140.00. By the first of November next, I promise to pay to the order of John Thompson, at the Rochester City Bank, one hundred and forty dollars, value received with use. Rochester, April 18, 1848. George Silence. I hereby guarantee the payment of the above note. F. Silence. On the trial the jury found the following special verdict: 1. That George Silence executed the note on the day it bore date. 2. That the defendant signed the guaranty at the same time the note was made. 3. That the consideration of the note was a pair of horses sold to George Silence, by the payee of the note, and that a condition of the sale was that the note should be guaranteed by the defendant, and the sale was not consummated until after the execution of the guaranty. 4. That after the execution of the note and guaranty the horses were delivered by the payee, Thompson, to George Silence, who at the same time delivered the note and guaranty to Thompson. 5. States the amount due. 6. That at the time of the execution of the guaranty, the defendant declared that the horses should be his until paid for. Held, that the defendant, Frederick Silence, was not liable on the guaranty. This case is commented upon in Church v. Brown, 21 N. Y. Rep., 315. but asserts that the reasoning of the court is not entirely satisfactory ; and in the Court of Appeals, Justices Jewett and Gardiner were of opinion that the guaranty was within the statute of frauds, and therefore void. But the decision of the court was as stated in the text, and is to the same effect as that made in Johnson v. Gil- bert, 4 Hill R., 178 ; see Durham v. Manrow, iu 2 Comst. R., 533. A guaranty in these words : " I hereby guaranty the due acceptance and payment of any draft issued in pursuance of the above credit" which may be read in connection with the paper to which it is attached, expresses the consideration; Union Bank v. Coster's executors, 3 Comst., 204. So does a promise to become responsible "for all euch goods as W should buy of C " indorsed on a contract of sale ; Church v. Brown, 21 N. Y. Rep., 315. But a guaranty like this : I guaranty the within contract, a con- tract for the purchase of stock, cannot be supported by reference to the consideration of the sale, though both are made at the same time ; Draper v. Snow, 20 N. Y. Rep., 331. Nor is a verbal promise by a third person to pay for repairs to a boat, the same being delivered to the owner and the lien thereon released on the strength of tho tromise, valid under the statute; Mallory v. Gillott, 21 N. Y. Rep., 412. GUARANTY OF NOTES AND BILLS. 213 on appeal, proceeds upon the recognition of cases tliat are com- mented upon and disapproved in the Court of Appeals. 1 Under these decisions, an undertaking to pay the debt of another person, whether presently contracted on the faith of the guaranty or preexisting, must be made in writing, and must show on its face a consideration sufficient to support the contract. 8 Many of the earlier cases decided in this state were adjudged under a statute of frauds drawn in terms somewhat less explicit * than that now in force ; 3 and the Eevised. Statutes have # 997 so far altered its language as to require the consideration to be expressed in the agreement to answer for the debt of another, and that it be subscribed by the party to be charged therewith.' 4 But the alteration is certainly not very material, since under the old statute the agreement was required to be in writing, and there can be no valid agreement without a consideration. 6 Our statute, as it stood prior to the adoption of the Eevised Statutes, was a transcript from the English statute of frauds ; and it declared that no action should be brought to charge a defendant on a special promise for the debt, default or miscarriage of another, unless the agreement, or some memorandum or note thereof, be in writing and signed by the party, or by some one by him thereunto duly authorized. 6 From which it is evident that the change made, requiring the consideration to be expressed in the writing, though not in substance an alteration of the law, was clearly not intended to render it any the less strict. 7 In order to render an agreement valid, it must appear to have been made for a good consideration ; for the consideration is not an 1 Curtiss v. Brown, 2 Barb., 51 ; 4 Seld. R., 210. Mr. Justice Willard, delivering tho opinion in this case, says : " Various efforts have been made, at different times, to elude the effect of the statute. Thus, in Manrow v. Durham (3 Hill, 5S4), a guaranty was turned into a promissory note. In Lequeer v. Prosser (1 Hill, 256), a guarantor was converted into a joint maker of a note; and in Oakley v. Boorman (21 Wend., 588), a contract of guaranty was upheld by calling it an indorsement, thus dispensing with the necessity of expressing the consideration. Neither of these grounds can be taken since the cases of Brown v. Curtiss, 2 Comst., 225; Spies v. Gilmore, 1 id., 321; and Hall v. Newcomb, 7 Hill, 41G." In Brown v. Curtiss, tho declaration contained tho common counts, 2 Comst. R., 553; 4 Seld., 213. • 20 Barb., 298; 2 Duer R., 497. ■ 1 R. L., 78, § 11. 4 2 II. B., 195, § 2, 3d ed. ; Church v. Brown, 21 N. Y. Rep., 316. • Sears v. Brink, 3 John. R., 210, holds that the consideration must bo in writing. • Do Woff v. Rabaud, 1 Teters' S. C. R., 47G. ' 2 R. S., 195, 3d ed.; 3 Kent's Com., 121. 214 BILLS OF EXCHANGE AND PROMISSORY NOTES. incident, but a necessary and constituent part of every legal agree ment. And, therefore, when a statute requires that agreements of a particular kind shall be made in 'writing, it must be intended that the legislature used the terms employed by them in their ordinary and settled meaning. Acting upon this principle of con- struction, the English courts did not hesitate to require that the contract, both the consideration and the promise, should be in writing. 1 There was, indeed, for a time, much controversy on the subject ; but it became at length a recognized and settled doc- -x-ooQ trine, that the ^consideration must appear upon the face of the instrument, in such a manner that the court may be able to judge of its sufficiency ; 2 and parol proof is not admissible to supply a defect in this particular. 3 The American authorities show various departures from the doctrine held in England. ' In this state the courts have lately shown a disposition to give the statute a plain and strict interpre- tation ; while in others there is a tendency to modify and explain it away, so as to make it nearly a dead letter.* In some of the states, the language of the statute requires simply that the promise or agreement should" be in writing ; and, in these, the construction has been, with good reason, much less strict. 6 In truth, the main difficulty in the application of the statute, is one of construction ; and the import of the word agreement, as used in the law, is the true subject of inquiry. Understood in a popular sense, as not necessarily including all the requisites of a binding contract, and the original statute bears the interpretation put upon it by Chief Justice Parker ; and there is some force in his suggestion that the legislature probably did not search any law dictionaries to ascer- tain the meaning of that term, as has been clone since, in order to complete the work of construing the act. "Sometimes the sense of an instrument or statute is lost by looking too deep for it; as men have been known to impoverish themselves by digging into the bowels of the earth for riches, which they would have obtained with less labor by working upon its surface. Not that I am dis- posed to treat with disrespect the labors and researches of patient 1 Wain v. Warlters, 5 East R., 10. J Saunders v. Wakefield, 4 Barn. & Aid., 59.") ; Jenkins v. Reynolds, 3 Brod. & Bing., 14. 1 Morley v. Boothby, 3 Bing. R., 107 ; Newbury v. Armstrong, 6 Bing. R., 201 ; All- nutt v. Ashhenden, 5 Mann. & Grang. 392. 4 Packard v. Richardson, 17 Mass. R., 122, and cases there cited. 6 Cranch R., 151, 152; Taylor v. Ross, 3 Yerger, 330. GUARANTY OF NOTES AND BILLS. 215 and learned jurists, in ancient or modern times. Certainly the science of the law requires such investigations, but, as in other sciences, the object of pursuit has been sometimes lost by reason of its *being thought at a distance, when all the time it has _^«„ t. ,., *229 been near. ' The usual guaranty is unquestionably an agreement, not under seal, " whereby one person engages to be answerable for the debt, default or miscarriage of another." It is not a direct engagement to pay one's own debt, or to perform an obligation resting prima- rily on the guarantor, for it assumes the liability of another as principal, and for whom the guarantor becomes surety. The engage- ment is in aid of, and collateral to, the original liability of the vjrincipal debtor or party for whom the guaranty is given. 3 \Vhen the undertaking, though drawn in the form of a guaranty, is in substance an original promise for a valuable consideration expressed upon the face of the instrument, it has been repeatedly held that a recovery may be had on it against the guarantor as in legal effect a maker of the note. 3 In truth, such a contract is not that of a maker of a note, nor that of a guarantor ; it is an under- taking distinguishable from either. 4 And it is conceded that where the undertaking is not within the statute of frauds, as where the holder and payee of a note made by a third person guarantees its payment and delivers it to his creditor in discharge of his own previous debt, a recovery may be had upon the guaranty, notwith- standing it contains no words importing a consideration for the promise ; and in this case, parol evidence may be given of the con- sideration. 6 Peter Farmer made a promissory note for two hundred and fifty dollars, payable to Samuel Hall, the plaintiff, or his * order, . x on demand, with interest ; on the back of which note Ncw- 1 17 Mass. R., 137. Is it not quite as safe and reasonable to assume that the law maker had a competent knowledge of the law that he undertook to amend, and that he used the terms of the science in the sense which they commonly bear ? The legal meaning of the word agreement is well ascertained and fixed; but what is tho popu- lar meaning of the term ? 3 Hall v. Farmer, 5 Denio R., 487. ' Hunt v. Adams, 5 Mass, R., 358; White v. Howland, 9 Mass. R., 314; Bfoagb v. Gray, 19 Wend., 202; Dean v. Hall, 17 Wend. R., 214; Lequcer v. Prosser, 1 Hill R., 256; B.C.,4 Hill R., 420. * 2 Comst., 225, 553 ; i Selden R., 207. *Idem; 8 John. R., 28; Durham v. Manrow, 2 Comst, 533; Sal] v. Farnum, id., 653. A verbal promise would be valid; Cardi.ll v. McNeal, 21 N. Y. Rep., 33G. 216 BILLS OF EXCHANGE AND PE03IISSOEY NOTES. comb, the defendant, indorsed his name in blank at the request of the maker, to enable him to get the money on the note. And the question arose whether Newcomb, who might have been charged on the note as an indorser, could be rendered liable thereon- as a maker or guarantor of its payment, it appearing that he wrote his name on the note to enable the maker to obtain the money on it from the payee ? And it was adjudged that he could not be charged as a guarantor or maker, but only as an indorser of the note. 1 A different rule prevails in some of the states ; and it is a gene- ral principle that every contract ought to be carried into effect according to the intention of the parties. 2 There is, however, a manifest distinction between those cases in which the party has made a valid and explicit contract, as where a person writes his name on the back of a negotiable note, and that class of cases where the contract cannot be carried into effect as an indorsement, according to mercantile usage, as where a person indorses his name on the back of note that is not negotiable. In respect to the former, the contract is to be enforced according to its legal effect, under principles that are well established and presumed to be within the knowledge of the parties ; while in respect to the latter, courts endeavor to prevent the utter failure of the contract, by giving it effect in some other way, as by allowing the holder to overwrite the indorsees name with the real contract implied by law, or recover against him as a maker or guarantor of the note. 3 But where the #9q1 engagement is within the statute of frauds, being an under- taking to answer for the debt or default of a * third person, it is not clear upon what principle a contract of guaranty can be supplied by law or enforced in this state. 4 1 Hall v. Newcomb, 3 Hill R., 233 ; S. C, 7 Hill R., 416. The case was twice argued in the Court of Errors. See also EDis v. Brown, 6 Barb., 282 ; Spies v. Gil- more, 1 Comst. R., 321 ; Cottrell v. Conklin, 4 Duor, 45. When a third person indorses the note of a purchaser, drawn payable to the seller of goods, or his order, with the design to become responsible for the property, he is liable thereon to the payee of the note as an indorser; Moore v. Cross, 10 X. Y. Rep., 227. In some of the states ha is treated as an original promisor or surety ; Childs v. Wyraan, 44 Maine, 433 ; Hawkj v. Phillips, 7 Gray (Mass.), 284; Riley v. Gerish, 9 Cush., 104; Carpenter v. Oaks, 10 Rich. Law (S. C), 17 ; or according to the actual contract ; Schollenberger v. Nahf, 28 Penn. State, 189 ; Rey v. Simpson, 22 How. U. S., 341. a Baker v. Briggs, 8 Pick., 122 ; 4 id., 385; 24 id., G4; Flint v. Day, 9 Verm. R., 345; 12 id., 219; Sandford v. Norton, 14 id., 228 ; Beckwith v. Angel, 6 Conn. R., 318. * Dean v. Hall, 17 Wend., 214 ; 5 Mass., 358 ; 9 id., 315; 3 id; 274; Griswold v. Slocum, 10 Barb. R., 402. * 1 Hill R., 416 ; 1 Comst., 321 ; 2 id, 225 ; 4 Selden R., 207. The statute of fraudi GUARANTY OF NOTES AND BILLS. 217 When a note is made payable to a particular person or bearer, and indorsed by a third person, and then delivered to the payee, the latter may recover thereon against such third person as an indorser ; he does not stand in the position of a maker of the note.' Thesis being nothing to prevent charging him as an indorscr, he is liable in that capacity and no other. The payee of a negotiable note offers it in payment on the pur- chase of a horse, and the vendor refuses to take it unless the payee indorses it or guaranties the payment ; and he thereupon signs his name under that of the maker and delivers it, and it is adjudged that he thereby becomes liable as a joint maker of the note." Where the owner and holder of a promissory note sells the same, and as a condition of the sale guarantees its payment, his contract of guaranty is an original undertaking ; and would be valid though not in writing.' For this is a new contract not within, the statute, and is supported by a consideration which is recognized as sufficient at common law. It is as much an original undertaking as is a contract of warranty made on the sale of a horse, or any other chattel.' The statute of frauds does not apply to such cases because the contract is not in the nature of an ordinary guaranty : * nor does it apply to the case of a covenant, or a promise under seal to pay the debt of a third person. 6 In order to bring the contract within the statute of frauds, the undertaking must be collateral to and in aid of the promise of another." If the original debt be discharged or merged in the 1 Dean v. Hall, supra ; Seabnry v. Hungerford, 2 Hill R., 80. In this case the defendant added to his indorsement the word "backer," without limiting or qualifying his liability 1 Partridge v. Colby. 19 Barb. R., 248 ; Cobb v. Titus, 10 N. Y. Rep., 198. ' Meech v. Smith, 7 Wend. R., 315; How v. Kemble, 2 M'Lean, 103; 3 Hill R., 584; Cardell v. McNeil, 21 New York Rep., 336. 4 Per liR'ASON, 2 Comst.. 225. A consideration, to be sufficient at common law, must be either a benefit to the party promising, or some trouble or prejudice to the party to whom the promise is made. 1 Comyn on Contr., 13. ' Livingston v. Trcmper, 4 John. R., 16. "The meaning of a guaranty is an un- dertaking to pay the debt of another, in case he does not;" Dole v. Young, 21 Pick., 250, which cannot be varied by parol, 13 Gray, 531. ' Wain wright v. Straw, 15 Verm., 215. had been the source of infinite litigation, and the decisions of tho highest court are not always perfectly harmonious. See Brown v. Curtiss, 2 Comst., 225; Durham v. Manson, id., 633 ; Hall v. Fanner, id., 553 ; Brewster v. Silence, 4 Seldon R., 207. Euw. 2b 218 BILLS OF EXCHANGE AND PROMISSORY NOTES. new contract, the new becomes an original undertaking.' So, where a person promises to pay the debt of another in considera- tion of funds placed in his hands for that purpose by the debtor, the undertaking is original and need not be in writing.' And in general, where there is a new contract based on a new and suffi- cient consideration, it will not be defeated or rendered invalid merely because it operates incidentally to secure the payment of another person's debt, and is not in writing.' When a guaranty or promise to pay the debt of a third person # 9 oo i s within the statute, and it is necessary that the * consid- eration of the undertaking should appear upon the face of the instrument, it is sufficient if a consideration may be fairly im- plied from the terms of the guaranty. 4 It cannot be inferred from circumstances; it must be expressed in some form.' If drawn in this form, " for value received I guaranty the payment of the within note," it is valid, and is an unconditional engagement for the payment of the note. 6 The same rule applies where the guaranty is written upon a separate piece of paper, describing the note ; for the character of 1 Anderson v. Davis, 9 Vt., 136. 1 Hilton v. Dinsmore, 8 Shep., 410. ' Allen v. Thompson, 10 N. Hamp., 32, This case holds that though designed to secure the debt of another, the contract is valid. 2 Denio, 45. The English statute of frauds has been, as we have seen, generally adopted in this country, but it has been modified more or less in its terms in all the states ; and this has led to great diversity in the authorities. In many of them, as in this state, the statute remains substantially unchanged, while the decisions under it have not always followed those of England ; in others, the terms of the statute have been changed, and there is no propriety in consulting foreign authorities in the work of interpreta- tion. Under these circumstances it is not deemed important to collate in this con- nection the decisions of the several states respecting the contract of guaranty. The following relate to promissory notes : Hodgkins v. Bond, 1 N. Hamp., 284 ; Nelson v. Boynton, 3 Met, 396; Peabody v. Harvey, 4 Conn., 119, 124; 2 M'Cord, 208; Gunnels v. Steward, 3 Brevard, 52; Taylor v. Ross, 3 Yerger, 330; Josselyn v. Ames, 3 Mass. R., 274; Ulen v. Kittredge, 7 Mass. R., 232; Oxford Bank v. Haynes, 8 Pick. R, 423; Beckwith v. Angell, 6 Conn. R, 315; Douglass v. Howland, 24 Wend., 35; Hunt v. Adams, 5 Mass. R., 358; White v. Howland, 9 Mass. R, 314; Allen v. Rightmere, 20 John. R, 365; Palmer v. Grant, 4 Conn. R., 389; Hunt v. Brown, 5 Hill R., 145; Ringgold v. Newkirk, 3 Pike, 96; "Ware v. Adams, 11 Shep., 177; Manrowv. Durham, 3 Hill R, 584; Russell v. Birch, 11 Verm., 166, 265; 14 id., 147 ; Coburn v. Tolles, 14 Conn., 341 ; M'Doal v. Teomans, 8 Watts, 361. The late cases in this state have been cited above. • Stadt v. Sill, 9 East, 348. • Smith v. Ives, 15 Wend., 182. • 20 John. R, 365; 2 Hill R., 188 ; and Miller v. Cook, 23 N. Y. Rep., 495; a C, 22 How. Pr., 66. GUARANTY OF BILLS AND NOTES. 219 the contract is the same, whether it be written under the note, on the back of it, or in a separate instrument. 1 If the agreement be really and in substance one of guaranty, it must be supported by a sufficient consideration. 1 If it be equivalent to a new note, though in the form of a guaranty, it needs no consideration to be expressed on its face in order to render it obligatory ; that is to say, it will be valid where the guarantor undertakes for his own benefit, and upon a full consideration received by himself, his undertaking not being within the statute.* Strictly speaking, such a contract is neither a guaranty nor a promissory note, but a dis- tinct and original undertaking for the payment of a certain sum of money ; an engagement to pay his own debt. An absolute guaranty of payment made on a good consideration, indorsed on the back of a note, is, as we have said, an engagement that the maker shall pay it at maturity, and that if it is not so paid the guarantor will himself pay it. 4 In effect this contract does not differ from an instrument drawn * in this form, #g _. "for value received I promise to pay T. M., fifty pounds, if my brother does not pay it, within six weeks ;" which is not a promissory note.* But an undertaking indorsed on a promissory note, at the time it was made, in these words, " for value received, we jointly and severally undertake to pay the money within men- tioned to the said B," the payee, has been held to render the guarantors liable as joint and several promisors with the maker 1 Watson's Executors v. McLaren, 19 Wend. R, 557; S. C., 2G id., 425; Wend r. Clark, 4 Sand. R., 31. One who guarantees the payment of a note on a separate paper after having seen it, is bound to pay it, although it turns out that the signature of the maker and first indorser were forgeries, there being no other note in circulation answering its des- cription when the guaranty was made. Veazie v. Willis, 6 Gray (Mass.), 90. la WLnne v. Page, a surety for the payment of rent on a lease was held liable, although the signature of the lessee to the lease was a forgery ; but as it did not appear that the surety signed it after the lessee's signature was attached, the decision in tho Supreme Court was put mainly upon the ground that the surety did not repudiate hia contract as soon as he discovered tho forgery. Not reported. * 4 Seld. R., 207; 4 Sand. R., 31. 1 Johnson v. Gilbert, 4 Hill R, 178 ; 2 Comst, 229. In this case tho written gua- ranty showed no consideration for tho promise; but the facts proved showed an origi- nal undertaking, and the court denied that tho guaranty could be treated an a note. BeeCardell v. McNeil, 21 N. Y. R., 336. * 20 John. R., 3G5, Allen v. Rightmere. 'Appleby v. Biddulph, 8 Mod., 3C3. 220 BILLS OF EXCHANGE AND PKOMISSOKT NOTES. of the note. 1 Whether regarded as an original or collateral agree- ment, the undertaking here is to pay the amount of the note to the payee, and it is an absolute contract A guaranty of collection is a very different contract from a guaranty of payment ; the latter being a contract that the money shall be paid at maturity, while the former is in substance a war- ranty that it is collectible. 2 Thus, where the guarantor in consid- eration of a sale of goods to the maker of the note, " undertook and faithfully promised that the note was good and collectible after due course of law," it was held that he was not liable, unless the note turned out not to be good or collectible, after a regular prosecution against the maker and indorsers, with due and reasona- ble diligence ; that the use of diligence in attempting to collect the note by due course of law was a condition precedent, to be per- formed by the plaintiff; and that a neglect for the space of seventeen months to proceed against the maker of the note operated as a discharge of the guarantor. 9 So, where a party " guaranteed the collection of the note," it was adjudged that the guaranty was -™~ equivalent to an undertaking that the note was *collectible by due course of law, and that the plaintiff was bound to prosecute all the parties to the note with due legal diligence, before he could resort to the guarantor. 4 Where this guaranty was written on the back of an indorsed note, " for a valuable consideration I guaranty the collection of the within note," it was decided in an action on the guaranty that the plaintiff must show a diligent attempt to collect, both as against the indorser and maker, or he could not recover. 5 The transfer of 1 White v. Rowland, 9 Mass. R., 314; 5 id., 545 ; 8 Pick., 122. A guaranty that a note already due shall be paid according to its tenor, is a stipu lation for its payment on demand. Crocker v. Gilbert, 9 Cush., 131. 2 Moakly v. Riggs, 19 John. R., 69; 20 id., 365; Taylor v. Bullen, 6 Cowen, 624; Thomas v. Woods, 4 Cowen R., 173; Cumpston v. McNair, 1 Wend., 457; White v. Case, 13 id., 543; Curtis v. Smallman, 14 id., 231; Eddy v. Stanton, 21 id., 255, Loveland v. Shepard, 2 Hill, 139; Burt v. Horner, 5 Barb. R., 501; 6 id., 547. 3 19 John. R., 69. In consequence of the delay in this case, the maker had obtained his discharge under the insolvent law. 4 Cumpston v. McNair, 1 Wend. R., 457; Sawyer v. Haskell, 18 How. Pr., 282. 8 Loveland v. Shepard, 2 Hill R., 139. A promiso to pay after failure to collect, is an admission of diligence. Tinkum v. Duncan, 1 Grant's Cases, 228. A guaranty of the collection of a note is an undertaking that its payment maybe legally enforced — that it is collectible if diligently prosecuted. Failure in diligence discharges the guarantor; and a valid agreement extending the time of payment, or GUARANTY OF BILLS ANT> NOTES. 221 such an instrument would cany the indorsement as an incident, and a release of the maker would discharge the indorser ; and so the guaranty of the collection of the instrument has reference to it as an indorsed note. 1 "I warrant this note good," indorsed by the payee upon a note, means that it is collectible, that the maker is responsible ; it is not an engagement that the note will be promptly paid at maturity ; and it is. therefore, incumbent upon the holder of such a note and guaranty, in order to charge the grantor, to prove by legal evidence that the maker was not responsible and that payment of the note could not be enforced from him. 2 And the proper evidence that the note was not good is furnished by showing the failure to collect on a diligent prosecution. The terms of the guaranty must be complied with before the guarantors can be rendered liable on the contract. The defendants being the payees and holders of a negotiable note, sold and trans- ferred it to the plaintiffs, and agreed that they would repay them the amount thereof with interest and costs in case they could not set off the note in payment of a balance due from them to the maker on settlement, or collect the same *in some other _ M #936 way or by due course of law ; and it was held that the defendants could not be made liable until the three conditions precedent were shown to have been fulfilled, namely: that they could not use the note as a set-off, nor collect it in some other way, nor by due course of law. 3 The insolvency of the maker of the note is no excuse for a neglect to attempt a collection in the usual way. The question of due diligence is to be decided in view of all 1 Moakley v. Riggs, 19 John. R., GO. In this case the indorser alone was sued; in Lovcland v. Shepard, the maker alone was sued. Held in both cases the plaintiff must show a diligent prosecution against all the parties to the note. 1 Curtis v. Smallman, 14 Wend. R. t 231 ; Cooke v. Nathan, 16 Barb. R., 312. If the note be in fact worthless at the time it is guaranteed, the guaranty is broken as soon as made. Kock v. Mclhorn, 25 Penn. State, 89. * Kddy v. Stanton, 21 Wend. R., 225 ; Taylor v. Otis & Brown, 6 Cowen R., G24. t felting of a new note or bill payable at a future day which operates as a suspen- sion of the right of action on the original debt, discharges him. Hart v. Hudson, 6 Duer, 294. The mere fact that a note is transferred with a guaranty of collection indorsed on it, the guaranty having been given on a former transfer and left on the note by mistake in the second transfer, will not give to tho purchaser any right under the guaranty. Gallagher v. White, 31 Barb, 92. 222 BILLS OF EXCHANGE AND PROMISSORY NOTES. the facts and circumstances. The defendant assigned to the plain- tiff a bond and mortgage against a third person ; and covenanted that in case the plaintiff should not be able to procure or enforce payment, at the time and in the manner therein specified, by due process of law, the defendant would be accountable to him for such sum or sums of money as should remain due ; and it was decided in an action on the covenant that the plaintiff was bound to proceed with diligence, such as a prudent man would use in conducting his affairs with skill and judgment, to enforce the pay- ments as they became payable, by due process of law ; but that a brief delay, such as suffering a term to elapse before suit after a payment became due, was not of itself evidence of neglect or want of due diligence. 1 Jn construing a guaranty of collection, reference must be had to the subject matter of the contract, and the situation or condition of the maker of the note. Thus, where the guaranty was in these words ; " value received, I hereby guarantee the collection of the within note," and it was shown that the maker of it left or removed from the state before the note became due, it was thought that by a true construction, the contract implied not only that the note was collectible against the maker, but that he would be in a situa- tion to be sued within the jurisdiction of the state within which the contract was made ; so that where legal proceedings, by attach- ment* or otherwise, cannot be taken in consequence of such removal, a recovery may still be had on the guaranty.' But if the maker of the note resides in a foreign state or country at the time the contract of guaranty is entered into, his non-resi- dence will not vary the construction of the agreement, nor excuse the neglect to institute legal proceedings against the maker for the collection of the note. Thus, where one guarantees the collection of a note made by a person in Canada, the presumption is that the parties contract with reference to the circumstances as they exist ; and it would be doing violence to the terms of the guaranty to hold it to imply that the maker of the note should change his place of residence and remove to that of the guarantee.' There is a perfect analogy between the principle here laid down and that 1 Thomas v. Woods, 4 Cowcn R., 173 ; Kies v. Tift, 1 Cowen R., 98. No delay will be tolerated detrimental to the guarantor. 1 Caines, 427. ' White v. Case, 13 Wend., 543. The same has been more distinctly held inCookt v. Nathan, 16 Barb. R., 342. See Foster v. Julien, Amer. Law Reg.. 362, 369. ' Burt v. Horner, 5 Barb. S. C. R., 501. GUARANTY OF BILLS AND NOTES. 223 made applicable to the contract of indorsement ; if the maker of a note, not payable at a particular place, removes from the state after it is made, and before it matures, the holder is not bound, for the purpose of charging the indorser, to demand payment of the maker personally ; it is sufficient if a demand is made at his last place of residence in this state. 1 But where the maker resides out of the state when the note is made, the demand must be made at his resi- dence. 3 A guaranty that a note is collectible, is a conditional promise, binding upon the guarantor only in case of diligence. In order to perfect the obligation so as to render him liable thereon, the gua- rantee must use diligence in the endeavor to collect the note ; for this is a conditioned precedent.' In other words, the obligation which is imperfect and inchoate, does not become absolute until the guarantee has performed the condition of the contract on his part ; and it seems that if he fails to perform the condition precedent, so that in fact no obligation ever accrues and becomes perfect against the gua- rantor,* even a subsequent and express promise to pay will #9qft not render him liable thereon. 4 Such a promise is not like a waiver of a forfeiture or of laches ; it is a new undertaking, and being without any consideration, it is void under the rule laid down by Lord DENMAN ; " that an express promise can only revive a preceding good consideration which might have been enforced at law through the medium of an implied promise, had it not been suspended by some positive rule of law ; but can give no original cause of action if the obligation on which it is founded never could have been enforced at law, though not barred by any legal maxim or statute provision." ' Where the undertaking of the guarantor is to pay a certain sum in a certain event, on request, the request is parcel of the contract and must be specially alleged and proved. 8 So, if a bond be condi- tioned that another shall pay on demand, the demand is thereby made an essential part of the covenant/ 1 dimming v. Fisher, Anthon's N. P., 1 ; 14 John. R., Ill ; 24 N. T. Rep., 28. a Gilmore v. Spies, 1 Barb., 158; S. 0., 1 Comst. R., 321. * 2 Hill R., 139; 13 Wend. R., 543; 14 id., 231; 19 John. R., C9. 4 Vandervccr v. Wright, 6 Barb. R., 547. 1 Eastwood v. Kenyon, 11 A. and E., 438; Wennall v. Adncy, 3 Boa. and PulL, 249. ' Nelson v. Bostwick, 5 Hill R., 39, 143, and cases thero cited. ♦ Douglas v. Bathbone, 5 Hill R., 143. 224 BILLS OF EXCHANGE AND PROMISSORY NOTES. The terms of the guaranty must be strictly complied with, or the guarantor will not be bound. If he proposes a credit, that particular credit must be given to the principal. 1 But where the guarantor proposes a credit of three months, the taking of a note at three months from the purchaser, which gives three additional days of grace, is a substantial compliance with the terms of the guaranty. Like other commercial contracts, guaranties are to be construed with reference to the usages of trade." An authority to draw at ninety days from time to time, is limited to bills payable ninety days after sight, and does not authorize one drawn payable ninety days after date. 3 Such an authority is a promise to accept, and under our statute " an * uncondi- tional promise 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 shall have received the bill for a valuable con- sideration." 4 But the bill or bills authorized to be drawn, must be described in terms not to be mistaken ; and the bills drawn must come within the terms of the authority. 5 Letters of credit are divided into two classes, general and special. They are general when addressed to any and all persons without naming any in particular. They are special when addressed to a particular individual or firm by name. When addressed to all persons, a letter is in effect a request made to any person to whom it may be presented, and any individual may accept and act upon the proposition contained in it, and when he does so, that which before was indefinite and at large, becomes definite and fixed ; a, 1 "Walrath v. Thompson, 6 Hill, 540. The credit given in this case was a week less than that proposed, and it was held that the guarantor was not liable. a Smith v. Dann, 6 Tlill R., 5-13. The legal effect of a guaranty of payment can- not be varied by parol. Worcester Co. Institution for Savings v. Davis, 13 Gray, 531. Taking a note for the demand payable at a future time, extends the time of payment and discharges the guarantor. Carkin v. Savory. 14 Gray, 528. ' The Ulster County Bank v. McFarland, 3 Denio, 553. It is held in Massachusetts that such an authority covers bills drawn so many days after date or after sujkt; Barwy v. Newcomb, 9 Cush., 46. 4 2 R. S., 53, 3d ed. A verbal promise is invalid; Blackiston v. Dudley 5 Ducr, 373 ; and so is a conditional promise in writing, under the statute ; N. Y., and Vir- ginia S. S. Bank v. Gibson, 5 Duer, 574. • Coolidgo v. Payson, 2 Wheat, 66; Boyce v. Edwards, 4 Pet. R., Ill; Rigga y Lindsay, 7 Cranch, 500; 3 Burr., 10C3. GUARANTY OF BILLS AND NOTES. 225 contract immediately springs up between the person making tlie advance and the writer of the letter, and it is thenceforward the same thing in legal effect, as though the name of the former had been inserted in the letter from the beginning. 1 Letters of credit and commercial guaranties are not negotiable ; neither is the party for whose benefit the letter is drawn by a third person, privy to the contract, so that he can sue upon it. The person writing such a letter stands in the relation of guarantor or surety to the person to v horn it is addressed ; and is answerable to him to the extent of his undertaking. And if the credit opened be for bills to be drawn at sixty days sight, it will not cover those drawn for any other length of time. 3 * Where a firm residing in the city of New York, wrote a general letter of credit, undertaking to accept and pay at maturity any draft or drafts on them at sixty days sight, issued by a particular firm in New Orleans, to the extent of twenty -five thousand dollars ; and the defendant wrote underneath, " I hereby guarantee the due acceptance and payment of any draft or drafts issued in virtue of the above credit," it was held that the letter and the guaranty were to be construed together as forming one instrument, and that they expressed a sufficient consideration to 1 Per BltoxSOK, Ch. J., in Brickhcad v. Brown, 5 Hill B/., 641 ; S. C., 2 Demo B. f 375; 1 Sand. S. C. R., 563. Where tho first letter of credit was drawn to cover bills drawn at sixty days sight, and afterwards extended by two other letters without mentioning the length of the bills : Held that they did not cover bills drawn at ninety days. See Union Bank v. Coster, 3 Comst., 203. When one party issues to another t letter of credit, engaging to accept and honor certain bills to be drawn in a certain manner on London; and the latter agrees to furnish the former here with fluids to meet such drafts at least one month beforo they mature; the engagements of tho former are dependent upon fulfillment of the latter, and a failure on his part authorizes the former to revoke the letter of credit. Duncan v. Edgerton, 6 Bos., 36. A special guaranty by letter of payment of goods to be purchased, addressed to a particular firm, and acted upon becomes an absolute contract according to its terms. Church v. Brown, 21 N. Y. Rep., 315 ; Yancey v. Brown, 3 Snecd, 89 ; 3 Comst., 204. Whether the guaranty is to be limited to a particular purchase, or construed as a continuing guaranty, depends upon tho terms of the letter. A promise to be res- ponsible for what stock K has had or may want hereafter to tho amount of $5,000 is a continuing guaranty. Gates v. McKce, 3 Kern., 232; Low v. Beckwith, 14 B. Mon., 184. So is an engagement to pay any indebtedness not exceeding $1,500 arising on dealings with a person named. Wardlaw v. Harrison, 11 Rich. Lavv(S. C), 626; or to pay for goods purchased by A. to a certain amount; Benedict v. Shenill, IliU and Denio, 210. Tf the letter be a mere offer to become responsible, notice that it is ac- pted and acted upon, should be given. 1 1 Rieh. Law, 626 ; but if the undertaking do absolute, notice is not necessary ; 3 Snecd, 89. 1 5 Hill R. 835. EdW. 29 226 BILLS OP EXCHANGE AND PROMISSORY NOTES. uphold the guaranty. 1 The letter is an open proposition to accept and pay drafts drawn in a particular manner, and the guaranty is an undertaking that they shall be accepted and paid ; and as soon as any person accepts and acts upon the proposition, both of the contracts become perfect. 1 A collateral undertaking to guarantee the payment of a bill of exchange, being an agreement to answer for the debt, default or miscarriage of a third person, is within the statute of frauds, and must be in writing, and must either expressly or impliedly state on its face an adequate consideration.' But this rule does not apply in those states in which the statute is satisfied if the promise be in writing.* The contract stands upon the same footing as the guaranty of a promissory* note. 6 It is not a negotiable instrument ; 8 and, in an action upon it, the plaintiff is bound to declare specially. 7 In France, the payment of a bill of exchange, independently of the acceptance and indorsement, may be secured by a guaranty, par un aval. This guaranty is given by a third person, either on the bill itself or by a separate writing. 8 The person thus guaran- teeing is bound in the same manner as the drawer and indorser ; The Union Bank of Louisiana v. Executors of Coster, 1 Sandford's Superior Court Rep., 563 ; S. C, 3 Comstock's Rep., 203 ; Gates v. McKee, 3 Kern., 232. It is not necessary that the party acting upon such a guaranty should give to the guarantor notice to that effect, in order to fix his liability. Smith v. Dann, 6 Hill R., 543. The rule is that when one guarantees the act of another, his liability is equal to that of his principal, and he is not entitled to notice of the principal's default, as a condition precedent to the bringing of an action against him, unless the contract expressly provides for such notice. Douglass v. Howland, 24 Wend. R., 49. A guaranty that " all drafts drawn by G. C. H. will be duly honored and paid by me, should he meet with any misfortune, that he will not be able to do it himself," is an undertaking for the payment of such drafts, valid and not within the statute of frauds. Grant v. Hotchkiss, 26 Barb., 63 ; 21 N. Y. Rep., 315. 8 But an agreement to guarantee the payment of another person's note, describing it, but expressing no consideration, is void ; and parol testimony is not admissible to prove that there was in fact a good consideration. Weed v. Clar£, 4 Sand. R., 31. As to notes or drafts to be drawn, see ante, p. 239. ■ Morloy v. Boothby, 3 Biug. R, 107 ; 3 John. R., 210. As to acceptances, indorsements and notes deposited as security for loans, see ante, note, p. 224. • 17 Mass., 122; Sage v. Wilcox, 6 Conn., 81; 5 Cranch, 151. • Hawcs v. Armstrong, 1 Bing. N. C, 761 ; 1 Scott, 661 ; Emmott v. Kearns, 5 Bing. N. C, 659. • Ex parte Harrison, 2 Cox, 172; 2 Bro. C. C, 614; 26 Wend., 425. 7 5 Wend. It., 307. • Code do Commerce, liv. 1, tit. 8, §§ 141, 142. GUARANTY OF BIIXS AND NOTES. 227 and the contract of guaranty is negotiable in the same manner as the bill itself l The same rule prevails very generally on the con- tinent, and is the law of Scotland.' Notice of non-payment is not necessary in order to charge the guarantor ; but it is advisable to give him notice inasmuch as it frequently becomes important to prove notice as a means of rebutting the presumption of laches in the party guaranteed.' Mr. Ciiitty states the rale thus : " in general, if the bill or note be given as a collateral security, and the party delivering it were no party to it, either by indorsing or transferring it by delivery when payable to bearer, but merely caused it to be drawn or indorsed, or indorsed over by a third person as security, or has merely gua- ranteed the payment, it has been considered that he is not within the custom of merchants an indorser or party to it, so as to be absolutely entitled to a strict regular notice, nor discharged from his liability by the neglect of the holder to give him such notice, unless he can show by express evidence or by inference, that he has actually sustained loss or damage by the omission ;* for if a * person deliver over a bill to another, without indorsing „ ,_ *94-2 it, he does not subject himself to the obligations of the law merchant, and cannot be sued upon the bill, and as he does not sub- ject himself to the obligation he is not entitled to the advantages ; and if he can prove that he has sustained damage, then he is only discharged to the extent of such actual damage. If the parties who ought primarily to have paid the bill or note were solvent at the time when the same became due, and for some time after- wards, and only subsequently became insolvent, before notice, an inference of actual damage from the want of notice to the party guaranteeing or otherwise collaterally liable, will prevail, until rebutted by actual proof, that if notice had been given, payment would not have been obtained.* But if the parties became bank- rupt, or wholly insolvent before the bill or note fell due, then the inference will be that no injury arose from the want of notice; though that inference may also be rebutted." ' 1 2G Wend. R., 443, 449. ' 1 Bell Comm., 376; our law is different; Breed v. Ilillhouse, 7 Conn. R., 528. • Story on Bills, § 305. 4 Warrington v. Furbor, 8 East, 212; Thillipa v. Astling, 2 Taunt, 20G ; Swingard v. Bowes, 5 Maule k 8., 62 ; Hollrow v. Wilkius, 1 Bar. & Cres., 10; Van Wart v. Woollcy, 3 Bar. & Cres., 439; Camidge v. Allenby, G Bar. A Cres., 373; Truo v. INrding, 2 Fairf., 103; Reynolds v. Douglass, 12 Peters, 497. • 2 Taunt., 20G: 5 Maule k B., 62. • 8 East, 212 ; Walker v. Forbes, 31 Ala., 9; 4 Ohio N. S., 2G3. 228 BILLS OF EXCHANGE AND PEOMISSOEY NOTES. It is plain from the cases cited by him as well as from the American authorities, that notice to the guarantor is not a term or condition of the contract j 1 but only a mode of showing that the party guaranteed has taken the proper steps to enforce or secure payment of the principal debt : that the person holding a guaranty for the payment of a bill, is nevertheless bound in duty to the guarantor to make a proper presentment of it for payment, and give due notice of its dishonor so as to charge the parties liable thereon : 2 that, where an indorsed note, not yet due, is deposited as collateral security, the pawnee is bound to have it duly pro- tested, and to do those acts which will preserve the liability of the indorser : 3 and that the guarantor of a bill is no party to the instrument, and is not by the custom of merchants entitled to ,.~.~ notice of *the dishonor: but that if he can show that for want of regular notice he has sustained actual damage, he will have a defense, at least pro tanto.*' Mr. Justice Bayley in his work on Bills and Notes states the rule as follows : " A surety, though not a party to a bill or note, may be discharged by want of notice and neglect to present, if it is probable he would otherwise have been safe. 6 As if the parties who ought to have paid were solvent when the bill or note became due, and have failed since. 6 But a person not a party to a bill or note, (being a guarantor of its payment,) cannot complain of laches or want of notice, unless he can show that it has done him prejudice. 7 Therefore he cannot complain if the person who ought to have paid the bill or note were insolvent when it should have been paid." 8 When by the terms of the guaranty it is the duty of the party guaranteed to take any measures or steps to insure payment, notice of non-payment becomes material ;' but if the undertaking 1 See authorities above cited, and Gibbs v. Cannon, 9 Serg. & Rawle, 198 ; Erwin t. Lamborn, 1 Harr. (Del.), 125; Prentice v. Danielson, 5 Conn., 175; 2 Amor. Lead Cases, by Hare and Wallace, 33-98. 1 2 Taunt., 20G. 5 Russell v. Hester, 10 Ala. It., 535 ; Edwards on Bailm., 238. 4 Chitty on Bills, 441—144. The edition cited is the eleventh American from the ninth London edition. 6 Bickerdike v. Bollinau, 1 Terra R., 405; Rogers v. Stephens, 2 Term R., 713. • Philips v. Astling, 2 Taunt., 206. T Warrington v. Penbor, 8 East R., 242. "Bayley on Bills and Notes, 184; American, from the fourth London edition, i82G. • Camidge v. Allenby, G Bar. k Cres., 373. GUARANTY OP BILLS AND NOTES. 229 of the guarantor be absolute and unconditional that the bill or note shall be paid at maturity, it is his duty to see that it ia done. The obligation of the guarantor is that which the fair import of the language used imposes upon him ; if he engages for the pay- ment of a given sum of money, when the same falls due, he is not I'ntitled to insist upon any condition. 1 A general guaranty of the note, or a guaranty of its collection, implies a right on his part to insist that the party guaranteed shall use diligence in collecting the debt of the principal debtor, and give to him, (the guarantor,) every opportunity to * protect himself against his principal. The usual and proper means of putting him upon his guard, is to give him prompt notice of non-payment ; and hence if he be prejudiced by the want of such notice, he is held discharged to the extent of the damage sustained by him. 8 On the other hand, where he is not injured by the want of notice, he is liable just the same as if duly notified ; 3 and the absence or want of notice does not imply such an injury to the guarantor as will discharge him from his liability. 4 To have that effect, it must appear affirma- tively that he has been injured by the omission. "Where one of two or more joint and several makers of a pro- missory note adds to his signature the word surely, being such in fact, he becomes liable thereon, to the payee or holder, as a maker of the note. 6 The signers arc liable to the holder as principals.* But if the maker who signs as surety, or is such with the know- ledge of the payee, chooses to do so, he may, after the note matures, call upon the holder to proceed and collect the note of the princi- pal, he being then solvent ; and if the holder refuses or neglects to do so, and the principal afterwards becomes insolvent, the surety is thereby discharged. 7 The principal is regarded as solvent, under 1 Breed v. Hillhouse, 7 Conn. R., 521! ; Williams v. Granger, 4 Day, 444; Read v. Cutts, 7 GtreenL, 186. 1 Reynolds v. Douglass, 12 Peter?, 407. * Gibbs v. Cannon, 9 Berg. & U. , 108; Babcock v. Bryant, 12 Pick., 133, 416. 4 Rhctt v. Poe. 2 How. U. S., 451; Woodson v. Moody, 4 Humph., :i0:i; 9 Slicp., 101; Mathews v. Chrisman, 12 S. A M., 505. ' Robinson v. Lyle, 10 Barb.. 515. Under the former practice no recovery could bo had against him as a principal maker, under the money counts. Butler v. Rawson, 1 io, 105. isson v. Barrett. C, Barb., 100 ; S. C, 2 Comst., 40(1. 1 Pain v. Packard, 13 John. P., 17 1 ; King v. Baldwin, 17 .hum. R.. 3.84; Warner v. i; L, 194,198. A different rule prevails in some of the other states j id., 198. 230 BILLS OF EXCHANGE AND PROMISSORY NOTES. this rule, when he is able to pay all his debts from his own means, or has property sufficient at a reasonable valuation to satisfy all his liabilities. 1 In several of the States the doctrine is that the holder of the note has the same legal rights against the surety as he has against the principal maker ; and cannot, therefore, be called upon and compelled to prosecute one of them for the benefit of the other. And this doctrine evidently proceeds upon the most natural inter- pretation of the contract. 2 The terms of the contract of guaranty are construed strictly ;' and the law does not supply any condition which is not incor- porated into the agreement, or fairly implied from the language used. 4 1 Herrick v. Borst, 4 Hill R., 650. 1 Bull v. Allen, 19 Conn., 101 ; Bond v. Storrs, 13 id., 412 ; Davis v. Huggins, 3 N". Hamp., 231; Fryc v. Barker, 4 Pick., 382; Buchanau v. Bordley, 4 Har. & McHen. R., 41; Croughtonv. Duval, 3 Call's R, 69; Moore v. Proussard, 20 Martin's R., 277; Lenox v. Prior, 3 Wheat. R., 524. * Bigelow v. Benton, 14 Barb. R., 123. * Wright v. Johnson, 8 Wend., 512; Hunt v. Smith, 17 Wend., 179; Dobbin t. Brandley, 17 Wend., 422 ; Walrath v. Thompson, 6 Hill R, 540 ; 2 Comst. R. 185. INDORSEMENT AND TRANSFER. 231 *CHAPTER V. *245 , INDORSEMENT AND TRANSFER. Notes and bills payable to order, or to bearer, or containing any words to make them assignable, may be transferred so as to give the indorsee a right of action upon the bill or note against all the antecedent parties ; and bills or notes containing no express words making them assignable, may, in general, be assigned so as to give the assignee a right of action upon them against the as- signor. 1 Bills of exchange are assignable at common law ; and promis- sory notes are by statute placed upon the same footing. The former were held assignable, at first, under the custom of mer- chants, which at length ripened into a general custom and became a part of the common law : and the latter were by statute made assignable or indorsable over in the same manner as inland bills of exchange.' The transferable quality of bills and notes is that which prin- cipally distinguishes them from other contracts ; for it was the general rule of the common law, that choses in action are not assign- able.' Of late years, indeed, this rule has been subjected to a variety of modifications ;* relaxed by degrees, it has finally been reversed in several of the states, so that an action at law may now be maintained by the assignee of a chose in action in his own name ;* though the same defense* may be interposed as if . X . 91A no assignment had been made." But, as we have before 1 Bayley on Bills, 65. In this state the assignee has a right of action in his own name in either case. 9 Barb. R., 214; 1C id., G20. ' 3 and 4 Anne, c. 9, § 1, made perpetual by 7 Anne. ch. 25. This statute took effect from and after May 1, 1705, and the preamble recites the rules then hold in relation to notes in writing for the payment of money. 1 2 Black. Com., 4G8. 4 2 Caines, 369 ; 19 John. R., 493; 4 Cowen, 73; G Cowcn, 151 ; 11 John., 47 ; 11 Barb. 620. » Code of Procedure, g§ 111, 112; 2 Hill, -196; 5 Pr. R., 99; 3 Sme. & M., 647; Eall T. Robinson, 2 Comst., 293. ' 3 Barb. R., 40; 1 Sand. R., 23; 4 Sand., 610; 11 Barb., 260. 232 BILLS OF EXCHANGE AND PROMISSORY NOTES. I observed, this latter qualification of the rule does not apply to a negotiable promissory note or bill of exchange, transferred in good faith, and for value, before due ; thus, to a great degree preserving the line of distinction between negotiable paper and other choses in action. The transfer of notes and bills being a contract, it is of course necessary that the payee or holder of the instrument should in the first place have a legal capacity to do the act ; that he should be competent to bind himself by the indorsement or delivery of the paper. What constitutes such legal capacity we have already con- sidered at length ; and shall therefore in this connection only mention the subject as it bears upon the right to convey the title to bills and notes. An infant may indorse a negotiable promissory note or bill of exchange, made payable to him, so as to transfer the property to an indorsee for a valuable consideration ; though he cannot so bind himself by the act of indorsement as to surrender his right to in- terpose a plea of infancy, in avoidance of his liability as an indorser. 1 His indorsement, like the making of a note, is voidable and not void. 2 And where he receives a full consideration for the transfer of the property, such as a negotiable note or bill of ex- change, and makes a manual delivery of it, his right to rescind or avoid the contract is, it seems, suspended until he comes of age.' And on coming of age, he is not allowed to disaffirm the contract unless he returns the consideration received by him ; that is to say, he cannot disaffirm it in part and ratify it as to the residue. 4 And so where he purchases a quantity of goods and pays for them during his infancy, he is not permitted to retain the * pro- perty, or to misuse and depreciate it in value, and then repudiate the contract of purchase. 6 1 Nightingale v. Withington, 15 Muss. R., 272. His contract is good, until he him- self repudiates it. Oliver v. JIuuldlet, 13 Mass. R., 237. * Goodscllv. Myres, 3 Wend., 179; 17 Wend., 419; 2 Hill R , 120; 11 Wend., 85; contra, see 10 John. R., 33. An infant maker of a note does not ratify it on coming of age, by an offer of compromise, which is not accepted. Dunlap v. Hales, 2 Jones' Law (N. C), 381 ; it can only lie ratified by a distinct promise made to the creditor. Hodge v. Hunt, 22 Barb., 150. 5 Roof v. Stafford, 7 Cowen R., 179; 8. C, 9 id., C2G; 15 Wend., 63G. 4 Medbury v. Watrous, 7 Tlill R., 110 and cases cited there. Kitchen v. Lee, 11 Paige, 107 ; Gray v. Lessington, 2 Bosw.. 257. •2 Paige Ch. R., 191; 1 Dana R., 45; Bartholomew v. Fincmore. 17 Barb., 428; Gray v. Lessington. 2 Bosw., 257. INDORSEMENT AND TRANSFER. 233 The common law rule is that the husband is entitled to all the personal property belonging to his wife at the time of marriage, or acquired by her during coverture ; and where that property con- sists of negotiable paper, payable to her or to her order, it is in legal effect payable to her husband, so that as a general rule an effec- tual transfer can only be made in his name. 1 But a married woman may make a valid indorsement of a note payable to her, by a name different from that of her husband, where the circumstances are such as to justify the presumption that he assented to the indorse- ment. 2 She may act as the agent of her husband, and by indorsing it in his name transfer the title. 8 And where the husband permits her to carry on business in a name different from his own, it is to be presumed that he has authorized her to indorse notes in the name used by her in the transaction of business. 4 On the death of the holder or payee of negotiable notes or bills, his executor or administrator duly appointed becomes vested with the title and has the right to transfer the same by indorsement or delivery. 6 And it has been held in this state in the case of a note payable to bearer, that an administrator appointed in Pennsylvania may maintain a suit here in his own name as bearer; there being nothing to impeach his character as a bona fide holder, and no pre- tense of a set-off. 6 But where * letters of administration „^ „ 248 have been granted in this state, and a suit has been com- menced here by the administrator against the maker of the note, a foreign administrator has no power to control the suit or to release the demand ; debts of this character are bona, notabilia in the state where the debtor resides. 7 ■ 1 Strange, 516; 3 Wils., 5; 10 Mod., 245; 2 Black. R., 1081 ; 4 Terra R., 361; 3 Burr, 1770; 2 Maule Bark, 79. An indorsement merely for collection, made by the cashier of a bank, binds neither; 30 Barb., 332. 236 BILLS OF EXCHANGE AND PROMISSORY NOTES. merit. 1 By making the note or accepting the bill, and issuing it, the maker and acceptor assert to the world the competency of the payee to negotiate and assign the paper ; and they are not after- wards permitted to gainsay the assertion so made. Where the doctrine of estoppel does not apply, the rule in regard to the transfer of bills and notes is, that no one but the payee or the person legally interested in the instrument can con- vey the title by indorsement.' For this reason, in an action against the drawee of a bill, it is not enough for the holder to prove that it has been accepted, without also establishing his title to the bill : and if the acceptor, under a mistake as to the fact of ownership, has paid the bill to one who had no title, the money may be recovered back, although it was paid to a bona fide holder.' And so where a bill falls into the hands of a man bear- ing the same name as the payee, and he indorses it over to another person, no title passes. 4 For the indorsee of a note cannot recover on it against the maker, without deducing his title through the payee ;" nor can the indorsee of a bill of exchange recover in an action against the drawer or acceptor, without proving an assign- ment of the bill by the payee. #0 „ 1 *In order to give currency to a bill or note, care should be taken to write the name of the payee correctly ; and where there are two or many persons of the same name, the instru- ment should contain a proper description of the person named as payee. This, however, is only a matter of convenience ; for though a note or bill be drawn payable to a person in a wrong name, the error will not affect his title nor. destroy his right to transfer the 1 Taylor v. Croker, 4 Esp., 187. The bill in this case was drawn by two infants, accepted by the defendants, and indorsed by the drawers ; and it was held that the defendants, by accepting, admitted that the infants were competent to indorse, and that they could not afterwards deny their competency. The same rule was applied in Draton v. Dale, 2 Barn. & Cress., 293, where the payee became bankrupt, and then indorsed oyer the note before his assignees had taken possession of his assets. So the iudorser impliedly guarantees the competency of the makers. Erwin t. Downs, 15 N. Y. Hep., 575; PrescottBauk v. Caverly, 7 Gray, 217. 3 Canal Bank v. Bank of Albany, 1 Hill R., 287. See observations on this caso by Bronson, J., in Coggill v. American Exchange- Bank, 1 Comst. R., 11G. ' 1 Hill, 287, and Carr v. Lewis, 20 N. Y. Rep., 138. * Gibson v. Minct, 1 H. Bla., G07 ; Mead v. Young, 4 Term R., 28. Such an in- dorsement is a forgery, and the holder, though ho took the bill in good faith, cannot deduce liis title through a forged signature. The same is held in Graves v. American Exchango Bank, 17 New York Rep., 206. • Blakely v. Grant, 6 Mass. R., 388, INDORSEMENT AND TRANSFER. 237 paper.' The initials of his name are sufficient, if accompanied with an accurate description of the person intended.* And where the payee's name is written in full in the body of the instrument, it is held that he may transfer it by making his mark or writing his initials on the back, provided it is shown that they were used as a substitute for his name.' So, where a note was made payable to the order of the person who should thereafter indorse it, it was held to pass by the indorsement of the person to whom it was deliverd.* Under the code of procedure, which requires that actions shall be prosecuted in the name of the real party in interest, the mere holder of a negotiable promissory note who has no interest in it, cannot now, as he could formerly, maintain an action upon it ; 6 for if the plaintiff's name does not appear upon the instrument, it is essential for him to show in some way the connection between himself and the note ; as that it has been indorsed or transferred to him, or that he is the holder or owner of the note.* * A trustee of an express trust with whom or in whose „„ , 252 name a contract is made for the benefit of another, such as mercantile agents and factors doing business according to the usage and custom of merchants in their own names for other parties, ma} 1- sue without joining with him the party for whose benefit the action is prosecuted. 7 Under this rule the factor who may take a note payable to himself on a sale of his principal's goods, may 1 Cowen's Trca., 186 ; Robb v. Bailey, 13 La. An., 457. But a note payable to John P. cannot be indorsed by Joseph P. a different person, though it was, in fact, given to the latter. Bolles v. Stearns, 11 Cush., 320. 1 Rex v. Box, 6 Taunt, 325. J Merchant's Bank v. Spicer, 6 Wend. R., 443 ; Brown v. The Butchers' and Drovers' Bank, G Hill, 443; 5 Barn & Cres., 234; George v. Surrey, 1 Mood. & Malk, 516; 8 AdoL & Ellis, 94. 4 The U. States v. White, 2 Hill R., 59. The makers promised to pay to " the order of the indorser's name at the Utica Bank, $800," and delivered it to Adams, and he indorsed it to the Navy Commissioners. * Parker v. Totten, 10 Howard Pr. R., 233; See, also, Code, §§ 111, 113, 162. * I/n-d v. Cheeebrough, 4 Sand., S. C. R., 696. Tho plaintiffs in this case gave a copy of ilio note, and added below it " indorsed C. S. & Co.," but tho complaint con- tained no allegation that the note was indoresd or transferred to plaintiffs; held de- fective. See, also, 9 Burh. It., 211; 11 id., 620, as to the proper modo of transfer. Aa indorsement is not essential to transfer the titlo to a negotiable note. Hough- ton v. Dodge, 5 Bosw., 326; 6 Bosw., 427. But a transfer without indorsement does not vest the assignee with the title discharged of all equities between the original parties. Franklin Bank v. Raymond, 3 Wend., 69; post 286. 1 Code, g 113; Griunell v. Schmidt, 2 Sand. R., 706; 3 Code R., 19. 238 BILLS OF EXCHANGE AND PROMISSORY NOTES. doubtless maintain an action upon it in his own name;' and it is certain that he may transfer negotiable paper so taken to a bona fide purchaser for a fair and valuable consideration so as to vest the title in him. 1 In respect to his principal he acts as an agent, and where he holds negotiable paper in that capacity and transfers it fraudulently to a person who takes it without notice of the fraud, the policy of the law will not allow the real owner to assert the fraud of his agent to defeat the title of an innocent purchaser for value. 3 Where the person to whom an agent transfers negotiable paper is acquainted with the fact of his agency, it is his duty to ascertain the extent of his authority ; 4 and it is but reasonable that he should be deemed to acquire only such an interest as the agent is authorized to convey. The same rule applies to the making as well as the indorsement of notes and bills : if the act purports to be done by one person for another, the principal will not be bound beyond the authority given. 5 But where an agent is intrusted with blank indorsements or strips of paper having the signature of his principal written * thereon, to be filled up in the form of promissory notes, he has an implied authority* to fill up and deliver the instrument ; and though he acts fraudulently or carelessly in the execution of his trust, the paper will be valid in the hands of a subsequent holder, who receives it in good faith and for value.' In itself such indorsement is a letter of credit foi 1 Edwards on Bailm., 280-283; 4 Cowen, 250; Fenly v. Stewart, 5 Sand., 101. a Bay v. Coddington, 5 John. Ch. R., 54-50 ; 6 Hill R., 93. 3 6 Hill R., 93. By allowing the factor to sell and take notes in his own name, or permitting him to retain them after they are taken, the principal clothes his agent with the power to put them into circulation ; and if he does so in violation of his trust, it is just that the principal should suffer the consequent loss, rather than an innocent purchaser who has not even been guilty of negligence. 4 Chitty on Bills, 200, 11th American from 9th London ed. * Rossiter v. Rossiter, 8 Wend., 494; Webber v. Williams College, 23 Pick., 302; Tabcr v. Cannon, 8 Metcalf, 45G; Smith v. Gibson, G Blackf., 370; 4 McCord, 89, 438; Grant v. Seitsinger, 2 Penn., 525. Actual authority need not be shown. The Cashier, President or managing agent of a corporation, accustomed to indorse bills and notes held by or payable to itself, may transfer such notes and bind the corporation by indorsement. 19 N. Y. R., 312; Klwell v. Dodge, 33 Barb., 33G ; Curtiss v. Leavitt, 15 N. Y. R., 48 ; Eno v. Crooko, € Seld., GO. Proof that the agent of an insurance company who indorses a note pay- able to the company as treasurer, is its secretary and financial manager, is not sufficient proof of his agency to transfer by indorsement. Knight v. Long, 4 E. D. Smith, 381. °4 Mass. R., 4G; 5 Crancli, 142; 1 Ala. N. S., 18; 5 Monroe, 25; 2 Dana, 142; Johnson v. Blasdalc, 1 Smedes & Marsh, 17-20; ante, 92-95. INDORSEMENT AND TEANSFEB. 239 an indefinite sum ; and the maker by delivering it to his agent, or to any person, authorizes it to be filled up in proper form. 1 When negotiable paper is transferred to an agent for a special purpose, and that purpose is plainly expressed in the indorsement, it is no longer transferable so as to prejudice the rights of the real owner.' Thus an indorsement in these words " pay to A. B. for my use," or "pay to A. or order for my use," checks the currency of the bill or note, because it is equivalent to a notice given to every person to whom it is afterwards presented, that the indorser is not the owner of the paper. 3 And it is the general principle that none but the owner, that is, the payee or the person to whom he has transferred the title can convey it by indorsement. Lord Tenterdex, C. J. : " The use of indorsements of this kind is not small, nor are they, as it seems to me, inconsistent with the inte- rests and convenience of commerce. Such an indorsement will not prevent the indorsee from receiving the money from the acceptor when the bill becomes due. If he pay it to his principal all will be well, but the indorser must look to him for the appli- cation of it. It will have the effect of preventing a failing man from disposing of the bill before it becomes due, and from pledg- ing it to relieve himself from his own debts at the expense of his correspondent I cannot see that the interests of commerce will be prej udiced by our holding that such an indorsement is restric- tive. On the contrary, I think the interests of commerce will be thereby advanced. It is said, that it cannot be expected that bankers *or others, when requested to discount such bills # 9 ~ A as this, should look into the accounts between the principal and his agent. I agree, it cannot be expected they should ; but still, if they take the bill so indorsed, they take it at their peril, and must be bound by the state of the accounts between those parties." 4 ' Russell v. LangstafiTe, Dougl., 514 ; V Cowen R., 333 ; ante, 93. 'Burr, 1227; 1 Atk., 249; post, 277. * Bayley on Bills, 69, 70, 76; Atwood v. Munnings, 7 Barn. &, Cres., 278. Ou a deposit of commercial paper as collateral security for a loan, an indorsement " for account of" the party making the deposit, vests the title in the party so receiv- ing it, the pledgee, and he may recover thereon. Nelson v. Wellington, 5 Bosw., 178; Smith v. Hull, id., 319; Marino Bank v. Vail, 6 Bosw., 421. 4 Bigouraey v. Lloyd, 8 Barn. & Cres., 622. The payees indorsed the bill to Atwood, and he Indorsed it as follows, "pay to Samuel Williams, Esq., of London, or his order for my ase.' 3 and it was held that this indorsement was restrictive, and did not authorize Williams to get the bill discounted and have the proceeds credited to himself; that tin: qualifying words so used have the effect of restraining the negotiability of » 240 BILLS OF EXCHANGE AND PROMISSORY NOTES. When a note or bill is made payable or is indorsed to several persons, who are not partners, all of them must unite in transfer- ring the instrument :' when made payable or indorsed to a firm, either of the partners has the right to convey the title by indorse- ment ; 2 this right is said to cease as soon as the partnership has been dissolved.' As partners, the members of a firm are joint owners of the partnership property, and each of them acts as the authorized agent of the concern in the making and negotiation of commercial paper." The form of the instrument generally shows whether it is payable to or held by the payees or indorsees jointly or severally : if two persons not being partners, draw a bill on a third person payable to their order, and sign it separately, it shows on its face that it is not a partnership transaction : 6 and on the other hand, # Q --. ^ a no ^ e or bill ^ s drawn payable to them, or indorsed *to them, in a firm name, and one of them indorses it over in that name with the consent of the other the title will pass.' The maker of the instrument cannot dispute that it is payable to them as partners ; and though they are not so in fact, the assent of the party in interest to the indorsement will render it binding upon both of the indorsers. 7 Although a dissolution of partnership terminates the right of each partner to bind the firm as between themselves, it is a well settled rule that the acts of each will continue to bind the firm until a notice of dissolution has been given ; and consequently, 1 Goddard v. Lyman, 14 Pick., 2G8. A note given to three payees was indorsed by two of them to the third and a stranger, and afterwards the third also indorsed to the stranger; held a good transfer to him. Wood v. Wood, 1 Harr., 428; Roger v. Reed, G Ship., 257, Dwight v. Pease, 3 McLean, 94. 1 Cumston v. McNair, 1 Wend., 457; Everit v. Strong, 5 Hill, 163. ' Sanford v. Mickles & Forman, 4 John R., 224; 1 Hill R., 572; 3 Kent Com., 63, ante, 120. * 2 Barb. Supreme Court Rep., C25. 6 Car wick v. Vickery, Doug., 653 ; 10 Serg. & Rawle, 75 ; 2 Selden R., 19, 124. ' Chitty on Bills. 57 ; Snelling v. Boyd, 5 Monr., 172. One of several joint holders. of a bill may transfer the whole interest therein by his indorsement. In Hopkins v. Smith, it was held that the fact that two persons signed a joint note was no evi- dence of a partnership between them. 11 John. R., 161, 271; see 1 Denio, 472; 4 Cowcn, 163. T 12 Wend., 433. the bill, or at least of making the first indorsee (if he takes the bill with those words on it, as Williams did in this case,) a trusteo for the original indoiser. The samo doctrine was held in Snee v. Prescott, 1 Atk., 247 ; Edie v. The East India Co., 2 Burr 1216; Ancher v. The Bank of England, Doug., 637. INDORSEMENT AND TRANSFER. 241 when that has not been done, and until it is done, the acts of each in the making and transfer of negotiable paper, to parties receiving it in good faith, will be valid against the firm. 1 On the dissolution of a partnership, the presumed agency of each to act for and bind the firm is at an end ; and neither of them can from that time forward make any new contract or engagement in the name of the firm, so as to bind the concern, inconsistent with the primary duty, incumbent upon him, of winding up the business of the copartnership. 2 When the partnership is dissolved by mutual consent, or by the expiration of the term for which it was farmed, and. there is no agreement to the contrary, it is presumed that each partner still has authority to dispose of the partnership property, to collect, adjust and pay debts and give proper acquit- tances ; but he cannot renew a note, or bind the firm by indorse- ment. 8 *On dissolution of the partnership by death, a new principle applies to the rights of the surviving partner : as ° survivor he is entitled to all the choses in action and other evi- dences of debt belonging to the firm; and there can be little doubt of his right to sell and transfer the title to bills and negotiable notes held by him in that capacity. 4 Where a note or bill is made payable or indorsed to A for tho use of B, the title and right of transfer is in the trustee ; 5 and so where the payee of a promissory note is described in it as tho assignee of another person, and he indorses it without any addi> tion to his name, the indorsement is sufficient to pass the payee's interest in the note, whether he holds it in his own right, or as assignee for the benefit of some one else.* But where a note is drawn payable to one person to the order of another, the latter is payee of the note, and the title passes under his indorsement. 7 1 Bristol v. Sprague, 8 Wend., 423. As to what is good notice of dissolution, seo Wardell v. Haight, 2 Barb., 549, and cases there cited; G Barb. 244; 3 Comst., 1G8 * 2 Comst. R., 523. The right of a partner to bind his firm is based on a principle of agency ; and death always revokes the authority of an agent. 1 1 Hill It., 57G. " During the continuance of the parnership each partner is entitled to act for all, as their general agent. On dissolution, he ceases to hold that character, and must be considered as a mere joint debtor — his authority is revoked." Ante, 113- 123. * Cowen It., 441. It is not pretended that a surviving partner can bind the joint property by the collateral contract of indorsemenl ; but aa lie holds tho title ho can transfer it ; see 2 Barb., G25, and Sage v. Chollar, 21 Barb. S. 0. It., 59G ; ante, 120, 121. 'Evans v. Oramlington, Carth., Sj 2 Vent., 307. * Bay v. Goon, l Denio l:. 108; Thornton v. Rankin, 19 Mis. (4 Ben), 193. ' Willis v. Green. 10 Wend., 51G. Phiuucy made his note, by which he promised Euw. 31 242 BILLS OF EXCHANGE AND PROMISSORY NOTES. la cases of bankruptcy, the property and choses in action be- longing to the bankrupt, or in which he is beneficially interested, are by the assignment vested in assignees : in England the statute protects all contracts, dealings and transactions by and with any bankrupt, bona fide made and entered into before the filing of a petition for adjudication of bankruptcy, notwithstanding any prior act of bankruptcy ; provided the party so dealing had no notice of such act. 1 Under this provision an indorsement or transfer of a bill or note made after an act of bankruptcy and before the filing of petition, in good faith, is valid ; a though the general rule is that ^ ^ 7 the assignment * in bankruptcy, relates back and operates as a transfer of the property and things in action belonging to the bankrupt, including bills of exchange and promissory notes.' The general rule, of course, does not apply to negotiable paper held by him in trust for another person. 4 The objects of a bankrupt law are the summary and immediate seizure of all the debtor's property, the distribution of it among the creditors in general, and the discharge of the debtor from future liability for existing debts. 5 On the other hand, insolvent laws are designed mainly for the relief of the debtor.* But it is suffi- cient in this connection to say that an assignment, whether made by the party himself, or by judicial and legislative authority, is a transfer of his property and choses in action j and that a statutory assignment has no binding force beyond the territorial jurisdiction of the country in which it is made.' It does not convey personal property situated in a foreign state. 8 The assignment under our insolvent laws passes the entire estate of the debtor ; 9 but does not carry with it property in money, 1 2 and 3 Vict, c. 29; and 12 and 13 Vict. a Chitty on Bills, 208. s Bell v. Hunt, 3 Barb. Ch. R, 391 ; Berthelon v. Betts, 4 Hill R., 511; Smith v. Brinkerholi; 2 Selden R., 305. * Wilson v. Codman, 3 Cranch R., 193. In is not deemed worth while to enter hero at length into the investigation of the decisions under the English bankrupt laws. 1 2 Burr, 829. • Sackett v. Andross, 5 Hill, 327. The bankrupt act of 1841, blended and com- bined the theory of insolvent and bankrupt laws in one statute. 7 Abraham v. Tlestoro, 3 Wend. R., 539. • 3 Barb. Ch. R, 391, and cases there cited; 1 Selden R., 320, post, 385, 386. * Roseboom v. Hosier, 2 Denio, 61 . to pay to John R. Willis, to the order of Smith Johnson and Lester Green, a certain Bum of money, it was held that the title passed under the indorsement of Johnson and Green to Willis. Pike v. Galloway, 17 Ark., 90. INDORSEMENT AND TRANSFER. 243 notes or other clioses in action held by the assignor in trust :' and the title does not pass until an actual assignment is made.' Receivers of banking institutions and other companies, appointed under the statutes of the state, are also vested with the property and choses in action belonging to such companies* on compliance with the requirements of the law and the rule appointing them. 3 But in order to establish a right of recovery on bills and notes, they must allege an appointment such as the law makes to operate as a transfer of the title to them. 4 The time when a transfer of bills of exchange and negotiable notes may be made is not limited by any positive rule of law ; though the time is often important in its effect upon the rights of the indorsee.* The party taking notes or bills already due, takes them as we have seen subject to every defense existing against them in the hands of the holder when they became due. 6 With this qualification, negotiable notes may be transferred as well after as before they have been dishonored : 7 and when paper overdue is transferred, it is deemed payable within a reasonable time, upon demand ; ' and the purchaser takes it with the usual remedy against such indorsers thereon as have been properly charged with no- tice.' A transfer as well as an acceptance of a bill of exchange, sup- poses the existence of the bill accepted or transferred ; but a blank indorsement will operate as a transfer of a bill not yet drawn, and it is no objection to the validity of a bill that the acceptance was written before it was filled up. 10 Nothing appearing to the con- trary, the presumption of law is, that the indorsement is cotempo- 1 Kennedy v. Strong, 10 John. R., 289. 1 Bailey t. Burton, 8 Wend., .'!30 ; Wilson v. Allen, 6 Barb., 545. By statute, in this state, receivers and committees of lunatics and habitual drunkards, duly appointed, may sue in their own names for debts transferred to them, or entrusted to their control. • Gillet v. Fairchild, 4 Denio, 80; 2 Selden R., 236 ; 3 Kern. R., 114. 4 White v. Low, 7 Barb. R., 204 ; G Barb., 542 ; 2 R. S., 559, 564, 3d ed. A cash- ier of a banking institution has no right to make an assignment of promissory notes exceeding in value $1,000; Gillet v. Phillips, 3 Kernan, 114. • 1 John. Gas., 51, 331 ; 5 Wend., 600; 24 Wend., 97. • 3 Cowen, 252. Ante, 56. 57. • 1 Cowen R., 387 ; 9 John. R., 121 ; James v. Chalmers, 2 Selden, 209. " Leaviti v. Putnam, S Comst. R., 494. The indorsco of a note that is overdue, is entitled to have it presented within a reasonable time for payment ; and the notice of iiBhonor should be given him immediately; Tyler v. Young. 30 Perm, state, 143. • Williams v. Matthews. 3 Cowen. 252 ; French v. Jarvis, 29 Conn., 3 IT. 10 4 Ifa a., 45; 7 Cowen, 336; 3 Mass., 275; Schultz v. Astlcy, 2 Blag. N. C, Ml. 244 BILLS OF EXCHANGE AND TKOMISSORY NOTES. raneous with the making of a note, or at all events antecedent to its becoming due. 1 * When a bill payable a certain time after date, has been presented for acceptance and refused, and the holder has neglected to give notice of such dishonor to the drawer or indor- Eers, they are discharged from liability to such holder ; but if he transfer the bill to a bona fide purchaser for a valuable considera- tion, before the specified time of payment, and the latter takes it ignorant of the laches, it is held that he may recover thereon against the drawer and indorsers. 3 This decision is placed on the ground that, as the holder is not bound to present the bill for acceptance, there is nothing on the face of the unaccepted bill to awaken suspicion that it has been presented and dishonored ; and that therefore the purchaser of the bill is entitled to the usual pro- tection extended to a bona fide holder. 8 Taking the paper with notice of the dishonor, or after it is due, it is incumbent upon the purchaser to satisfy himself that it is good ; and if he neglects to do so, he is presumed to have taken it on the credit of his in- dorsee * The English rule is that the indorser of an overdue bill or note is liable to such equities only as attach on the bill or note itself, and not to claims arising out of collateral matters.* Mr. Justice Story states the rule with a similar qualification ; the holder is affected only " by such equities as attach to the particular note, and would, as between these (prior) parties, be available to control, qualify, or extinguish any rights arising thereon." e Unquestiona- bly the rule depends upon the terms of the statute authorizing a 1 Pinkerton v. Bailey, 8 Wend., 600. The holder is also presumed, in the first in- stance, to have paid value for the bill, Case v. The Merch. Banking Association, 4 Comst. R., 1G6; and this presumption is not overcome by showing that the plaintiffs acquired the paper after it was due ; James v. Chalmers, supra; the presumption may be overcome by proof of circumstances ; Lounsberry v. Dcpew, 2S Barb., 44. 1 O'Keefe v. Dunn, 1 Marsh., 613 ; 5 Maulo & S., 282. s Bown v. Davis, 3 Term R., 80. 4 Rothschild v. Comey, 9 B. & C, 391; 4 Metcalf, 69; 11 Term., 70; 7 Porter. 541; 8 Miss., 107. 145; 5 Watts & Serg., 164; 18 Maine, 179; 8 John. R.. 454; 2 Bailey. 298; see Brown v. Mott, 7 John. R., 361. A subsequent payment to a prior party, will not affect the rights of the indorsee ; Davis v. Miller, 14 Gratt. JVa.), 1 ; but want of consideration between the original parties will. McCready v. Cana, 5 llarring. (Del.), 175. 6 Burrough v. Moss, 10 B. ecial. "Pay John Halloway, or order. James Atkins." 6. Restrictive indorsement in favor of indorser. "Pay John Halloway, for my use. James Atkins;" or "Pay John Halloway, for my account. James Atkins." 7. Restrictive indorsement in favor of indorsee or a particular person only. "Pay O. S. only. James Atkins;" or "The within must be credited to A. B. James Atkins. ,; 8. Indorsement of a foreign bill, dated, stating name of indorsee, and valid, and au besoin, and sans protet. " Payee La Fayette frercs, ou ordre, valeur recue en argent, or en merchandises, or en compte. James Atkins." A Londre, 18 Juin, A. D., 1831. Au besoin chez Messrs. , Rue , Paris. Retour sans Protet." * 12 Wend. R., 439. As the law merchant prevails in the more commercial portions of the country, while in several of the states the liability of the indorser is very much restricted by statutory enactments, our plan is to state the general principle in the text, and mention the departures from it in the form of notes. The place of delivery is the place of indorsement. 5 Seld., 279; 3 Com»t., 266; t Ohio, N. S.j 387; 6 McLean, 622; 12 Abbt., 55; 32 Barb., 522. * Slacum v. Pomery, 9 Cranch R., 221 ; Powers v. Lynch, 3 Mass. R., 77 , 12 Wend., 439 ; 1 Metcalf R., 82. The foreign drawer of a bill on a resident of this State is responsible here to the- holder through an indorsement valid under our laws. Everett v. Van Dryes, 19 N. Y. Rep., 4.36. INDORSEMENT AND TRANSFER. 24.9 protect his right of property in the bill and insure its collection. On the other hand, where the law is modified by statute, and framed in one state with the primary design of accommodating a strictly agricultural community., and in another so as to advance the interests of commerce, the holder of such paper is often under the necessitv of investi^atinc the laws of conflicting jurisdictions, in order to adjust his conduct to the requirements of this or that state polity. 1 1 It may bo useful to state here the law of the different states affectiug the eon- tract of indorsement, and give a brief abstract of the statutes defining the rights of parties to bills of exchange aud promissory notes. In Maine, the effect of an indorsement in blank, is to transfer the note, and to impose a conditional liability upon the indorser; McDonald v. Bailey, 14 Maine R., 101, and the condition is fulfilled by making a demand of payment on the maker, and giving the indorser due notice of non-payment. McDonald v. Smith, id., 99. "The drawer of an inland bill of exchange and the indorser of a promissory note, as well as the acceptor and maker, are entitled to three days of grace, by the statute of 1824,' eh, 272. when the bill, or note, lias been discounted by a bank, or left there for col- lection." Packard v. Valentine, 13 Maine R., 412. Though there does not appear to be any statute in this state expressly placing promissory notes upon "the footing of inland bills of exchange, they are referred to and treated in its statutes as negotiable ; for the statute allows the usual days of grace on any promissory note, inland bill, draft or order for the payment of money, payable in the state at a future day, or at sight, and not on demand; (R. S. of 1857, page 273,) and allowing an action to recover back excessive interest, it declares that such provision does not apply to negotiable bills of exchange or promissory notes, in the hands of an indorsee or holder in good faith, for value, and without notice. Id., 322, 323. In an action on a promissory note, payable at a place certain, on demand, or on demand at, or after, a time specified, the statute requires that a demand must be shown. Id., 273. In New Hampshire, in order to charge the indorser of a promissory note, it must appear that a demand of payment has been duly made upon the maker ; and that notice thereof and of its non-payment, and that the holder relies upon the indorser for payment, has been seasonably given to the indorser ; or that demand and notice has been waived by him, or the want thereof excused. Lawrence v. Langley, 14 N. Ilamp., 70 ; vol. 2, second series. The demand should bo made on the last day of grace; an earlier demand is insufficient to charge the indorser. Leavitt v. Sitnes, 3 N~. II. Rep., 14. The statutes of this state recognize promissory notes as negotiable, and allow days of grace on bills, negotiable notes, orders or drafts, except such as are payable on demand. Compiled Statutes of 1853, p. 400. And the protest of any such paper duly certified by any notary public, under his hand and official seal, is by statute made evidence of the facts stated in it, and of notice to tho drawer or indorsers. Id., 70. In Vekmon'T, the obligation of the indorser is conditioned that tho holder will pre* sent the bill, at maturity, to the acceptor for payment, and, in caso of non-payment, give notice to the indorser ; but the notice may bo sent by mail, addressed to him at the town post office, in the town where ho resides, and it will bo sufficient, even though he resides nearer to another post office than he does to that. Bank of Man- oncsttr v. Slason, 13 Verm. R., 334. Aud a waiver of notice is, not a waiver of Euw. 32 250 BILLS OF EXCHANGE ANT) PROMISSORY NOTES. , MMm , -Where the law-merchant prevails, the indorsement of a bill or note in blank, or in full, without restriction ot qualification, passes the interest and property therein to the indorsee, and is an undertaking that the bill or note shall be duly honored, and that if it is not, and the indorser has due notice of the dishonor, he will pay the amount to the indorsee. 1 And a 1 Chitty on Bills, 241 ; Story on Promissory Notes, § 135, and on Bills, §§ 224, 225. Mr. Justice Story says: "The indorsement of a note, in contemplation of law, amounts to a contract on the part of the indorser with and in favor of the indorseo and every subsequent holder, to whom the note is transferred; 1. That the instru- ment itself, and the antecedent signatures thereon, are genuine ; 2. That he, the indorser, has a good title to the instrument; 3. That he is competent to bind himself by the indorsement, as indorser ; 4. That the maker is competent to bind himself to the pay- ment, and will, upon due presentment of the note, pay it at maturity, or when it is due; 5. That if, when duly presented, it is not paid by the maker, he, the indorser, will, upon due and reasonable notice given him of the dishonor, pay the same to the indorsee or other holder." The engagement of the indorser may, in a general sense, be said to include these seve- ral undertakings ; but it is evident that they are all resolvable into one, namely, that he will pay the note if the maker does not, and he is properly notified of the non-pay- ment. A stipulation that he is competent to bind himself as an indorser, would be of little avail, if he were, in fact, neither competent to stipulate nor to indorse. By his indorsement, he asserts the note to be genuine, and that he has the title to it ; but suppose a previous indorsement has been forged, so that the title fails, what, in that case, is his liability ? Clearly, he is answerable, as an indorser, to his indorsee, and to every subsequent holder, the same as if the note had been genuine ; unless it can be shown that he was guilty of a fraud in the transfer, and then he would be answerable on the contract, and also in an action of tort. Chitty on Bills, 242. demand upon the maker; so held where the defendant indorsed and transferred a promissory note, "waiving notice." Buchanan v. Marshall, 22 Verm., 561 ; 1 McCord, 339 ; 6 Mass., 524. In this state, where a person who is not otherwise a party to a note, indorses his name upon the back of it, he assumes the same obligation as if he wrote his name upon the face of the instrument, and may be sued as a maker of the note ; but the signature being blank, he may show, by parol evidence, the obligation assumed by him at tho time of signing; so held in the case of a negotiable note indorsed by the defendant sometime after the making of the note, and after it had been indorsed by the payees. Sylvester v. Downer, 20 Verm. R., 355 ; 6 id., G42 ; 9 id., 34-5 ; 14 id., 228 ; 16 id., 554. The statutes of this state give to the indorsee of any bill or promis- sory note for the payment of money, and drawn in a negotiable form, an action thereon in his own name ; and gives the like action to the holder of any bill or note, payable in money, to the bearer, or to any person or bearer, without indorsement. They also regulate and allow the usual days of grace on bills of exchange, drafts and promissory notes, executed in any other state and payable in Vermont, or executed in that stato and payable in any other ; but this regulation does not apply to any contract payablo on demand, or in any way but in money. Compilation of 1850, page 443. In Massachusetts also, the law-merchant prevails, and the indorser is liable only on the usual condition that f ,he note is presented for payment, and due notico of non- INDORSEMENT AND TRANSFER. 251 right of recovery accrues against the indorser as soon as the bill or note becomes due, on compliance with the conditions ^ oa „ * precedent to his liability ; namely, making due present- ment for payment and giving to the indorser due notice of non- payment; 1 or in the case of a foreign bill, having it duly protested and notice thereof given to the antecedent parties. 4 We shall better understand the contract of indorsement by con- sidering more particularly the modes in which it may be executed. And first let us observe, that what is true in respect to the body of the instrument, is true also in respect to the indorsement; namely, that no set form of words is essential to be used. 3 The •Cuylor v. Stevens, 4 Wend., 5G6; 1 Comst., 413; 15 N. Y. Rep., 575. 1 Story on Bills, § 273. 3 Hill v. Lewis, Holt, 117 ; Pinckney v. Hall, Lord Raym., 176. payment given to him. The Boston Bank v. Hodges, 9 Pick. R., 420. A notice of non-payment given before demand, though made on the same day, is insufficient. But it is sufficient, if given the day after a demand, notwithstanding it is later by one day than it is the custom of the bank having the note for collection to give the notice, according to its usual course of doing business. Grand Bank v. Blanchard, 23 Pick. R., 305. By statute, notes payable on demand may be demanded so as to charge indor- sers at any time within sixty days ; and bonds of corporations and joint stock compa- nies, under seal, drawn in a negotiable form, are rendered negotiable in the same maimer and to the same extent as promissory notes. General Statutes of Massachu- setts, 292, 3, 4. < ' 'Vnt.cticut. Promissory notes for the amount of thirty-five dollars or more, payable to any person or his order or to the bearer, are assignable and negotiable as inland bills. R. S., G93, compiled in 1854. It is a principle received everywhere, that it is incumbent on the holder of a note or bill to show affirmatively, that notice of non-payment was given in due time: it is a condition precedent to a rig-lit to re- cover, in ordinary cases, against an indorser; and the onus of proving it lies upon the plaintiff. Lockwood v. Crawford, 18 Conn. R., 3G2. The indorsement is a transfer of the title, and imports a future liability on the part of the indorser to pay the note or bill, in case it is dishonored and he is properly notified. A delivery of the instrument is necessary to complete the transfer. Clark v. Sigourney, 17 Conn. R, 511. In the .f a note not negotiable payable on demand or on time, a blank indorsement im- ports an engagement by the indorser, that the note is due and payable according to its tenor; that the maker shall bo of ability to pay it, when due; and that it is col- lectible by the use of due diligence. Castle v. Candee, 1G Conn. R., 224; 4 Conn. R., 527 ; 5 id., 175. So, also an indorsement in blank on a negotiable promissory note, made by a stranger to tlie instrument, for the better security of tho payee, imports the same contract as the blank indorsement of a note not negotiable. Perkins v. Cat- I'm. 1 1 Conn. II., 213 Prior to 1811, promissory notes were not negotiable in Con- it : in that year a statute w;ts passed, making notes, properly exeetited. given for the sum of thirty-five dollars, or more, -negotiable and assignable ae inland bills of exchange, n ''ohm i:.. 213. A note not negotiable, and not purporting on its face to be Car value received, doej not imply a consideration, but the same must bo JJ52 BILLS OF EXCHANGE AND PROMISSORY NOTES. mere signature of the party making it, is hi general sufficient ; and it is certainly tlie most * concise mode of transferring an interest, or creating a contract, that could possibly be invented. 1 The word itself imports a writing on the back of the 1 Ckitty on Bills, 227 ; Story on Notes, § 121. alleged and proved ; it is otherwise in respect to negotiable notes. Bristol v. Warner, 19 Conn. R., 7; see statutes of Conn., compilation of 185-4, page 693; R. S. of 1849, p. 515. Rhode Island. Notes for the payment of money only, made payable to order or bearer, are assignable or indorsable over in the same manner as inland bills of ex- change are or may be, according to the custom of merchants ; and the assignee or indorsee of such negotiable note may maintain an action against the maker or any prior indorser for the recovery of the amount due thereon. Public Laws of R. I., revised and adopted in 1844, p. 287. Bills at sight not entitled to grace. R S. of 1857, p. 277-8. New York. " All notes in writing, made and signed by any person, whereby ho shall promise to pay to any other person, or his order, or to the order of any other person, or unto the bearer, any sum of money therein mentioned, shall be due and payable as therein expressed ; and shall have the same effect, and be negotiable in like manner, as inland bills of exchange, according to the custom of merchants." Every such note may be signed by an agent ; and the word " person " includes every corporation capable of making contracts. The payees and indorsees of every such note payable to them or their order, and the holders of every such note payable to bearer, may bring actions thereon against the makers and iudorsers respectively in like manner as in cases of inland bills of exchange, and not otherwise. Such notes when made payable to the order of the maker or of a fictitious person, are of the same force as when payable to bearer. Acceptances are to be in writing on the bill: when written on another piece of paper, they bind only in favor of the person to whom shown. An unconditional promise in writing to accept, is a good acceptance in favor of a person acting on the faith thereof for value. The drawee must accept on the \>ill ; a refusal subjects the bill to protest for non- acceptance. The statute does not take from any one his right of action on a valid promiso to accept. If the drawee destroys or refuses to ret-arn a bill delivered to him for acceptance, he is deemed to have accepted the same. 2 R. S., 51, 52, 53, 54, 3d ed. The liability of the indorser is tho same as under the law merchant. Drafts or bills of exchange drawn payable at sight at any place within the state are due on presentation, without grace ; and checks, bills or drafts, on their face drawn on any bank, banker or banking association, payable on a day specified, or in any number of days after date or sight, are duo according to their terms, without grace ; and all notices of dishonor may be served by mail, even where the party to be served resides in the city or town in which the paper was dishonored. 1 Session Laws of 1857, page 838. Nevada The statutes of this territory enacted in 18G1 are substantially a copy of those of New Y" k in respect to bills of exchange and promissory notes. Laws of 1801. pp. 4-6. New Jersey. At an early day tliis state re-cnactod substantially tho English sta- INDORSEMENT AND TRANSFER. 255 note or bill ; but the law does not allow the etymological signifi- cation of words to prevail over the meaning and intention of the persons using them. On the contrary, it holds the indorsement good, though made on the face of the bill or note, or on a separate piece of paper annexed to it, called an allonge. 1 The paper so attached becomes in fact a part of the instrument When the indorser simply writes his name on the back of nego- tiable paper, it is called an indorsement in blank, or a blank indorsement: and when the indorsement mentions the „... 2 08 * name of the person m whose favor it is made, it is called an indorsement in full, or a full indorsement. 2 Each of these modes of indorsement has its advantages. After an indorsement in full, none but the indorsee or person to whom it is ordered paid can demand its payment; and moreover, he himself can only transfer the bill or note as negotiable paper by adding his own indorsement in writing. 3 This mode of indorse- ment is therefore very generally adopted among business men to insure safety in the transmission of negotiable paper. 4 Thus 1 Folger v. Chase, 18 Pick. R., 63. * Bayley on Bills, G7, edition of 1826. ' Burdick v. Green, 15 John. R., 247. This is the general rule; but a negotiable note or bill may be assigned without indorsement, subject to all the equities. Hedges T. Sealy, 9 Barb., 214; Billings v. Jane, 11 id., G20. 4 Bank of Utica v. Smith, 18 John. It., 231. tute making promissory notes assignable and indorsable over in the same manner as inland bills of exchange; with a proviso that just set-offs should be allowed against the assignor until notice of the assignment should be given, unless the note should bo expressly drawn " without defalcation or discount." The same act makes an inland bill of exchange received in payment of a former debt, an extinguishment of it in case the holder should neglect to obtain and insure its payment. Laws of New Jersey, revised and published in 1821. The act above referred to was passed in 1799. Kl- mer's Digest, G67. Notes and bills may be protested. DELAWARE, In this state, all bonds, specialties, and notes in writing, payable to any person, or order, or assigns, m;iy be assigned or indorsed, and the assignee or indorsee, hi* executor, administrators or assigns, may again assign or indorse the same, and so on, as often as may be desired ; and the assignees, or indorsees, or their executors, or administrators, may in their own name sue for and recover the money thereon; but the assignment of specialties must be made under seal and before at least two witnesses. Assignors and indorsers cannot releaso or discharge demand after assignment. Checks, notes, drafts and bills payable without time, or at Bight, arc due and payable on presentment, without graco. Laws of Delaware, Revised Code of 1862, pp. 183, 184. Pennsylvania. In Bulloch v. Wilcox, it was decided in 1838, that a note payable to a Certain person or bearer was to be treated as a negotiable note ; and that the person taking it in good faith for value, was entitled to recover on it against the 254 BILLS OF EXCHANGE AXD PROMISSORY NOTES. where a bill is drawn in Chicago, on the city of New York, and it is necessary for the payee to * send it forward by mail *269 • . . . for collection, he can do so without incurring any danger of its being lost or stolen on the way, by indorsing it specially to the order of his correspondent in the city where it is payable. 1 On the other hand, where the payee of a bill of exchange or negotiable note indorses it in blank, the instrument is transferable by delivery ; for there is no difference between a note indorsed in blank, and one payable to bearer. 2 When, therefore, a bill so in- dorsed is transmitted from one place to another, the holder incurs the risk of its being stolen or lost on the route, and afterwards negotiated to a bona fide purchaser for value ; so held where a bill was drawn by the defendant payable to Ingham or order, and 1 Davis draws a bill at Brockport on New York, payable to the order of Patchin, aud Patchin indorses it, " pay Richard Yates, or order," and though it should be stolen on the way to New York, no one but Yates himself, or the person to whom he indorses it, can demand the money on it. Chautauque Co. Bank v. Davis, 21 Wend. E., 5S4. 8 Bayley on Bills, GT. " A blank indorsement, so long as it continues blank, make3 a bill or note payable to the bearer." Curtiss v. Bemis, 26 Conn., 1. A note drawn payable to the order of the maker, is transferable by delivery, though not indorsed by him. Central Bank of Brooklyn v. Long, 1 Bosw., 202; Bigelow v. Coltou, 13 Gray, 309. maker, free from all subsisting equities between the original parties. 7 Watts, 328. In 1849, a statute was passed providing: 1. That in actions brought upon or for the recovery of the amount due on any promissory note, post note, note of hand, duo bill, bill of exchange, draft, order, check, or other instrument in writing in the nature thereof, no defense shall be allowed for want of proper and timely demand of pay- ment or acceptance, or protest and notice of non-acceptance or non-payment, unless the place where the demand is to be made or notice served or given, or the names and residences or places of business of the parties thereto are legibly set forth therein. 2. That wheu such instruments do not specify the place of demand and notice, or the residences or places of business as above mentioned, the demand may be made and notice given either before or after tho same become due. 3. That such omissions shall operate to make such notes, duo bills, &c., payable and protestablo where they are dated, or if not dated, then where they are held for collection; and shall operato to make bills of exchange, drafts, orders, and checks acceptable, payable and protest- able at the place where they are addressed. 4. That a party receiving forged paper may recover baelt the amount paid thereon. 5. That bills of exchange, drafts, orders, checks, promissory notes, &c., made, drawn or indorsed to order within the common- wealth, are declared negotiable by indorsement, and recoverable by tho indorsee in his own name, in tho same manner, and to all intents and purposes, as bills of ex- change and promissory notes formerly drawn and ordinarily in use and negotiable in tho state, are by law recoverable therein. Laws of Pennsylvania. Duulop's c-d., pp. 1156-7. INDORSEMENT AND TRANSFER. 255 Ingham indorsed * it in blank, after which, it was stolen #Q „ and transferred to the plaintiff, who took it in good faith and for a valuable consideration. 1 But where the payee of a note or bill transfers it by an indorsement in blank, the indorsee is thereby authorized to fill it up with what name he pleases, thus converting it into a full or special indorsement. 2 A full or special indorsement is generally written in this manner : a Pay A. B. or ordei." But it is held that an indorsement in these words, '-Pay the within to A. Thatcher, value received," does not restrict the negotiabilit} r of the instrument, though made after it has been dishonored.' The indorsement follows the nature of the original 1 Peacock v. Rhodes, Doug., 633. ■ Lovell v. Evertson, 11 John. R., 52; Williams v. Matthews, 3 Cowen R., 252. * Leavitt v. Putnam, 1 Sand. R., 199 ; S. C, 3 Comst. R, 49-1. The statute of 1851 (Laws of that year, p. 398) repeals the seventh, eighth and niuth sections of the act of 1S49, as to future contracts. The sections so repealed, are given under the above subdivisions 1, 2 and 3. A statute of 1857 (see Laws of that year, page G29) provides that all drafts and bills of exchange drawn at sight shall become due and payable on presentation, without grace, and may be protested immediately on being dishonored; the presentation made or to be made beyond the commonwealth must be at the actual place of business or residence of the drawee ; it is uot enough to present at the office or No. to which the bill or draft is addressed. Maryland. The bona fide holder of a negotiable note for a valuable consideration without notice of facts which affect its validity as between antecedent parties, if ho - it by indorsement before it becomes due, acquires a valid title and may recover upon it, although as between antecedent parties the transaction may bo invalid. Gwynn & Co. v. Lee, 9 Gill R., 138, decided in 1S50. It docs not appear that the statutes of Maryland expressly render promissory notes negotiable ; but they fix the rato of interest at six per cent, and declare that no plea of usury is available against any legal or equitable assignee or holder of any bond, bill obligatory, bill of exchange, promissory note, or other negotiable instru- ment, when such assignee, indorsee or holder has received the same for a bona fide and legal consideration, without notice of the usury ; thus recognizing them as nego- tiable, as do also the decisions of the state. 1 Md. Code, Public Laws, G9C ; see Ses- sion Laws of 1X25, p. 23, as to judgments on blank indorsements. The contract of the indorser cannot be changed into any thing different by over- writing his signature with a promissory note; as where the defendant wroto his namo on the back of a note payable to another person, and the payeo wrote over tho signa- ture a note payable to him. Hoffman & Riger v. Coombs, 9 Gill, 284. A protest of a notary public of a promissory noto for non-payment, or of a bill of exchange, whether foreign or inland, for non-acceptance or non-payment, is prima ii" ■ of Bach n. n payment or non-acceptance and of presentment in tho man- ner st;it. "i i n the protest, including tho fact that proper notice has been delivered, or lent to tho parties to be charged thereon SVssion Laws of 1838, ch. 253. Soo Barry t. Orowley, i QUI, 194; see Bi n v. Bagertown, 7 Gill It., 21C. * 271 256 BILLS OF EXCHANGE AND PROMISSORY NOTES. note, which being itself negotiable, a direction by the payee to pay it to any person named, is a direction to * pay it to such person or his order, according to the tenor of the lote itself. 1 To make the indorsement restrictive, it is necessary that it should contain express words of restriction. When a bill or note is transferred by a blank indorsement, and the indorsee fills it up, making it payable to a particular person, for the purpose of collection, and the bill or note is returned to him dishonored, he has the right to strike out of the indorsement all but the name of the indorse*, leaving it an indorsement in blank. 3 And though it has been several times successively transferred for the same purpose, the owner has the right, under the decisions, to erase these indorsements and bring an action on the instrument in his own name.' 1 Eddie v. The East India Co., 2 Burr., 1216 ; 3 Comst. R., 494. 4 Bank of Utica v. Smith, 18 John. R, 220; 21 Wend.. 584. * Dugan v. The United States, 3 Wheat., 172. The opinion in this case goes the length of holding that if any person indorse to another a bill of exchange, whether for value or collection, and shall come again to the possession of it, he is to be regarded, unless the contrary appear, as a bona fide holder, and may recover without re-indorse- ment. 18 Jolin. R, 230; and 21 Wend., 584; see also, Mottram v. Mills, 1 Sand. R., 37. An indorser taking up by paying dishonored paper, in effect repurchases and holds it against the prior parties. French v. Jarvis, 29 Conn., 347. Virginia. In this state, promissory notes, or checks for money, payable at a par- ticular bank, or office thereof, for discount and deposit, or at a savings institution, and inland bills of exchange payable in the state are deemed negotiable, and may, upon being dishonored for non-acceptance or non-payment, be protested ; and the protest ia evidence of dishonor as in case of a foreign bill of exchange. And an action of debt may be brought against all the parties, drawers, indorsers or acceptors. As to other instruments, such as bonds, notes or writings not negotiable, the assignee may recover thereon in his own name, subject to a set-off of all just demands against either himself or his assignor before notice of the assignment. But only joint assignors are to be joined as defendants in one action. Code of Virginia published in 1849, pp. 581, 582, 583. The assignee of a note not negotiable is bound to use due diligence to recover against the maker, before he can recover against the assignor. Caton & Veale v. Lenox, 5 Rand., 31 ; 4 Call, 492; 5 Munf., 388; G Leigh, 135, 230. North Carolina. Promissory notes for the payment of money are made negotiable as inland bills of exchange; and bonds, notes and bills for the payment of money, with or without seal, and whether expressly made payable to order and for value received or not, are assignable over in like manner as inland bills of exchange are by custom of merchants in England: and the indorsee may sue the maker of the instru- ment or the indorser. Orders for the payment of money are to be presented for accep- tance and payment; and may be protested for* non-acceptance, so as to give tho payee an action against tho drawer ; or if accepted, an action may be brought thereon INDORSEMENT AND TRANSFER. 257 *272 *It is sometimes said that a blank indorsement gives to the indorsee authority to write over it what he pleases ; that by itself it is not a transfer of the property in the bill, but only a power to write over the signature a contract of indorsement. 1 But it id well settled that the signature of the indorser written on the back of a negotiable note or bill of exchange is in itself a complete and perfect indorsement ; J and that a blank indorsement, though it authorizes the indorsee to fill it up so as to make it payable to any person he pleases, does not give him authority to write over the signature any other species of contract, such as a note or guaranty. 1 1 Bayley on Bills, 67; Chitty on Bills, 225, 230; Thced v. Lovell, 2 Stra., 1103; 12 Mod., 244 ; Lord Raym., 443. • Grifforn v. Jacobs, 2 Miller (Louis.), 192 ; Gillman v. State Bank, 2 Scam., 245 ; Chewning v. Gate wood, 5 Howard (Miss.), 552 ;. McDonald v. Bailey, 14 Maine, 102. 'Seabury v. Hungerford, 2 Hill R., 80; Farmer v. Rand, 14 Maine, 225, 284; Central Bank v. Davis, 19 Pick. R., 373; Hoffman v. Combs, 9 Gill, 284; Hance v. Miller. 21 111., 636. An indorsement in blank is a contract which cannot be varied or changed by a co- temporaneous parol ageement ; it cannot he proved that it was agreed by parol that the indorser should be bound as such without demand of payment. Bank of Albion v. Smith, 27 Barb., 489. Nor can the liability of a party be varied by parol, where he indorses his name on the back of a note payable to the maker's order; indorsed in blank by the maker, such a note is payable to bearer. Bigelow v. Colton, 13 Gray, :)09. The parties indorsing such a note for the benefit of the maker, becomes responsible thereon prima facie according to. the order and import of their indorsement. Clapp et aL v Rice et al., 13 Gray, 403. against the acceptor. Bills of exchange payable within the state, at sight, or at a future day certain, arc entitled to days of grace; but neither bills of exchange, pro- missory notes, nor drafts payable on demand are entitled to days of grace. Bonds, bills, notes, bills of exchange, and liquidated accounts bear interest from the time they become due; and when payable they bear interest from the time when they are demaudable. The protest of a notary public, of a justice of the peace, clerk of a court of record, or clerk and master, is, prima facie, evidence of demand made, or notice given as stated in the protest. The indorsement of any bill, or negotiable bond, or promissory note, unless other- wise expressed, renders the indorser liable as surety to any holder of such bill, bond or promissory note ; and no demand on the maker is necessary previous to an action against the indorser; but tliis provision does not apply to foreign and inland bills of exchange. Revised Code of North Carolina, enacted at the session of IS 54, pp. 110, 111, 112. South Cardura. In this state the English statute making promissory notes assignable and indorsablo over in the same manner and with the like effect as inland bills of exchange, was re-enacted at an early day. 2 Statutes of South Carolina, 544. edited by Thomas Cooper, and published in 1837. To charge the indorser of a note, there must be a regular demand mado of the maker for payment and Motice ^iven to the indorser. Allwood v. Ilaseldon, 2 Bailey II., 457. And even a special indorse- Edw. 33 258 BILLS OP EXCHANGE AND PKOMISSOKY NOTES. He has the right to fill up the blank ; " but in doing it he is not at liberty to write just what he pleases over the name, but is bound by mercantile usage ; which on this point has the force and cer- ^ „ Q tainty * of law, and clearly does not extend to a waiver of any of the legal conditions of indorsement" 1 "Where a person puts his name, in blank on the back of a pro- missory note, he may be held liable as maker or guarantor, when there is an agreement to that effect, and when he cannot be charged as an indorser.* This is allowed in order to prevent an entire fail- ure of the contract, on the principle id res magis valeat quam pereat. But this maxim allowing a blank indorsement to be so construed, does not apply in any case where the person making it can be charged as an indorser. 3 For instance, where a note is made pay- 1 Per Morton, J., in Central Bank v. Davis, 19 Pick., 376, holding that the indor- see has no right to insert over the name a waiver of notice of non-payment ; or a note; Hoffman &Riger v. Coombs, 9 Gill, 284; or a guaranty, 21 111., 636. 4 Josselyn v. Ames, 3 Mass. R., 214; Nelson v. Dubois, 13 John. R., 175; Gris- wold v. Slocum, 10 Barb., 402 ; see 4 Selden, 207. 3 2 Hill R,, 84; 3 Hill R., 233; 7 Hill R., 416; Ellis v. Brown, 6 Barb. R., 282; 4 Duer, 45. When two persons sign their names on the back of a joint and several negotiable note, neither of them being named in it as payee,, they are to be treated as iudorsers; they cannot be treated as joint makers; Goldin v. Linderman's ex'rs, 34 Penn., 58 ; so in Indiana, parol evidence will not be received to vary the legal effect of indorsements appearing on the note. Vose v. Hurst, 13 Lad., 551. And even in a state where parol evidence of the real contract is admissible, what was said between the indorser and makers of the note, in the absence of the payee, cannot be shown to authorize a guaranty to be written over his signature. Draper v. "Wild, 13 Gray (Mass.), 530. ment of a promissory note before it becomes due, as thus, "I guarantee the payment of the within to B. & D., for value received," does not dispense with the necessity of a regular demand upon the maker, and notice to the indorser, in order to charge the latter. Barrett v. May, 2 Bailey R., 1. The demand and notice must be made and given just the same to charge the indorser, though he knows the maker to be insol- vent. Jervey v. "Wilbur, 1 Bailey R., 453. A set-oft' is not permitted against a bona fide holder of a negotiable note, of a demand held by the maker against an interme- diate holder, not the original payee, although the note came to the plaintiff after it was due. Perry v. Mays, 2 id., 354. Georgia. Bonds and other specialties, promissory notes, and liquidated demands for the payment of money or property, are negotiable by indorsement ; unless the maker of the instrument expresses in it the intention that it shall not be negotiable. Cobb's Digest of the Laws of Georgia, 519, published in 1851. The indorser of such instruments are hold, taken and considered as securities; and are liable thereon with- out any proof iA' demand or notice; and may bo sued in the same manner and in tho same action with the principal or maker of such notes or other instruments: not so, where promissory notes are given for the purpose of negotiation at any chartered INDORSEMENT AND TRANSFER. 259 able to a particular person or bearer, and a stranger writes his name on the back of it and it is then delivered to the payee, it is held that such indorser cannot be charged as a maker of the note, nor in any * other character but that of an indorser. 1 On the „ 274 Bame ground, where a stranger or third person writes -his name on the back of a promissory note made payable to the order of the payee, to whom it is afterwards delivered, it is decided that there is nothing in such an indorsement to indicate that the person making it means to be considered liable in any other character than that of a strictly commercial indorser ; the payee by indors- ing it himself, may charge him as a second indorser. This, there- fore, is the contract which the act of indorsement imposes upon him, and by which he is bound. 3 1 Dean v. Hall, 17 Wend., 214. "There is no legal difference between a note paya- ble to bearer and one payable to a particular person or bearer; neither need be indorsed to make it negotiable. Xotes payable to bearer, to a particular person or bearer, or to a particular person or order, and indorsed in blank, all pass by delivery, and neither need be indorsed to transfer it according to the law merchant." s Hall v. Xewcomb, 3 Hill It., 23?,. When a contract cannot be enforced in tho particular mode contemplated by the parties, the courts, rather than suffer the agreement to fail altogether, will, if possible, give effect to it in some other way. But they never make contracts for parties, nor substitute one contract for another. This was in legal effect, regular mercantile paper, upon which the defendant contracted the obligation of an indorser within the law merchant; and by that obligation and no other, he is bound. Per Broxso.v, J., in Seabury v. Hungerford, 2 Hill R., 80 ; 6 Barb., 282; Cottrellv. Conklin, 4 Duer R., 45. INDORSEMENT by a straxger. When a stranger, that is, a party not named as payee nor receiving the note by indorsement, indorses the note before it is handed to the payee, Ins contract is one of indorsement ; and the presumption is that he is not liable thereon to the payee ; Barto v. Schmech, 28 Penn. State R., 447 ; Locoon v. Kirkman, 95 Eng. Com. Law, 929: Weaver v. Marvel, 12 La. An., 517. He cannot in the State of New York be charged thereon as a guarantor: Cottrell v. Conklin, 4 Duer, 45: Spies v. Gilmore; 1 Cornst, 321; see also Clanston v. Barber, 4 Suead (Tenn.), 330; 13 Ind., 551; but it may be shown under proper pleadings that he in- tended to become responsible to the payee, and in that case ho is chargeable thereon as an indorser, by the usual demand and notice ; Moore v. Cross. 23 Barb., 53-1 ; S. C, 19 X. Y. R •[)., 227; the pleadings must be special; Waterburyv. Sinclair, 20 Barb., 455; l ]•;. D. Smith 664; 22 How. U. S., 341. In some of the states, such indorser may be charged thereon as an original promisor, or surety ; Carpenter v. Oaks, 10 ttU'li. Law (3. C), 17; Riley v. Currish, 9 Cusli. (Mas-:.), mi; Cook Y. Southwiek, 9 18, C15; according to the actual contract; Schollenberger v. Nehf, 28 Penn. State It.. 169; Bey v. Simpson, 22 How. U. S., 341. bank, or deposited then for colli stion. But the indorser may define his liability in the net of ladoi And any "security or indorser" may, if he thinks proper, uf ter the note or instrument becomes due, require the holder to proceed and collect the 260 BILLS OF EXCHANGE AND FROMISSORY NOTES. „ * Where a negotiable note is indorsed in blank by the 275 • payee, it becomes assignable by delivery, and a subsequent holder can strike out all the indorsements except the first, and make title under that ;' and this he may do, notwithstanding the bill or note may have upon it subsequent indorsements in full.' n the actual course of business, bills and notes are daily trans- mitted from the holders to the prior parties, without striking out the special indorsements ; and each indorser receiving a dishonored bill or note, deems himself authorized to cancel his own and sub- sequent indorsements. Such, at least, is a common practice among merchants and bankers ; 3 and the rule of law on the'subject has been stated in a leading case, in these words : " the court is of opinion, that if any person who indorses a bill of exchange to 1 The "Watervliet Bank v. White, 1 Denio R., 603 ; Pentz v. Winterbottom, 5 Denio R, 51 ; 1 Cowen R., 387 ; 3 id., 252. * Gordon v. Nelson, 16 Louis., 321 ; Hale v. Bailey, id., 213; 12 id., 619; Chitty on Bills, 230; 12 Mod., 345; Dolfus v. Froseh, 1 Denio R., 367. 1 1 Sand. R., 40 ; 12 La. An., 614. same ; and if, being so required, the holder neglects to do so for the space of three months, the indorser or security is discharged. One who signs his name to a bond, note, or obligation, adding to it the word "security," is to be so considered without other evidence. Cobb's Digest, 594, 595. Florida. Promissorj' notes and other instruments in writing are declared by statute to have the same force and effect as bonds and writings under seal ; and the plaintiff suing on them need not prove their execution unless the defendant, by hi3 plea, denies the execution, and verifies the plea by his oath. Thompson's Digest of the Laws of Florida, 330, 331, 348. The indorsement of notes conveys the title and right of action thereon to the indorser. Id., 348. Alabama. Bills of exchange and promissory notes payable in money at a bank or private banking house, are governed by the commercial law ; except as otherwise specially provided ; and all other instruments payable in money, at a bank or private banking-house, are governed by the commercial law, as to days of grace, protest and notice ; but no days of grace are allowed on any contracts except those above mentioned. §§ 1525, 1526, 1527, Code of 1852. Bonds, contracts, and writings for the payment of money, or other thing, or for the performance of any act or duty, are assignable by indorsement, so as to authorize an action thereon by each successive indorsee. All contracts, except bills of ex- change, promissory notes payable in money at a bank or private banking house, or paper issued to circulate as money, are subject to all payments, set-offs and discounts, cad or possessed against the same, previous to notice of the assignment thereof §§ 1530, 1531. A sufficient notice of protest for non-acceptance or non-payment U made (by mail,) by sending the notice to the place where the person to be charged resided at the time of drawing, making or indorsing the note, bill or negotiable instru- ment, unless he specifies on the paper the place where it is to be sent. £ 15-12. On all contracts assigned by writing, except thoso payable in money at a bank, of ENDORSEMENT AND TRANSFER. 261 another, whether *fdr value or for the purpose of collection, shall come to the possession thereof again, he shall be regarded, unless the contrary appear in evidence, as the bona fide holder and proprietor of such bill, and shall be entitled to recover, notwithstanding there may be on it one or more indorsements in full, subsequent to the one to him, without producing any receipt or indorsement back from either of such indorsers, whose names he may strike from the bill, or not, as he may think proper." ' i Dugan v. The United States, 3 Wheat, 173. Tins rule was approved in Norm v. Badger. 6 Cowen R., 453, and in Dolfus v. Frosch, 1 Denio, 367, and in Mottram v. Mills, 1 Sand. R., 37 ; see, also, cases there cited. first above mentioned, when the amount is over fifty dollars, in order to charge the indorser or assignor, a suit must be brought against the maker as soon as it can be done in the county where he resides ; and an execution must be issued against him, returnable at the next court, and returned " no property." § 1543. In cases where the sum is less than fifty dollars, the suit must be brought within thirty days, and prosecuted in the same manner. § 1544. The indorser or assignor may extend or waive the time for bringing suit. § 1545. And the holder is, in certain cases, excused by law from prosecuting suit to judgment, as where the maker does not reside in the etate, cannot be found, dies, or defeats a judgment by a good defense. § 154G. Code of Alabama, pp. 316, 317, 318, 319. This Code was prepared under the direc- tion of the legislature, and adopted in February, 1852. Louisiana. Promissory notes are governed by the commercial law ; and the holder is not required to prove, in a suit against the maker and indorser, the circumstances under which he acquires a negotiable note, except where the want, failure or illegality of tho original consideration is clearly shown, and in the case of a lost or stolen instrument. Judson v. Holmes, 9 Louis. An. R., 20, 22, 27, 132. When the owner sues on a note that has been destroyed, it is not necessary to allege and prove that the destruction was advertised; the rule is different in the case of a lost note. Bebee v. McNeil, 8 id., 130. Tho accommodation indorser holds himself out to tho public, by his signature, as absolutely bound to every person who shall take the note for value, to the samo extent as if that value had been advanced to him personally, or at his request. Mat- thews v. Rutherford, 7 id., 225. Any words that show tho parties to a note intended to make it negotiable, will operate to give it that character, as where it was made " payable and negotiable at the Planter's Bank." Bacon v. Dahlgrecn, id., 599. The mode of making protest and serving notice on the parties to be charged, is specially pointed out by statute. 1 Bullard and Curry's Digest, 41, 42, 43. To bind the indorser, demand should bo mado of the maker of a note, either in person or at the place of his domicil. Bigelow v. Keller, C Louis. An. Rep., 59, 98. Notico sent to the indorser that the note lias been protested is sufficient. Id., 100. See Revised Statutes of 1856, pp. 43-46. The Revised Statutes do not in terms make promissory notes negotiable like inland bills ; but tho statute declares that when they are indorsed in terms for it of tin; drawer, and the latter procures them I" be discounted in any bank of the stale, or shall obtain any money thereon from any person, tho indorser shall bo bound to the holder in tin; same maimer as if they had been discounted <>r negotiated for their own benefit; and it provides also for tho protest thereof. R. S. of Louisiana of 1856, pp. 45, 40. 262 BILLS OF EXCHANGE AND PKOMISSOKY NOTES. * The payee or indorsee having the absolute property in a bill or note and the right of disposing thereof, has the power to make what is called a restrictive indorsement, precluding the person in whose favor it is made from making a transfer so as to give a right of action against either the person making it, or any of the antecedent parties. 1 But in order to make an indorsement restrictive, it is necessary that it should be so drawn as to negative the right of transfer in the indorsee, or so as to give him a bare authority to receive the money. 2 Thus, an indorsement in these words, "pay the contents to John Halloway only," prevents the bill from being again transferred ; and an indorsement, "pay J. H., for my use," or "for my account," shows plainly that the indorser does not mean to part with the absolute property in the bill, and is inerefore barely an authority to receive the money upon it.' 1 Bayley on Bills, 69-71 ; 2 Burr., 1216. 4 Leavitt v. Putnam, 3 Comst. R., 494. 3 1 Atk., 247; 2 Burr., 1227; Doug., 627; ante, note, 253. Mississippi. In this state, bonds, bills, promissory notes and all other writings for the payment of money or other things, may be assigned by indorsement, whether drawn payable to the order or assigns of the payee or not ; the assignee or indorsee may sue thereon in his own name, in the same manner as the payee or obligee might have done; and a set-oft' is allowed of demands accruing at any time before notice of assignment. The assignee or indorsee may recover against the assignor or indorser as in cases of inland bills of exchange, provided that where the debt shall be lost by the negligence or default of the assignee, the assignor shall not be liable. Ilutchinson'a Code, 640, 852 ; Revised Code of 1857, p. 355. Texas. It is not necessary, in this state, for the owner or holder of a bill of ex- change, promissory note, check, draft, or other mercantile negotiable instrument, to have any of these instruments protested for non-acceptance or non-payment; nor i3 it necessary to give notice of such dishonor, to any drawer, indorser or assignor of the same; and every such party is, without any protest or notice whatever, held responsible as security for the final payment of every such instrument. Instead of protest and notice, the holder is to use due diligence to collect the same; and duo diligence requires the holder to institute a suit before the first term of the District Court, after the right of action accrues, or at the next term where lie cannot do so before. The assignee and indorsee may bring the action thereon in his own name, and the maker or obligor is entitled to a set-off of all demands existing against the payee, in case of a transfer by him after the note or other instrument became due. No set-off allowed that accrues after the notice of assignment. Hartley's Digest of the Laws of Texas, 771, 772; published in 1850. The holder of negotiable notes and bill3 may charge the drawer and indorsers, by having the same protested by a notary, and the usual notice thereof given by him, according to the custom of merchants. Oldham & White's Digest, pp. 52, 53. Arkansas. In this state, all bonds, bills, notes, agreements and contracts in writing, for the payment of money or property, or for both money and property, ar» INDORSEMENT AND TRANSFER. 263 * It imports that the indorsee receives the bill for a special # ^o purpose, and as a trustee for the party indorsing ; and is equivalent to a direct notice to every person to whom it may after- wards be presented, that he has not a right to dispose of it as his own property. 1 "Pay the contents to A. B., being part of the consideration in a certain deed of assignment executed by the said A. B., to the indorser and others," is not a restrictive indorsement, because it only specifies the consideration of the transfer, and is at most barely a surplusage that does not affect the subsequent negotiability of the bill. 1 1 Sigouraey v. Lloyd, 8 Barn. & Cres., 622 ; 3M.4 By., 58; 3 Younge & J., 229; 6 Bing., 525; 3 Moore & P., 229, An indorsement in these words: "the within must be credited to Captain Moreton L. Dahl, value in account," was held restrictive. Doug., 637 ; ante, 253. 1 Potts v. Reed, 6 Esp. R., 57 ; 7 Term R., 733. So of a draft, which is in effect a promissory note. 28 Barb., 391; 15 N. Y. Rep., 337. assignable ; and the assignee has a right of action thereoa in his own name. In- dorsee or assignors of any instrument in writing assignable by law for the payment of money alone, on receiving due notice of the non-payment or protest of any such indorsed or assigned instrument in writing, are equally liable with the original maker, obligor or payee of the instrument, and may be sued thereon with the maker, or separately. English's Digest of the Statutes of Arkansas, 161, 1G2, 163. The statute only confirms the law merchant in relation to bills of exchange, and extends it to other instruments. Buckner v. R. E. Bank 5 Ark. Rep., 536. Set-offs are allowed against assignors till notice; not after. Digest of 1S58, p. 158. Missouri. In this state, every promissory note for the payment of money, ex- pressed on the face thereof, to be for " value received, negotiable and payable without defalcation," are payable as therein expressed, and have the same effect, and aro negotiable in like manner as inland bills of exchange. The holder may maintain actions thereon against the makers and indorsers in like manner as in cases of inland bills of exchange and not otherwise. When such notes are made payable to the maker, or to a fictitious person, they are deemed payable to bearer, as in the state of Xew York. Revised Statutes of Missouri, 174, 175. Notes drawn in the manner above specified are placed on the footing of inland bills of exchange: other notes are not so negotiable, and consequently the assignee of them takes them subject to any defenses which the maker may have against them. Austin & Haines v. Blue, 6 Missouri Rep., 2G5; Muldrow v. Caldwell, 7 id. 563; 8 id., 107, 336. Tknnksske. " Every note whereby the maker promises to pay money to any other person or order or to the order of any other person, shall be negotiable in the same manner as inland bills of exchange, by the custom of merchants." "And every bill, bond or note for money, whether sealed or not, and whether expressed to be payable to order, or for value received, or not. shall be negotiable in the same manner as promissory notes." Orders directing the payment of money vo 264 BILLS OF EXCHANGE AND PROMISSORY NOTES. * The right of property in a bill or note implies the right to sell it, or make such a disposition of it as the owner and holder may see fit. 1 Accordingly the payee or indorsee of the instrument may indorse it over to another, inserting in the indorse- ment a condition making it payable upon the happening of an un- certain event. 2 To make such an indorsement operate as a perfect transfer of the title, it must be shown that the condition has been complied with or fulfilled. But the payee or indorsee of a note cannot assign or transfer part of the sum due thereon, so as to enable his indorsee to main- tain an action on the note against the maker. 3 The * reason 280 • is, that no one can recover on a note or bill of exchange t 1 9 Barb., 214; 11 id., 620; with or without indorsement, 6 Bosw., 427. ' Robertson v. Kensington, 4 Taunt., 30. In this case the plaintiff being the payee of the bill, indorsed it, "pay the within sum to Messrs. Clark & Ross, or order, upon my name appearing in the gazette as ensign in any regiment of the line between the 1st and 64th, if within two months from this date ;" and the transfer was held subject to the condition. 3 Douglass v. Wilkeson, 6 "Wend., 637 : S. C, 17 Wend., 431 ; 22 Wend., 559. The note iu this case was made for $2,500, and the payee indorsed it "pay on the within $750." Under the Code the action may be sustained in equity, all the parties to the noto being made parties to the action, so as not to split up the demand. Field v. Mayor of N. Y., 2 Seld., 179. any person, or to the bearer, are due and payable to, and may be recovered on, by the payee or holder. No grace is allowed on sight bills or drafts. Bonds with col- lateral conditions, and bills or notes for specific articles, are assignable. Code of Tennessee of 1853, pp. 399, 400. Negotiable paper, by the law merchant, and by the statutes of this state, includes orders or bills of exchange, checks on banks, bank notes, and notes of hand, with or without seal, but all for money, which they represent for the convenience of com- merce. 5 Yerger, 435. Kentucky. All bonds, bills or notes, for money or property, are assignable, so as to vest the right of action in the assignee; but the right to any defense, discount or set-off which the defendant has or might have used agaiust the original, or any inter- mediate assignor, before notice of the assignment to the plaintiff, is not impaired. Bills, drafts or checks, payable in bank notes, or currency, or other funds, wheresoever drawn or payable, are deemed negotiable, and treated as if drawn for money. Revised Statutes, 193. 194; adopted and published in 1S52. The notarial protest, under the notarial seal, of the non-acceptance or non-payment of a bill is evidence of its dishonor ; but the protest may be disproved. R. S., ed. of 1860, p. 268. The assignee of a note or bond, to secure a right of recourse upon his assignor, must, if there is time after the assignment, and after the note is'due, bring suit in the proper court soon enough to get a judgment at the next term. McMurray v. Wood, 9 Dana R., 45. INDORSEMENT AND TRANSFER. 265 unless he shows a title to the instrument; and he cannot deduce his title through an indorsement, which is not made in compliance with the established custom of merchants ; and this custom does not allow the contract to be apportioned so as to subject the parties liable thereon to separate and distinct actions. 1 The custom directs that the indorsement should be made in writing on the note or bill, appointing the contents to be paid to some third person; 2 but does not recognize a partial indorsement. 3 The language of the books is, that * an indorsement transfers the property of the bill or note to the indorsee ; what does less than that, is not strictly an indorsement ; and hence, says Mr. Justice Bayley, an indorsement cannot be made for the transfer of less than the full sum appearing to be due upon the bill or note. 4 1 6 Wend., 639. " Indorsement is a term known in law, which, by the custom of merchants, transfers the property of the bill or note to the indorsee, and is usually made on the back of the bill, and must be in writing." Cunn. on Exchange Law, 43; Bee 2 Seld., 179. 8 Gibson v. Minet, 1 H. Black., 605. s Hawkins v. Cardy, Lord Raym., 3C0 ; Garth., 466; 12 Mod., 213; Salic, 65. The remedy must be under the law of the state where the action is brought. 2 Sold., 179. 4 Bayley on Bills, 72 ; 3 Kent's Com., 59. Ohio. In this state, bonds, promissory notes, bills of exchange, foreign and inland, drawn in a negotiable or assignable form, are negotiable by indorsement, so as to transfer and vest the property in each and every indorsee successively: the indorsee may sue the maker of the same in his own name, and recover thereon; or he may sue and recover against the indorser, having first used due diligence to obtain the money of the drawer, maker or obligor. When such instruments are transferred after due, the maker, drawer or obligor is entitled to the same defense as if no trans- fer had boen made. When transferred before due, the defendant may set up pay- ments actually mafic before the transfer, on proving that the plaintiff had notice of such payments before the indorsement to him was made. Such instruments are en- titled to three days of grace in the time of payment. And the demand of pi yment from the maker on the third day, and notice given to the indorser within a reasonable time thereafter, is due diligence entitling the holder to recover against the indorser, where no other condition is expressed in tho indorsement. Swan's R. S. of Ohio; I». -iby's edition of 1854, pp. 575, 576; 10 Ohio R., 49G; 14 id., 490 ; 17 id., 128, 572; 18 id., 154 ; see also R. S. of 1860, pp. 862, 863. The bona fide indorsee of negotiable paper without actual notice, is not affected by prior usury. R. S. of I860, p. 744. Michigan'. The Revised Statutes of this state make promissory notes in writing for the payment of money to have the same effect and bo negotiable in like manner as inland bills of exchange, according to tho custom of merchants, whether signed by the maker or his autliori/.'d agent. Tho payees and indorsees may maintain action thereon as upon inland bills. Acceptances must bo in writing; and days of grace are allowed upon bills payable at sight or at a future day certain within th. xtatc, and also on negotiable not .s. orders and drafts payablo in like manner; but uot on Euw. 34 266 BILLS OF EXCHANGE AND PROMISSORY NOTES. A writing indorsed on the back of a promissory note showing the purpose for which it is executed, or making its payment de- pendent upon a contingency, is not a part of the note so as to affect its negotiability ; but in an action upon it, the holder must unquestionably show a right of recovery upon the whole instru- ment. In other words, taking it with express notice of the con- dition upon which it is to become due, the indorsee must show that that condition has been complied with. 1 1 Sanders v. Bacon, 8 John. K., 485. The indorsement stated that the note was delivered as a consideration for a certain judgment and execution to be assigned to the makers; held no part of the note. Tappan v. Ely, 15 Wend., 362. The indorse- ment stated that the note was made as a security for certain acceptances, and that in case the acceptances were paid by the party accommodated the note was to bo void ; held no part of the note, but a good notice to the purchaser of the condition on which it was to become due and payable. An agreement between the makers and indorser of a negotiable note that it was not to be delivered as an indorsed note, unless and until a certain bill of sale of a steamer was delivered to the makers and a first lien thereon secured to the indorser, is not admissible in evidence, unless it be accompanied with proof that plaintiff re- ceived the note with notice. Richetts v. Pendleton, 14 Md. R., 320. bills, notes or drafts payable on demand. The statutes closely resembles those of New York. See R. S. of Michigan, 156. So also as to pleading, and bringing suit against all the parties in one action, 439, 440, 441. Illinois. The statute of this state makes bonds, bills, notes and other instruments in writing assignable by indorsement thereon, so as to transfer and vest the property thereof in the assignee ; declares them due and payable ; gives the assignee a right of action thereon; and then provides that the assignor shall be answerable to the assignee, if he has used diligence in the prosecution of a suit against the maker of the assigned instrument without avail, or if it is shown that such a suit would have been useless, or that the maker had absconded, or left the state. R. S. of 1845, pp. 384, 385. The assignee is not bound to give the assignor any notice of non-pay- ment; and if he does, it will not give him any right of action against the assignor. Pierce v. Short, 14 Illinois R., 144. Want of consideration may be shown, provided the right of a bona fide assignee shall not be impaired. R. S., ed. of 1858, p. 292. Indiana. Notes payable to order or bearer in a bank in this state, are by statute negotiable as inland bills of exchange, and the payees and indorsees thereof may re- cover as in case of such bills. But in general, notes, bills, bonds and other instru- ments in writing, payable in money or specific articles, are only assignable by indorse- ment so as to vest the property in the indorsee ; the assignment not being governed by the law merchant. Bullitt v. Scribner, 1 Blackf., 14. The indorser in such a case warrants two things : 1. That the note is valid, and the maker liable to pay it. 2. That the maker of the note is solvent, and able to pay it. Howell v. Wilson, 2 Blackf., •418. As to notes payable at a chartered bank in the state, and therefore negotiable by statute, the indorser's undertaking is different. Niles v. Porter, 6 Blackf., 44 ; id., 314; Mix v. State Bank, 13 Ind., 521 ; see 1 Revised Statutes of that state, 1852, p. 378. In Missouri, Indiana, Alabama and Illinois, the indorsement of a note, which is not INDORSEMENT AND TRANSFER. 267 * "When the payee or indorsee of a promissory note or #OQO bill of exchange intends simply to sell or transfer the in- strument without rendering himself liable thereon as an indorser, he should state the fact in his indorsement ; which may be done by adding under his name " without recourse to me," or any other words showing that he does not intend to incur any responsibility.' Such an indorsement transfers the title to and property in the bill, while it rebuts the indorser s liability to the indorsee and subse- quent holders. 2 A qualified indorsement of this kind may bc> written thus: "I hereby indorse and transfer my right and inte- rest in this bill to C. D. or order, but with this express condition, that I shall not be liable to him or any subsequent holder for the 1 Goupy v. Harden, 7 Taunt., 160 ; 2 Marsh, 454. * Richardson v. Lincoln, 5 Metcalf, 201. In this case, it was held that the defend- ant, not the payee of the note, having indorsed it at the time it was made, was liable as an original promisor and surety. As to the form of an indorsement without re- course, see Chitty on Bills, 224, 234, note. by statute rendered negotiable, or not made fully negotiable as an inland bill, binds the iudorser (assignor) to pay only after and in case the assignee has used duo dili- gence by suit to recover of the maker, or where the maker is insolvent or non-resident. (R. C, 1855, p. 323), Ivory v. Carlin, 30 Miss., (9 Jones, 142 :) Sherman v. Smith, 20 111., 350; Dugdale v. Marine, 11 Ind., 194; McDougald v. Rutherford, 30 Ala.. 253. In Missouri, a stranger who indorses a note, being neither payee nor indorsee of it, is treated as a maker of the note, in the absence of extrinsic evidence. Baker v. Black, 30 Mis., 225. Wisconsin'. Promissory notes have the same effect and are declared negotiable in like manner as inland bills of exchange, (as in New York,) and the provisions of the 6tatutes, in other respects, relating to negotiable paper are similar to ours. Revised Statutes of 1849, pp. 262, 263, 503, 504. See R. S., of 1858, p. 408. Iowa. Notes in writing for the payment of money, drawn in a negotiable form, are negotiable by indorsement or delivery, in the same manner as inland bills of ex- change according to the custom of merchants; and bonds, due bills, and all instru- ments in writing for the payment of money, or any sum of money in property, or labor, or acknowledging the same to be duo, are assignable by indorsement, though drawn without words of negotiability; and they are made negotiable when the terms of the instrument evince an intention to make them such. The blank indorsement of an instrument fur the payment of money, property or labor, by a person not a payee, indorsee or assignee thereof, is deemed a guaranty of the performance of the contract. Such indorser must have reasonable notice of non-payment, unless it be shown that he has suffered from want of notice. The indorser of negotiable paper, .-111(1 such a guarantor, is liable on the usual notice, under the rules and principles of the commer- cial law. L ;i ws of Iowa, Revision of 1860, pp. :: 1 7-.'!20. Kansas. All notes in writing for the payment of money or properly to any person, or to his order, or to bearer, import a consideration and arc declared duo and payable according to their terms; and all bondsornotes forth'' payment "f money orproporty are assignable by indOT ement, and the assignee may sue thereon in his own name, 268 BILLS OF EXCHANGE AND PROMISSORY NOTES. acceptance or * payment of the bill." 1 But any form of words will answer the same purpose, by which the party indorsing disclaims the responsibility of an indorser.' The mere addition of the word agent to the indorsees name, where he is known to be acting in that capacity ; ' or the word treasurer, where the note is drawn payable to him as such ; 4 or the word cashier, where he is known to be acting officially, is a sufficient indication that he does not intend to assume the personal responsibility of m^k. an indorser. 6 But where the indorser adds to his* name 284 the word backer, or the word surety, he does not in any 1 Chitty on Bills, -235 ; Piko v. Street, Mood. & M., 266. * Rice v. Stearns, 3 Mass. R., 225. 3 Mott v. Hicks, 1 Co wen R., 513. 4 Babcock v. Beman, 1 Kcrnan R., 200. 5 "Watervliet Bank v. White, 1 Denio, G08 ; Brockway v. Allen, If "Wend., 41 ; Hicks v. Hinde, 9 Barb., 528. So, when a draft is drawn requesting the drawee to charge to the account of a bank, and signed A. B., Cashier; the bank and not A. B., is the drawer of the draft. 1 Hill R., 11 ; 4 id., 442 ; 3 Barb., 523 ; 19 N. T. R., 312; 20 How. Pr., 509. but the obligor or maker may interpose the same defense, after as before assignment. The assignee may recover of the assignor, 1st, if he use diligence in bringing a suit and prosecuting it against tho obligor or maker for the amount due; 2d, if the obli- gor or maker is insolvent or a non-resident. Statutes of 1855, pp. 155-157. Tho Statutes of the State, which seem to have been taken from those of Missouri, also contain this provision, that the payees and indorsees of every negotiable note payable to order or to bearer may sue the makers and indorsers thereon in like manner as in cases of inland bills. Id., 142. A section making certain notes negotiable seems to have been omitted. Minnesota. Notes in writing for the payment of any sum of money drawn in a negotiable form, are negotiable in like manner as inland bills of exchange, according to the custom of merchants; and the payee, indorsee or bearer thereof may bring actions thereon as upon inland bills. Usual days of grace allowed on, except upon bills of exchange, notes or drafts payable on demand. Statutes of Minnesota, ed. of 1859, p. 375. California. This state has adopted substantially the statutes of New York in relation to bills of exchange and promissory notes, making notes for tho payment of money to have the same effect and bo negotiable in like manner as inland bills of exchange, according to the custom of merchants. When notice of non-acceptance, Or non-payment of a bill of exchange, promissory note or other negotiable instrument. may be given by mail, it is sufficient to direct it to the place where the person to bo charged resided at the drawing, making or indorsing of the paper, unless he has spe- cified under his signature thereon tho post-offico where notice is to be sent. Com- piled Laws of California, 146, 147, 148, 149, published by authority in 1853. Tho act relating to bills and notes was passed in April, 1850. tJREQbif. Notes in writing for the payment of money aro made negotiable as inland bills, find tho usual days of graco are allowed; acceptances must be in writing Sta- tutes of 1855, pp. 530, 531. INDORSEMENT AND TRANSFER. 269 respect limit his responsibility as an indorser; although, lie may thereby acquire, or show a state of facts entitling him to the privi- leges and rights of a surety in his relation to the maker. 1 In short, whatever words are used in the writing of indorsement on a note or bill, are to be construed, as in other contracts^ so as to carry into effect the expressed design of the parties. a In the ordinary course of business, the unqualified indorsement of a note or bill is a double contract : it is a present transfer and assignment of the paper to the indorsee, and an executory contract by which the indorser agrees, upon certain conditions, to pay the amount of the note or bill himself As a regular indorsement it must operate as a transfer of the paper ; and it will operate as a collateral contract, unless a * contrary intent is expressed in the writing of indorsement. 3 The actual delivery of the bill or note transferred, should pro- perly accompany the assignment in all cases ; for the possession of negotiable paper raises many important presumptions in favor of the holder/ In the case of bills and notes drawn pa}^able to order, the assignment is ordinarily made by indorsement and deliver}', while bills and notes drawn payable to bearer, or origi- nally payable to order and indorsed in blank, may be assigned either by delivery only, or by indorsement and delivery. 6 On a transfer by delivery only, without indorsement, the person making it ceases to be a party to the bill or note ; on a transfer by indorsement, he is accord iug to the legal operation of his act, a new drawer. 6 In an action against the maker of a promissory note, it is usual to aver that the defendant made and delivered the note ; while in an action by an indorsee against the indorser of a note, it is suffi- cient for him to allege the making and delivery of the note to the defendant, and that the defendant indorsed *the 1 Seabury v. Hungerford, 2 Hill R., 80. By adding the word lacker the indorser only declares still more explicitly his character as an indorser. Bradford v. Corey, 5 Barb. It., 401; adding the word surety to his signature, gives him tho privileges of that relation, without affecting his rights or liability as an indorser. ' :i Mass. ]{., 225. Post, 033-035. * Kernan It., 200 A receipt of so much money indorsed on the back of a not©, I by the payee, cannot be converted into an indorsement by parol evidence that it was afterwards delivered with the intention that it should operate as such. McCoon v. Irigga, 2 Hill it., 121. 4 3 John. Cas., 5; 1 Johu. R., .'510; 8 Wend., GOO; 7 Paige Oh. R., G15; C Hill R, 336; 1 Dfiiio, 116. » Baylcy on bills, 05, CO; Dough, C11-C33; 3 Jolin. R., 435. ' Small wood v. Veruou, Str., 478. 270 BILLS OF EXCHANGE AND PROMISSORY NOTES. note to him, the plaintiff. 1 The note has no legal inception until it is delivered to some person, as evidence of a subsisting debt ;' nor is the drawee of a bill bound as an acceptor by the mere act of "writing his acceptance upon it ; for if he changes his mind and obliterates the acceptance before the bill is delivered back to the holder, he is not bound as an acceptor. 3 On the same principle the indorsement of a note or bill is not complete until the instru- ment is delivered to the indorsee, or put under his legal control. Indeed, it is not at all material when or for what purpose the indorsement is written, since it is the delivery of the paper pro- perly indorsed that operates as a contract of indorsement/ A promissory note made payable to order may be transferred without indorsement, so as to vest the property in it in the purcha- ser. Transferred in that manner, it was formerly necessary to bring the action upon it in the name of the payee ; under the Code, it may be brought in the name of the real owner. 6 But such a transfer does not clothe the assignee with all the rights of an indorsee of negotiable paper, transferred * to him in the *287 . usual manner and course of business : it gives him the title to the note, but subject to the rules applicable in the case of an assignment of any other chose in action. In short a note negoti- able by indorsement but not indorsed, transferred by delivery, 1 Chitty on Bills, forma 553, 554. The allegation in a complaint on a bill or note that the payee or other holder indorsed the note to the plaintiff imports a delivery and transfer so as to confer title. Byles on Bills, 11G. A delivery to the indorsee is necessary to complete the act of transfer by indorsement. Sainsbury v. Parkinson, 20 Eng. Law and Eq. R., 351, note. A delivery of an indorsed bill, for a special pur« pose, e. g., for the purpose of getting it discounted, is not an indorsement to the agent. Lloyd v. Howard, 1 id., 227. But if the agent in such a case deposits it as a pledge for money advanced on it, and the pledgee takes it in good faith, he acquires a valid title and right to recover on it. Palmer v. Richards, id., 529. "Marvin v. M'Cullum, 20 John. R., 288; Smith v. Wyckoff, 3 Sand. Ch., 77. On a purchase of goods to be paid for by the note of a third person, the tender of the note to the seller after delivery of the goods, vests the title in him. Des Arts v. Leggett, 16 N. Y. Rep., 582. 3 Cox and others v. Troy, 5 Barn. & Aid., 474. 4 Havens v. Huntington, 1 Cowen R., 387; Callow v. Lawrence, 3 M. & S., 94; Guild v. Zager, 17 Mass., 615. In these cases it is taken for granted that the indorser of dishonored paper may take it up, and put it again in circulation, striking off ths names of subseque7it indorsers. The delivery completes the transfer and the contract of indorsement; and for this reason, where a note is indorsed in Michigan, to be deli- vered for goods purchased or on an indebtedness in New York, or where a note is signed in Ohio and delivered on an agreement completed in this state, the contract is held to bo made here. Ante, 185. * Billings v. Jane, 11 Barb. R., C20; 10 B. & C, 122; 6 Bosw., 427. INDORSEMENT AND TRANSFEB. 27l and a note not negotiable transferred by delivery, are equally open to every equitable defense which the maker had against it at the time of the transfer ; and if the payee could not have recovered at that time, the. assignee cannot. 1 The transfer by indorsement is equivalent in effect to the draw- ing of a bill, the indorser being in almost every respect considered ' as a new drawer." Mr. Justice Bayley says, that the indorsement of a bill or note, implies an undertaking from the indorser to the person in whose favor it is made, and to every other person to whom the bill or note may afterwards be transferred, exactly simi- lar to that which is implied by drawing a bill, except that in the case of a note, the stipulations with respect to the drawer's respon- sibility and undertaking do not apply. 8 Now, the act of drawing a bill implies an undertaking from the drawer to the payee, and every other person to whom the bill may afterwards be transferred, that the drawee is a person capable of making himself responsible for its payment, and that he shall, if applied to for the purpose, express in writing upon the bill an undertaking to pay it when it shall become paj-able, and that he shall then pay it ; and subjects the drawer on a failure in any of these particulars to an action at the suit of the payee or holder, provided the proper steps have been taken to charge him with liability thereon. 4 Other authorities consider it more correct to say that an indorse- ment is in the nature of a new drawing. 6 It is clearly a distinct and independent contract, that the bill shall be * accepted ^ 0QQ and paid, or that in case it is not accepted when presented for that purpose, or not paid on due presentment when it becomes payable, and the holder gives him due notice thereof, he, the in dorser, will pay the bill.' In respect to promissory notes, the engagement of the indorser is to pay, if the maker of the noto does not, upon being required to do so when the note falls due, and 1 Hedges v. Seeley, 9 Barb. R., 214 ; 20 John. R., 144. Ante, p. 251. The possession of a note payable to a person named as bearer, is proof of plaintiff's titlo and of a transfer to him before it became due; Pettee v. Prout, 3 Gray, 502; but the pos- session of a note not negotiable is not prima facie proof of titlo or of transfer to plaintiff before the note matured; Barrickv. Austin, 21 Barb., 211. a 12 Wend. R., 443; 3 East., 482; 2 Burr., G74, 6T5; 1 Str., 111. • Bayley on Bills, ch. 5, § 3 ; Story on Bills, § 108. 4 Bayley on Bills, ch. 1, § 13, ch. 5, § 1 ; Story on Bills, § 107. • Gwinii.ll v. Herbert, 5 Ad. k EL, 436; 6 N". .fe M., 723. • 4 Wend., 50G: 1 Comet. P.., 413, 2 John. Ca&, 75. 272 BILLS OF EXCHANGE AKD PROMISSORY NOTES. • ■upon the further condition that the indorser is duly notified of such default. 1 The foundation of the law on this subject is stated with great clearness bj Chief Justice Marshall. 2 "The liability of the drawer of a bill of exchange stands upon the same principle with every other implied contract. He has received the money of the person in whose favor the bill is drawn, and promises that it shall be returned by the drawee. If the drawee fail to pay the bill, then the promise of the drawer is broken, and for this breach of con- tract he is liable. The same principle applies to the indorser. His contract is not written, but his name is evidence of his promise, that the bill shall be paid, and of his having received value for it. He is in effect a new drawer, and has made a new contract. The law does not require that this contract shall be fully expressed in writing ; and, in determining what evidence shall be sufficient to prove it, does not introduce new conditions not actually made by the parties. The same reasoning applies to the principle which requires notice. The original contract is not written at large. It is founded on the acts of the parties, and its extent is measured by those acts. A. draws on B. in favor of C, for value received. The bill is evidence that he has received value, and has promised that it shall be paid. He has funds in the hands of the drawee, and has a right to expect that his promise will be performed. He has also a right to expect notice of its non -performance, because his conduct may be materially influenced by this failure of the drawee. He ought to have notice that his bill is * disgraced, because this notice enables him to take measures for his own security. It is reasonable that he should stipulate for this notice, and the law presumes that he did stipulate for it." It has been contended that an indorsement is equivalent to a warranty that the prior indorsements were made by persons having competent authority ; and, though that doctrine is not fully con- ceded, it is agreed that an indorsement admits all prior indorsements to have been in fact duly made." The indorser, moreover, impliedly warrants that the instrument is not forged; in other words, he 1 5 Barb. It., 463. An indorser of a note for value, by indorsement before maturity, without notice, is Hot affected by any prior payment thereon. Grant v. Kidwell, 30 Mis., 455. a 3 Ogden v. Saunders, 12 Wheat. R., 213, 311. * Chitty on Bills, 242; Lambert v. Pack, 1 Salk., 127; Critchlowv. Parry, 2 Camph, 182; Free v. Hawkins, Holt N. P. R., 550. ENDORSEMENT AND TRANSFER. 1.73 warrants the title which he undertakes to convey, and is responsiblo on his warranty in case it fails. 1 Though he transfers the note upon condition that it is to be collected at the risk of the indorsee, he is nevertheless responsible if the note proves to be a forgery. And this warranty of the title or genuineness of the instrument, which accompanies the transfer of all negotiable paper, is broken where the paper is forged, as soon as the transfer is made. 1 Furthermore, the indorscr always warrants the existence and legality of the contract which he undertakes to assign. Thus, it has been adjudged that he is answerable as the indorser of a note made by an agent in the name of a principal who was dead at the time the note was signed/ And, where the payee of a note, given for a usurious or gaming debt, indorses it to a purchaser who receives it without notice of the facts impeaching its validity, it is held that he is liable thereon as an indorser. 5 So, if he indorses the. note of a minor, or of a married woman, or a note that has been forged, he is responsible upon his contract with the indorsee." In this sense *it is decided that "the indorser must take the _. 290 risk of the validity of the note which he assigns. He gives currency to it, in fact warrants its genuineness in respect of the indorsee." The decisions proceed upon the principle that the indorser warrants the title and genuineness of the paper he transfers ; and that when prosecuted upon his contract of indorsement, he is estopped from denying the existence, legality or validity of the contract which he has assigned for the purpose of defeating his own liability. 7 Where the title fails, he is answerable independent 1 Herrick v. Whitney, 15 John. R, 210; 1G id., 201; 5 Wend., 181. 1 Shaver v. Ehle, 1G John. R, 201 ; Delaware Bk. v. Jarvis, 20 N. Y. Rep., 22G. 'Murray v. Judah, 16 Cowen R, 484; ante, 1SS-19I. 4 Btirrill v. Smith, 7 Pick. R., 29i. ■ McKnight v. Wheeler, G Hill R., 492; Edwards v. Dick, 4 Barn, k A1<1., 212. Tho indorsee might recover of his indorser in such a case for money had and received. In- galls v. Lee, 9 Barb. R., G47. ' 7 Pick. R., 294; Erwin v. Downs, 15 ST. Y. Rep., 575; 20 id., 22G. ' G Hill R., 492 ; 4 Barn, k Aid., 212: 7 Pick., 294. Mr. J. Story states the impli- Ufl of contracts resulting from the act of indocsoou at much more strongly than eitlicr Mr. Chitty or Mr. Bayley. Tho latter says, that •'an Indorsement is no warranty that the prior indorsements are genuine. At least it is not, in tho caso of a person who has tin: suine means of judging as the indorser, and who asei these means, and judges for himself." Bayley on Bills, ch. 5, § 3 ; seo McGregor v. Rhodoe, 3G Eng. Law and Iv[., 144. EDW 35 27-i BILLS OF EXCHANGE AND PROMISSORY NOTES. Of his contract of indorsement ; ' in most other cases he is respon- sible as an indorser. 3 The acceptor of a draft admits the genuineness of the drawer's signature ; but neither acceptance nor payment is, under any cir- cumstances, an admission by which he is concluded, that the first or any other indorsees name is genuine. 3 He is supposed to know the handwriting of his immediate correspondent. On the same principle, the holder of a bill is supposed to know the handwriting of the indorser who transfers the bill to him : and consequently, when he negotiates it or procures it to be discounted, he does by that act plainly affirm that the indorsement is genuine, so that the bill may be negotiated by delivery/ * The party assuming to transfer a negotiable instrument, thereby asserts it to be genuine, and is bound to make his assertion good. An exchange broker sells a bill of exchange pur- porting to be drawn by a commercial banking company, and does not mention to the purchaser the name of the principal for whom he acts ; the bill turns out to be a forgery ; and the broker is held answerable for the money received on the sale. We are satisfied, say the court, that the rule of law which governs the case is this : That where a person sells property, stating that he acts for another but does not disclose the name of his principal, he makes himself responsible to the purchaser in any way in which the actual prin- cipal would be liable ; but that he may exonerate himself from such liability by showing a payment over to his principal, or other special circumstances attending the transaction proving that it would be inequitable, as between the parties, to hold him responsible.' 1 16 John. R., 201 ; Jones v. Rydc, 5 Taunt., 488 ; Bruce v. Bruce, 1 Marshall, 157 ; 1 Hill, 287 ; 6 Mass., 182, 321; 2 John., 455; 5 Conn., 71. 2 6 Hill R., 492; 4 Barn. & Aid., 212; 7 Pick., 294. One who transfers a note without indorsement impliedly warrants that it is valid so far at least as he has been connected with its origin, that it is not to his knowledge void for usury. Delaware Bk. v. Jarvis. 20 N. Y. Rep., 22G. 3 Canal Bank v. Bank of Albany, 1 Hill R., 287. In this case, it appeared that tha indorsement in the liamo of the payee was a forgery ; and the acceptor having paid it supposing it to be indorsed by the payee, recovered back the amount paid. The acceptor must act promptly; Mather v. Maidston, 37 Eng. Law and Eq., 335. * Coggill v. The American Exchange Bank, 1 Comst. R., 113. In this case tho drawers presented the bill with the name of the payee indorsed upon it for discount^ and though the name of tho payee was a forgery, it was held that the title to tho bill passed to the bank discounting it. 6 Morrison v. Currie, 4 Duer Sup. Ct. R., 79; see also Houghton v. Adams, 18 Barb. R., 545, as to the effect of selling the notes of an insolvent bank, where neither party knows that the bank has failed. Ante, 188, 189. INDORSEMENT AND TRANSFER. 275 It follows from the conditional nature of the indorsees under- taking that a payment of the note by the maker or by either of the prior indorsees, by the acceptor of the bill or by either of the prior parties liable thereon, is a fulfillment of his contract — or a discharge of his obligation. 1 A release of the acceptor, or of a prior indorser, discharges him. 3 A valid agreement with the ac- ceptor, giving him further time for payment, works the same result.* But the acceptance by the holder of a note or bill overdue, of another note made by a third person payable at a future day as collateral security, on an agreement that the taking of such secu- rity shall not prejudice the rights of the holder against the maker and indorser, nor prevent the commencement of a suit, if ordered by the indorser, is not such a valid agreement to give the maker time * for payment as will operate to discharge the indorser. 4 ^ 0QO Mere indulgence extended to the maker will not have the effect to discharge the indorser, though granted on the reception of new securities accompanied by a general request for indulgence. There must be a valid common law agreement to give time, founded upon a good consideration, or it will not operate as a discharge.' The same rule applies, whether the note be indorsed by the payee or a subsequent holder through whom the title passes in the usual form, or by a third person ; provided he stands in the rela- tion of a surety to the maker of the note. 6 In one sense the indorser is not entitled to the privileges of a surety : 7 it is his duty to take up the note when it is dishonored, and if he neglects to do so he cannot complain of the holder for not taking steps to insure its collection. 8 In respect to the person who stands fully in 1 1 Cowcn R., 395; 17 Mass., 615; Davis v. Miller, 14 Gratt. (Va.), 1. Payment by an indorser discharges only subsequent indorsers ; tho noto remains valid against prior parties. French v. Jarvis, 20 Conn., 347. a 9 Mottram v. Mills, 2 Sand. R, 189; Newcomb v. Rayner, 21 Wend., 103; 12 "Wend. It., 115. 1 7 Wend. R, 200. A valid agreement to delay or extend tho time of payment, even after judgment against all the parties, will in equity dischargo the surety, an accommodation indorser, the agreement being made without his consent. Storms v. Thorn, 3 Barb., 314; and :n law also; La Fargo v. Ifeaton, 11 Barb., 159, and cases there cited. 4 Bailey v. Baldwin, 7 Wend. R., 289. * Bank of Utica v. Ivos, 17 Wend. It., 501; Agricultural Bank v. Bishop, 6 Gray, 317. * Bank of Orleans v. Barry, 1 Denio R., 11G ; 13 Wend., 375. f 5 Barb. It., 402, 463. * 17 Wend., 501; 1 Denio It., 11C; 5 Barb. R. ( 463; G Wend., C13; 8 id., 199. BILLS OF EXCHANGE AND PROMISSORY NOTES. the relation of a surety, the rule is that the principal contract can- not be varied without his consent : the surety is entitled to pay the. debt when it becomes due, or he may call upon the creditor to enforce his demand against the principal debtor. On paying the debt, he is entitled to the creditor's place by substitution ; and if he creditor, by agreement with the principal debtor, without the surety's consent, has disabled himself from suing, when he would otherwise have been entitled to sue under the original contract, or has deprived the surety on his paying the debt, from having imme- diate recourse to his principal, the contract is varied to his prejudice, and he is consequently discharged. 1 The indorser cannot, like a surety, call upon the holder of the note to proceed and collect it of the maker ; " for the in- dorser, * though in the nature of a surety, is answerable upon an independent contract, and it is his duty to take up the note when dishonored." a An accommodation indorser stands in the relation of a surety towards the party for whose accommoda- tion the indorsement is made, and may recover against him the costs to which he has been subjected ; 3 but he does not thereby lose the character of an indorser, as respects the holder of the note.* In like manner, though a person signs a note or sub- scribes his name under that of the drawer of a bill of exchange as a surety, he is responsible to the holder of the paper as a drawer ; and if the drawee accepts a bill so drawn without funds, he may recover for money had and received against both the parties, prin- cipal and surety. 6 But as between the principal and surety, the latter is entitled to protection in the character of a surety ;° and his relation as such is to be established as a question of fact ; if he puts his name to a joint and several promissory note, under that of two 1 2 John. Cli. It., 5G0; 9 Cowcn It., 206; Pain v. Packard, 13 John. R., 174. Ono who signs a note with another as surety, has a right to call upon the creditor to pro- ceed and collect the note of the principal debtor, and if he refuses to do so and delays until the principal debtor becomes insolvent, the surety is discharged. King v. Bald- win, 17 John. It., 384. Ante, 244. 1 Pain v. Packard, 13 John. R., 174; Trimble v. Thome, 16 John. R., 162; "Warner v. Beardsley, 8 "Wend. R., 194. • Baker v. Martin, 3 Barb. R., 634; 15 John. R., 273; 7 Bing. R., 217 ; 8 Barn. & Crcs., 407. 4 Bradford v. Corey, 5 Barb. R, 461. The indorser in this case added to his signa ture the word "surety." See Sisson v. Barrett, 2 Comst. R., 406. • Suydam v. Westfall, 2 Denio R., 205 ; Dickerson v. Turner, 15Ind., 4. • Harris v. Warner, 13 "Wend R., 400. INDORSEMENT AND TRANSFER. «277 others, adding the word surety, it must be shown whether he signs as surety for one or both. 1 One of the makers of such a note does not by adding the word surety to his signature thereby limit his responsibility, nor alter the nature of the contract ; he is liable thereon under ordinary circum- stances for the face of the note, and may be sued upon it either severally or jointly with the other makers. 3 Where the surety has paid the money on his principal's debt, or •satisfied the debt, the law implies an undertaking on the part of the latter to refund the amount paid, and it was formerly * held that the proper form of action was indebitatus assumpsit for mone3 r paid.' The holder of a dishonored bill of exchange has a right of action 'against the acceptor, the drawer and each of the indorsers who have been properly charged ; and the holder of a dishonored note has a right of action against the maker and each of the indorsers whose liability has been fixed by demand and notice. But the drawer and indorsers are so far regarded in the light of sureties to the maker and acceptor that they are discharged by the holder's accord and satisfaction of the maker's or acceptor's liability. 4 And if an indorser takes up a note, and petitions, as a creditor to the amount of the note, for the maker's discharge as an insolvent, the discharge of the maker discharges the prior indorsers also. 5 So, if the holder agrees to receive from the maker of a note, or from an indorser, other securities, and extend the time of payment, he thereby discharges all subsequent indorsers. 6 As long as the holder remains passive, all his remedies remain ; and if any of the parties are discharged by the act of law. the holder is not prejudiced as to the others. But the parties are all 1 2 Comst. R., 406. * Cobb v. Titus, 10 N. Y. Rep. (G Seld.), 198, 200; if a firm sign such a note, it is to be treated as one party; Van Zinc v. Crane, 1 Wend., 524; as to the effect of tho judgment against some of the parties sued jointly; Robertson v. Smith, 18 John. R., 459; but see Code § 120. Ante, 219, and post, note GG5. * Powell v. Smith, S.John. R., 249; Witherby v. Mann, 11 John. R., 518. * Douglass v. White, 3 Barb. Oh. R., 621, * Lynch v. Reynolds, 1G John. R., 41. * Myers v. Wells, 6 Hill R., 463; 21 Wend. R., 103; 2 Sand. R., ISO. But taking ft bend and warrant of attorney from an indorser, or a cognovit for a judgment, and giving a stipulation to delay issuing an execution for a certain length of time, not however, extending beyond the time when the judgment might have been obtained on a litigation, will not work a discharge or the indorser. Hallctt v. Holmes, 18 John R., 28; Sizer v. Ileaeoek, 23 Wend., 81. 27& BILLS OF EXCHANGE AND TKOMISSORY NOTES. responsible for the payment of the same debt, and if the holder enter into an agreement with a prior indorser in the morning, not to sue him for a certain period of time, and could then oblige a subsequent indorser in the evening to pay the debt, the latter must immediately resort to the very person for payment, to whom the older has pledged his faith that he shall not be sued. 1 To avoid such an absurdity the law holds valid the agreement made by the holder extending * the time of payment, and declares it such an alteration of the original contract as discharges the indorser. 8 But the law does not permit an invalid agreement to have that effect. 3 , Nor does an agreement made with an indorser, giving him further time for payment, discharge either of the prior parties to the note or bill.* Nor is the rule altered by the fact that the • paper was made for the accommodation of the indorser, at whose instance the time of payment was postponed.- 6 The liabi- lity of the prior indorser being once fixed, it is his duty to take up the note or bill at once ; and if he neglects to do so, he cannot complain of the holder for delaying, or agreeing with a subsequent indorser, to extend the time of payment ; because he does not thereby suffer any prejudice. 6 1 Per Lord Eldon, in English v. Darby, 2 B. & P., 62. Taking a new note from the rirst indorser payable at a future day. with additional security, discharges the second indorser; Kelty v. Jenkins, 1 Hilt., 73 ; Piatt v. Stark, 2 Hilt., 399. 3 9 Cowen R., 206 ; Curia per Savage, C. J. In this court, the maker is considered the principal debtor, and the indorser as a surety ; and the surety is bound by the terms of his contract. If the creditor, by agreement with the principal debtor, with- out consent of the surety, varies these terms by enlarging the time of performance, the surety is discharged; for he is injured, and his risk is increased. 3 Hall v. Constant, 2 Hall, 185; Planter's Bank v. Sellman. 2 Gill & John., 230; 12 Wheat, 554. 4 Murray v. Judah, 6 Cowen R., 484; Fentum v. Peacock, 5 Taunt., 192. • Walker v. Bank of Montgomery County, 12 Serg. & R., 382. Post, 569. Of course the maker of a note or the acceptor of a bill for value, is not discharged by giving time to an indorser or drawer; Atlantic Fire k M. Ins. Co. v. Boies, 6 Duer, 583; 7 Paige, 9; 20 Wend., 510; as against the acceptor and indorser, both for accommo- dation of the drawer, a discharge of the acceptor discharges also the indorser. Doug- lass v. White, 3 Barb. Ch, 621 ; and it has been repeatedly held that an accommodation acceptor is to be regarded in courts of law as the principal debtor, and that he is not discharged by giving time to the party who ought as between themselves to pay the bill; that the acceptor of a bill and the maker of a note stand in the same relation to the holder. Diversy v. Moss, 22 111., 330; Wallace v. McConnell, 13 Peters, 136; Hans- brough v. Gray, 3 Gratt., 356 ; Murray v. Judah, 6 Cowen, 492; Corwiu Bank v. Cun- ningham, 24 Pick., 214, post, text and notes, 569-573. 6 Cowen R., 484. LOSS OF NEGOTIABLE PAPEK. 279 LOSS OF NEGOTIABLE PAPER. The loss of negotiable paper transferable by mere delivery, pre- cludes the owner from maintaining an action at law thereon. 1 This rule of the common law is founded on the principle that the party liable thereon cannot be called upon to pay the note or bill unless he is adequately protected against a second demand for the same debt ; a protection which it was formerly supposed only a court of equity could properly provide for. 8 Under the statutes of this state : " In any suit founded upon any negotiable promissory note or bill of exchange, or in * 9 n A which *such note, if produced, might be allowed as a set- off in the defense of any suit, if it appear on the trial that such note or bill was lost while it belonged to the party claiming the amount due thereon, parol or other evidence of the contents thereof may be given, ofi such trial, and notwithstanding such note or bill was negotiable, such party shall be entitled to recover the amount due thereon, as if such note or bill had been produced. But to entitle a party to such recovery, he shall execute a bond to the adverse party, in a penalty at least double the amount of such note or bill, with two sureties, to be approved by the court in which the trial shall be had, conditioned to indemnify the adverse party, his heirs and personal representatives, against all claims by any other person on account of such note or bill, and against all costs and expenses by reason of such claim." * This statute, it will be observed, applies in terms only to nego- tiable paper that has been lost ; it does not apply unless it is shown affirmatively that the paper was negotiable ; 2 nor does it apply where the instrument has been deliberately and voluntarily destroyed, and there is nothing in the case accounting for, or affording any explanation of the act, consistent with an honest or 1 Pintard v. Tackington, 10 John. R., 104; Rowley v. Ball, 3 Cowen R., 303 ; Kirby v. Sisson, 2 "Wend., 550; Crowe v. Clay, 25 Eng. Law and Eq. R., 451. Destruction by fire does not; Des Arts v. Leggett, 16 N. Y. Rep.. 582, 586, 588. 1 Pierson v. Hutchinson, 2 Gampb., 211; G Vesey, jun.. 812. ' 2 R. S., 503, 3d ed. When a party to the action is allowed to prove by his own oath the loss of any instrument, the adverse party may bo sworn to disprove the losa or account for the instrument. A negotiable check is a bill of exchange within tho statute. Jacks v. Darrin, 3 E. D. Smith, 548. The giving of tho bond is an essential pre-roquisito to a recovery on a lost note. Desmond v. Rice, 1 Hilt., 530. * 10 John. R., 101 ; 3 Wend., •': 1 1. The court will not prcsumo a lost note to have been negotiable. Moore v. Fall, 42 Maine, 450. 280 BILLS OF EXCHANGE AND PKOMISSORY NOTES. justifiable purpose. 1 Though supposed to be lost, a negotiable instrument does not fall either under the doctrine that calls for indemnity with a view to proceedings in equity, or under the above provisions of the statute, if found and produced on the trial ; for the statute applies only to the remedy, and in no way affects the rights or liabilities of the parties arising out of the proceedings to charge the drawer or indorser. These stand upon the principles of commercial law, the same as before the enactment; and any ^™~ defense that might before have been available at law, if the * note had not been lost, or in equity, if lost, must be equally so since the statute. 2 On account of its transferable character, the parties liable on a negotiable note or bill of exchange have a right to demand an indemnity against any claim founded on the lost instrument. On the payment of an ordinary debt, the debtor "has no right to demand a receipt or voucher for its payment ; 3 and yet the demand is under our law assignable, so as to vest a right of recovery in the assignee. True, the law protects him in the act of paying it to his creditor, notwithstanding it has been assigned, where he pays in good faith without notice of the assignment ; though it does not protect him against the chances of a law suit.' Follow- ing this analogy, it has been held in a neighboring state that the owner of a negotiable note lost after it became due, may recover upon it without producing the note; on the ground that a dis- honored note can only be transferred subject to the equities exist- ing between the original parties. 5 The rule as held in this state 1 Blade v. Noland, 12 Wend. R., 173. * Smith v. Rockwell, 2 Hill R., 482 ; Streater v. Bank of Cape Fear, 2 Jones Eq., 31. ' Parsons on Contr., 155, 15G; 5 Esp. R., 48. In England, the creditor is required by statute to give a written receipt for the payment of mouey, under a penalty of ten pounds; but the debtor is not permitted to demand a receipt as a condition of paying his debt. 43 Geo. III. c. 126, §5; Laing v. Meader, 1 C. & P., 257; but see Richardson v. Jackson, 8 M & W„ 298. * Muir v. Schenck, 3 Hill R., 228. * Jones v. Fales, 5 Mass. R., 101. There were two trials in this action, and the notes were produced and proved at the first, but lost before the second trial, when the plaintiff was allowed to prove their contents and recover on them. Sloo v. Roberts, 7 Ind., 128. A note payable to A. B. or order, which has not been indorsed by the payee, or which has been specially indorsed by the payee to the plaintiff, is not in that condi- tion considered negotiable to tho maker's prejudice. Moore v. Fall, 42 Maine, 450. Nor is a bank bill which has been severed. Union Bank v. Warren, 4 Sneed (Tenn.), LOSS OF XEGOTIAI5LE TAPER. 281 and in England is different : if the action be upon a negotiable note, such as a note payable to bearer, or to order and indorsed in blank, and afterwards lost or stolen, the plaintiff cannot recover by proving the execution of the nti#, his title to it, and that it was lost after it became due, unless he proceeds under the statute.' *In an English case, where an action was brought by the • *298 indorsee of a bill of exchange against the acceptor, and it was shown that the plaintiff was the holder of the bill, and that it was overdue when it was lost ; that the plaintiff then offered the defendant an indsmnity, but he refused to pay the amount, unless the bill was produced and delivered up to him ; Lord Tenterden 0. J., delivering the opinion of the court, snys : " Amid conflicting opinions, the proper course is, to revert to the principle of these actions on bills of exchange, and to pronounce such a decision as may best conform thereto. Now, the principle upon which all such actions are founded is the custom of merchants. The general rule of the English law does not allow a suit by the assignee of a chose in action. The custom of merchants, considered as a part of the law, furnishes, in this case, an exception to the general rule. What, then, is the custom in this respect ? It is that the holder of the bill shall present the instrument, at its maturity, to the acceptor, demand payment of its amount, and upon receipt of the money deliver up the bill. The acceptor paying the bill has a right to the possession of the instrument for his own security, and as his voucher and discharge pro tanto in his account with the drawer. If, upon an offer of payment, the holder should refuse to deliver up the bill, can it be doubted that the acceptor might retract his offer or retain his money ? And if this be the right of an acceptor, ready to pay at the maturity of the bill, must not this right remain the same if, though not ready at the time, he is ready afterwards? and can his right be varied if the payment is to be made under a compulsory process of law ? The foundation of his right, his own security, his voucher, 1 Rowley v. Ball, 3 Cowcn R., 303; Kirby v. Sisson, 2 "Wend., 550; Crowo v. Clay, 18 Eng. L. and Eq., 514; S. C, 25 Eng. L. and Eq. R., 451. This was an action for poods sold ; and it was held in it that a plea that a hill of exchange had been accepted by the defendant for them and lost, was good, though it did not allcgo that the- bill was overdue, or that the plaintiff had indorsed it. 167. And it has been held that a recovery may ho had on a lost noto where tho defendant is protected by the statute of limitations from futuro liability thereon. Torrey v. Fobs, 4 Maine, 74. Edw. 3G 282 BILLS OF EXCHANGE AND PROMISSORY NOTES. and his discharge toward the drawer, remain unchanged. As far as regards his voucher and discharge toward the drawer, it will be the same whether the instrument has been destroyed or mislaid. With respect to his own security against a demand by another holder, there may be a difference. But how is he to be assured of the fact, either of the loss or destruction of the bill ? Is he to rely upon the assertion of the holder, or to defend an action at the qq * peril of costs ? And if the bill should afterwards appear and a suit be brought against him by another holder, a fact not absolutely improbable in the case of a lost bill, is he to seek for the witnesses to prove the loss, and to prove that the new plaintiff must have obtained it after it became due ? Has the holder a right, by his own negligence or misfortune, to cast his burden upon the acceptor, even as a punishment for not discharging the bill on the day it became due ? We think the custom of mer- chants does not authorize us to say that this is the law. Is the holder, then, without remedy ? Not wholly so. He may tender sufficient indemnity to the acceptor, and if it be refused, he may enforce payment thereupon in a court of equity. And this is agreeable to the mercantile law of other countries. In the modern Code de Commerce of France, this is distinctly provided ; and the provision is not new in the law of that country, for it is found also in the Ordonnance de Commerce of Louis the Fourteenth. 1 All authorities agree that the party called upon to pay the amount due upon a lost negotiable instrument, which is transfera- ble by mere delivery, is entitled to demand a reasonable acquittance and discharge from the obligation. 3 Where the strict common law rule prevails, as in this state before the enactment of the statute, it is on the ground that it is better for the parties to go into a court of equity, where all the circumstances of the loss can be better investigated, and a suitable indemnity better estimated and adjusted. 3 Where a different rule prevails, a recovery is allowed, in the case of a negotiable note lost before it became due, on condition that, the plaintiff files or executes and delivers to the defendant a sufficient bond of indemnity ; so that in truth the real distinction between the two rules is one of practice rather than 1 Hansard v. Robinson, 1 Barn, k Cres., 90, decided in 1827; "Wilder v. Seelye, 8 Barb., 409. 1 Fales v. Russell, 16 Pick. R., 315 ; 7 Mass. R, 486; 5 id., 101 ; 1 Hall R, 562. * 3 Cowen R., 301 ; 2 "Wend., 550. LOSS OF NEGOTIABLE PAPER. 283 principla 1 Lord Tenterden assumes that according to # „^ fl *the custom of merchants, the acceptor of a bill lost after it fell due has a right to demand indemnity the same as if it had been lost before it became due ; in other words, that he is entitled to protection, not only against his liability on the instrument, but also against the burden of any legal contest on the bill. Our 1 In England, the owner of a lost bill must give security, though it was lost when overdue ; and the same rule has been held here. 7 Barn & Cres., 90 ; 3 Cowen R., 301. Not so in Massachusetts. In Fales v. Russell, Chief Justice Shaw says : " The objection to the plaintiff's recovery is, that they cannot produce and file the notes. Is this conclusion correct? The delivery up of notes and other negotiable securities, upon payment of them, and the filing of them in court, on obtaining judgment, are not conditions precedent of the right to recover in either case. That right depends upon other groumds. The delivery up of the notes in the one case, and the filing them in tho other, is only that reasonable acquittance and discharge, adapted to the nature of the obligation performed, which any man, upon making satisfaction of a demand upon him, is reasonably entitled to have. Inasmuch as it is payable to any holder, the actual sur- render of the security, upon payment, is the proper and suitable acquittance. I have said that the right to recover depends upon other grounds, to wit: that the note was made by the defendants, payable to the payee or order ; that it was duly indorsed by him to the plaintiff, who became the bona fide holder. All these must appear, and, in general, the presence of the note is necessary to enable the plaintiff to prove them ; but the}' may be proved without producing the note, and in the present case they are admit- ted. The plaintiffs having proved title in themselves, by a well known rule of evidence, such title will*be presumed to continue, till a transfer, release or satisfaction is shown. Upon a case like this, where a note has been lost after it was due, it has often been held that a plaintiff is entitled to recover without tho note. Jones v. Fales, 5 Mass., 101. But the title is, in fact, the same; the only difference is, that the defendants are exposed to greater risk in the one case than in the other, because, if lost before it was due, there is a possibility that it may have been negotiated to a bona fide holder, in tho ordinary and regular course of business, before it was due. But as this does not affect tho plaintiff's title or his actual and real interest in the debt, and in the security, according to its tenor, but only leaves the defendant exposed to a hazard, which, according to mercantile law and the usage of trade, it is not understood that he is to take, we think he ought to be protected; and this court, as a court of law, holding a just regulating power over tlie judgments and proceedings before them, have authority to prescribe an equivalent security to the defendants, by a sufficient and reasonable indemnity. * * * Considering it in this view, that the production of the note is not essential to the plaintiff's title, but only to the defendant's reasonable security, it appears to us that the objection, that a court of law has no jurisdiction to order, or to judge of the sufficiency of an indemnity, is rather ideal than solid, and Ought not to prevail when the consequence would be an entire failure of justice." Judgment for plaintiffs on filing a sufficient bond of indemnity with sureties. When the statute requires it. the giving of a bond of indemnity is an essential pre- requisite to a recovery. Desmond v. Rice, 1 I lilt., 530. In the absence of a statute, t.h'- tender <«f a Bufnoieni bond, authorizes a recovery when the not,'- is not produced. Alniy v. Red, 10 Gush., 421. So in the case of u lost bank bill Robinson v. Bank of Darlen, IS Geo., 65. 284 BILLS OP EXCHANGE AND PROMISSORY NOTES. statute evidently proceeds upon the same principle ; for it makes # oai no distinction between a note or bill lost * before, and one lost after it fell due ; and it requires a bond of indemnity, not only against any claim that may be founded on the paper, but also against all costs and expenses by reason of such claim. It is clear from the reason of the rule, that the parties liable on a negotiable note or bill of exchange that has been lost, cannot under all circumstances demand an indemnity before making pay- ment, or as a condition of paying the demand. If it is shown, for instance, that the note in suit was in the custody of a person acting as the agent of the plaintiff, and that person is called and testifies that he has mislaid the note and cannot find it after having made diligent search, that it has not been delivered or put into the hands of any other person, and that he is confident that it has been destroyed : it has been held that this is evidence sufficient to carry the case to the jury, on the question whether or not the note is still in existence, or has been destroyed. 1 It is enough if it be shown that the defendant, the maker of the note, cannot be again called upon for its payment. 2 Evidence that shows a note or bill to have been accidentally destroyed, or burned up under circumstances repelling any fraudu- lent design on the part of the holder, puts the plaintiff in the same situation in relation to the parties liable thereon, which he occupies when he brings an action on a lost note that was not negotiable or not transferable by delivery. 3 And notwithstanding the reason- ing of Lord Tenterden, already quoted, maintains the right of the party called upon to pay the bill, to demand the surrender of the bill as his voucher, it is pretty well settled that the owner of the instrument may recover thereon whenever it appears that it was not indorsed *by him, and that it was so drawn or in- dorsed to him at the time it was lost that it could not be 1 Swift v. Stevens, 8 Conn. R., 331 ; see also Des Arts v. Leggett, 5 Duer, 15G. 7 Jones v. Fales, 5 Mass. R., 101, was the case of a note lost from the files of the court, after one trial had been had in the case; and Rcnner v. The Bank of Columbia, 9 Wheat., 581, was a case where the note was in court a few days before, and proved on a trial against the maker, and afterwards mislaid. Templin v. Krahn, 3 Ind., 373; 5 Duer, 156. * Blade v. Noland, 12 "Wend. R., 173. It is not necessary to show that the instru- ment was not lost by the negligence or laches of the plaintiff or his attorney, to entitle him to prove the contents. Livingston v. Rogers, 2 John. Cas., 488; 16 N. Y. Rep., 582. LOSS OF NEGOTIABLE PAPER. » 283 transferred without his indorsement. 1 The reason is, that a hill or note so drawn or indorsed can never rise up in judgment against the party called upon to pay it ; and neither the finder of it nor a thief who has stolen it can acquire or transfer a title to the bill or note, by sale or delivery ; and it is well known that a forged in- dorsement conveys no property or interest in the instrument. So that in such cases the loss of the bill or note leaves the parties in the same condition as if the paper had not been negotiable. Now the loss of a promissory note, check or draft that was not negotiable, does not prevent the owner from proving the contents and recovering thereon in an action at law. 2 And where a note is shown to be lost or destroyed, and the fact does not appear whether it was negotiable or not, the court will not presume it to have been negotiable ; or if negotiable, that it had been indorsed in blank.' But where a negotiable note is given for money lent, for goods sold, or for a debt due, the creditor is not allowed to recover on the original contract without producing and canceling the note on the trial, or proving that it has been destroyed or lost uuder circumstances showing that the maker cannot be again called upon to pay it/ This is on the principle that the acceptance of negotiable paper on account of the debt, is prima facie evidence of satisfaction. * which must be rebutted by producing: the note to be canceled or giving some account of it showing the creditor's right to recover. In many cases it is not possible, nor is it necessary to give direct and positive evidence of the destruction or loss of a bill or note ; nevertheless the party seeking to recover upon it as a lost instru- 1 Depew t. Whcelan, C Blackf., 485; Rolt v. Watson, 4 Bing, 273. In this caso the defendant had accepted a bill payable to plaintiff for goods sold, and the plaintiff not having negotiated, nor indorsed the bill, lost it and then brought an action for the purchase money of the goods, and was allowed to recover at law; see also Moore v. Fall, 12 Maine-, 450. In Champion v. Terry, the bill had been indorsed in blank and lost, and a different rule was held. 3 B. & B., 295; 10 John. R., 104; 3 Cowen R., 303; 2 Wend., 550 ; Wend., 276; Long v. Bailie, 2 Campb., 211. In this case the hill was specially indorsed to the plaintiff, and when lost had not been indorsed by li'.n. and be had a verdict. J 10 John, li., 101; 2 Hill R., 482; Charnley v. Grundy, 25 Kng. Law and Eg. EL 318. • :: Wend., 344; 10 John. R, 104. 4 Holmes k Drake v. D'Camp, 1 John. R., .!•!; Fierson v. Hutchinson, 2 Campb., 211 ; Dangerfleld v. Wilby, 4 Esp. R., IjBftj Angel v. Feltou, 8 John. R., MO; Burdick 'uccn. 15 id., 217; Hughes v. Wheeler, 8 Cowen U., 77; 10 John., 101; Fruncia v. Del Banco, 2 Duer, 133; 25 Law and Eg. R., 451. 286 BILLS* OF EXCHANGE AND PROMISSORY - NOTES. ment must establish the fact that it has been destined or lost, in such a condition that no person can acquire the title to it as against the defendant. 1 Proof that the defendant, the acceptor, has wrong- fully obtained the possession of it, is sufficient to authorize a recovery against him at law on the bill. 3 Thus, where the plain- tiff placed a bill of exchange in the hands of his attorney for collection, and he went out of his office leaving the bill on his table, and on his return the bill was missing, and a clerk proved that during the attorney's absence, the defendant called to ask for time and was shown into the attorney's office where the bill was left, where he remained a short time and then left, and the bill could not afterwards be found, and a notice was given to the defendant to produce the bill ; it was left to the jury to presume whether or not the defendant had taken it away, and the plaintiff recovered without producing the bill, on proving its contents." Actual possession is not essential to a right of recovery. 4 On a well known and familiar principle, the plaintiff is bound to account for the non-production of the instrument before he can ask to in* troduce inferior and secondary evidence of its contents. Accord- ingly, where he shows that it has been destroyed, or burnt up by himself, he must go further and show that it was done under cir- cumstances that repel all inference of a fraudulent design on his part. 5 * Independent of the statute on the subject, the owner of a lost note or bill has a right to demand payment of it, on giving to the party liable a sufficient indemnity ; and, where payment is refused on a tender of ample indemnity, the owner may enforce the collection in a court of equity, and recover the costs of the proceeding." And it seems that an indorsee may file 1 Swift v. Stevens, 8 Conn. R., 331. * Smith v. McClure, 5 East., 477 ; 2 C.impb., 212; Decker v. Matthews, 2 Kernan It., 313 ; 10 John. R., 172. 1 5 East., 477 ; Chitty on Bills, 2G5. 4 Sehlen v. Fringle, 17 Barb., 454. Blade v. Nbland, 12 Wend. R., 173. A written instrument should be produced: 1 . To enable the court to give a right construction to it from the words. 2. To see that there are no material erasures or interlineations. 3. That any condition, limitation, or power of revocation, may be seen. Leyfield's case, 10 Coke, 93G; 2 John. Caa., 488; 2 Caines, 3G3; 10 John. R., 374; 11 id., 44G; 8 id., 149; 3 Cowen, 303; 8 id., 77; 3 Wend., 344; 8 East, 288. • WalmsW v. Child, 1 Vcs., sen., 338, 344; Toulmin v. Price, 5 Ves., 288; Tercesa v. Oeray, Finch's Rep., 301; 6 Ves., 812; 1G Ves., 430. In Burrows v. Goodhue, 1 [owa, 48, the complainant was required to pay costs of the suit. LOSS OF NEGOTIABLE PAPER. 287 his bill in equity against the acceptor, without making the drawer or prior indorsers parties to the action. 1 In England the owner of an inland bill, lost before due, has a right by statute to call for another bill of the same tenor, on giving security to indemnify against the lost bill. 3 But the court will not call on a party to renew or pay a lost bill without providing him with a satisfactory indemnity. 3 In the case of a foreign bill of exchange drawn in sets, if one part be lost by the drawee, or be by his mistake given to a wrong person or otherwise disposed of, so that the holder cannot have a return of the bill, either accepted or not accepted, it is said that the drawee is bound to give to the holder or to his order a pro- missory note for payment of the amount of the bill on the day it becomes due, on delivery of the second part, if it arrive in time ; if not, upon the note ; and that if the acceptor refuse to give the note, the holder should immediately protest for non-acceptance, and when due demand the money though he have neither note nor bill ; and that if payment be refused, a protest must be regu- larly made for non-payment. 4 * The statute of this state # QA p- declares, that every person upon whom a bill of exchange is drawn, and to whom the same is delivered for acceptance, who shall destroy such bill, or refuse, within twenty-four hours after such delivery, or within such other period as the holder may allow, to return the bill accepted or non-accepted, to the holder, shall be deemed to have accepted the same. 6 Where an indorsed note is lost by the holder, tender of indem- nity should be made to both maker and indorser at the time of demand and notice ; because, as the former is not bound to make payment without the production of the note, or indemnity in case of loss, for that very reason payment ought not to be required of the latter till the proper steps have been taken to secure his imme- diate recourse against his principal. Besides, the indorsees own 1 Davies v. Dodd, 4 Price, 176; Macartney v. Graham, 2 Sim., 285. * 9 and 10 Wm.III, c. 17, which is applicable to promissory notes. Bylos on Bills, 302. * Byles on Bills, 302. * Beawea pL, 188; Chitty on Bills, 270. Foreign bills, as wo have seen, aro drawn in several parts or sets, in order that tho holder, having lost ono by miscarriage or Otherwise, may receive liis money on the other; each part containing a direction to the drawee to pay on condition tho others have not been paid. And in an action on the hill, the part protested for non-acceptance must bo produced, to guard against a ■nbsequent claim by an acceptor supra protest. Wells v. Whitehead, 15 Wend., 527. » 2 R. B., 53, 3d ed. 288 BILLS OF EXCHANGE AND PROMISSORY NOTES. liability upon the paper demands indemnity to himself, which should be given without delay, so that he may be in a situation to pay the demand at any time after the notice and look to the maker. 1 The same remark may be made in respect to the drawer and indorsers of a bill of exchange. . The loss of a bill or negotiable note does not change the contract entered into by the several parties to the instrument, in any mate- rial particular : its only effect is to give the parties called upon to pay, a right to demand security against any further or different liability than that which they have assumed." The mode of demanding payment is necessarily changed, but the act is not dis- pensed with. The owner cannot present the bill or note for payment, as the holder is ordinarily required to do ; but he can make a valid demand of payment by tendering to the maker or acceptor a pro- per indemnity, even where he refuses to pay on the ground that n« the note, being lost, is not presented. 3 And the indorser * cannot complain that a demand of payment is defective, which the law declares legal and valid ; * but to charge him as an indorser, it is in all cases incumbent on the holder to give him notice of its dishonor/ In a late action on a negotiable promis- sory note against the makers and indorser, the demand was made, and notice of non-payment given, without any objection being interposed by any of the parties on account of the absence of the note ; no bond of indemnity was offered to or requested by the makers or indorser, and it did not appear that either knew of the loss till the suit was commenced ; and the note being found before the trial, the proceedings were held sufficient to charge the indorser, and judgment was rendered for the plaintiff." It makes no difference whether a bill has been accidentally des- troyed or lost by the owner ; it is incumbent upon him in both 1 Smith v. Rockwell, 2 Hill R., 482. per Ch. J. Nelson ; see also 8 Barb. R., 408. * 7 Barn. & Cres., 90 ; Chitty on Bills, 2G3 ; Story on Notes. § 290. * Freeman v. Boynton, 7 Mass. R., 4S:J ; Woodbridge v. Brigham, 13 Mass. R., 557. When a note is payable at a particular place, the general rule is that the holder must have the note there to be surrendered on payment ; and if the maker does not appear and pay it, notice may bo given to the indorser of non-payment. 4 Whitwell v. Johnson, 17 Mass. R., 419. It is tho usage of banks in Boston to send notice to their customers that a note has been deposited with tho bank for collections, where they are requested to call and pay it, and this is held a sufficient demand. ' Gilbert v. Dennis, 3 Metcalf, 495. This case involves the requisites of a good notice. * Smith v. Rockwell, above quoted. LOSS OF NEGOTIABLE rAPEK. 289 cases to make a regular demand of payment at the time it becomes due. and give due notice of non-payment to the drawer and indorsers, in the same manner as if the bill had not been lost or destroyed. 1 Having done this, the drawer and indorsers arc legally charged with liability en their respective contracts. And being so charged, the iudorser has a right to demand, on payment of the debt, secu- rity against the lost bill, so that he may have immediate recourse to the prior indorsers. On the same principle, the loser is bound to indemnify all the .parties responsible on the lost bill, against any claim to be founded on the instrument. 2 For this reason, where the bill has been several times negotiated and then lost, it may be more convenient to file a bill in equity against all the parties than to bring an action at law against one of * the indorsers. S5rtT J udgment recovered m an action against the acceptor ot a bill, or agaiust the maker of a note that has been lost, followed by satisfaction, is an adjustment of the whole transaction ; not so where a recovery is had against a party entitled to recover thereon against prior parties.' When the owner of bank bills cuts them in two parts for the purpose of transmission by mail, and sends them in separate letters or by different conveyances, and one half is lost and the other comes to hand, the owner is entitled to recover against the bank issuing them the fall amount of the bills, with interest from the day payment thereof was demanded. Severing the bills does not destroy the negotiability, so as to prevent its being restored by putting the parts again together ; but in their severed condition neither part is negotiable, so that it can ever come into the hands of a bonafiiJji holder. And, therefore, the owner of them is entitled to demand the face of the bills, the same as if they had been actually destroyed or had not been negotiable.* 1 Thackray v. Blnckett, 3 Campb., 101. Where the acceptor has accidentally des- troyed a bill, lie certainly can have no occasion to demand an indemnity. a Chitty on Bills. 203: Story on Promissory Notes, §§ 244, 290, 1 15. ' The statute of this state allows a party to recover in any suit founded upon a negotiable promissory note or bill of exchange, that baa been lust, on executing a bond to u the adverse party," conditioned to indemnify him against all claims, &c. But it has not been decided whether in an acti in against the iudorser of a lost bill, under the statute, the plaintill' is hound, also, to indemnify the prior indorsers and drawer of the bill, it having been accepted. 2 Hill K.. I I 4 Hinsdale v. The Bank of Orange, i; Wend., 378; Bank of Virginia v. Ward, G Man/., 100; Patten v. Bank of J wolina, 'i ETott & &fc0ord,484; Martin v. Bank ef r. S.. 4 Wash., 'i:,\\ ; \J. 0. Hank v. Sill, .0 Conn., Lft6; 1 Kind., 180. See, also, Union Bank v. Warren, 4 Sneed, 107. Edw 37 290 BILLS OF EXCHANGE AND PROMISSORY NOTES. Where a bill of exchange, a note or check, drawn payable to bearer, or to order, and indorsed in blank, is lost or stolen, the owner should, for his own protection, immediately give notice to all the parties not to pay the money thereon to any person but himself ; and he should publish a notice as extensively as possible, in the newspapers where that is the most ready and efficient mode of publication, cautioning all persons against taking or buying the lost or stolen paper. 1 Of course, *the notice should be explicit and definite in describing the lost instrument, as to date, amount, parties and time when payable." In the case of an accepted bill, the acceptor should be forthwith notified not to pay the bill to any person but the owner ; s in the case of a note, the same notice should be promptly given to the maker ; 4 and in the case of a check or an unaccepted draft, the drawee or the bank on which it was drawn should be directed not to accept or pay it on presentment. 6 The object of these precautions is to stop the payment and arrest the circulation of the paper, and thus afford the legal holder some opportunity of tracing and recovering his property. The conduct to be pursued by the loser should be determined with a view to the transferable quality of the paper, and the rule of law by which the title of a bona fide holder is maintained and defended, notwithstanding any defect in his chain of title. Having considered this principle in another connection, we shall speak of it here only in its relation to lost or stolen bills and notes. A bank note, though stolen, becomes the property of him who gives valu- able consideration for it, having no notice, or knowledge of the theft. Lord Mansfield : " Bank notes are treated as money, as cash, in the ordinary course and transaction of business, by the general consent of mankind ; which gives them the credit and cur- rency of money, to all intents and purposes. They are as much money as guineas themselves are ; or any other current coin that is used in common payments, as money or cash." 6 In legal effect, 1 Such -was the course pursued in Fales v. Russell, 16 Pick., 315. 9 Chitty on Bills, 253. ' Beckwith v. Corrall, 2 Car. & P., 2G1; 3 Bing., 144. * 16 Pick. 315 ; Story on Notes, § 382. 1 Chitty on Bills, 514. A banker must not pay after a notice that the check hag been lost, nor prematurely. c Miller v. Race, 1 Burr., 452. Bank notes are not like gcods, chattels or other Becurities, nor are they treated as such. LOSS OF NEGOTIABLE PAPER. 291 bank bills are negotiable paper, and being payable to bearer, are transferable like any similar note made by a private person. 1 * It was at one time held in England that the purchaser of a lost or stolen bill could not recover on it where he had not used reasonable caution, and had taken the bill under circum- stances which ought to have excited suspicion ; and the question presented to the jury in such case was, whether the party ivho took the lost or stolen instrument, took it under circumstances that ought to have excited the suspicion of a prudent and careful man? to which was sometimes added this, further question, whether the loser had used due diligence in giving explicit and immediate notice of his loss?* But this rule has been greatly modified, and it is now settled that the title of an indorsee for value can only be defeated by showing that he acted in bad faith in taking the bill ; and the true question for the jury is held to be, whether the purchaser took the bill in good faith. " Gross negligence may be evidence of mala fides, but it is not the same thing." s Ohief Justice Shaw states the doctrine on the subject, and the reason on which it is founded, as follows : The law in regard to bills of exchange and promissory notes is so framed as to give confidence and security to those who receive them for valuable consideration, in the ordinary course of business, when payable to bearer or indorsed in blank so as to be transferable by delivery ; 1 Hinsdale t. The Bank of Orange, 6 "Wend., 378. The title to a bank bill is to be established or impeached in the same manner as any other negotiable note. Solomons v. The Bank of England, 13 East., 135; 1 Hose, 99; 6 Munf., 1G9; G Conn., 106. So, also, a check payable "to the order of bills payable," is in effect payable to bearer. Willetts v. Phoenix Bank, 2 Duer, 121. * Gill v. Cubit, 3 B. & C, 466; 3 Bing., 444; 11 Moore, 335. * Goodman v. Tlarvey, 4 Ad. & El., 870. Lord Dexman, C. J.: "The question I offered to submit to the jury was whether the plaintiff had been guilty of gross neg- ligence or not. I believe wo are all of opinion that gross negligence only would not be a sufficient answer, where the party has given a consideration for tho bill. Gress negligence may bo evidence of mala fides, but is not the same thing. Wo have shaken off the last remnant of the contrary doctrine. Whero tho bill has passed to the plaintiff without any proof of bad faith in him, thero is no objection to his title." King v. Milson, 2 Campb., 5. Possession is prima facie evidence of title to nego- tiable instruments; therefore in trover for a bank note, it is not a prima facie caso for the plaintiff to prove that the note belonged to him, and that the defendant after- wards converted it. The most reliable test of good faith in the party taking negotia- ble paper, is the fact that he gives value for it. The want of duo care and caution will not defeat his title, unless it be such as to disprove the good faith and honesty of tho transaction. Steinhart v. Boker, 3 1 Barb., 136; Goodman v. ll.iruy, 1 Ad & EL, 870; Goodman v. Simonds, 20 How. U. S. ltcp., .'!03. 292 BILLS OF EXCHANGE AND LUOAIISSORY NOTES. and in general a party taking such a bill under such circumstances, has only to look to the credit of the parties to it, and the regula- rity and genuineness of the signatures and indorsements. So that if such a note or bill be made without consideration, or be lost or stolen, and afterwards negotiated * to one having no know- *310 ... ledge of these facts, for a valuable consideration in the usual course of business, his title is good and he shall be entitled to re- ceive the amount. 1 The credit which the law thus attributes to notes and bills of exchange that are transferable by delivery, arises mainly from the confidence inspired by actual custody and posses- sion, and the actual delivery of the security upon such negotiation. To so great an extent is this principle carried, that in regard to bank notes, and in most respects in regard to other bills and notes transferable by delivery, the title and possession are considered to be inseparable. And it will be presumed that the party thus in possession of a bill, holds it for value, until the contrary appears ; and the burden of proof is on the party impeaching his title." 3 The party in possession of a negotiable instrument is prima facie the owner of it ; 3 but as soon as it is shown to have been lost or stolen from the true owner, the presumption is changed, and he must then show not only what consideration he gave for it, 4 but also that he took the paper in good faith in the ordinary course of business ; after that the party resisting payment may undoubtedly reply, impeaching the good faith of the transaction ; which he may do by either direct or circumstantial evidence, that the plaintiff acted in bad faith in taking the bill. 6 This appears to be the order of the trial, notwithstanding the strong presumption in favor of the indorsee for value. The onus of proof to show that he came honestly hy the bill or note lies on the plaintiff; is cast upon him by proof of the instrument's having been lost by accident or theft.' 1 1 Burr., 452; Peacock v. Rhodes, 2 Doug., 633; Grant v. Vaughan, 3 Burr., 1516. 2 Wheeler v. Guild, 20 Pick. R, 550 ; Collins v. Martin, 1 Bos. & Pul., 648. » 2 Campb., 5 ; 4 Sand. R., 97. * Rees v. Marquis of Ileadfort, 2 Campb., 574. 6 3 Burr., 1516; see a review of the authorities on the subject, in Stalker v. McDo- nald, 6 Hill R., 93. c Saunders on Pleading and Evidence, 628, 5th Amer. ed; Mills v. Barber, 1 M. & W., 425; 9 B. & C, 208. Where a defendant, sued as a maker or iudorserof a nego- tiable note, proves that it was obtained by him by fraud or fraudulently put in circu- lation, the plaintiff must prove that ho gave value for it; and t ! i .■ • 1 ■ !\ ■ u ■ I ; 1 1 1 1 mu.st CONSIDERATION - . 293' ^CHAPTER VI. CONSIDER ATION. Negotiable notes and bills of exchange are presumed to have been given for a valid and adequate consideration; and whether they purport to have been given for value received or not, it is unnecessary for the plaintiff, in the first instance, to allege or prove a consideration. l In this respect they differ from other parol contracts. Between the original parties the consideration may be inquired into ; but the burden of proof lies on the defendant to rebut the presumption raised by implication of law. 3 In like manner, where the plaintiff sues in behalf of one of the' original parties, the merits of the case and the terms upon which the bill or note was given, are open for examination, equally as if the suit were between the immediate parties to the instrument.' ■ The consideration may also be inquired into where the plaintiff takes the note after it becomes due, or has been dishonored ; 4 for 1 Hughes v. Wheeler, 8 Cow-en R., 88; Coursin v. Ledlie, 31 Penn. State, 50G. * Halliday v. Atkinson, 5 Barn. & Cres., 503; Cruger v. Armstrong, 3 John. Cas., 5, 259; 4 Hill R., 442. In an action by the payee of a check against the drawer, the defendant may show the transaction in which it originated, that its delivery was conditional, and that the tondition has not been fulfilled Bombard v. Brunnen, 4 Bosw., 528. * Denniston v. Bacon, 10 John. R., 198; Grew v. Burditt, 9 Pick. R., 205. Under our recent Code all actions must be brought in the name of the real party in interest, except where the plaintiff sues as trustee, &c. 4 Johnson v. Bloodgood, 1 John. Cas., 51; Jones v. Caswell, 3 id., 29; Lansing v. Lansing, 8 John. R., 454; 5 Wend., GOO. prove that plaintiff received it with notice. Catlin v. Hansen, 1 Duer R., 309; Roch- ester v. Taylor, 23 Barb., 18. It being shown that the bill or note was in respect to the defendant fraudulently put into circulation or negotiated, the plaintiff must show that he gave value for tho bill. This proof casts upon the defendant the burden of Bhowing that the plaintiff took it in bad faith or with notice ; Ro - v. BedaTL 5 Dtier, 462, andCatlfnv. Hansen, I id., 309. This case of Catlln v. Hansen was rhuch considered. Means of know- ledge, (Raphael v. Bank of England, i I Eng. <'"in. L Rep., L61,) or want, of caution; (Carlon v. Ireland, 85 id., 7G5,) does not tako from plaintiff the Character of a bona jule holder. 294 BILLS OF EXCHANGE AND PROMISSORY NOTES. in such cases the purchaser takes it subject to every defense which existed against it before it was negotiated ;' but it lies with the defendant to show that the plaintiff received it after it was due. 1 In other words, the presumption is that *the plaintiff acquired it in the usual course of business and before maturity.' There is still another class of cases in which the consideration may be inquired into, namely, where the plaintiff purchased the note or bill knowing it to be void in the hands of the party from whom he received it, either on account of fraud, 4 failure, 8 want," or illegality of consideration. 7 When the purchaser takes the bill or note with notice of the facts impeaching its validity, or with sufficient information on the subject to put him upon his inquiry, he cannot recover upon it as a bona fide holder. 8 But though he has such notice, yet if he derives his title from a bona fide holder for value, he may recover thereon. 9 As we have said, the law presumes in favor of negotiable paper a good consideration, until the contrary appears ; 10 it presumes that the holder is the owner until circumstances of suspicion are shown ;" it presumes in relation to indorsed paper, that the indorsement was made before it became due ; ia that the party in possession took the same in the usual course of business, for value ; " that the maker of a note is the primary debtor ; 14 and that the acceptor of a bill of exchange is primarily liable thereon. 16 These presump- tions, designed to facilitate the use and negotiation of commercial 1 Williams v. Matthews, 3 Cowen. 252. a Pinkerton v. Bailey, 8 Wend., 600. 5 Pratt v. Adams, 7 Paige, 615. 4 Robinson v. Reynolds, 2 Adol. & Ellis (N. S.), 196, 211; Ilaseall v. Whitmore, 19 Maine, 102 ; Smith v. Hiseock, 14 id., 449. 6 Cone v. Baldwin, 12 Pick. R., 545; Rumsey v. Leek, 5 Wend., 20; Hall v. Hal], 8 Conn., 336. 8 Skilding v. Warren, 15 John. R, 270. T Deering v. Chapman, 9 Shepley, 488. 8 Small v. Smith, 1 Denio, 583. • 19 Maine, 102; 14 id., 449; 2 Adol. & Ellis (ST. S.), 196, 211. 10 Goshen Turnpike Co. v. Huntin 9 John. R., 217; 12 Wend. R., 484; 13 Wend., 557 ; 8 Cowen, 77, and that it was legally issued, 16 N. Y. Rep., 129. 11 Cruger v. Armstrong, 3 Jolin. Cas., 5, 259; 18 Barb. R., 344. " Pinkerton v. Bailey, 8 Wend., 600 ; 7 Paige Ch. R., G15. " Nelsoa v. Cowing, 6 Hill's Reports, 336; Chitty on Bills, 69; Story on Notes, §§ 7, 81. " Bank of Orleans v. Barry, 1 Denio, 116. w Anderson v. Anderson, 4 Dana, 352 ; 2 Burr., 674; Dougl., 294; 8 Esp. R., 47. CONSIDERATION. 295 paper, yield * to evidence, and are generally controlled by the actual facts, where the inquiry or defense is admissible between the parties to the action. It deserves to be mentioned in the outset, that a note which has been executed and delivered cannot be contradicted, nor can its legal effect be controlled by oral evidence that it was to have no validity except in a certain event. 1 When the parties have deli- berately put their engagements in writing, in such terms as import a legal obligation, without any uncertainty as to the object or extent of such engagement, it is presumed that the whole contract of the parties, and the extent and manner of their undertaking, has been reduced to writing ; and hence oral testimony of a pre- vious colloquium between the parties, or of conversation and decla- rations at the time when it was completed, will not be admitted to substitute a new and different contract from that actually committed to writing. 1 Thus, parol proof is inadmissible to show that there was a mistake in the time of payment mentioned in a note ; 3 or that another man and not the maker was to pay it ; 4 or to show that an absolute agreement for the payment of money was to be per- formed only in a certain event ; i or at a different place from that specified ; * or that a party indorsing a note did so on condition that it should b£ renewed ; 7 or to vary the terms of an acceptance ; ' or that a note payable on demand should not be demanded so long as the interest was promptly paid.' On the same ground, parol evidence will not be admitted of 1 Erwin v. Saunders, 1 Cowen R., 249; Payne v. Ladue, 1 Hill, 116; ante, 148. 3 Stackpole v. Arnold, 11 Mass. R., 27. See Hill v. Buckminster, 5 Pick. R., 391; 6 id., 427 ; 3 id., 207. A guaranty comes within rule stated in the text. Hunt v. Adams, 7 Mass. R., 518. ' Fitzhugh v. RuDyon, 8 John. R., 375, 189. The action was on a note; it was not an action to reform the instrument. A mistake in the amount may bo shown when the pleadings permit it. Seeley v. Engell, 3 Kern., 542. 4 Shoe and Leather Bank v. Camp, 21 How. Pr., 443. 6 Wells v. Baldwin, 18 John. R, 45; Adams v. Wilson, 12 Met., 138, 275. • Potter v. Tallman, 35 Barb., 182. T Hoare v. Graham, 3 Campb., 57. The note given expresses the contract of the parties; Pratt v. Gulick, 13 Barb. R., 297; Bank of Albion v. Smith, 27 Barb., 439; Kelly v. Brown, 5 Gray, 108. 8 Mason v. Graft", 35 Perm. State, 448; Clark v. Flint, 22 Pick., 231. * Hanson v. Stetson, 5 Pick., 50G; or that but half of the note was to be paid on a certain event; Smith v. Thomas, 29 Miss., 307. It may be shown that tho delivery of a note or check was conditional, and that the condition being unfulfilled, tho paper Eliould have been returned; Buruhard v. Brunnerj 1 BoflW., 528; Boutello v. Wheaton, 296 BILLS OF EXCHANGE AND PROMISSORY NOTES. an agreement entered into at the time the note was given, that an account which the maker then held against the payee * should be deducted from the note. 1 The rule does not ex- clude parol evidence to show fraud, or want of, or entire failure of consideration" A distinction is taken in some cases between the mere passing of a note into the hands of the payee on a condition that it shall not take effect, as a delivered instrument, until after the happening of a certain event, and a delivery of the note upon an agreement that it shall be void if the event does not take place. 3 Where one of the heirs of an estate sold and executed to his brother a written release of his interest, and took from him notes u i therefor, and there was a verbal understanding between them that both the notes and the release were to be void unless a settlement with the other heirs should be obtained on certain terms ; it was held, in an action on one of the notes, that the parol agreement could not be proved, because it was not in writing, and was offered to defeat a written contract by showing that it was to become void on the happening of a certain contingency. 4 So, where the defen- dant gave the plaintiff a promissory note on a settlement of mutual accounts between them ; and the defendant at the time insisted there must be some mistake, mentioning an account of twenty thousand brick ; and the plaintiff, the payee of the note, claimed he had a separate receipt for that item, and promised that if he did not find and send it to the defendant, he would give up the note ; it was adjudged that the evidence of the parol contract could not 1 Eaves v. Henderson, 17 Wend. R., 190. The rule does not apply to an account to accrue; 2 Taunt, 170; 3 id., 76; nor to a subsequent agreement in relation to a precedent agreement. Gardner v. Calender, 12 Pick., 374. "Ely v. Killon, 5 Denio. 511. 3 Goddard v. Cutts, 2 Fairfield R., 410 ; 5 Denio, 510. It may be shown that the defendant signed the note on the condition that it was not to be delivered till signed also by another person; Miller v. Gamble, 4 Barb., 14G. 4 5 Denio, 514. The two papers, to wit: the release and the note, were treated as constituting one agreement, each being the consideration of the other, and the parol agfeemeVt was excluded as being only a collateral undertaking. The failure of that was at most only a partial failure of the consideration ; 1 Hill, 116 ; see Bernhard v. Brunnen, 4 Bosw., 528; Billings v. Billings, 10 Cush., 178. 1 .''. Pick., 499 ; ante, 148. And it may be shown that it was not given for value, though so expressed; Clark v. Sisson, 22 N. Y. Rep., 312; and the purpose for which it was given may be shown, though in conflict with its terms; Dana v. Munson, 23 N. Y. Rep., 567; Clapp v. Rice, 13 Gray, 403. CONSIDERATION". 297 be given to contradict the written agreement. 1 The note was given on a settlement; the promise to *pay was absolute and unconditional, and the evidence offered went to control or contradict the act of the parties and the terms of the note. The rule is that verbal evidence is not admissible to contradict or vary an absolute engagement to pay money on the face of a bill or note, but is admissible to establish a defense on the ground of a want of consideration, failure of it, or illegality.* A verbal agreement made at the same time and inconsistent with the note, cannot be proved to vary its terms, 3 either in respect to time of payment, 4 the period of collection,* or the condition on which it is to be enforced. 6 When the bill or note states on the face of it an adequate and special consideration, the defendant is not permitted to show a different consideration in contradiction to his written admission ; as that a note given by an administratrix and expressed to be " for value received by my late husband," was given only as an indemnity, and that the payee had not been damnified. 7 Want of consideration. A valid and sufficient consideration is of the very essence of every contract not under seal ; and pro- missory notes and bills of exchange are no exception to the gen- eral rule. 8 Where a note is made for the accommodation of the payee, it is self-evident that no action can be sustained thereon in the name of the payee against the maker. 9 No more can the drawer of a bill maintain an action thereon against the drawee 1 Brown v. Hull, 1 Denio, 400. The want of a consideration, or the total failure of the consideration may be shown ; but the terms of the contract cannot bo varied or contradicted; M'Curtie v. Stevens, 13 Wend., 527; 3 John. R., 4G3. * Chitty on Bill3, 142 ; Ridout v. Bristow, 1 Tyrw., 84. * Farnham v. Ingham, 5 Verm., 114, 152, 5 Denio, 51G, 1 Hill, 11G. 4 Woodbridge v. Spooner, 3 B. & Al., 223. * Moselcy v. Hanford, 10 B. & C, 729. * Spring v. Lovett, 11 Pick., 117. * Ridout v. Bristow, 1 Cromp. &, Jor., 234 ; 1 Tyrw., 84. In Ten Eyck v. Vander- pool (8 John. R., 120) it was held tliat a note given by defendant as administrator of P, B. for value received by G. B. and heirs, is void for want of consideration. * Chitty on Con., 27, 28; Berry v. Story. 25 Eng. Law T. Smith, 4GG. 4 10 Wend., 473 ; 4 Sand. R., 79, and the authorities cited in thoso cases. S23 BILLS OF EXCHANGE AND PROMISSORY NOTES. ment to sign a petition for the debtor's discharge under the insol- vent law, is illegal and contrary to the policy of the statute. 1 On the same ground, a bond or note given by the petitioning debtor to one of his creditors as a condition or inducement for his with- drawing all opposition to the discharge ; a and a note given by a third person to induce a creditor to sign the petition, with the knowledge of the other creditors, is void, as being against the policy and in fraud of the law. 3 And it has been held that under the bankrupt act of 18-11, it is illegal for a third person, without any knowledge or connivance on the part of the debtor appljdng for his discharge as a bankrupt, to buy the debt of an opposing creditor, so as to remove his opposition ; and that promissory notes given on such a purchase, to induce the creditor to withdraw his opposition to the debtors discharge, are illegal and void.* Between the parties to the transaction, no suit can be maintained on promissory notes given for property purchased with the inten- tion of defrauding creditors. 6 That is to say, the law will not aid the plaintiff to enforce a fraudulent contract; not because the defendant is more favored where both are equally criminal, but because the plaintiff is not permitted to approach the altar of justice with unclean hands/ An individual shall not be assisted by the law in enforcing a demand originating in a breach or viola- tion, on his part, of its principles or enactments. 7 *Q 47 * Where the law points out a mode in which a corpora- tion shall be organized, or prescribes the compensation which a public officer is to receive, it will not enforce contracts made in violation of its spirit or in a departure from its terms ; * 1 Payne v. Eden, 3 Caines' R., 213. * Bruce v. Lee, 4 John. R., 419; Wig-gin v. Bush, 12 John. R., 306. * Jackson v. Buel, 9 John. R., 29G. Under the statute "the petitioning creditor makes affidavit that such a sum is due, or will become due. and that he hath not received from the insolvent, or any other person, any payment of part of his demand in money, or by sale, gift or reward, upon any contract or confidence that he should becornc a petitioner." * Bell v. Leggett, 2 Sand. R., 450; S. C, 3 Seldcn R., I70^msor v. Kendall, 3 Story R., 507 ; Fox v. Paine, 10 Ala. R., N. S., 52::. W * N.'llis v. Clark, 20 Wend. R., 24; S. C, 4 Hill, 421 ; 10 Barb., 3G9. 8 9 Dana R., 317 ; 15 Wend. R., 412 ; Nivor v. Best, 10 Barb., 3G9. 7 Watts v. YanNess, 1 Hill, 7G. Plaintiff' cannot recover for work done on Sunday, not included among "works of necessity and charity." 3 Eng. Law and Eq. R., 416; 13 Barb., 533; Smith v. Wilcox, 24 N. Y. Rep., 353. ' 15 WedL, 341, 44. CONSIDERATION. 329 as where a party promises to pay a sheriff an extra fee for the ser- vice of process, or where an indorsed check was received on a subscription for stock that was required by law to be paid in cash. 1 When the statute declares that certain persons, such as banking associations, shall not issue or put in circulation any bill or note unless the same is made payable on demand and without interest, and makes every violation of the law in this respect a misde- meanor, punishable by line or imprisonment, or both, in the dis- cretion of the court; it has been adjudged that promissory notes made by a banking association doing business under the statute, payable a certain length of time after date, with interest, are ille- gal and void. 3 And as the statute, known as the Restraining Act, is a public and not a private statute, every person receiving such notes, appearing upon their face to have been issued in violation of law, must take them chargeable with knowledge of their illegal character.' Bills of exchange or negotiable drafts drawn by banking asso- ciations payable at a future day, answering the purpose of a circu- lating medium, are within the restrictions of the general banking law, "and are likewise illegal ; and the indorsee, a resident of this state, is chargeable with notice of the illegality.* The statute pronounces a draft issued by a banking institution of this state, payable a certain length of time after date, void ; and the law presumes every citizen and resident acquainted with its requirements. But when a person * residing in this state negotiates such a draft to a resident of another state, who takes it without any actual knowledge of our statutes on the subject, the indorsee may recover back the money paid for it. Johnson", J.: "The defendant was a resident of this state, and chargeable with a knowledge of all legislative enactments here. 1 Crooker v. Crane, 21 Wend., 211; Hatch v. Man, 15 id., 44. a Leavitt v. Falmer, 3 Comst. R., 19; Bank Commissioners v. St. Lawrenco Bank, id., 513; 3 Seld. K., 3G4. A guaranty of an illegal note is void. Swift v. Beers, 3 Denio, 70 ; Tyler v. Yates, 3 Barb. R., 222. 1 See statutes of 1840 ; Saflford v. Wyckoff, 1 Hill It., 11; S. C, 4 id., 442. A batik in New Jersey that discounts a note -payable there, and pays over the pro- ceeds in its own notqf) of a less denomination than fivo dollars, knowing that they aro to be sent to the indorser, and used here, but without any agreement to that effect, ig not chargeable with knowledge of our laws, and may recover on the notes so discounted. Merchants' Bank of New York v. Spalding, 5 Scld., 53. * Smith v. Strong, 2 Hill R., 211. See Leavitt v. BlaMhfoiti, 17 N. Y. Rep., C21; as to certified r-hflcks, gee 1G N. Y. Rep., ]•>:•, 1'J'J; 21 id., 400; ante, "7G. Euw. 42 330 BILLS OF EXCHANGE AND PROMISSORY NOTES. The law imputes to him knowledge that this paper, negotiated by him, was utterly void and worthless — no better than mere blank paper. The money was then advanced and paid to him without consideration. It was advanced in Ohio, and the plaintiffs are a corporate body of that state. They are not presumed to have notice of our statutes. The statutes of our state are only brought to the notice of courts and citizens of that state by proof. * * The plaintiffs then stand in precisely the same situation as though the money had been paid by them under a mistake as to material facts. Ignorance of the law of a foreign government is ignorance of fact — and in this respect the statute laws of other states of this Union are foreign laws." l A certificate of deposit issued by a banking association, paya- ble to the order of a particular person, six months after date, with interest, stands on the same footing ; it is in effect a negotiable promissory note, and comes within the prohibition of the statute.* Statute corporations, such as banking associations, possess only the powers and authority conferred upon them by statute; and such as are necessary to the exercise of those powers. Organized under the act to authorize the business of banking, they are clothed with certain enumerated powers, and permitted to exercise such incidental powers as are essential or necessary to carry on the business. Acting within the legitimate scope of the business, they may make any contract which is not prohibited by law ; acting bej'ond the scope of the business as authorized by law, the officers of the company have no power to bind the association, 3 and the association * itself has no power or capacity to contract* 1 The Bank of Chillicothe v. Dodge, 8 Barb. R., 233. The decision in this case waa concurred in by Justices Selden and Welles. 5 Seld., 53 ; see 15 N. Y. R., 95-99. Mere knowledge of the intention of the purchaser to use the thing purchased in another state in violation of a positive law, will not prevent the seller from recover- ing the price. Mclntyro v. Parks, 5 Mete, 207 ; 5 Seld., 63. Not so, it seems, where a note is given for liquors bought for the purpose of being sold in violation of law. 13 Gray, 277; see 339, ante. 2 Hank of Orleans v. Merrill, 2 Hill R., 295. Such a certificate payable on demand, transferred with the understanding that it shall not be presented in thirty days, vests in the indorsee as a bona fide holder. Barnes v. Ontario Bank, 19 N. Y. Rep., 152. ' The Bank of Genesee v. The Patchin Bank, 3 Kernan, 309, per Denio. J. * Talmage v. Pell, 3 Selden, 328. Though orders on an insurance company for tho payment of money, intended to and circulating as bank notes, be unauthorized and illegal, the party who redeems CONSIDEEATTON". 331 For instance, they have no power to engage in the purchase and sale of stocks for profit, as a distinct branch of business, or as a means of raising money ; though they may take stocks as secu- rity for a loan made by, or in payment of, a debt due to them. 1 And it seems that they are not authorized to indorse negotiable paper for the accommodation of other persons ; J though they have the right to sell and transfer negotiable paper by indorsement.' It remains to consider more particularly some considerations and contracts which the law declares void ; such as agreements for usurious interest, for or on account of money or property or things in action staked on a game of chance, for or on account of any raffle, stock-jobbing contracts, and the like. In this state the statute declares that, " all bonds, bills, notes, assurances, convey- ances- ; all other contracts or securities whatsoever, (except bottomry and respondentia bonds and contracts,) and all deposits of goods or other things whatsoever, whereupon or whereby there shall be reserved or taken, or secured, or agreed to be reserved or taken, any greater sum or greater value, for the loan or forbearance of any money, goods or other things in action, than is above pre- scribed, shall be void." 4 There is a great diversity in the statutes of the different states on the subject of usury : in several of them, as in this state, the contract and securities taken on a usurious loan, are declared void, and are not capable of being enforced under any cirumstances. The favor which the policy of the law extends to bills of exchange 1 See Session Laws of 1862, p. 181. , 1 3 Kcrnan R., 309. The bank is bound by cashier's indorsement, when he acts officially. Bank of Genesee v. Patchin Bk., 19 N. Y., 312. * Marvine v. Ilymers, 2 Kcrnan R., 222. 4 2 R. S., 5G, § 5, 3d ed. Seven per cent is the rate "above prescribed." The statute does not apply to a contract of sale of lands ; and in such a contract a stipulation for more than seven per cent is not usurious. Cutler v. Wright, 22 N. Y. Rep., 472; Bcete v. Bidgood, 7 B. & C, 453 ; City Savings Bank v. Bidwell, 29 Barb., 325. No corporation can in this state interpose the defense of usury. .'! R. S., !>th ed., p. 75 ; but the indorsers of its notes given usuriously, may do so, since they arc not within the prohibition of the statute. Hungerford's B:mk v. Dodge, 30 Barb., 026. The Btatute applies to past transactions ; Curtis v. Leavitt, 17 Barb., 309 ; 15 N. Y. Rep., 9. '- Green v. Elmer, 4 Selden, 422; see note on subsequent page, 714-719. them at the request of the treasurer and takes a promissory note for the amount so paid in this redemption, may recover on such note : the consideration of it is not illegal. Wright v. Hughes, 13 Ind., L09. 332 BILLS OF EXCHANGE AND PROMISSORY NOTES. and negotiable notes is not allowed to protect them against the terms of the statute : when given on a usurious contract, they are void, even in the hands of a bona fide holder who has received the same for a valuable consideration and in the regular course of trade. 1 The instrument *is tainted with usury, and no action can be maintained against either of the parties to the illegal contract. 2 When, however, the payee of such a note indorses it to a third person for value, who takes it without notice of the usury, the indorsement, as we have seen, amounts to a new and independent contract between the indorser and indorsee, which is not affected by the illegality of the note as between the maker and payee. 3 The Kevised Statutes of this state, after declaring all usurious bills and notes void, added, " But this section shall not extend to any bills of exchange or promissory notes payable to order or bearer, in the hands of an indorsee or holder, who shall have received the same in good faith and for valuable consideration, and who had not at the time of discounting such bill or note, or paying such consideration for the same, actual notice that such bill or note had been originally given for a usurious consideration, or upon a usurious contract." 4 Under this provision usurious notes and bills 1 Wilkic v. Rosevelt, 3 John. Cas., 66, 206. 4 Churchill v. Suter, 4 Mass., 156, 161 ; Chadbourn v. Watts, 10 id., 121 ; 4 id., 370; 5 id., 286 ; Payn v. Luze, 2 Bay, 23 ; Powell v. Waters, 8 Cowen, 669. Though the party negotiating a note void for usury, with knowledge, is liable to repay the amount of it ; 20 N. V. Rep., 226 ; no recovery can be had against the inno- cent accommodation party to the void instrument. Rossange v. Ross, 29 Barb., 576; Hall v. Wilson, 16 id., 618 ; even though represented to be business paper by the party negotiating it. Jackson v. Fassett, 33 Barb., 615. It is held in Ferguson v. Hamilton (35 Barb., 427); by the general term of the Fourth District, that when the maker of a note employs an agent to negotiate the sale thereof to raise money to pay their joint debts, and the agent in negotiating the noto assures the purchaser that it is valid business paper in his hands, the maker will be bound by the representations of the agent, and will be estopped from setting up tho defense of usury ; and this ruling is ably supported, in the opinion of the court, by- Mr. Justice Bockes. Ante, 327. 3 M'Knight v. Wheeler, 6 Hill R., 492; Edwards v. Dick, 4 Barn. & Aid., 212. 4 2 R. S., 56, note, 3d ed. The R. S., took effect on the first of January, 1830, and the section in question was amended in 1837, as stated p. 349. The statute of 58 Geo. Ill, ch. 93, enacts "that no bill of exchange or promissory note, although it may have been given for a usurious consideration, or upon a usurious contract, shall be void in the hands of an indorsee for valuable consideration, unless such indorsee had, at the time of discounting or paying such consideration for tho sanv*. actual notice that such bill of exchange or promissory note had been originally given for a usurious consideration, or upon a usurious contract.." See 2 B. & A., 58a CONSIDERATION. 333 were held valid in the hands of an innocent holder for value paid, when leceived in the usual course of business and before maturity ; but when transferred after they became due, the holder was held to have received them subject to the defense of usury, existing against them as between the immediate parties to the instrument.' Taking such a note in extinguishment of a previous debt was held a r2ceiving of it for a valuable consideration ; 2 and the question whether it was received in good faith was solved in this as in other cases. * Notwithstanding the statute declares void all contracts „„,„., . . 351 and securities affected with usury, without any reference to the source from which the objection comes, or the consequences which may follow ; the courts have, to some extent, limited the influence of this sweeping provision. For example, they hold that 'a bona fide purchaser under a statute foreclosure of a mortgage void for usury, acquires a good title ;' and that the bona fide holder of a note, void in its inception for usury, may take from the debtor a new and valid security in place of the note.' 4 These, and like exceptions, proceed upon the principle of protecting, as far as pos sible, an innocent third party who had no notice of the usury. 6 Moreover, contracts affected by usury, are not so utterly void but that they may be ratified ; if a borrower repay a loan which he might have avoided for usury he cannot recover the money back again, though he nuay, under the statute, recover the excess which he has paid beyond the legal interest;* and if the debtor makes a conveyance of his land to the creditor in satisfac- tion of a usurious debt, the deed cannot be avoided for the usury.* But as between the immediate parties, and in respect to all persons seeking the enforcement of the contract, it is void ; and this taint of usury in the original agreement is carried forward and enters into all subsequent securities taken for the same debt, 1 Hackley v. Bpragoe, 10 "Wend., 113. 1 Bank of Sandusky v. Scovillo, 24 Wend., 115; 21 "Wend., 499. ' Jackson v. Henry, 10 John. R., 195. But if tho mortgagee purchase under such ■ mortgage, his title may be impeached. Jackson v. Dominick, 14 John. It., 4:55; Jackson v. Tuttle, 9 Cowen, 2.';:'.. 1 Cutlibert v. Haley, 8 Term R., 390; Smalley v. Doughty, G Bosw., GC, 74; 8 Cowen, 681. 1 Klli.s v. Warner, Cro. Jac, 33; Bearco v. Barstow, 9 Mass. R., 45; Hussoy y. Jacoli. 1 Ld. Raym., 87. * Dii v. Van Wyck, 2 Hill R., 522, and cases there cited; 2 R. S., 5G, § 3. * Dean v. Dodds, 1 John. Cas., 158; Pratt v. Adams, 7 Puige, G15. 334 BILLS OF EXCHANGE AND PEOMISSOEY NOTES. by way of renewal and additional security. 1 That is to say, a mere change of securities, for the same usurious loan, to the same party who committed the usury, or to a party who had notice of it, can never purge the original consideration, or give a right of action ;* as where a note is given to the original party to the contract, to ^ renew and take up former * usurious notes. 3 The renewal note is of the same illegitimate progeny as the first. Not so, where the renewal note is taken by an innocent holder of the former note, who received the same for a valuable consideration without notice of the usury. 4 "When a note or bill is valid in its inception, so that the holder may maintain an action upon it when due, no after transaction with a third party can effect its validity : on the contrary, when a note or bill is made for the purpose of raising money on it, and is not delivered as evidence of an existing debt, but passed away in the first instance on a usurious contract ; as where a note is indorsed for the accommodation or the maker, and he delivers it as security for a usurious loan ; the instrument is void in its original forma- tion. 5 In other words, if the bill or note was of no validity in the hands of the holder, as against the other parties, as is the case in respect to accommodation paper, and he procures it to be discounted at a higher premium than the legal rate of interest, it is void in its inception ; 6 because it can have no existence as a binding con- tract until it is delivered as such. The distinction is between the purchase of a note that has been made and delivered by the maker in the usual course of business, as evidence of a subsisting indebt- edness, and a note delivered for a loan upon it by way of discount. To make it salable by him, the note must be perfect and availa- ble to the holder ; and the test is the right to maintain an action upon it, against the parties to it, assuming it to be then due. 7 J Reed v. Smith, 9 Cowen It., 647 ; Bell v. Lent, 24 Wend., 230. s 8 Term R., 390. 3 Tutliill v. Davis, 20 John. R., 286. 4 Kent v. Walton, 7 Wend. R., 256; Smedbergv. Simpson, 2 Sand., 85; 6 Bosw., 06. 5 Mimn v. Commission Co., 15 John. R., 44; 2 Sand. R., 60; 1 Kern., 368; Hall v. Earnest, 26 Barb., 585. ' Powell v. Waters, 17 John. R., 176; S. C, 8 Cowen, 670; 22 N. Y. Rep., 312. 1 8 Cowen R., 669, and authorities there cited; Marvin v. McCullum, 20 John. R., 288 ; Seymour v. Strong, 1 Hill, 503. In Aeby v. Rapelye (1 Hill, 9); accommodation notes were sold in the market by the person for whose accommodation they wera made, at more than the legal rate of discount; held, that they were void. Cockney v Forrest, 3 Gill & John., 483; 22 N. Y. Rep., 312. CONSIDERATION". 335 Although an accommodation note is invalid in the hands of the person for whose benefit it was made, and if discounted for him at a usurious rate, is equally invalid in the hands of the person who thus receives it ; still, if the payee for whose *accommo- dation the note was made, transfers it as business paper, at a usurious discount, to a bona fide purchaser, he cannot after wards set up the defense of usury against his liability on the note. So far as the other parties to the instrument are concerned, it is, notwithstanding the misrepresentation of the vendor, usurious and void ; but the law will not allow him to assert that the representa- tions on which he sold the note were false, and thereby make a profit out of his own falsehood, at the expense of an innocent party. 1 For, where a party, either by his declarations or conduct, has induced another to act in a particular manner, he is not afterwards permitted to deny the truth of his assertion, to the detriment of the person who has acted upon the faith of his representations. 2 As we have seen, the pa} r ee of an available note, such as a note given to him on a purchase of merchandise, may sell it with im- punity for a higher premium than the legal rate of interest ; but where he so indorses it over to a third person for less than the face of the note, his indorsee is entitled to recover thereon in an action against him, only the amount actually advanced upon it with law- ful interest from the time of the advance. 3 When the payee trans- fers the note without indorsing it or guaranteeing its payment, the authorities all agree that the transaction is free from usury ; but 1 Dowo v. Schutt, 2 Denio. 621; Holmes v. Williams, 10 Paige, 32G; 2 Hill, 522; Truscott v. Davis, 4 Barb. R., 495. ■ Welland Canal Co. v. Hathaway, 8 Wend., 483; Dezell v. Odell, 3 Hill R., 221; 4 Barb., 495; 2 Denio, 621. When the maker, indorser, drawer or acceptor of negotiable paper represents tho same to have been made, indorsed or accepted for value, and the same is purchased or taken on- the strength of those representations, he is estopped from showing the contrary. Benedict v. Gaffe, 5 Duer, 220; Robbins v. Richardson, 2 Bosw., 218. And the ri^lits of the indorsee thereon are the same (against the parties so representing it) as if it had been in fact business paper. Burrall v. De Groot, 5 Duer, 379; Chamber lain v. Townsend, 2G Barb., Gil; 17 How. Dr., 5G9; 29 Barb., 5G9; Middlctown Bank v. Jerome, 18 Conn., 443. So if tho maker, on being inquired of, says ho has DO defense to a note, he is estopped from defending against the party taking tho note on that representation. Rose v. Teeple, 16 Ind., 37 ; Wright v. Allen, id., 284. ' Cram v. Hendricks, 7 Wend. R., 5G9. This case was considered at great length, and tho opinions of the court of errors occupy nearly one hundred pages. 1 Hill R., 9; 9 Barb. It., 617; Cobb v. Titus, 10 N. Y. Rep., 198; Hall v. Earnest, 3G Barb., 585. 336 BILLS OF EXCHANGE AND PROMISSORY NOTES. in some of the states where the payee indorses the note or gua- rantees its payment, on a sale for less than its face, the contract between the indorser and indorsee is held usurious and void, while the latter is permitted to recover against the maker the full face of the note. 1 The doctrine as held in this state is clearly the , * most logical ; for if the transfer by indorsement for a higher premium than the legal rate of interest is pro- nounced void, the indorsee cannot trace his title through this con- tract of indorsement in an action against the maker of the note ; and there would be the same difficulty in the way of a subsequent holder's recovering upon the instrument against the prior parties, in respect to whom the note was good business paper. 2 Where promissory notes that have been made in the regular course of business for a valuable consideration are hypothecated as security for the payment of a usurious loan, the lender acquires no title to the notes ; he holds them simply as collateral security, and as such they must, in his hands, abide the fate of the princi- pal debt, to secure which they were given. 8 But the validity of the notes is not impaired as against the makers, by such act of hypothecation, and the owner of them, having acquired the pos- session of the paper, by extinguishing the loan, or by any other legal means, is restored to his original rights as a bona fide, holder.* Exacting a premium on the renewal of a note, beyond the amount due with legal interest, renders the new security usurious and void ; but does not extinguish or destroy the antecedent debt. 6 So, if the new security be given for two or more antece- dent loans, one of which was infected with usury, the whole secu- rity is void. The instrument cannot be void in part, and good for the residue ; for the statute declares that notes, bonds, bills and 1 Gaither v. The Farmers' and Mechanics' Bank of Georgetown, 1 Peters R., 37 ; Pvuffin v. Armstrong, 2 Hawk's R., 411; Foltz v. May, 1 Bay R., 486; Johnson v. King & Jones, 3 McCord L. R., 365 ; Burt v. Gwin, 4 Harris & Johns. R., 507 ; Little v. Hord, Hardin R., 81 ; Churchill v. Suitor, 4 Mass. R., 162. 1 Idem. Where such a rule is held, it is qualified materially; and the maker is not allowed to set up usury between the intermediate parties to defeat the action brought by a subsequent bona fide holder, notwithstanding he claims through the usurious in- dorsement. 1 Bay R., 486; 4 Harris A Johns. R., 507 ; Chapman v. Black, 2 Barn, it Aid., 589. ' Bell v. Lent, 24 Wend. R., 230; Swift v. Beers, 3 Dcnio, 70, was decided on the same principle. Ante, note 327. 4 Warner v. Gouverneur's executors, 1 Barb. R., 36. Post, note 355. * Svrartwout v. Payne, 19 John. R., 294; Gray V. Fowler, 1 H. Bl., 462; 1 Saund, 295 a; Markle v. Hatfield, 2 Johns. R., 455. CONSIDERATION. 337 contracts, whereupon or whereby there shall be reserved, taken or secured, or agreed to be taken or secured, above the sum of seven per cent, shall be void. 1 A * subsequent agreement for #Q „_ usurious interest, as the consideration of forbearance, does not invalidate a previous security ; and it is not itself a valid con- tract f and consequently an agreement to extend the time of pay- ment, in consideration of an executor// agreement to pay a usurious premium, is void, and does not suspend the remedy of the credi- tor against the principal debtor, so as to operate as a discharge of sureties on the original contract.' Where time is given to the principal debtor, by a valid agreement, which ties up the hands of the creditor, though it bo for' a single day, the surety is discharged. 4 And where the credi- tor takes from the principal debtor a bond and mortgage payable at a future day, covering the debt in question, and also one that is tainted witlr.usury, it does not lie with him to repudiate this new security as usurious and illegal. 4 And it is a general rule, that a stranger to the transaction cannot insist upon the invalidity of a security on the ground of usury. 6 The statute establishes the rate of interest, and then declares void all bills and notes and other contracts whereupon or whereby there shall be reserved or taken, or secured or agreed to be reserved 1 Jackson v. Packard, 6 "Wend. R., 415. • * Crane v. ITnbbell, 7 Paige Ch. R., 413. • Vilas v. Jones, 10 Paige R., 79; S. C, 1 Comst. R., 274; Tudor v. Goodhue, 1 B. Monroe L. and Eq. R., 322; Kenningham v. Bedford, id., 325, holds that such a con- tract executed, discharges the surety; but the contrary opinion is strongly expressed in Vilas v. Jones, per Broxso.v and Jewett, justices. 4 Bangs v. Strong, 7 ITill R., 250. "Where an action is brought on a judgment re- covered on a promissory note made by two persons, one as surety for the other, both of the defendants are to bo regarded as principals. La Farge v. Herter, 3 Denio, 157. • La Farge v. TIerter, 4 Barb. R., 310; or a note, 3 Denio, 512. "When the maker sets up in his answer to an action on a note that it was given for a usurious cifhsideration, and verifies the answer, the holder may discontinue his Suit and bring an action on the original security, though that has been surrendered and destroyed. The holder cannot in the first instance resort to the surrendered secu- rity, but after his opponent has alleged the usurious character of the note lie may take tho benefit of that state of facts in a new suit on the primary and valid security. Khrpliard v. Hamilton, 29 Barb., 150; Central Cily Hank v. Dana, :;•_> Hark, 290. • Post v. Dart, 8 Paige it.. 839 j wen R., 2:j3; om who stands in privity with the debtor, may set up tho defense; 2 Hill, 522; 9 Paige, 1:7 ; Churchill v. Hunt, 3 Denio, 321. Tho obligor in a boo 1 to pay or indemnify the maker of a uoto against his liability thereon, cannot set up usury in tho note. Edw. 43 838 BILLS OF EXCHANGE AND PROMISSORY NOTES. or taken, any greater sum or greater value, for the loan or for bearance of any money, goods or other things in action, than ^o-a the rate prescribed. 1 What is the true * construction of the statute ? The letter of the law pronounces void all contracts and sec,jirities by which more than the prescribed rate shall be taken or secured ; but it is evidently not the intention of the act to render a contract or security void on account of a mere mistake in the calculation of interest, 2 or in drawing the instrument ; and it is accordingly held that, where more than seven per cent is un- intentionally received in either of these ways, the contract is not to be deemed usurious. 3 The intention of the contracting parties is the principal subject of inquiry, in determining whether a contract be usurious or not ;* and the cases go upon the principle that a corrupt agreement is the essence of the offense : 5 so that, in pleading usury, a corrupt agreement must be alleged, and upon that the issue is taken.' But giving and receiving intentionally more than the prescribed rate of interest, is in the sense of the law a corrupt agreement ; notwithstanding the parties act upon an erroneous interpretation of the statute, without any corrupt intention other than that which is manifested by one party's allowing and the other receiving the unlawful interest. 7 The parties are supposed to know what the law of the land requires, and ignoraniia legis neminem excusat. If therefore they plainly contract for the payment of more than law- 1 2 R. S., 3d ed., 56. s N. T. Firemen Ins. Co. v. Sturges, 2 Cowen R., 664. 1 N". Y. Firemen Ins. Co. v. Ely, 2 Cowen R., 678; Nevison v. "Whitley, Cro. Car., 601; Buckley v. Guildbank, Cro. Jac., 678; Glassford v. Laing, 1 Campb., 149. 4 Ord on Usury, 37; 2 Cowen, 701; 13 Barb., 330. "Bank of Utica v. Wager, 2 Cowen R., 712; S. C, 8 Cowen, 398; the same v Smalley, 2 id., 770. "Cloyes v. Thayer, 3 Hill R,, 564; Tate v. Wellings, 3 Term R., 531; Carlisle v. Trears. Cowp., 671; 4 Paige, 533; 2 Chitty PI., 46, 47; Murray v. Harding, 2 Bl. R., 865; 19 John. R., 500; 16 id., 367. * If an agent entrusted with money to loan, exact a bonus without the knowledge of his principal, the note taken for the loan is not usurious; Condit v. Baldwin, 21 N. Y. Rep., 219; see also North v. Sargent, 20 How. Pr., 519. The delivery of bank notes or money to the agent of the borrower, on an executory contract for a usurious loan, to be retained by the agent and returned if certain title papers are not found correct, may be recovered back from the agent ; such a delivery does not pass the title, and the lender is not bound to complete the loan; Graves v. Dudley, 20 N. Y. Rep., 76; an unconditional delivery, is irrevocable; Worrall v. Munn, 1 Sold., 229 ' Bank of Maine v. Butts, 9 Mass. R., 49 ; 8 Cowen, 696. CONSIDERATION. 339 ful interest, the law declares the agreement between them corrupt and usurious, and will not allow the intention of the parties, how- ever innocent, to give life and force to an illegal contract j 1 . * nor will it permit a usage of trade, a custom of merchants, 357 or any other contrivance to evade the statute. 3 Where a bank discounted a note for one thousand dollars, paya- ble ninety days after date, and received eighteen dollars and nine cents for the loan, calculating interest on 360 days as a year, the note was adjudged usurious and void, without any other evidence of a corrupt agreement 5 But under our statutes, thirty days are now the twelfth part of a year, for the purpose of computing interest. An agreement for the payment of compound interest, made after the interest has accrued, does not constitute usury ;* nor are notes given for the balance of an account, on which interest has been cast annually and added to the principal, usurious. 5 Interest is justly and equitably due at the end of each year, if payable annu- ally ; and there is no legal reason why the debtor may not give his note or bond for its payment.' A promissory note payable three or five years after elate, with interest annually, draws the established rate of interest and nothing more ; but there are cases in which interest upon interest has been allowed on the sum due, 1 Marsh v. Martindale, 3 B. & P., 153. • Dunham v. Gould, 1C John. R., 3G7; ex parte Aynsworth, 4 Vesey, G78. ' Bank of Utica v. Wager, 2 Cowen, 712; 8 id., 398 ; Utica Ins. Co. v. Tillman, 1 Wend., 555; but see 2 R. S., 58, allowing interest to be calculated in that manner. " The rule for casting interest, (as laid down in Connecticut v. Jackson, 1 John. Ch. R., 17,) when partial payments have been made, is to apply the payment, in the first place, to the discharge of the interest then due. If the payment exceeds the interest, the surplus goes towards discharging the principal, and the subsequent interest is to be computed on the balance of principal remaining due. If the payment bo less than the interest, the surplus of interest must not be taken to augment the principal ; but interest continues on the former principal until the period when the payments, taken together, exceed the interest due, and then the surplus is to bo applied towards dis charging the principal ; and interest is to be computed on the balanco of principal as aforesaid." 3 Cowen R., 87. Under this rule compound interest is wholly excluded. For the rule in regard to time, see 2 R. S., 58, 3d ed. 4 1 John. Ch. R., 14; La Orange V. Hamilton, 4 Term R., 513; 2 II. Black., 144; Forbes v. Cantfleld, :: Ohio, 17; 4 id., 373. • Kellogg v. Ilickok, 1 Wend. R., 521. • Tylee v. Yates, 3 Barb. II., 222. The creditor is entitled to interest from the time a debt become* due. Van Rensselaer v. Jowctt, 2 Cornst., 135; Dow v. Drew, 3 N. Qanap., 40; Muwry v. Bishop, 5 Paige, O.s. 340 BILLS OF EXCHANGE AND PROMISSORY NOTES. ^ by way of damages *for its detention. 1 In other cases i\ has been held that interest upon the annual interest cannot be recovered, by suit founded upon the original contract 8 And, the rule appears to be settled in this state that an agreement to pay interest upon interest which is to accrue subsequently, cannot be legally enforced ; although it does not render the agreement usurious. 3 Upon principle, there does not seem to be any ground of distinction between an agreement to pay interest upon interest that is to accrue, and an agreement to pay interest upon interest which has already accrued.* A compensation for the use of money is equitably and as absolutely due from the time it becomes paya- ble, as a compensation for the use of land in the shape of rent ; and it is admitted that the landlord may recover interest upon rent due, though payable in specific articles. 6 It is said, that the credi- tor is at liberty to demand and collect his interest as soon as it becomes due, and that by neglecting to do so he waives his right to recover any thing for the use of such interest money ; but the same thing might be said with equal reason in regard to rent Indeed, it is conceded that the rule, holding prospective agreements for the payment of compound interest invalid, is not founded upon the usury laws, but upon public policy, 6 and for this reason the rule yields to considerations of equity. 7 Taking interest in advance on a loan of money is not usurious ;* although such a practice undoubtedly operates to give to the lender more than the rate of interest prescribed by law." *If a per- son loans a thousand dollars for a year, and at the same time receives from the borrower seventy dollars for the interest, and loans that also on interest, he will receive seventy-four dollars and ninety cents on his capital, instead of seventy dollars, for the 1 Pierce v. Rowe, 1 N. Hamp., 179; Greenleaf v. Kellogg, 2 Mass. R., 568. 3 Hastings v. Wiswal], 8 Mass. R., 455 ; Doe v. Warren, 7 Greenl. R., 48 ; Sparks v. Garrigues, 1 Binney R., 1G5. 8 5 Paige Cb. R., 98 ; 1 Barb. R., G32. 4 Pawling v. Pawling, 4 Yates R., 229; Kennon v. Dickens, Cam. & Nor. Rep., 357. • 2 Comst. R., 135. In Pawling v. Pawling, the Supreme Court of Pennsylvania decided that an agreement to pay intorest upon tho annual interest which should not bo punctually paid within three months after it became due, was a valid agreement. For a case of mistake in the payment of compound interest see Boyer v. Pack, 2 Denio R., 107 ; the excess may be recovered back in such a case. Quackenbush v. Leonard, 9 Paige, 334 ; 8 Mass. R., 455. 1 5 Wend. R., 572. • 2 Cowen R., 678; 15 John. R., 1G8; 8 Wheat., 838; 4 Wend., 652. • 2 Cowen, 766. CONSIDERATION. 341 'year. By extending the term of the loan a sufficient length of time, it is easy to see that the interest would in this manner absorb and eat up the principal. But the decisions do not go the length of declaring that the interest may be taken in advance on long loans ; and the early cases hold explicitly that it is usurious to take interest in advance on a loan of money for a term of years. 1 Chief Justice Savage, in the Bank of Utica v. Wager, expresses the opinion that the privilege of deducting interest by way of discount is confined to bankers, and those who deal in bills of exchange or promissory notes, by way of trade, asserting distinctly that this is the rule in England. 2 True, an authority to discount notes and bills implies the right to take interest in advance; aricl where the authority is conferred by an act of the legislature upon particular persons, it may become a privilege. But in England, " where no statute authorizes bankers to make discounts, it has been solemnly adjudged that the taking of interest in advance, by bankers, upon loans, in the ordinary course of business, is not usurious." ' In an early case decided in this state it was adjudged that the taking of interest in advance, by a banking institution, on dis- counting a note, is not usury ; and this decision has been „ * affirmed and the principle applied to other companies and persons discounting bills of exchange and promissory notes. 4 In computing interest it is lawful and right to include the three days of grace, for the money is not practically due until the third day, and the holder cannot compel payment till after the expira- tion of the days of grace. 6 1 In Marsh v. Martindale (3 13. &. P., 154), the late plaintiff discounted a bill of ex- change payable in three years, for £5,000, and deducted the three years' interest, £750 ; and this was held to be usurious on the authority of Barnes v. Worlich, Oro. Jac., 25. 1 2 Cowen, 7C9. Probably the practice grew up among the class of persons alludod to, but it is clearly not the intention of the statute, or of the people to accord to them auy superior privilege in this respect. Maine Bank v. Butts, 9 Mass. 11., 5 1. * Fleckncr v. The Bank of the U. S., 8 Wheat. R., 338. The cases of N. Y. Fire- man's Insurance Company v. Ely and v. Sturges hold that there is no distinction between bankers or banking institutions and other companies and persons; nor is it easy to perceive any ground for such a distinction. 2 Cowen, 604, 078. •Utica [ns. Co. v. Bloodgood, 4 Wend., 052; B id., 409. In this state banking hatfe i-ower to carry on the. business of banking, by discounting bills, fltid other evidences of debt, by receiving deposits," ic. 1 R. S., 1147, 4th ed.; •Mar-. hie v. Hymers, 2 Kernan R., 223. 1 2 Cowen, 712; 3 Pet., 40. 342 BILLS OF EXCHANGE AND PROMISSORY NOTES. Usury is a defense which must be strictly proved ; and where an instrument will bear two constructions, one of which will render it operative and the other void, the former should be adopted. 1 Thus, if notes promise the payment of interest from a time anterior to their date, the court will not presume that they were given for money lent at the time they were made ; on the contrary, the fair presumption will be that they were given for goods sold, or for a debt due at the time from which they bear interest. 2 "Where a country bank discounts a bill payable at large, for the drawer, who desires and receives for it drafts on New York, it is not usurious for the bank to deduct, in addition to the usual dis- count, the difference of exchange between the two places ; in effect, this is only a double contract ; it is an ordinary discount, and a sale of drafts on New York. 3 Nor is it usurious to include in a note the rate of exchange between the place of payment and the residence of the payee, where the note is made payable at a distant place for the accommodation of the maker. 4 Neither is it usurious for a bank, on discounting a bill of ex- change for the holder, to give to him, for his accommodation, certificates of deposit payable in fifteen days, where it appears *that the holder of the bill wants to use the money at a distant place, and it will take about that time for the cer- tificates to be sent and returned ; the giving of the certificates not being made a condition of discounting the bill. 6 Nor is it per se usurious for a person discounting a note, to give to the borrower depreciated notes at par, where he seeks the accommodation on the ground that they will answer his purposes the same as current funds. 8 A contrivance to evade the statute will not be tolerated ; 1 3 Cowen, 290. a Marvin v. Feeter, 8 Wend., 533. The taking of a note for the full amount which is agreed to be loaned, is not usurious, though the lender does not hand over the whole amount at the time the note is taken, and though the borrower allows him to retain and use the balance, until the note matures, there being no intention to secure more than legal interest. Keyes v. Moultrie, 3 Bos., I. * Cayuga County Bank v. Hunt, 2 Hill, G25 ; 10 Paige R., 109. 4 Merritt v. Benton, 10 Wend., 116. The payee resided in New York, the maker at Little Falls, and the note was made payable at UtU-a, and the differance of exchange between New York and Utica was included. 1:5 Barb. R., 339. 6 Knox v. Goodwin, 25 Wend. R., 643. The borrower wished to use the funds in Ohio, and it would take about fifteen days for certificates sent there to be returned. But such certificates are illegal. 2 Hill R., 295; 3 Comst. R., 19, 513; 3SeldenR., 364. e Rockwell v. Charles, 2 Hill R., 499. COSTSIDEKATTON. 343 but there is no tiling to prevent the borrower from receiving bills or notes at par that are worth to him par in his business. 1 " If it is a part of the agreement for the loan that the borrower shall take uncurrent bills at a higher rate than their actual value, and for more than they are worth to either party in cash or current funds, the loan is usurious." 2 So, if it is made the condition of a discount that the borrower shall take a certain number of shares of stock at par when they are not worth par, or shall take bills of exchange or uncurrent notes at more than their cash value, the transaction is usurious.' It makes no difference whether the proposition, to give or take a thing of less value than money, on a loan or discount, comes from the borrower or from the lender : if the maker of a note, in asking for a discount, offers to take a certificate payable at a future day, with less than legal interest, and this offer is accepted, it avoids the note just the same as if the maker had offered to pay eight or ten per cent discount ; but *if he voluntarily accepts such # oao a certificate after the transaction of discount has been closed, it does not affect the note.* So, if a person, in his proposition for a discount, offers, and the bank receives at par, drafts on New York which are worth more than par, it is of no consequence that the offer comes from the borrower ; if more than the law allows is intentionally received for the use of the money, or the forbearance of the debt, the transaction cannot be supported. 6 So, where a bank at Erie discounted bills payable in New York, and in addi- tion to six per cent allowed by its charter, deducted one half of one per cent, as a charge for its collection, at a time when such drafts were worth, at that place, one half of one per cent premium, 1 Slasson v. Duff, 1 Barb. R., 432. In tliia case the question was whether tho loan of uncurrent funds, which were about three-fourths of one per cent below par, to be returned within a week in current funds, was in itself usurious; and it was held not to be so. * Cleveland v. Loder, 7 Paige R., 557 ; Stewart v. Tho Mechanics' and Farmers' Bank, 19 John. R., 496; Bank of the United States v. Waggoner, 9 Peters, 378. 1 Eggleston v. Shotwell, 1 Johns. Ch. R., 53G; Pratt v. Adams, 7 Paige, 615; Roso v. Dickson, 7 John. R., IOC. ' Cillett v. Averill, 5 Denio R., 85. * Tho Seneca County Bank v. Schermerhorn, 1 Denio, 133. This was the case of a renewal; the defendant gave the plaintiff a now note and paid tho interest, and then gave to the bank two drafts on New York, for $ 3,000, in such a way that tho bank received <•'"' premium tiny were worth in the market, namely twenty-two dollars and a half, as an inducement to make the discount. 844 BILLS OF EXCHANGE A2ED PROMISSORY XOTES. the transaction was regarded as usurious. 1 And so, the discount of a note, made upon an agreement that the borrower shall receive the bills of the discounting bank, and keep them in circulation until the note becomes due, is usurious. 3 On the other hand, it has been held that, where an insurance com- pany is applied to for a loan of money, it is not usurious for them to stipulate that the borrower shall effect an insurance with the com- pany at usual and fair iates. 3 Nor is it unlawful for a commission merchant, who, under an agreement to receive produce for sale on commission, undertakes to accept drafts and bills in advance, to agree for and receive a commission of two and a half per cent for acceptances or advances met otherwise than with produce .; that being a fair, usual and customary allowance for the trouble and inconvenience* in transacting the business." Neither is it usurious for an agent or factor to stipulate for a commission to be paid to him, for accepting and paying bills with funds to be furnished by his principal. 6 But, in all such cases, the true point of inquiry is, whether the arrangement is a fair business transac- tion, or a mere device for the loan of money at usurious rates. The true construction of the statute is that no more than the prescribed rate of interest shall be taken, on a loan, or forbearance of money, directly, or indirectly by way of loan of goods or choses in action, or in any other manner. "Interest" and "for- bearance " cannot be predicated of any other than a loan of money, actual or presumed ; because interest is" defined to be a certain pro- fit for the use of the loan ; and forbearance is the giving of a fur- ther day, when the time originally limited for the return of the loan has passed. And both imply that the thing loaned has an established value, so that the lender, on its return, with the com- pensation fixed by law for the use and risk, may receive a "cer- tain profit ; " and this he can only do where there is a loan of 1 Bank of U. S. v. Davis, 2 Hill R., 451. * Pratt v. Adams, 7 Paige, G15. "Utica Ins. Co. v. Cadwcll, 3 Wend. R., 29G. "The insurance was a lawful act, and the principal business of the plaintiffs ; and as it was made at the usual rates of premium, there could be no shift or contrivance in this transaction whereby the de- fendants were made to pay more than seven per cent interest on the loan made." 4 Trotter v. Curtis, 19 John. R., 160; Suydam v. Westlall, 4 Hill R., 211; Deforest v. Strong, 8 Conn. R., 513. * Suydam v. Bartle, 10 Taige R.. 94. , * Ord on Usury, 30, 24 ; per Gakdineu, J., in The Dry Dock Bank v. Tho Ameri can Life Ins. & Trust Co., 3 Comst. R., 344, reviewing the authorities on the subject CONSIDERATION. 345 money, all other commodities being of a changeable and fluctuat- ing value. 1 Accordingly, a loan of goods or chattels is not within the sta- tute, whatever may be reserved for their use ; because there is an uncertainty whether the thing to be returned, will at the end of the term be of the same, or less, or greater value than it is at the time the loan is made. 1 The reason of the rule * applies M 864 to agreements for the loan of cattle, grain and flocks, and every thing except money, the value of which is subject to fluctu- ation.* Thus, the owner of stock may loan it on the understand- ing that the borrower is to convert it into money, pay the accruing dividends to the lender for its use, and restore or replace the stock at the end of the term ; for such a contract is really in the nature of a speculation and bargain of hazard. 4 The owner bears the risk of depreciation, and has a right to say upon what terms he will dispose of his property for a given length of time. No doubt such a contract, when the hire exceeds the rate of legal interest, may be converted into a usurious loan by an agreement on the part of the borrower to return similar stock, equal in value to that loaned ; for by so doing the contract becomes in substance a loan of so much money, in the form of stock, to be returned absolutely in a specified article, and the owner is thereby exempted from the risk of depreciation. 6 Take an adjudged case for illustration: the owner of a flock of sheep lets them for fifty cents a head, to be paid annually, on an agreement for the return of the same number of sheep, of the same quality and age : this is clearly not a usu- rious loan ; on the contrary it is a sale. — it cannot be determined ' Money itself has not a fixed and unchangeable value, but it comes nearer to it than any other article, and the law moreover makes it the measure of the value of other property. 1 R. S., 780, 3d ed. 8 Cummings v. Williams, 4 "Wend. R., G79. Williams loaned Cummings a two year old heifer and calf, and Cummings agreed within four years to return the heifer and another heifer, both to be with calf; Williams incurring only the risk of the loaned heifer's being killed by lightning. At the time of the loan the heifer was worth from $15 to $18, at the time of the return from |20 to $-20. and the other heifer to be re- turned was worth from $15 to $18. Held, that the contract was not usurious. Spencer v. Tilden is to the same effect, 5 Cowen R., 144, and Holmes v. Wetmore, id., 149; and Hamlin v. Fitch, Kirb. Conn. R., 2G0. * Stcptoe v. Harvey, 7 Leigh, 500; Tate v. Welling, 9 Term R., 538; 8 East, 304. The statutes of several of the states except loans of this kind from their operation. 4 Tike v. Ledwell, 5 Ksp. R., 164; 3 Term, 531 ; Wilson v. Kilburn, 1 J. J. Marsh, 491. . * Comyn on Usury, 1 1 4. Edw. 44 346 BILLS OF EXCHANGE AND PROMISSORY NOTES. as a matter of law what will be the value of the flock to be re* turned. 1 But suppose the parties had in their contract estimated the value of the sheep at a certain sum, and agreed for the return of that sum in sheep of a particular quality ; here, manifestly, the question would be whether fifty cents a head per annum is more than the legal rate of interest on the loan. 9 * A sale of credit made in good faith is no more within 365 • the prohibition against usury than a sale of merchandise.' For example, the owner of a bond and mortgage may sell the same for less than the amount due, and execute to the purchaser a valid bond, conditioned that the mortgagor shall pay the full amount of the mortgage ; 4 any person may sell his indorsement, and take a percentage on the amount of the note indorsed ;' or sell his guaranty to be indorsed on a promissory note. 6 For, as the law now stands, a man has as good a right to sell his credit as he has to sell his goods or his lands ; and if he deal fairly, he may take as large a price as he can get for either of them. Of course the principle applies to every engagement, direct or collateral, assumed in good faith, by one man for another, for a stipulated consideration. 7 In brief, neither sales of credit, nor loans, nor sales of property other than money, are touched by the statute. But the law does not tolerate usury disguised under any form ; either in the shape of a sale of credit, 8 or of property, 8 or a loan of either. 10 Where the contract in form is one of sale or exchange, if the court look- ing at the whole transaction can see, that the value secured to the vendor, was in good faith but the price of the thing sold, or exchanged by him, there can be no usury, whatever the price may 1 Hall v. Haggart, 11 Wend. R., 280. 8 Barnard v. Young, 17 Ves., 44; White v. Wright, 5 Dowl. & RyL, 110; Whipple v. Powers, 7 Verm. R., 457 ; Rice v. Bull, 1 Selden, 315. 5 3 Comst, 356; 19 John. R., 160; 4 HillR., 211. 4 Rapelyo v. Anderson, 4 Hill R., 472. » Ketchum v. Barber, 4 Hill R., 225; S. 0., 7 id., 444; VanDuzer v. Howe, 21 N. Y. Rep., 531. * More v. Howland, 4 Denio R., 264. T Dunham v. Dey, 13 John. R., 40. An exchange of notes for a commission was not treated as per se usurious. 8 13 John. R., 40 ; 3 Comst. R., 344; 4 Selden R., 426. • 1 Bro. Ch. C, 150; Lowe v. Waller, Dough, 786; 2 Campb., 375; Holt's N.P. G, 295. " 21 Wend. R, 103; 4 HilL 224; 5 Barb., 613; 2 John. Ch. R., 182; 2 Barb., 56 CONSIDERATION. 347 be, or the mode in which it may be reserved. 1 But where the object of the parties is a loan of money, and something else under the form of an exchange or sale is evasively substituted for it, the principal of the loan, and consequently of the debt con- tracted * by the nominal vendee, will be the value in money of the substitute ; and any consideration paid or secured to the vendor beyond that, will in general be considered as interest for its forbearance. 1 Where a note is made in another state or territory, bearing eight per cent interest, and is not made payable at any particular place, the court will not presume it to be usurious according to the law of the state in which it was made : 3 nor will a contract bearing seven per cent interest, made in this state by a corporation, char- tered in another and in terms required to observe its usury laws, six per cent being its established rates of interest, be declared usurious or invalid ;* for the lex loci contractus governs in both cases. Neither will a note made in one place payable in another, be declared usurious for the reason that the rate of exchange was in favor of the place of payment, at the time the note was made.' The ground of decision here is this ; it cannot be presumed that the rate of exchange will continue in favor of the place of pay- ment. On the same principle, it is not usurious for a country bank, discounting paper payable in New York, and giving there- for at the request of the borrower, drafts on the city, to deduct interest and the difference of exchange between the two places.* 1 Beebe v. Bloodgood, 4 B. & Cres., 453 ; Van Schaiek v. Edwards, 2 John. Cas., 356, 9 Peters, 378; 1 Hill, 227; 1 B. & P., 151; 4 Comst., 363, 463. Where a party receives a commission of 2 1-2 per cent for exchanging his noto for that of a firm made for sale in the market, the transaction is not usurious ; it is a sale of credit on the one side, and a negotiation of the firm's note on the other. Elwell v. Chamberlain, 4 Bos., 320; 3 Comst., 362; 4 id., 363; 4 Denio, 268. 'DougL, 786; 1 Bro. Oh. C, 150; 2,Campb., 375; Comyn on Usury, 94, 95; Brooks v. Avery, 4 Comst. R., 225; 1 Selden. 315. * Davis v. Garr, 2 Selden, 124; Cutler v. Wright, 22 N. Y. Rep., 472. 4 Bard v. Poole, 2 Kernan R., 495. * Cuyler v. Sandford, 13 Barb. R., 339. e Marvine v. Hymers, 2 Kernan R., 223. A default will not bo opened to lot in a defense of usury, except upon terms. And an answer Interposing the defense of usury must state specifically the usurious con- tract, and the rate of usurious interest taken; Morris v. Slatery, <; Abbt., 74; Man- ning v. Tjrler, 2] X. Y. Rep., 561 ; and must show that the note never had any valid 348 BILLS OF EXCnAKGB AND PROMISSORY NOTES. Dento, J. : " The exacting of a premium of exchange on the drafts, with which the proceeds of the discounted paper were paid, presents a question of more difficulty. Some of the protested paper, which formed the consideration of note sued on, was paya- ble in terms in the city of New York ; and the evidence tended to show that portions of the proceeds of such paper were paid in drafts on New York, upon which a premium of exchange was charged and allowed. Now, if the contract of the maker or ac- ceptor of this paper had l>een performed according to its terms, the * bank would, at maturity, have received payment at the ° same place at which its drafts were payable, and conse- quently of the same value ; and, having received the interest for the whole period of credit, it would, in this way, secure the amount of the premium of exchange in addition to the legal interest. Independently of the fact that the bank was to be ultimately reim- bursed in the same species of funds which it had advanced, there is no objection upon principle to its securing the difference of exchange upon the drafts which it gave the borrower instead of it3 own circulating notes. It had a legal right to loan its own notes ; but if the -borrower elected to take funds more valuable because they were on deposit at a different place, it was quite right that he should pay this difference in value." Besides, neither the court, nor the parties can know certainly that the paper discounted will be worth a premium, because payable in the city of New York, at the time it matures. The course of trade renders it very probable, but does not establish it with that certainty which will authorize the court to pronounce on it as a question of law. 1 1 Cayuga Co. Bank v. Hunt. 2 Hill, 635, commented upon by Judge Denio, 2 Ker- nan, 232. If the bank discounting the paper were to insist upon such an arrangement as a condition of the discount or loan, it would present a different question from that passed upon by the court. Legally money is of the same value in every part of the state. It is not therefore usurious for a bank to discount on the usual terms a note made in the state gayablo in the city of New York, though made payable at that place in the expectation that there will be a difference of exchange in favor of New York when the note becomes payable. Oliver Lee & Co's Bank v. Walbridge, 19 N. Y. Rep., 134 ; Price v. Tho Lyons Bank, 30 Barb., 85. A banking association is not within the safety fund act restricting chartered banks to six per cent on paper maturing in sixty-three days. International Bank v. Bradley, 19 N. Y. Rep., 245. enster.ee until it was negotiated usuriously; Burall v. Bowen, 21 now. Pr., 378. But an answer that sets forth a usurious contract, is sufficient if it sets forth the contract •ccor'ling to its terms, though theso bo somewhat indefinite. Dagal v. Simmons, 23 N. Y. Rep., 491. CONSIDERATION. 349 By the statutes of this state, all contracts for or an account of any money or property or thing in action, wagered, bet or staked upon any race, or upon any gaming by lot or chance, or upon any casualty, or contingent event, are declared void; 1 and contracts and securities given, made or executed for or on account of any raffle, or distribution of money, goods or things in action, for the payment of any money or other valuable thing, in consideration of a chance in such raffle or distribution, or for the delivery of any money, goods or things in action, so raffled for, or agreed to be distributed, are placed upon the same footing. 1 Under these statutes, bills and notes given for the amount of a gaming debt, or in the execution of any such invalidated #0™ * contract, are inoperative and void. 3 The law begins by declaring all wagers and bets unlawful, and concludes by annulling every contract growing out of such a transaction. 4 In effect, such contracts are placed in the same category with agreements which the law declares void on account of usury ; and hence the same qualifications and principles are applicable to both species of con- tract 6 If the payee of a usurious note indorses it over to a third person, who takes it for value and without notice of the usury, he is liable on his indorsement as on a new contract ; and so the holder of a bill taken for a gambling debt, who indorses it over to another person for a valuable consideration, is liable thereon, he is estopped from asserting its invalidity.' * 1 It. S., 839, 3d ei * Id., 841, of raflling and lotteries. * Bowyer v. Brampton, 2 Stra., 1153. 4 3 Dcuio R., 108, 340. 1 Dewitt v. Brisbane, 16 N. T. Rep., 508; McKnight v. Wheeler, G Hill R., -192; Oulds v. Harrison, 28 Eng. Law and Eq. R., 524. This was an action upon a bill of exchange drawn by one Bennett upon tho defendant, payable to the order of Bennett, and by him indorsed to the plaintiff. Tho transaction was as follows: Bennett had advanced money to pay bets made by him on account of the defendant, and had paid the bets so made without any special request from the defendant to pay them, and tho bill in question was accepted by the defendant for the money so paid. Held, that circumstances did not furnish any defense to tho action. Hay v. Ayling, 3 id., 416; action by the drawer against the acceptor of a bill. The defense was that tho leration of the acceptance was a bet lost by him to A. B., and that the defendant had notice of the premises at the time, and accepted the bill at the request of A. B., to secure the payment of the money so lost at play. Held, that tho defenso was good, atute 5 and 6 Will. IV, c. 41, § 1, providing that such securities shall bo deemed to have been made for an Illegal consideration, and thereby making them void except in the hands of a bona fide holder. * Edwards \. Dick, 1 Harn. y his principal to draw the draft. 1 By adding the word agent to his name, where he acts with authority for another, the drawer gives notice that he does not mean to make himself personally liable. 3 But where the person drawing a draft or sign- ing a note does not act for and bind his principal, it is not material what words are added to his name — he binds himself. Thus, where the maker of a note added under his name the words, " agent for the Churchman," it was held, the note of the party signing it.' The drawing and negotiation of a bill of exchange implies, as we have seen, an undertaking from the drawer to the payee, and to every other person to whom the bill may afterwards be trans- ferred, that the drawee is a person capable of accepting the bill and making himself responsible for its payment ; that he shall, if applied to for that purpose, express in writing upon the bill, an undertaking to pay it when it shall become payable ; that he shall pay it, on presentment for that purpose, when it becomes payable ; and that if the drawee fail to do either, he, the drawer, will pay „, the amount stated in the bill, with legal *damatres thereon, 379 • • ■ . . provided he have due notice of the dishonor. 4 The original theory of the bill is, that the drawer has money in the hands of 1 Jlicks v. TTinde, 8 Barb. R., 528, and authorities there cited. It is otherwise if the principal be not known, or not disclosed. 10 Wend., 271. ' Conro v. Port Ilenry Iron Co., 12 Barb. R., 27, 54; see, also, Walker v. The Bank of the State of New York, 5 Selden, 582, and 19 N. Y. Rep., 312. 1 De Witt v. Walton, 5 Selden, 571 ; Bank of B. N. America v Hooper, 5 Gray, 567. 4 BayU-y on Bills, ch. 1, § 13 ; Chitty on Bills, 193 ; Story on Bills, § 107 ; Wing v. Terry, 5 Hill R., 1G0. CONTRACT OP THE DRAWER. 361 the drawee, and directs it to be paid over to the payee or to his order. 1 Assuming this to be the true relation of the parties, the law implies only a conditional contract on the part of the drawer; namelv, that in case the bill is dishonored, he will pay it himself, on being duly notified that the drawee refuses to accept, or fails to pay the bill at its maturity. 2 Having funds in the possession of the person on whom he draws, or what is the same thing, a right bv agreement to draw upon him, he expects, with good reason, that his bill will be duly honored ; and the law presum s that he will act accordingly, upon the understanding that it has been accepted and paid. On this account he has a right to prompt notice of the non-acceptance or non-payment of his bill, so that ho may take immediate measures for his own security. 3 Where an order is drawn for the whole of a particular fund, it amounts to an equitable assignment of that fund, and will after notice to the drawee bind the fund in his hands. 4 But a bill of exchange drawn in the ordinary form, against a consignment of goods, does not operate as an equitable assignment of the proceeds thereof: it is not in the nature of an order drawn on a particular fund, and is not payable upon any contingency. 9 When so drawn that it operates as an equitable assignment of funds in the hand of the drawee, it no longer possesses all the characteristics of a bill of exchange ; * for, being negotiated in that form, it carries information upon- its face making it dependent upon a special fund.* Hence, it is not necessary that an order of this kind should be formally accepted as a bill of exchange ; 7 being itself an equitable assignment of the fund on which it is drawn, that takes effect as soon as the drawee is notified of it. The tenor of the instrument determines whether it is to be considered as a bill of exchange, or an appropriation of an exist- 1 Commercial Bank of Albany v. Hughes, 17 Wend., 91 ; 4 Mason, 1 13 ; 2 II. Black., 6 Mass., 170; 7 Wind., 168. ' It is sometimes said that the drawer and indorser arc presumed to stipulalo for notice of non-acfcptnnco or non-payment. Ogden v. Sautiders, 12 Wheat. R., 213. • Idem, and 17 Wend, 101 ; 12 Wend. R., 439. 4 Mundovillo v. Welch, 5 Wheat., 277; 1 Hill R., 82; Vreeland V. Blunt, C Barb. R, 182; 1 Hill R., 583; 5 Paigo Ch. R., 632; McMcnomy v. Ferrers, 3 John. R, 72. • Co\vp<-rih\vait v. Sheffield, 1 Sand. R, 410; S. C, 3 Comst., 243. •Lufft; v. Pop'-, 5 Hill K., 413; & C, 7 Hill, 577; Harrison v. Williamson, 2 Edw. Rep., 430. • Morton v. Naylor, 1 Hill R., 583; 1 H. Black., 239, 242; 12 John. R, 279. 283- 3 Paige, 373; B id.. o.iJ, S4L Euw. 40 362 BILLS OF EXCHANGE AND PROMISSOEY NOTES. ing or accruing fund which operates as an equitable assignment. The intention of the parties not expressed in the draft, will not follow the instrument so as to diminish or qualify the rights of a bona fide holder ; but if a principal debtor provides, in the hands of his surety, a fund to pay a given debt evidenced by a bill of exchange, the creditor is entitled to have such fund applied in payment of that debt. 1 But this is on a ground of equity, and not on the principle that parol evidence can be introduced to vary the terms of the contract expressed in the bill, or implied by law from its terms. 2 Mr. Chitty, stating the substance of the contract implied by law on the part of the drawer to the payee and to every subsequent holder, says that the drawer stipulates that the drawee is to be found at the place where he is described to reside, if that descrip- tion be mentioned in the bill. 3 By addressing a bill to the drawee at a particular place, naming the number of the street and the city of his residence, the drawer certainly asserts, if he does not stipu- late, that the drawee is to be found there, and it would be clearly unreasonable to permit him afterwards to raise the objection that that was not the proper * place to present the bill for accept- ance or for payment. 4 But the time for presenting a bill for acceptance not being prescribed by a fixed and rigid rule, the holder has an opportunity to make full inquiry for the person to whom the bill is addressed ; and in case he has removed, it w/is formerly held to be incumbent upon the holder to endeavor to ascertain to what place he has removed, and to make the presentment there. 6 It is agreed, that if the drawee cannot be found at the place where the bill states him to reside, and it appears that he never lived there, or has absconded, or the house be shut up and no one there, the bill is to be considered as dishonored.* And where the bill is addressed to the drawee at a particular place, and accepted gene- 1 The Marine and Fire Ins. Bank of Georgia v. Jauncey, 1 Barb. R., 486 ; 9 Paigo Ch. R., 434; G Barb. R., 182. 2 7 Cowen R., 249; 1 Hill, 116; 17 Wend., 190; 5 Denio, 514- 8 John. R., 190, 375; 1 Denio, 400; 13 John. R., 238. 8 Chitty on Bills, 192. 4 De Wolf v. Murray, 2 Sand. R., 166; Cayuga Co. Bank v. Hunt, 2 Hill R., 365; Wilkins v. Jadis, 2 Barn. & Adol., 188. 6 Collins v. Butler, 2 Stra., 1087 ; Bateman v. Joseph, 12 East, 433. Mr. Justice Stouy states the rule in the same manner. Story on Bills, § 235; 3 Campb., 262; 2 id., 4G1 ; post, 399. • Lord Raym., 743; nine v. Alleby, 4 Bam. & Adol., 624; 2 id., 188. / CONTRACT OF TUB DRAWEE. 363 rally, and the acceptor cannot be found there in business hours, there is no reason for saying that the holder is bound to follow him and demand payment in a different and perhaps distant place.' The drawer engages that the drawee is capable of accepting the bill and binding himself for its payment, and that he will pay it on its becoming due. The scope of his engagement is such as to make him answerable without any regard to the nature of the obstacle that may lie in the way of acceptance or payment of the bill. Thus, a bill was drawn in London upon Paris, and negotia- ted through Holland ; before it became due, the French govern- ment prohibited the payment of any bill drawn in England, in consequence of which it was dishonored, and sent back through the different hands by which it had been negotiated, to London ; and the drawer w T as held * liable for the whole amount of # the reexchange between the different countries. Buller, J., " What is the engagement of the drawer of a bill of exchange ? He undertakes that the bill shall be paid when due. If it be not paid, it is not necessary for the holder to inquire for what reason it is not paid, and if the holder has been guilty of no default, the drawer is answerable for the amount of the bill ; and if he is lia- ble for the amount of the bill, he must also be liable for the ree'x- change, which is a consequence of the bill not being paid." 3 The rule is different where the' law of the country in which the drawer has his domicil interposes and forbids the performance of the con- tract, for the courts of a state cannot carry into effect an engage- ment which the law of that state forbids, nor can they enforce it in an illegal manner. 8 1 2 Sand. R., 1GG. In this case, the bill was addressed to IT. 0. Collard, No. 18 Cha- pel Walks, Liverpool, and was presented there for payment by the notary, who found the office door closed and no person there to give an answer respecting the bill; held a good presentment of the bill to charge the indorser. 4 Barn. & Adol., 624; 7 Barb. R., 143 ; 3 John. R., 202, 210 ; 18 Barb. R., 290 ; Wiseman v. Cliiappella, 23 Now. U. S., 308. The rule stated in the text is clearly supported by the English decisions. In llino v. Alleby. the bill was addressed to the drawee, No. G Budge Row, Watting street, accepted generally, and presented there for payment, and no one found to answer tho ml. In Buxton v. Jones, 1 Man. & Gi\, 83, the bill was drawn on P. lv. No. 30 Minto St., accepted generally, and presented there, the acceptor having removed. In Pierce v. Btruthers, 27 Penn. State, 219, the draft was addressed to P. at a number and Street in New Yoik, but the drawee resided in Albany, and the same rule was held. As to presentment for acceptance, we post, 399, ■ M-llish v. Simeon, 2 U. Black., 378. The bill was drawn in July, 1793, pending the flrsl French revolution. • Pollard v. Berries, 3 Boa, k l'ull., 340. 364 BILLS OF EXCHANGE AND PROMISSORY NOTES. When the place of payment is specified in a bill, it is a material part of the drawer's contract that the payment shall be made at the place designated ; and on a failure in this respect he is answer- able for the damages. 1 The drawer contracts with the payee and with every subsequent holder, that the drawee will accept the bill when duly presented for that purpose. Accordingly, where a bill drawn payable a cer- tain number of days after sight, is presented for acceptance and dishonored, the holder, giving proper notice of the non-acceptance, has an immediate right of action thereon against the drawer.* The giving of the bill is not simply an agreement that it shall be paid at maturity : it is also an undertaking that it shall be hon- ored and thus made capable of negotiation as accredited paper. Moreover, this contract on the part of the drawer is an under- ^383 #oq. the same not being according to the tenor of the bill. S. C, 5 Seld., 582. * Byles on Bills, 149. • Rowe v. Young, 2 Brod. k Bing., 165. CONTRACT OF THE DRAWER. 3fl5 ble at a banking house in Buffalo, or Boston, the acceptance is not according to the tenor of the bill ; for if accepted generally, as drawn, it would be presentable for payment at the place of busi- ness or residence of the drawee in New York, and a change in the place of payment may operate to the prejudice of the drawer, by delaying the payment or preventing so early a notice of non-pay* mcnt as might have been received from the town on which the bill was drawn. But there is not the same, nor indeed any objec- tion to an acceptance making the bill payable at a bank or bro- ker's office in the city where the acceptor resides ; for no prejudice can possibly arise to the drawer from the holder's taking an accept* ance which changes the place of payment from the * ac- ceptor's counting house to the house of his banker in the same town. 1 The indorser is considered in almost every respect as a new drawer ; and the nature and extent of the liabilities incurred by each are, as we have seen, determined by the law of the place where the bill is drawn or the indorsement made.* The contract of both the drawer and indorser is implied by law, but it is absolute in its terms and conditions ; and cannot be modi- fied by any act of theirs, any more than a contract of a different kind can be changed by the act or volition of only one of the con- tracting parties. But the obligations assumed by the drawer may 1 In Rowe v. Young, cited above, a bill of exchange was drawn by a person at Gosport, upon a person at Torpoint, requiring him in general terms to pay at two months afterdate a certain sum of money to the order of the drawer, and the drawee accepted the bill payable at a banking house in London ; and it was held necessary for the holder to aver and prove a presentment for payment at the banking house in London. The case being carried to the house of Lords, one of the questions presented to the twelve judges was this: "Whether, if A draw a bill upon B in favor of 0, for 100/; and C, without the previous authority or subsequent assent of A, take an ac fptance of the bill for the whole amount of the 100/, but an acceptance qualified ai to the time or place of payment; C could, notwithstanding his taking such acceptance maintain an action upon the bill against A ?" And the general opinion was that the ICtion oould not be sustained. By way of illustration one of the judges puts tlie case *>f a bill drawn in general terms upon a banking house in London, and by them aeeop* ted payable at Dublin or Amsterdam, and says it would certainly discharge the drawer if taken without his assent. And Mr. Justice Bkst says plainly that a qualified ac* nee, making the bill payable at another town, without the assent of the drawer, will d the drawer. It i- now settled in this State that a draft drawn generally on parties in a city named, Is accepted according to the tenor of the Mil, when the acceptance makes it payable at a particular hank in that city; Troy City Bank v. Lauman, 19 N. Y Hep., 477; 31 Barb., 403, and Myers v. Standart, 1 1 Ohio State, 29. ■A/mat v. .Sheldon, 12 Wend EL, 439. Ante, 185, 2G2. 366 BILLS OF EXCHANGE AND PROMISSORY NOTES. be discharged or released by the laches or neglect of the holder ; for where a party takes a negotiable security, he takes it subject to the principles of the law incident to the paper. 1 If the bill be drawn payable at sight, or a certain number of days after sight, the law implies a duty on the part of the holder to use diligence in presenting the same for acceptance, in order that the period may commence from which the payment is to take place. 2 And though the law does not prescribe any fixed time within which such a * bill must be presented, it does make the holder responsi- ble for laches in not presenting the bill for acceptance within a reasonable time, or not putting it in circulation. 3 In this respect also, the engagement of the drawer is, like that of a surety, con- ditional in its nature ; for laches or negligence in a creditor do not operate to discharge an unconditional obligation to pay a given debt,* We shall see, as we proceed, under what circumstances the drawer is discharged or released, on account of the negligence or default of the payee or holder of the bill. But in this connection, it is proper to state that the contract of the drawer is not only raised and determined by the law of the place where it is made, but is also discharged by the same law. If a person draws a bill of exchange in Louisiana, and is afterwards discharged from his debts as an insolvent debtor under the laws of that state, the dis- charge operates according to the lex loci, upon the contract of the drawer. 6 1 Chitty on Bills, 194. 2 Muilimali v. D'Eguino, 2 II. Black., 565 ; Robinson v. Ames, 20 John.R., 147. 3 Gowan v. Jackson, 20 John. II., 176. A foreign bill payable ninety days aftor sight, circulated through several hands, was held properly presented six months after date. * 2 Wheaton, 3S5 ; 9 Mass. R, 60; 4 Dana R., 352; 7 Wend., 227 ; Green v. Goings, 7 Barb. R., 652. The defendant who has accepted a bill payable at a particular bank, is liable without any demand ; but he may defeat a suit by showing that he was at the place, ready to pay. 6 Smith v. Smith, 2 John. R., 242; Hicks v. Brown, 12 John. R., 142; Potter v. Brown, 5 East, 131; 3 Mass. R., 81; 6 Cranch, 221; 12 Wend., 443; 6 Conn., 480; 2 Blackf., 394. An insolvent's discharge under the laws of another state, is not a defense in this state to an action here by one of our citizens on negotiable notes made in the state where the discharge was granted and payable generally, that is, not specifying any place of payment ; the right of the indorsee, as against the makers, is, in other words, to be governed by the law of the place where tho indorsement was made to him. Ballard v. Webster, 9 Abbt., 404; see Savage v. Marsh, 10 Met., 594. It is held in Massachusetts, that the discharge operates upon debts expressly made payable in that Kate ; Seribner v. Fisher, 2 Gray, 43. CONTRACT OP THE DRAWEE. 367 This statement must, however, be taken with a qualification : if the parties to the bill reside in the same state, the discharge of the drawer under the insolvent law of the state pronounces his release from the contract ; not so where the payee or holder of the bill is a resident of another state. In respect to residents of the state, they are presumed to stipulate with reference to the existing law, and cannot therefore claim that the law involves a violation of the obligation of the contract ; while in respect to citizens and resi- dents of other states, the same presumption does not arise. Thus, where a resident of Kentucky drew a bill of exchange on Ogden of New York, who accepted the bill at his residence and was after- wards * discharged as an insolvent debtor, under the laws of this state, the Supreme Court of the United States deci- ded that such discharge did not operate to release him from this debt due to the citizen of another state, though the contract was made here. The law of the state has no extra-territorial operation. 1 So where a bill was drawn in Maine in favor of a citizen of that state, upon and accepted by a citizen of Massachusetts, it was held that a discharge of the acceptor, under the insolvent laws of Massa- chusetts, was not a bar to an action against him by the payee, who had not proved his claim thereon against the insolvent's estate.* But it has been held in this state that where the holder of such a bill comes in and proves his claim and accepts a dividend from the insolvent's estate, he becomes a party to the proceedings, which thereupon operate as a discharge of the debt.' It is easy to apply the principle of these cases to the contract of the drawer. 1 Ogden v. Saunders, 12 Wheat., 213; 6 Peters, 348, 642; Van Hook v. Whitlock, 26 Wend., 53; 11 Barb. R., 558; Donnelly v. Corbett, 3 Seld., 500. The contract of acceptance is made in such cases where the bill is accepted. Wilde v. Sheridan, 11 Eng. Law and Eq. It., 380; Barker v. Sterne, 25 id., 502; Suydam v. Barber, 6 Duor, 3-L A party accepting a bill in England drawn and held by a citizen and resident here, is discharged from his acceptance by the usual discharge under the English bankrupt law. Oliphant v. Atwood, 4 Bos., 459. This case is distinguished from tho caso of Donnelly v. Corbett, 3 Seld., 500, by this fact, that in tho latter, tho debt was con- tracted in New York. Ante, 385, Scribner v. Eislier. An insolvent's discharge in the state where ho makes and delivers a noto payable to his own order with his own indorsement upon it, is not availablo as against an indorsee residing in another state. Smith v. Gardner, 4 Bos., 54. 1 Fisher v. Foster, 10 Mete, 597. » Gardner v. Oliver Lee Bank, 11 Barb. It., 558; Clay v. Smith, 3 Peters, 411. 368 BILLS OP EXCHANGE AND PEOMISSOEY NOTES XL Presentment for acceptance. The form of a bill of exchange and the nature of the under- taking entered into by the drawer and indorser of it, show plainly that the holder of the bill has an interest in having it presented for acceptance without any unreasonable delay. If it be drawn payable at sight, or a certain number of days or months after sight, Q7 or after demand, the presentment *is necessary in order to fix the time when it shall become payable ; and the law, not deeming it wise or equitable to prescribe a fixed period within which such a bill is to be presented for acceptance, so as to charge the drawer and indorsers, declares briefly that it must be presented within a reasonable time, and leaves it to the court to determine what is reasonable time under the circumstances of each particular case. 1 When the bill is drawn payable a specified length of time after date, or on a day certain, it is well settled that the holder need not, for the purpose of charging the drawer and indorsers, present it for acceptance until it becomes due and payable. 2 Never- theless, it is expedient for the owner of the bill to have it presented at an early day for acceptance ; for if accepted, he acquires thereby the additional security of the acceptor ; and if the drawee refuses to accept, recourse may be had immediately to the drawer and indorsers for payment. 3 When a bill is drawn payable a specified time after sight or after demand, the holder acting within the rule that requires him to use diligence in presenting the same for acceptance, has a right to make the time from which payment is to be made commence when he pleases. On the face of the bill it is apparently left entirely to his option to make the presentment soon or late : and it is only by 1 Aymar v. Beers, 7 Cowen R., 705 ; Sice v. Cunningham, 1 id., 307 ; 20 John. R., 14G; Field v. Nickerson, 13 Mass. R., 131 ; Mullick v. Radakisson, 28 Eng. Law and Eq. R., 8G. The law does not fix a time for presentment of bills for acceptance, where they are drawn payable on or after sight ; the rule in such case is, where there is no usage of trade, that the bill must be presented within a reasonable time, which is a mixed question of law and fact, to be determined by the jury with the assistance of the judge. In doing so, the interest of both the holder and drawee is to be considered. But these rules in relation to bills do not apply to banker's checks, which are peculiar instruments. 1 Allen v. Suydam, 20 Wend., 321 ; S. C, 17 id., 3G8. ' 3 John R., 202 ; 3 East, 481 ; Dougl., 54. If the holder present the bill for accept- ance, though not bound to do so, he must give notice of the non-acceptance to the drawer and indorser. without delay. Townsley v. Sumrall, 2 Peters' R., 170; Goodall r. Dolley, 1 Term R, 712. PRESENTMENT FOR ACCEPTANCE. 3G9 considering the nature of the instrument and the relation in which the several parties stand to each other, that we perceive the reason of the *rule qualifvine; the discretion of the holder in this ^* respect 1 Lord Mansfield, in a leading case, says : " A bill of exchange is an order or command to the drawee who has, or is supposed to have effects of the drawer in his hands, to pay. When the drawee has accepted, he is the original debtor ; and due dili- gence must be used in applying to him. The drawer is only liable in default of payment by him, due diligence having been used : and therefore if the acceptor is not called upon within a reasonable time after the bill is payable, and happens to break, the drawer is not re- sponsible at all." a What is here said with reference to the duty of the holder in making a demand of payment applies equally to the duty of making a presentment for acceptance, where that is neces- sary, to the end that the time within which payment is to be made may commence to run. In regard to foreign bills, it is sufficiently evident that what would be reasonable time in one case would be entirely inadequate in another. Thus, a bill drawn in Antigua, one of the West India islands, upon a merchant residing in London would require time for transmission, and that again would depend upon the regu- larity and frequency of the established communication between the two places: so that if put into circulation and negotiated through several hands, a delay of six months in presenting the bill for acceptance would not be unreasonable. 3 So, a bill drawn in London on Calcutta, and purchased at the exchange for a firm in Paris, requires not only time for transmission to India, but also time for a previous communication between London and Paris ; so that if the main voyage cannot be accomplished short of about six months, a delay of eight months in presenting the bill for acceptance would not be unreasonable, although it was not ^.oo Q * transmitted by the first opportunity to the place of its destination.* Take another illustration : a bill is drawn at Augusta 1 Muilman v. D'EguinO, 2 II. Black., 5G5. This case holds that the purchaser of a foreign, i. ryable sixty days after sight 2 II. Black., 565. El»w. 47 370 BILLS OF EXCHANGE AND PROMISSORY NOTES. in the state of Georgia upon merchants residing in the city of New York, payable sixty days after sight : the mail passes from one place to the other in ten days, leaving the former place three times a week ; and the usual course of business is to send the bill by one mail and advice by the next ; the payee transfers the bill, put- ting it into circulation ; and though it is not presented for accept- ance until seventy-five days after it is drawn, it has been adjudged that this is not an unreasonable delay. 1 When a bill payable after sight is negotiated, and kept in circu- lation from hand to hand, the courts have been very cautious not to fix any precise time within which it must be presented for acceptance. Negotiation is the purpose and nature of the bill, and if it take the ordinary and natural course of negotiable paper, the drawer cannot complain that it goes by a circuit which he did not contemplate. If, for example, a bill be drawn in London on a merchant in Lisbon, payable thirty daj^s after sight, and nego- tiated through France and Italy, so that it is more than three months on its journey before it arrives and is presented for accept- ance, the drawer is not discharged, though the drawee may have failed in the meantime ; for the bill has followed and obeyed the law of negotiable paper. 3 Where an inland bill payable after sight is not negotiated or put into circulation, the rule requiring it to be presented for accept- ance, is stated in the same terms ; it must be presented within a reasonable time. But the time which would be reasonable in the case of a negotiated bill would be quite unreasonable in the case *9 90 of one that has not been transferred. 5 The * payee (of a foreign bill), where he does not negotiate it, is not bound to present it immediately for acceptance ; neither is he at liberty to lock it up for an indefinite length of time. 4 A delay of two 1 Robinson v. Ames, 20 John. R., 14G. It was shown in this case that the first mail leaving Augusta, after the bill was drawn, was lost; but it was not shown that the first of exchange was sent by that mail. a Goupy v. Harden, 7 Taunt. R., 159; 2 Com. Law R., 58. 3 Fry v. Hill, 7 Taunt., 397. In this case the draft was drawn within twenty miles of the city of London at one month after sight, and it was determined that an omis- sion to present for acceptance until the fourth day, was not unreasonable. A similar delay between Lowell and Boston was not considered unreasonable. Prescott Bank v. Caverly, 7 Gray, 217. But four days' delay in the place of presentment, unoxcused, IB unreasonable. Brady v. The L. M. R. R. Co., 34 Barb., 249. * Straker v. Graham, 4 Mee. & Wck, 721 ; 2 II. Black., 5G5. PRESENTMENT FOR ACCEPTANCE. 371 months beyond the time within which the presentment might have been made, unexplained, is sufficient evidence of negligence. 1 A delay of four days (on an inland bill) is not sufficient evidence of laches, where it is drawn twenty miles from the residence of the drawee and no explanation is given and the drawee fails on the morning of the day on which the bill is presented.* There is a close analogy between a bill payable a given number of days after sight, and a promissory note payable on demand, fo far as respects the use of due diligence. In both cases, an unrea- sonable delay will exonerate ; in the former it exonerates the drawer and indorser, in the latter the indorser only. 3 In the case of such a note, a delay of two months and a half, where no excus- ing circumstances are disclosed, is unreasonable. 4 But a delay of seven days, 6 one month, 6 and four or five weeks, 7 has been held not unreasonable ; not such a delay as will let in a defense on the merits as against the indorsee. A delay of eight months, 8 seven months,* and of five months in making demand, 10 has been held unreasonable, so as to discharge the indorser. As in the case of the bill, the question of diligence depends upon the nature of the transaction, the circumstances and situation of the parties. 11 If the note be payable on demand with interest, the indorser remains liable until an actual demand is made, the interest being duly paid. 11 1 4 Mee. & "Wels., 721 ; ante, 155. * 7 Taunt, 307 ; an inland bill; 7 Gray, 217; ante, note, 389. 3 Furman v. Ilaskins, 2 Caines R., 3G9 ; Sice v. Cunningham, 1 Cowen R., 397 ; Yan Hoescn v. Van Alstyne, 3 Wend. R., 75 ; ante, 156-160. * Losee v. Dunkin, 7 John. R., 79. In this case the note was held dishonored so as to let in proof of payment to the payee before indorsement. • Seaver v. Lincoln, 21 Tick., 267. • Ranger v. Carey, 1 Mete. 369. T Wethey v. Andrews, 3 Hill, 582. 8 Field v. Nickerson, 13 Mass., 131. ' Martin v. Window, 2 Mason, 241. 18 Sice v. Cunningham, 1 Cow., 397. 11 An understanding for delay, between the maker and the payee, will not affect the indorser unless he is privy to the arrangement, 1 Cowen, 397. If the note bears interest it is a circumstance that shows an immediate demand was not contemplated. "Wethey v. Andrews, 3 Hill R., 582; Weeks v. Pryor, 27 Barb., 79; Field v. Nicker- son, 13 Mass. R., 131, discountenances tho idea of a verbal understanding to extend the time of demand, and there is a recent statute of that state requiring that a noto On demand shall be demanded within sixty days. Ante, note, 266; Kelly v. Brown, 5 Gray, 108. Diligence is a question of law; post, 39] ; which is to bo determined upon the circumstances of the case; Barbour v. Fullerton, 36 Pcnn. State, 105. " M-rritt v. Todd. 23 N\ Y. Bep., 28; Brooks v. Mitchell, 9 Mccs. & Wels., 15; Borough v. White, 4 B. & C, 325; Vreoland v. Hyde, 2 Hall, 429. 372 BILLS OF EXCHANGE AND PROMISSORY NOTES. While a promissory note continues in its original jmape of a promise from one man to another, it bears no similitude to a bill of exchange. When it is indorsed, the resemblance begins ; for then it is an order by the indorser, upon the maker *of the note, (his debtor, by the note,) to pay to the indorsee ; and this the very definition of a bill of exchange. The indorser is the drawer ; the maker of the note is the acceptor, and the indorsee is the person to whom it is made payable. The indorser only under- takes in case the maker of the note does not pay, and the indorsee takes the note upon that condition, and must therefore use dili- gence in making a demand of payment and in giving notice of non-payment; just as the person to whom the bill of exchange is made payable must show a demand or due diligence to get the money from the acceptor, before he brings an action against the drawer. 1 The analogy here is perfect, with one exception; in a bill that has not been negotiated, there are in the beginning but two parties ; whereas the note does not become analogous to the bill until it has been indorsed, and there are three parties to the instrument. This done, a promissory note payable on demand is like a bill payable at sight ; so that, as in the latter case the holder must present his bill for acceptance within a reasonable time, in order to charge the drawer ; so in the former, the indorsee must make demand of payment on the promisor within a reasonable time in order to charge the indorser. 2 In England the question whether the holder has used diligence in presenting a bill for acceptance, is treated as one of fact, to be passed upon by the jury under the rule of law laid down by the court; and, as might be expected, it occasionally happens that different conclusions are arrived at on substantially the same state of facts. 8 In this state, the question is considered one of law to be decided by the court ; 4 and where the facts are not disputed, this seems to be the general doctrine in similar cases.* 1 2 Burr., 676, per Lord Mansfield. * Per Chief Justice Parker in Field v. Niekersoo, 13 Mass., 13G. A promissory note payable on demand, with interest, is not dishonored until an actual demand is made, the interest being paid according to its terms. It is a continuing Security. Merritt v. Todd, 2:? N. Y. Hep., 28. This is also the doctrine of the English courts; Brooks v. Mitchell, 9 Mces. & Wels., 15 Barough v. White, 4 B k C, 325. s 2 H. Black., 565; 4 Mee. & Wels., 721 ; Mellish v. Rawdon, 9 Bing., 416. It is also treated as a question of fact in Massachusetts; 7 Gray, 217. * Aymcr v. Beers, 7 Co wen R., 705, and cases there cited. * Tindal v. Brown, 1 T. R., 163 ; Bell v. Wardell, Willes It., 204 ; Furman v. TTaskins, 2 Cai., 375 ; 20 John. R., 146 ; 13 Mass., 131 ; 1 Cow. R., 397 ; 1 Pet., 578 ; 10 Wend , 304 PRESENTMENT FOK ACCEPTANCE. 373 The law on the subject of presenting bills for acceptance is founded on the custom of merchants ; and therefore a general * and uniform custom may be shown byway of establishing the duty of the payee of a bill to send it forward for accept- ance, or by way of excusing his delay. 1 Delay caused by negli- gence in the holder, or in his agent and a post office clerk, is no excuse.' But a non-presentment is excused, where it is shown to have been impossible to present the bill in due time : thus, where a bill drawn on Leghorn was not presented in due time, owing to the political state of the country, that place being then occupied by the enemy, it was held that the due presentment of a bill neces- sarily implies an exception in favor of those unavoidable accidents which must prevent the party from doing it within the regular time.' On the same principle, delay in making the presentment within a proper time, maybe excused by illness or other reasonable cause or accident not attributable to misconduct of the holder. And hence, where a bill was drawn in New York on llichmond in Virginia, and delivered to the payee, who carried it with him to his residence about twenty miles from the latter place, and being in feeble health, traveled slow and was confined to his house for several days after his arrival home ; it was adjudged that twenty- nine days' delay were not sufficient to discharge the drawer. 4 What is reasonable time is to be determined by the circumstances of each particular case, and the sickness of the holder is one of those cir- cumstances which are to be considered. The object for which a bill is drawn, or where it is purchased in the market like an article of merchandise, the intention of the purchaser is material, it seems, in determining the question of dili- gence : as, if a traveler purchase bills in New York, on the differ- ent European cities through which he expects to pass, or if a dealer in the article buj^s bills on 'Change with the *design of selling them again for better prices. 6 In a Lite action J 9 Bing. R., -JIG; Story on Bills, § 231. • Scholefield v. Bayard, ?, Wend., 488; Allen v. Suydnm, 20 Wend., 321. On thil ground, if the agent fails to present, for acceptance lie is liable for damages. A delay caused solely by the neglect of the post-ofSoe official, will bs excosedi 'The bill was drawn on the 10th of September, 1800, and was not presented until the 31st of December; and the delay was excused on tin- ground of impossibility. Patience v. Townley, 2 Smith's Rep., 22.".. ' Avinar v. Beefs, 7 ('own ft., 70.",. * Story on Hills. £ 231. "In [gaped to foreign bills, the mnvniirntvs if not tho ities of trade, seem to require that, a very liberal allowance of time, both for the transmission and prcv'itment of bills, should i": allowed to every successive holder." 374 BILLS OP EXCHANGE AND PKOMISSORY NOTES. brought by the bolder against the drawer, on a bill of exchange that had been drawn in London on Eio de Janeiro, payable sixty days after sight, it was shown on the trial that foreign bills were constantly bought and sold in the market for the purpose of specu- lation, and that this course of business was so general that the defendant could not but have known of its existence : and Tindal, C. J., before whom the cause was tried, instructed the jury that they were to determine, on the evidence before them, whether there had been an unreasonable delay on the part of the plaintiff, the holder of the bill, in sending it forward for acceptance, or putting it into circulation ; and that in order to arrive at the proper determination of that question,. they were to take into their con- sideration the situation and interests, not of the drawer only, or of the holder only, but the situation and interests of both ; and to say whether, under all the circumstances, the delay in the case, which amounted to four months and twenty-two days, was unrea- sonable or not. And the jury having found a verdict' for the plaintiff, the instruction was approved in the court of King's #QQ,± ^ )enca - 1 ^ ie following sentences, while they ^exhibit the ground of the decision, may also serve to illustrate the con- siderations appropriately bearing on the question of diligence. "There was no evidence in the cause of any such unvarying course having been observed with respect to foreign bills payable at a given time after sight, as, that the holder who kept them in his own hands sent them forward for acceptance within any certain time, as for instance, by the first or second packet which sailed after they came to his hands. Had there been proof of any such 1 Melish v. Rawdon, 9 Bing. It., 41 G. On the trial there was no evidence of any such unvarying course having been observed with respect to foreign bills paya- ble at a given time after sight, as that the holder should send them forward for acceptance within any certain time ; as, by the first or second packet that sailed after they came into his hands; on the contrary, there was conflicting evidence given by the merchants on that point ; some stating that such was their understanding of the course and practice, others stating that they understood foreign bills were usually kept, without being forwarded for acceptance, as long as it suited the convenience or interest of the holder. But it appeared that where drawers of such bills are desirous of hunt- ing the time of their responsibility, there are various modes which they are accus- tomed to pursue to attain that object; either they are in the habit of sending forward one part for acceptance, and bringing another part of the bill to the market, upon which is noted the time at which the first was forwarded, or they may make it a matter of stipulation with the purchaser to send it forward within a limited time. And all the witnesses agreed that once put in circulation, it might be sent to any part of the world, provided each successive holder kept it only a reasonable time. The above may serve to show the range of inquiry permitted on the trial. PRESENTMENT FOR ACCEPTANCE. 375 general usage, it would have put an end to all doubt ; the parties would be taken to have dealt with each other on the footing of such usage ; the reasonable time for forwarding the bill would then have been marked with the same precision as the reasonable time for giv- ing notice of the dishonor of an inland bill ; and the only point for the consideration of the jury would then have been, whether the bill had been sent forward within such a limited time or not. But there was no such evidence of usage ; on the contrary, there was conflicting evidence of the judgment and opinion of merchants on that point ; some stating that such was their understanding of the course and practice, others on the contrary stating, that they under- stood that foreign bills were usually kept without being forwarded for acceptance, as long as it suited the interests or convenience of the holder. Again, there is no definite time prescribed by the law of England, within which such presentment for acceptance must take place. In some countries, as in France, the times within which a foreign bill payable at sight, or any certain time after, must be presented for acceptance to the drawee, are fixed by posi- tive law, according to the place where, and the place on which the bill is drawn. Thus, for instance, where it is drawn from the con- tinent of Europe, or the isles of Europe, and payable in the European possessions of France, such presentment for acceptance must be made within six months from the date ; in default of which the holder can have no * remedy against the drawer ^ QO ,. or indorsers. 1 But there is no such law in England ; and in the absence of any such positive regulation, or of any general usage, or course of trade, no other rule as it appears to us, can be laid down as the limit within which the bill must be forwarded to its destination, than that it must take place within a reasonable time under all the circumstances of the case, and that there must be no unreasonable or improper delay." The court then go on to say that it cannot be required of the holder instantly to send forward the bill for acceptance or put it in circulation, without regard to circumstances ; that such a rule would greatly impede if not altogether destroy the market for buying and selling foreign bills, to the great injury, no less than to the inconvenience of the drawer himself; and that in determining the question whether there has been reasonable diligence used in any particular case, the jury are to consider the interest of both 1 Code de Commerce, liv. 1, tit. 8, § 11. 376 BILLS OP EXCHANGE AND PROMISSOEY NOTES. the drawer and holder. The interest of the drawer is, that the bill should be presented as early as possible after he has sold it ; for the longer the delay the greater the risk he runs of the insol- vency of the drawee. The interest of the holder is, that he may be allowed to keep the bill until he can irp,ke a profit on it, or at all events save himself from loss. When trapse interests are found to clash one with the other the jury are to determine what, re- garding fairly the interest of both drawer and holder, is reasonable time within which to present the bill. 1 * A check drawn on a bank is a bill of exchange paj-able on demand. 2 If drawn on a foreign bank it is a foreign bill ; and although the current of decisions in this state seems to warrant o a distinction between a check and a bill, in regard to the effect of omitting to present the same to the drawee within a reasonable time, it is very clear that the drawer of a check, as well as the drawer of any other bill or draft, is discharged, if in consequence of unreasonable delay in presenting the check an injury or loss is sus- tained by him. 3 It is clear also that in an action against the drawer 1 '-In the present case, on the 10th of Sept., 1830, the bill was sold in the market by the defendant's order, and purchased by the plaintiff. It was kept by the plaintiff in his own hands until the first of February, 1S31, when it was again sold by him in the market, and put into circulation. But the rate of exchange in the market fell immediately after the purchase of the bill by the plaintiff, and during the whole of the interval down to the very time of the sale of the bill by him, continued lower than it was at the time plaintiff purchased the bill. * * * It was further proved at the trial, that foreign bill3 were constantly bought and sold at the market for the purpose of speculation ; that this course of business was so general that the defend- ant could not but know that it existed ; and the jury might probably infer, and if they did so, we think they were warranted by the evidence in so doing, that the defendant must have known that the particular bill in question had been purchased by the plaintiff for that purpose. As, therefore, the drawer choso his own time for bringing the bill into the market, the jury might not think it unreasonable that the purchaser should have the privilege of keeping it until the state of the market was such as to enable him to part with it without any great loss. And if such was their opinion, we are not able to say that it was unreasonable or contrary to law." The drawer might have stipulated for an early presentment, or otherwise have guarded himself against delay. Ordinarily, the holder has a sufficient interest in having the bill pre- sented at an early day ; since, by delay, he loses not only the interest on the amount of the bill, but also runs the risk of the parties remaining solvent. 23 Eng. C. L., 324. ' Chapman v. White. 2 Seldon R, 412. In this case the same principles are applied to a check as are applicable to an ordinary draft or bill of exchange; and the courl bolls distinctly that the drawee owes no duty to the holder until after the check or bill is accepted. Harker v. Anderson, 21 Wend., 373, and eases there cited; 1 Hall, 80; Bellamy v. Majoribanks, 8 Eng. Law and Eq., 528; 11 Taige Oh. R., GIG. 8 Little v. the Phcnix Bank, 2 Hill P., 425 ; S. C, 7 Hill R!, 359. PRESENTMENT EOR ACCEPTANCE. 377 of a check, the holder cannot, in general, recover unless he shows that it has been presented for payment and dishonored, and that notice of non-payment has been properly given. 1 But the holder of a negotiable cheek, in order to charge the drawer, has not been generally held responsible for the use of the same degree of dili- gence as the law requires of the holder of an ordinary bill pf exchange. 3 ]Jnless the bank on whieh the check is drawn, fails before it is presented for payment, the drawer loses nothing by the delay, (jreat stress is laid upon this fact as the ground of a distinc- tion between a bill and a cheek ; but exactly the same thing may be said in cither case. * If the drawee does not fail, the ., „ *397 drawer is not injured by the omission to present a bill for acceptance, or a check for payment. 3 The nature of the rule requiring diligence in the presentment of a check is shown by the cases that excuse a non-presentment : if the drawer have no funds in the bank, or if the bank itself be restrained by an order of court from paying o;it money or trans- acting business, presentment is excused ; because the law does not require the performance of acts that are merely ceremonial and nugatory, and because the drawer is not injured by the omission.* Here again, a bill and a check stands upon nearly the same footing ; for if it be clearly shown that the drawer of a bill of exchange had no funds in the hands of the drawee and no right to expect that his bill would be honored, or if it be shown affirmatively that no damage could arise to him in consequence of the omission, the necessity for presentment and notice does not exist' Indeed, most of the cases involving the question of diligence in the holder 1 Ilarker v. Anderson, 21 "Wend. It., 372; Shultz v. Depuy, 3 Abbt., 252; 4 Sand., 668. 1 Murray v. Judah, 6 Cowen R., 48 1 ; 2 Hill R., 425. Tbe drawer of a check is not discharged by any laches of the holder in not pre- senting it, unless he has suffered loss or injury by the delay; Morrison v. McCartney, 30 Mis., Jones 183. ' If a check is drawn payable at a future day, it is treated exactly as a bill of ex- change. Bowen v. Newell, 4 Selden R., 190; Martin v. Bailey & Burgess, 4 Arner. Law Reg., G32, Ohio case; Marzotti v. Williams, 1 Barn. , decided in 1831. The plaintiff alleged that the bill was drawn, and that the defendant afterwards accepted it accord- ing to the custom, &c, but this was held immaterial, and it was decided that the plaintiff need not give any evidence to show that it was the custom of merchants so to trans- act business. S. C, 4 Carr. & Payne, 492. ACCEPTANCE. 391 of the eighth section of the statute above quoted. 1 The written promise to accept need not contain a particular description or identification of the bill to be drawn : it is enough that it be drawn in pursuance of the authority. A bill of exchange was drawn and negotiated to the plaintiff on the faith of a letter written by the defendant and addressed to the drawer in these words : " I hereby authorize you to draw * on me at ninety days, from time to time, for such amounts as you may require, provided that the whole amount running and unpaid shall not exceed three thousand dollars. The above letter of credit to be good and binding for one year only from this date." And several of the prevailing opinions delivered in the action agree in holding this an unconditional promise to accept bills drawn in conformity with its terms, and hence to be deemed an actual acceptance of them. 1 Where there are only two parties to a letter of credit, the writer and the person to whom it is addressed, and it contains an engage- ment to honor bills of a certain description, it is clearly a virtual acceptance of bills drawn in the manner specified.' Not so where there are three parties to the transaction ; as where a merchant in New York writes a letter to a firm in Liverpool, opening a credit in favor of a concern, for a given amount, to be negotiated by the latter in Rio de Janeiro, by drafts on the firm in Liverpool. The writer of such a letter, who concludes it by assuring the firm in Liverpool that the concern doing business in Rio will keep them in funds, is not liable to a third person to whom the drafts drawn in the man- 1 The Ulster Co. Bank v. McFarlan, 5 Hill It , 432 : S. C, 3 Denio R., 553. There was no dissenting opinion in the supreme court, while in the court of errors Senator Haxd alone expressed the opinion that the promise was not sufficient because not definite in describing the bill to be drawn. See 17 Wend., 508 ; 2 id., 545, and 5 id., 414. ' The point stated in the text was fairly involved in the case cited, because tho action was brought against the defendant as the acceptor; but the .suit turned on tho construction of the letter, the court holding that the authority was limited to bills drawn payable ninety days after sight. 3 Denio, 553 ; ante, 238. A written promise by letter to accept bills to a certain amount, on receiving that sum in currency or bills of lading, is conditional and void; the letter being written hero by a party residing in this state, the promise is governed and rendered valid or void by our statute: N. Y. & Virginia S. S. Bank v. Cil.son, 5 Duer, 574; Boyco v. Edwards, 4 Pet R., ill ; Barney v. Newcomb, 9 Ousb., 40. Under the terms of the statute, (§ 8) qttere, if an authority to draw at so many days from time to time, provided tho whole amount running and unpaid shall not exceed $3,000, bo an unconditional promise * Russell v. WIggin, 5 Law Reporter, 533 ; 2 Mete, 381. 392 BILLS OF EXCHANGE AND PROMISSORY NOTES. ner prescribed are transferred on the faith of the letter ; for tha latter is not a negotiable instrument, and cannot, therefore, be acted upon by any one else except the house to -which it is addressed. ' In some respects the Ee vised Statutes of this state aye only a legislative declaration of the law as it stood before they were enacted. The eighth section apparently contains nothing new : it implies that a parol promise to accept a bill to be drawn in future is not to be deemed a virtual acceptance of it, and there had been previous decisions to the same effect. 2 * It gives effect to a written promise to accept a future bill, when the bill is taken upon the faith of the promise and a consideration is paid there- for; and the same rule had been previously sanctioned on good authority. 3 It makes the written promise an actual acceptance only when taken by a third person for value ; and that was the ground on which it was previously held tantamount to an acceptance. 4 While as between the drawer and the drawee a written promise to accept a future bill has never been held a virtual acceptance, it has always been treated as a valid undertaking or agreement ;' and the tenth section, quoted above, declares that the previous sections are not intended to impair or take away the right of the promisee to recover damages for a breach of promise to accept. So that where there is a valid engagement to accept, the party to whom it is made is entitled to recover thereon, as for the breach of any other contract. 6 The distinction between an action on a bill, as an accepted bill, and one founded on a breach of promise to accept, deserves atten- 1 Birckhead v. Brown, 5 Hill R., G34. The judgment below was affirmed in tho court of errors by a vote of eleven to eleven, but there was difference of opinion in the latter court on the question whether a third person could acquire any interest in the letter by acting on the faith of it. 2 Penio R., 375. 5 Johnson v. Colling. 1 East, 98; 12 Wend., 598. * Goodrich v. Gordon, 15 John. R., 6; 2 Wend., 54S. " A promise to accept a bill thereafter to be drawn, specifying tho amount and time of payment, so as to leave no reasonable douU as to the identity of the bill intended to be accepted, is, if shown to a third person, who, on the faith of such promise, takes the bill for a valuable con- sideration, in point of law, an acceptance binding the person who makes the promise." $0,t so, where the bill is not taken on the faith of the promise, 10 John. R., 307. 4 Catario Bank v. Worthington. 12 Wend., 593; Mason v. Hunt, Doug., 296. 1 bl' ;n. and Story on Bills, § 249. 8 Boice & Henry v. Edwards, 4 Peters' Rep., 111. Per Mr. Justice TnoJtrsox, 4 Peters, 122- 5 Ducr, 373, 574. ACCEPTANCE. 393 tion. To maintain the former, the promise must be applied to the particular bill alleged to have been accepted. In the latter, the evidence may be of a more general character, and the authority to draw may be collected from circumstances, and extended to all bills coming fairly within the scope of the promise. 1 There is a marked difference between the English and American doctrine on the subject of collateral acceptances. According to the law of England, a promise in writing to accept a non-existing bill is not equivalent to an acceptance of it. It is merely a con- tract made by the party promising *with the party to whom the promise is made. 2 The rule as settled in this country, and already stated as the rule of commercial law, holds a written promise to accept a bill not yet drawn a virtual acceptance of it in favor of a person who afterwards takes the bill on the credit of the promise. 8 It is not a virtual acceptance unless acted upon by a third person ; that is to say, it is not of itself equivalent to an acceptance. But where a person takes the bill on the strength of the promise, and pays value for it, the law does not permit the promisor to say that he has not given credit to the bill. 4 On the other hand, if no person has taken the bill on the faith of the pro- mise to accept, there is no reason why the drawer should not be left to his action on the contract to accept. Indeed, courts have latterly leaned very much against extending the doctrine of im- plied acceptances, so as to sustain an action upon the bill ; preferring rather to leave the parties to the rights and remedies and liabilities growing out of the engagement into which they have entered, Following this leaning of the authorities, Mr. Justice Story main- tains that the doctrine is not applicable to bills drawn payable ait so many days after sight : and whatever may be thought of the argument by which he sustains the distinction between such bills and those drawn payable on demand, or a certain time after date, 1 Lowery v. Steward, 3 Bosw., 505, construing §§ G, 7 and 8 of R. S. 1 Russell v. Wiggin, 2 Story C. C. R., 214, opinion of Sir Frederick: Pollock; Bank of Ireland v. Archer, 1 1 Mees. & Welsby, 383, is citod to the same effect. But in the latter case the point decided, is, that a parol promise to accept a hill not yet drawn is not an acceptance of it. 5 Duer, 373. • Coolidge v. Payson, 2 Wheat., 75 ; 1 Peters' Rep., 284; 4 id , 121 ; Storcr v. Logan, 9 Haw., 55; Bauorger v. Hovey, 5 Mass., 23; Wallace v. Agry, 4. Mason, 336; 3 Denio, 553 ; Grant v. Shaw, 10 Mass., 311. 4 Gror-lo v. Parker, 2 Wond., 545; 5 Wend., 414 ; 9 MaBfl., 55. EDW. 50 391 BILLS OF EXCHANGE AND PROMISSORY NOTES. all must agree with him that an undertaking to accept is a very different contract from the acceptance of a bill. 1 *It seems that the principal object of the Revised Statutes •4-1 ^ • -i of this state, which have been adopted, in the main, in several other states of the Union, is to obviate the inconvenience of the former rule, that gave effect to a parol acceptance. 8 It is scarcely necessary to say that an engagement to accept must, like all other contracts, be supported by a valid considera- tion. 3 In this respect, it differs from an acceptance ; 4 and shows itself to be a distinct species of contract. If the holder presents a bill payable at sight, and the drawee declines to pay it, alleging that he has not funds, but says he will pay it at the beginning of the next quarter, and the holder does not accede to the promise, 1 Wildes v. Savage, 1 Story C. C. R., 28. Mr. Story, J.: "But it does not appear to me that the doctrine was ever applicable, or could be applied, to any bills of ex- change, except such as were payable on demand, or at a fixed time after date. Where bills are drawn paj r able at so many days after sight, it is impracticable to apply the doctrine ; for there remains a future act to be done, the presentment and sight of tho bill, before the period, for which it is to run and at which it is to become payable, can commence, whether it be accepted or dishonored. How can the time be calculated upon such a bill before it is presented ? If a letter is written, promising to accept a non-existing bill, to be thereafter drawn at six months' sight, when is the acceptance to be deemed made ? At the date of the bill ? Certainly not ; for that would be at war with the obvious intent of the parties, which plainly is, that the acceptance shall be on a future sight of the bill. If it is said that the acceptance is to bo treated aa made when the bill is actually presented for acceptance, and it is dishonored by the drawee, it is plain that we set up a prior intent, or promise, against the fact. Upon what ground can a court say, when a party promises to do an act in future, such, for example, as to accept a bill when it shall be drawn and presented to him at a future time, that his promise overcomes his act at that time ? That his refusal to perform his promise amounts to a performance of it ? It is quite another question, whether the holder, who has taken such a bill upon the faith of such promise, may not have some other remedy, either at law or in equity, for the breach of it, against tho promisor. My judgment is, that the doctrine of a virtual acceptance of a non-existing bill, by a prior promise to accept it, when drawn, has no application to a bill drawn payable at some fixed period after sight ; for it then amounts to no more than a promise to do a future act. I have looked into the authorities ; and I do not find in any one of them, that tho bill drawn, and to which the doctrino was applied, was a bill drawn payable at or after sight." Russell v. Wiggin, 2 Story C. C. R., 214, decided in 1842. * Spear v. Pratt, 2 Hill, 582. For tho statutes of the different states on tho sub- ject, sec note on former pages, 264-284. ' Strohecker v. Cohen, 1 Spears, 349. So of a promise to pay out of proceeds of certain cotton. 3 Bosw., 505. * Raborg v. Peyton, 2 Wheat., 385; 9 Mass., 60. The law implies a sufficient con- sideration to support the acceptance, and hence it i3 not within the statute of frauds. ACCEPTANCE. 395 the offer to pay does not amount to an *acceptance ;' nor is it an agreement of any kind. 8 So, where the drawee says to a stranger, " I must pay the bill, or shall have to accept and pay it," such conversation, not being addressed to the holder, amounts to nothing. 3 There is a class of cases in which no formal acceptance is neces- sary in order to charge the drawee — a class in which the act of drawing the bill is, in itself, an acceptance. Thus, where a person draws a bill upon himself, or doos not address it to any one, it is to be regarded as an accepted bill. As drawer, he undertakes that it shall be accepted and paid, and it would be an idle ceremony to require it to be presented for acceptance.* So, the act of drawing a bill of exchange, by one partner in his own name, upon the firm of which he is a member, for the use of the partnership concern, as for the purchase of goods, is, in contemplation of law, an acceptance of the bill, by the drawer, in behalf of the firm ; and the holder of the bill may sustain an action thereon against the firm, as on an accepted bill. 6 The same rule has been applied to a bill drawn by one upon another officer of the same corporation. " The instrument offered in evidence in this case, was in the form of a bill of exchange. It was drawn by the corporation, under the signature of the president and secretary, by order of the board of trustees, who, by the act under which the corporation was organized, were the managers of its concerns and had control over its funds in the hands of its treasurer. It was drawn upon the treasurer of the corporation, who was but the officer, the agent of the corporation, and whose acceptance must have been considered the acceptance of the corporation. It was, then, a bill drawn by the corporation, through its proper officers, upon the same corporation, represented by another officer ; in other words, a bill drawn by the corporation on itself." So # . 1(y that no demand *of payment or notice of non-payment 1 Peck v. Cochran, 7 Pick. R., 34. * Corning v. Colt, 5 Wend., 523. An unaccepted offer can never bo made the basis of an action, Bruce v. Pearson, 3 John. R., 534. * Martin v. Bacon, 2 South Car. R., 132. * Cunningham v. Warden, 12 Maine R., 400, decidod in 1835; Lent v. llodgraan, 15 Barb., 27 1. * Dougal v. Cowles 4 Smith, 5 Day (Conn.) R., 511, decided in 1813; seo Wright v. Hooker, 10 N. Y. (G SelcL), 51, and 1 Denio, 402 '&96 BILLS OF EXCHANGE. AND rKOMISSOKY NOTES. need be shown. 1 In legal effect, such a bill is a promissory note. 3 If the drawee of a bill to whom the same is delivered for accept- ance destroys it or refuses to return it within twenty-four hours, accepted or non-accepted, he is deemed to have accepted the bill. The holder has, under the ninth section of the above statute, aright to require a written acceptance on the bill, and where that i? refused should protest it for non-acceptance. The commercial law is substantially the same, though not quite so explicit.* Lord Ellexborough, in a, case tried before him at Nisi Prius, where it appeared that the drawee had destroyed the bill, held this language : " the person on whom a bill of exchange is drawn, when it is presented to him for acceptance, ought to determine whether he will accept it or not ; and if he determine not to accept it, he is bound to return it ; for the party is entitled to the immediate use of the thing, and if the drawee deprive him of the use of the instrument by destroying it, he is liable as if he had written hi3 name upon it." * The King's Bench, though not expressly dis- senting from the rule laid down on the trial, agreed that it was not applicable in the case, where the holder had left the bill in the hands of the drawee a considerable length of time without calling for it, and the acceptance had been refused before it had been destroyed." In another case where the bill had been sent to the drawee in a letter, with a request that he would accept and % . 1 ~ return it, and he detained the bill some three, months until it became due, it was held *an acceptance. 1. Upon princi- 1 Ilasey v. White Pigeon Beet Sugar Company, 1 Douglass (Mich.) R., 193. Opinion delivered by Mr. Justice Felcii, at the July term, 1843 ; see 13 Barb. R., 636. Th» rule 'cannot of course apply where the bill is not addressed to the drawee as agent llalsted v. The Mayor, &c., of New York, 5 Barb. R,, 218. 1 Roach v. Ostler, 1 Man. &, Ry., 120; 15 Barb., 274 , It is not a bill of exchange ; Fairchild v. The Ogdcnsburgh, Clayton & Rome R R, 15 N. Y. Rep., 337; 28 Barb., 391; but it is negotiable, and maybe treated a3 a promissory note; Bull v. Sims, 23 N. Y. Rep., 572. 3 2 R. S., 53, 3d ed., § 11, quoted in a former part of this chapter. 4 Bayley on Bills, ch. 6, § 1, pp. 110, 111, 112. • Jenne v. Ward, 2 Stark., 289. ' 1 Bar. & Aid., 653. Two of tho judges, Lord Ellenborough and Holroyp, affirmed the doctrine laid down at Nisi Prius, and justices Abbott and Bayley held the contrary. T Harvey v. Martin, 1 Campb., 425. But it appeared in this case that the drawco had intended to pay tho bilL See 6 East,, 200.. ACCEPTANCE. 397 pie, a refusal to Teturn a bill accepted is not the same thing as accepting it ; for the act of acceptance is not complete until the "bill has been returned to the holder. Until that has been done the drawee has an opportunity of changing his mind, and a right, if he has written an acceptance upon it, to erase it and dishonor the bill. 1 It is no doubt equitable enough to hold the tortious act of destroy- ing or appropriating the bill equivalent to an acceptance ; but the one is not a contract, while the other is that and nothing else. But if the holder gives the drawee to understand that he will consider the detention of the bill as tantamount to an acceptance, and he afterwards destroys or refuses to return it, this, it has been held, is sufficient evidence of an acceptance. 3 The mere detention of a bill that has been sent to the drawee by mail, for acceptance, with the view of waiting for funds or securities to be forwarded by the drawer, is not an implied acceptance ; 3 for here the retention of the bill is consistent with the rights of both parties, unless the holder chooses to ask for the immediate return of the bill. "Where the holder leaves a bill of exchange for acceptance, in the ordinary course of commercial transactions, it is his duty to call for it within a reasonable time, so as to ascertain whether it has been accepted or not ; and if he does not call for the bill within a reasonable time, there is no ground upon which to raise or imply an engagement to accept or a contract of acceptance. 4 "When no words of restraint or limitation are used in an accept- ance, it is, as we have seen, an absolute engagement to * pay # . • in mone}' according to the tenor and effect of the bill ; it is an absolute or general acceptance. The bill itself cannot be drawn payable on a contingency ; but the drawee being desirous not entirely to dishonor it, sometimes makes what is called a conditional acceptance, that is to say, he accepts to pa)' the bill on the happening or performance of certain 1 Cox v. Troy, 5 B. & Aid., 474. 1 1 Campb., 425. The holder has a right to require a return, and it is but reasona- ble that he should bo allowed to say upon what terms another man is at liberty to detain his property. * Mason v. BurflT, 2 Barn. & Aid., 2G. 4 .Tenoe v. Wan). 1 Barn. osw., 005; Kellogg v. Lawrence, Hill & Denio, 332. 400 BILLS OF EXCHANGE AND PJiOMISSOEY NOTES. The same rule of pleading and proof applies as in the case of -a note payable in specific articles ; if the contract does not on its face purport to have been made for a valuable consideration, or a copy of it is not set forth in the complaint when it appears to have been founded on a good consideration, the plaintiff must aver and prove, as in ordinary cases, facts showing a cause of action. 1 If the note appear on its face to have been given for value received, a particular consideration need not be averred : 3 and so, without doubt, an order for the payment of money out of a given fund may be so drawn that a general acceptance of it will be an admis- sion that the fund is sufficient, and also an engagement to pay the amount directed to be paid. 3 Where a note or draft is given " for value received " for a defi- nite sum of money payable in specific articles, it is only necessary for the payee in the first instance, to aver and prove the execution of the note, or the acceptance of the draft according to its terms.'' It is not material in what manner the acceptance of a bill of ^ exchange is drawn or made : it is to be construed like any * other writing. A bill was drawn on the strength of a con- signment of goods made to the drawee, and the bill arrived and was presented for acceptance and refused before the bills of lading and invoices came to hand, and the drawee after their arrival called upon the agent of the holders and promised them that if they would get the bill back he would accept and pay it, and they did so, and this promise was held valid and binding.' But an offer to pay a bill if presented at a future day named, not accepted by the holder, is not an acceptance of the bill : e on the other hand, if the holder of a draft which is in legal effect payable at sight, is content to receive from the drawee on presenting it for acceptance a promise to pay the bill at a subsequent day named, this is a good acceptance ; and in an action thereon it is not necessary to aver or prove a presentment for payment at the time agreed upon. 7 1 Jerome v. Whitney, 7 John. R., 321. ' 7 John. R., 321 ; Saxton v. Johnson, 10 John. R., 4.18 ; Leo v. Swift, 1 Denio, 565. ' 3 McLean C. C. R, 272. 4 Crandall v. Bradley, 7 Wend., 311. Payment is a defense to bo interposed by tho defendant. Smith v. Smith, 2 John. R., 235; 4 Wend. R., 575. * Grant v. Shaw, 16 Mass; R., 341. ' Peck v. Cochran, 7 Pick. R., 35. 7 Clarke v. Gordon, 3 Richardson (So. Car.) R., 311. This case involved the ques- tion so elaborately discussed in Rowe v. Young, 2 Brod. & Bing., 106. ACCEPTANCE. 401 Where bills are drawn against shipments of goods by virtue of a letter of authority specifying the condition on whicli the writer will accept, the person taking the bills on the faith of the letter cannot recover unless the party drawing the bills pursues and con- forms to the terms of the authority given : the terms named are in the nature of a condition. 1 And if the bills are not drawn in the manner specified, the holder of them cannot recover thereon against the person giving the authority to draw. 8 In Louisiana, where a bill of exchange is drawn on a shipment, payable a certain number of days after sight, and is sold with the bill of lading appended to it, the holder of the bill cannot in the absence of any local usage to the contrary, or of the imminent insolvency of the drawee, require the latter to accept the bill but on the delivery of the bill of lading; and where in consequence of the holder's refusal to * deliver the bill of lading, accept- ^ A0 „ ance is refused and the bill of exchange protested, the pro- test will be considered as made without cause and the drawer will be discharged. Though drawn in terms absolute, such an instru- ment is not strictly a bill of exchange. 3 In a similar transaction that took place in this state, it has been adjudged that the delivery of a forwarder's receipt or bill of lading to a bank as security for the acceptance of a draft drawn on the consignee, on discounting the same for the drawer, is a valid transfer or pledge of the cargo to the holder of the draft/ The case was briefly this : the owner of a quantity of flour, delivered the same to a forwarder at Ko- chester, and took a receipt expressing that the flour was to be sent 1 Murdock v. Mills, 11 Metcalf R, 5. * The Ulster Co. Bank v. McFarlan, 3 Denio, 553 ; S. C, 5 Hill, 432. ' Lanfcar v. Blossman, 1 Louis. Ann. B., 148, decided in 184G. 4 Tlie Bank of Rochester v. Jones, 4 Comst. R., 497 ; S. C, 4 Denio R., 489. Tho Supreme Court held, first, that there was no sale of the flonr to the plaintiffs; second, that the flour was not mortgaged to them; third, that they acquired no lien by.virtuo of the receipt or bill of ladiug. But tho Court of Appeals decided differently, as stated in the text. The party taking spurious stock as collateral security for the payment of a loan ol money on the borrower's note, and delivering up the stock on the borrower's order directing its surrender to a third person on the payment of id.' none} Loaned, incurs no obligation to such third person, both of them being ignorant of the spurious cha- racter of the 6toek. Ketchum v. Stevens, President Hank of (>nfy borrowed, mid the first is paid, tho borrower is entitled t') judgment for tho balance. GefTchcn v. Slingerland, 1 Bosw., 449. Eow. 51 402 BILLS OF EXCHANGE AND PROMISSORY NOTES. to the defendant at Albany; the defendant being the factor to whom the owner usually consigned flour for sale, and to whom he was at the time indebted for advances on previous consignments : the owner on the same day drew upon the defendant against the flour and procured the plaintiff's bank at Eochester to discount the draft on delivering to the bank the forwarder's receipt and agreeing that the bank might hold it as security for the acceptance of the draft ; the bank then forwarded the draft with the receipt pinned to it, to their collecting agent in Albany, and he presented the same to the defendant for acceptance ; the defendant took off the receipt and retained it, and refused to accept the draft ; after that he received the flour and having appropriated it with knowl- edge of the circumstances, was held liable for it to the plaintiff in an action of trover. 1 A similar decision has been made in Massachusetts on substantially the same state of facts. 3 *The drawee named in a draft to which is appended a bill of lading as a security to insure acceptance and pay- ment, is at liberty to refuse or to accept the draft, as he sees fit ; but the drawer and each successive indorser transferring the draft with the bill of lading attached, has a right to require that the cargo be appropriated for their protection. The draft is drawn against a shipment of goods, and the title to the goods accompanies and i° transferred with the draft, as a pledge for its payment ; and equitj surely demands that the pledge shall be used to secure the honoi and payment of the bill. 3 A case that lately arose in the state of Pennsylvania presented this state of facts : there was a general arrangement entered into between the drawer and drawees, that the latter would accept and advance on produce consigned to them, on receiving the bills of lading ; and under the arrangement the bills of lading were some- times sent with the bills of exchange, and sometimes with letters of advice ; and the three last bills of lading having been false and fraudulent, the acceptors refused to pay the bill in question ; and it 1 The defendant surrendered the receipt soon after he took it from the draft, but intercepted the flour at Utica and sold it; and held, that he acquired no right or title to the property, not having received the bill of lading. 1 Allen v. Williams, 12 Pick. R, 297. * 1 Louis. Ann. It., 148. There is some difficulty in saying upon what principle the decision ii. Louisiana can be sustained, unless it is assumed that the draft, accompanied by the bill of lading, is not a bill of exchange. On that assumption nothing could ba more equitable. ACCEPTANCE. 403 Was decided that the defense could not be interposed, though the plantiff knew of the arrangement, it not having been shown that *he plaintiff, the payee named in the bill, was cognizant of the fraud practised by the drawer. 1 When the drawee accepts in writing and intends to make a con- ditional acceptance, he should be careful to express distinctly the condition he thinks proper to annex; for it would be a departure from a well settled rule, to allow a written acceptance to be varied by parol evidence ; and it is certain that a parol condition would be of no avail as against a person taking the bill for value, without notice of the condition. 2 *In the state of Mississippi, the #. OK acceptance being absolute, it has been held that the acceptor cannot show that there was a parol agreement made at the time of the aceptance, that the same was to be obligatory only upon con- dition that the drawer of the bill finished a certain job of work on which he was then engaged. Per Curiam : " The contract to pay as acceptor was in writing, and therefore could not be changed by parol ; the deposition went to show that there was not a positive agreement to pay, as acceptor, and, therefore, being parol testi- 1 Craig v. Sibbett & Jones, 15 Penn. State R., 238, decided in 1S50. It is very common to give notes, bonds, securities and certificates of stock in pledge, that is, as collateral security for the payment of money loaned or debts due. The party so receiving negotiable paper cannot sell it at auction, but may and is bound to collect the same and apply the proceeds to the payment of the debt thus secured. Brown v. "Ward, 3 Duer, C60; Garlick v. James, 12 John., 146, and Wheeler v. New- bold, 16 N. Y. Rep., 392. Special authority to sell such collateral paper does not imply a restriction to that mode of making the collateral security available. Nelson v. Wellington, 5 Bosw., 178. The delivery of possession is necessary to complete the contract, pledging personal property ; and a pledge of securities, stocks, bonds, notes, &c, is effected by a trans- fer in writing or by delivery. Having the title to stocks, for example, the pledgee has the power to sell them ; but he is bound to treat the pledge as a collateral tccurity, and cannot sell it without first demanding payment of tho original debt. Wilson v. Little, 2 Comst., 443. Tho title to the stocks transferred as collateral secu- rity does not become absolute by tlie non-payment of tho debt secured; nor docs a moneyed corporation, by taking its own stock as collateral and retaining it, ex- tinguish either the original debt or the stock. Butterwoitli, Receiver, v. Kennedy, 5 Bosw., 143. But tho party making tho pledge, that is, delivering tho stock as col- lateral, cannot bring an action to redeem after ten years from the timo when tho debt secured became due. Roberts v. Sykes, 30 Barb., 173. a Bayley on Bills, eh. 6. § 1 ; Chitty on Bills, 303. Mr. Story docs not state the rule an strongly, in respect to the right to give parol evidence, varying tho contract of acceptance, § 210. fcec Mason v. Graff, 35 Penn. State, 448. 404 BILLS OF EXCHANGE AND PROMISSORY NOTES. mony, was not admissible." ' So, a receipt given for a bill of exchange, showing that it was given as collateral to certain notes, and to be delivered tip on payment of the notes, does not make the bill conditional, or payable on a contingency. 3 When a bill that has been accepted in writing, comes into the nands of a iona /Me holder for value, the same rule which excludes a defense on the merits, operates to shut out proof of a parol con- dition appended to the acceptance. In a late English case, where an action was brought against the defendant as the acceptor of a bill, the acceptance having been made in blank some twelve years before, and recently filled up and negotiated, Mr. Justice Cress- well states the grounds upon which the defense was excluded, in these words : " A person who gives another possession of his signature on a bill stamp, prima facie authorizes the latter as his agent to fill it up, and give to the world the bill as accepted by him. He enables his agent to represent himself to the world as acting with a general authority ; and he cannot say to a bona fide holder for value, who has no notice of any secret stipulations, that there were secret stipulations between himself and the agent, any more than a principal, in the case already put, where he ^enables his agent, buying or selling in his behalf, to repre- sent himself as acting under a general authority." s Where the acceptance is verbal, as it may be in the absence of any local statute to the contrary, a condition annexed to the accep- tance may of course be shown, in the same manner as the acceptance itself is proved. Thus, on presenting for acceptance certain bills of exchange, the drawee said he would have accepted them if he had had funds (meaning the fund on account of which the 1 Heaverin v. Donnell, "7 Smedes & Marshall's R., 244, decided in the Court of Ap- peals in 1846. In Tucker v. Welsh, the same point was raised and reserved, but the cause did not turn npon that question. 17 Mass. R., 1G1. 3 Goodwin v. McCoy, 13 Ala, R.. 271, decided in 1848. "To allow a verbal con- dition in evidence to qualify a written acceptance would bo incorporating with a written contract, an incongruous parol condition, which is contrary to first princi- ples." Per Ld. Ellexborougii, Hoare v. Graham, 3 Camb., 57; Adams v. Wordley, 1 M. & W., 374. * Montague v. Perkins, 22 Eng. Law and Eq. R., 516, reported in 1853-4, The acceptance of a draft left in blank as to the amount, under an agreement that it shall be filled up for $1,000, binds the acceptor to pay the bill to a bona fide holder fur value, though filled up for a greater sum. The acceptor is estopped from denying that he accepted the bill. Van Duzer v. Howe, 21 N. Y. Rep., 531 ; Griggs v. Howe, 31 Barb. 100. ACCEPTANCE. 405 bills were drawn ;) that lie had not been able to obtain those funds from France, but that when he did obtain them he would pay the bills ; and it was held that this amounted to a conditional acceptance, and that the defendant, having subsequently become possessed of the fund in question, was bound to pay the bills ' But the acceptor cannot show statements made by him subsequent to the acceptance of a bill, such as that he will not be able to pay it until he gets returns from certain goods^ so as to make the acceptance conditional.' As we have seen, if a bill drawn in general terms is accepted, paya- ble at another place, the acceptance is, under the commercial law, a qualified or restricted engagement to pay at the place designated.* But in England, under a late statute, such an acceptance is general, unless the acceptor specifies that the payment is to be made at the place named and not elsewhere. 4 It is general as against the acceptor; but in an action against the drawer, when the bill has been accepted, pa}* able at a particular banking house, it is still necessary to show a presentment at the place named. Lord Ch. J. Tixdal : " The question raised for our consideration is this : whether in an action against the drawer of a bill on the ground of non-payment by the acceptor, it is not necessary to prove a pre- sentment for payment at the banking house in London where the same is made specially payable by the * acceptance. We #, 07 are all of opinion that such special presentment is necessary, in order to enable the holder to recover against the drawer of the bill." * Hence an allegation of presentment to the drawee for pay- ment, is sustained by evidence of presentment at the place at which the acceptance makes it payable ; 6 though a general acceptance under the statute, it is also an appointment of the place of pay ment 7 1 Mendizabal v. Machado, 3 Mooro & Scott's R, 841. * Wells v. Brigham, G Cush. R., 6. * Rowe v. Young, 2 Brod. & Bing., 165. Not if the acceptance be made payable at a bank in same city. 19 N. Y. Rep., 4.11, 480; 31 Barb., 403. 4 1 & 2 Geo. IV, c. 78 ; Siggers v. Nichols, 3 Jurist, 34. * Gibb v. Mather, 1 Moore & Scott R, 387, decided in 1832, after the passage of the Statute. The bill in this ease was addressed to C. & P., Liverpool, requiring them to pay in London, and the acceptance was to pay at Jones, Lloyd A, (Vs., Bankers, Lon- don, and payment was demanded of the acceptors in Liverpool. * Wilmot v. Williams, 8 Man. & Granger R., 1017, decided in 184L T Blake v. Beaumont, 4 id., 7. 406 BILLS OF EXCHANGE AND PROMISSORY NOTES. In this country where an action is brought against the maker of a promissory note, or the acceptor of a bill of exchange, payable at a particular place, it is not necessary to aver or prove a demand of payment at that place. 1 " The holder of a bill of exchange need not show a demand of payment of the acceptor any more than of the maker of a note. It is the business of the acceptor to show that he was ready at the day and place appointed, but that no one came to receive the money, and that he was always ready, afterwards, to pay." 2 As against the maker of a note, or the acceptor of a bill, a demand on the day and at the place where the same becomes payable is not in the nature of a condition precedent ; and there- fore it lies with the defendant in such cases to aver and prove that he was ready to pay at the time and place appointed ; and his plea is like a plea of tender in bar of damages and costs, and not in bar of the action. 3 Even where a note, such as a bank bill, is expressly made payable on demand at the counter of the bank, a suit, as in other cases of precedent *debt or duty, is a sufficient de- mand ; and the readiness of the maker to pay is matter of defense.'' When the action is against an indorser of a note, or the drawer or indorser of a bill, a demand at the place of payment is material and necessary to be shown. 6 If a note is drawn or a bill accepted, payable at a bank, the contract of the drawer or indorser being a conditional undertaking to pay in case the maker or acceptor does not, on due presentment for that purpose, it is the duty of the holder to demand payment at the time and place appointed. 6 In other words, it is incumbent upon the holder to show that he has made a legal demand of payment on the party primarily liable ; and this can only be done where the bill or note is payable at a 'Foden v. Sharp, 4 John. R., 183; Wolcott v. Van Santvoord, 17 id., 248; Cald- well v. Cassidy, 8 Cowen, 271; Bank of U. S. v. Smith, 11 Wheat., 171; TIaxton v Bishop, 3 Wend., 20; Rnggles v. Batten, 8 Mass. R., 480; Wallace v. M'Conncll, 13 Feters R., 136; Clarke v. Gordon, 3 Richardson, 311; Green v. Goings, 7 Barb., 652. ■ 4 John. R., 183. ' 17 John. R., 249; 8 Cowen, 271. 4 Haxton v. Bishop, 3 Wend. R., 13. 1 Woodworfh v. Bank of America, 19 John. R., 392; 18 id., 315; Story on Pro- missory Notes, §§ 228, 229. ' 11 Wheat. R., 174; 13 Peters, 136; 13 Mass., 556; 13 Pick., 465; Herring v. Sanger, 3 John. Cas., 71. The place is material, 25 Engl Law and Eq., 123. ACCEPTANCE. 407 particular place, by showing a demand of payment made at that place. 1 The effect of taking a limited or qualified acceptance upon the rights of the holder as against the drawer and indorser of a bill of exchange, is not necessarily the same. 3 The indorser is in many respects a new drawer, but certainly does not stand in quite the same relation as the drawer towards the drawee. The drawer knows or ought to know whether or not he has funds in the hands of the drawee, or such a credit established with him as authorizes him to expect that his bill will be accepted and paid ; and it is well settled that if he have no funds in the hands of the person on whom he draws and no right to expect that his bill will be honored, he is not entitled to notice of non-acceptance or non-pay- ment.' * Drawing under such circumstances, like the giv- „ ,^„ ing of a check upon a bank where the drawer has no funds, is an act of bad faith ; 4 and in such cases it would be absurd to hold the drawer entitled to notice of what he knew perfectly beforehand must be the result of his bill. In like cases the taking of a special acceptance plainly ought not to operate as a discharge of the drawer; 5 for the drawer here is not injured by the holder's taking a qualified acceptance of the bill. 8 It is true that such an acceptance is a departure from the tenor of the bill, and is fre- quently an extension of the time of payment ; but the drawer cannot complain of that, where he has voluntarily put himself into such a situation that he is not entitled to notice of non-accep- tance or non-payment. 7 1 3 John. Cas., 71; 8 Man. & Granger, 1017; 4 id., 7. The place of payment in such cases is undoubtedly a material part of the engagement to pay, and qualifies the rights of the parties under the contract. But where the action is against the ac- ceptor, it is quite as convenient as a rule of pleading and practice that the defendant's readiness to pay at the place named should be alleged as a matter of defense. 3 Rich- ardson, 311. 1 Walker v. The Bank of the State of New York, 13 Barb. S. C. R., C3G. ' Robinson v. Ames, 20 John. R., 146; Mobley v. Clark, 28 Barb., 390, 392. * Birckerdiko v. Bollmar, 1 Term R., 405 ; see Purchase v. Mattison, G Duer, 587. * 13 Barb. R., C36. * Baker v. Gallagher, 1 Wash. C. C. R., 4C1 ; Knox v. Reeside, Miles (Dis. Court Phila.) R., 291; 1 McCord, 408; 1 Moore & Scott, '387 ; 3 Rich., 413; 2 Brod. ] » 1 1 o <3 to tho defendants, who wero corres- pondent of tho payees, and they accepted tho bill in these terms: "Accepted under protest, for honor of Messrs. Le Roy, Bayard & Co., p. 3173, and will be paid for their account if regularly protested, and refused when duo " Ikld, in an actioa 420 BILLS OF EXCHANGE AND PROMISSORY NOTES. him to * take are pointed out by a statute which declares, 1 A 2 ' " That it shall not be necessary to present bills of exchange to such acceptors or acceptor for honor, or to such referees or referee, (persons to whom application is to be made in case of need), until the day following the day on which such bills of ex change shall become due ; and that if the place of address on such bill of exchange of such acceptors or acceptor for honor, or of such referees or referee, shall be in any city, town, or place othei than in the city, town or place where such bill shall be therein made payable, then it shall not be necessary to forward such bill of exchange for presentment for payment to such acceptors or acceptor for honor, or referees or referee, until the day following the day on which such bill of exchange shall become due." * Where a bill of exchange is drawn on a firm residing and doing business in one place and payable in another, and accepted for the honor of the drawer after protest for non-acceptance by the drawees, it is not necessary to present it to them again at their place of business for payment ;* for it is not payable there. „ . .„ * The holder of a bill of exchange is not obliged to receive an acceptance siqna protest ; 3 but if he does receive it, he takes upon himself the burden of performing all those acts which are necessary to charge the acceptor for honor. It is a waiver of his right to immediate recourse to prior parties; and makes that right dependent upon his taking the steps required by the law merchant in order to charge the acceptor, and also the other parties again in case he fails to pay. 4 The transaction is wholly changed, as soon as a third person intervenes and accepts the bill. The theory is, that the acceptor gives immediate notice 1 6 and 1 Wm. IV, c. 58, passed in 183 G. 2 10 Barn. & Cres., 4; 3 Wend., 488. The statute of 2 and 3 "Will. IV, c. 98, declares the law substantially as it had stood before its passage. 3 Mulford v. Wolcott, 12 Mod., 410; 1 Ld. Raym., 575; 2 Campb., 447. 4 3 Wend., 488. against the acceptor for honor, that by the special form of the acceptance, a present- ment for payment to the drawee in Liverpool, a refusal by him, and a protest there were necessary ; and that the bill was properly presented for payment thero on the day it became due. In the above case, where the bill was accepted for honor in London, it would not ordinarily be feasible for the holder to demand payment of the original drawees in Liverpool, and of the acceptor for honor in London on the samo day. See the case disclosed in Schofield v. Bayard, 3 Wend., 488, in which some of the parties are the same, and the circumstances are quito similar to those mentioned above. ACCEPTANCE FOR HONOR. 421 to the parties for whom he accepts, and that they take early mea- sures to meet the altered relations into which they are brought by this act of intervention ; so that if the holder is guilty of laches in presenting the bill for payment, first to the drawee and after- wards to the acceptor for honor, and causing it to be duly protested in each instance, in case of non-payment, the party for whose credit the acceptance was made is discharged. 1 The protest for non-payment by the drawee is essential, both to charge the acceptor for honor, and to give him a right of action thereon against the party for whom he accepts. 2 And the protest for non-payment by the acceptor is necessary for the protection of the holder — for the purpose of insuring his right of recourse to previous parties. Such is the result of the decision in Schofield v. Bayard, 3 "WendeX 1 Barring v. Clark, 19 Pick., 220. One who accepts for the honor of the drawer, must show, in order to recover against him, presentment to the draw ee for payment, protest, and notice to the drawer. 422 BILLS OF EXCHANGE AND PROMISSORY NOTES. *CHAPTER VIII. OF NON-ACCEPTANCE, AND PROCEEDINGS THEREON. The proceedings necessary to be taken by the bolder on a refusal of the drawee to accept, are the same in most respects as are required to be taken by him in the case of non-payment of a bill of exchange, or of a promissory note. The principles applicable to the giving of notice to the drawer and indorsers are under the law merchant the same in either case, and will be considered to- gether in a subsequent chapter; while in this connection, it is deemed advisable to consider briefly the rules more immediately relating to the conduct that should be pursued by the holder, where the bill is dishonored by non-acceptance. Each of the successive indorsers is a new drawer, and the con- tract of the drawer is an undertaking to pay the bill on certain conditions ; so that if the holder fails to comply with these condi- tions, his remedy on the contract is lost. Bearing in mind this relation of the parties, we shall find the rule requiring immediate notice of non-acceptance to be given to the persons to be charged, is not an arbitrary rule, though prescribed by a law that demands diligence and does not tolerate laches or neglect in the holder. Bills drawn payable a certain length of time after date, need not be presented for acceptance ; but if presented and acceptance be refused, the same proceedings must be taken as in other cases.' And if the notice of dishonor be not properly given, the neglect will operate as a discharge of the drawer *and indorsers, not only from liability on the bill but also from liability on the consideration for which it was given. 3 It is otherwise where 1 Allen v. Suydam, 20 Wend., 321; Townsley v. Sumrall, 2 Peters, 170.; Goodallv. Dolley, 1 Term R., 712; 3 Taunt., 130; 16 East, 43. 2 Blessard v. Hurst, Burr., 2670; Bueker v. HDler, 16 East, 43; Higgins v. Morri- son, 4 Dana, 102 ; 5 Mete., 216. NON-ACCEPTANCE AND PROCEEDINGS ON. 423 the holder can show a right of recovery on other grounds, inde- pendently of the notice. 1 "When a debtor gives to his creditor a draft or bill of exchange drawn on a third person, and it is received in full satisfaction of the debt when paid, the person so receiving it assumes the duty of presenting it properly for acceptance and payment, and giving timely notice of its dishonor. Failing in either of these respects, he makes the bill his own, and it is deemed a satisfaction of the debt' So where a merchant buys a bill of goods and gives a bill of exchange in payment of the purchase money, the vendor can- not recover in an action for the goods sold without showing that the drawer has been regularly charged on the bill. 3 Whether the bill is received as conditional payment, or on an agreement so to apply the money when collected, does not alter the principle ; for the duty of presenting the bill results from the nature of the secu- rity. On the same ground, the note of a third person received on account of a preexisting debt may operate as payment if the creditor parts with the note, or is guilty of laches in not presenting it for payment in due time. 4 The general rule is that a failure to give the drawer and in- dorsers notice of non-accej^tance discharges them ; the notice is required so that these parties may take prompt measures of * self-protection, the drawer by withdrawing them or with- holding the further accumulation of effects in the hands of the drawee, and the indorsers by obtaining or securing payment from the parties respectively liable to them. 5 It is important to bear in mind the ground on which this rule is founded. Upon the maxim that where the reason for a rule of law does not exist, it ought not to be applied, it has frequently been decided that where the non- 1 Franklin v. Smith, 21 "Wend., 624 An action cannot be sustained against a notary for a neglect to give proper notice, where the holder has a right to recover, notwithstanding the neglect ; as where the maker has agreed with the indorser of a note that the latter shall pay it. Van Wart v. Woolley, 3 Barn. & Ores., 439; 5-Dowl. k Ry., 374 ; 5 Maulo & Sel., 02. ' Dayton v. Trull, 23 Wend., 345; Stam v. Ken, 31 Miss., 2 George, 100. ' Jones v. Savage, G Wend., G58. The same rule applies where the purchaser pays In a note of a third person, which he indorses ; if the vendor of the goods neglects to demand the note, and give notice to the ipdoroer so as to charge him, he has made the note his own, and must rely upon the solvency of the maker. 4 Tobey v. Barber, 5 John. It., C8 ; see also authorities cited by BiiONSON, J., in Dayton v. Trull, above. Mclntyre v. Kennedy, 29 Penn. State, 148. •Chittyou Bills, 320; Commercial Bank of Albany v. 1 1 ii£ lies, 17 Wend.. 94. 424 BILLS OF EXCHANGE AND PROMISSORY NOTES. payment by the maker and failure of notice to the indorser cannot possibly operate to the injury of the latter, the omission will not discharge him ; ' as where the indorser is himself the debtor, the note or bill being discounted for his accommodation, and the money raised upon it received by him ; s or where he has taken the entire, effects of the maker into his hands, or enough of them to indem- nify him against the liability assumed. 3 Obviously the same rule applies in like cases where there has been a failure to give notice of non-acceptance. The presumption always is, that the drawer and indorser are injured by the failure to give them due and regular notice that the bill has been dishonored : prima facie they are discharged, where the holder neglects to give them notice of the dishonor ; whether that occurs by the non-acceptance or non-payment of the bill; and if the holder seeks to recover against them, notwith- standing the want of notice, the burden of proof is with him to show clearly that no injury or damage has been or could be sus- tained in consequence of the omission. 4 *dA t 7 * ^ n some °f tne ear ty cas es, it was held incum- bent on the drawer insisting on the want of notice, to show that he had really sustained damage by the neglect of the holder in this particular ; 5 but the later decisions uniformly 1 Mechanics' Bank of N. Y. v. Griswold, It "Wend., 165. The question presented in this case was, whether the indorser of a promissory note, who, before the note fell due, took an assignment of all the property and estate of makers for the express pur- pose of meeting his responsibilities, was entitled to the usual notice of non-payment. s Agan v. McManus, 11 John. R., 180; French v. Bank of Columbia, 2 Peters' Con- densed R., 64; 1 John. Cas., 99. 3 Bond v. Farnham, 5 Mass., ltO ; Corney v. Dacosta, 1 Esp. R, 302 ; Barton v. Baker, 1 Serg.& Rawle,334; 15 East, 222; Seacordv. Miller, 3 Kernan R., 55; taking a security is not enough. 4 17 Wend., 94, and cases cited by the court. 6 Magadora v. Holt, 1 Shower, 317. The marginal note is in these words: "In an action by the indorsee against the drawer of a bill of exchange, if the declara- tion allege the custom to be that the drawer is liable on non-payment by the acceptor, and it appears that the bill was not presented until after it was due, yet the plaintiff shall recover; for the drawer always remains liable, and the setting forth of the custom shall be rejected as surplusage." Eyres, Justice: "Now, if there be no accident happening or intervening, by the parties breaking, or the like, the drawer is chargeable, though the presenting of the bill and protest were after the day; for by the law of merchants it need not be tendered." Maggadow v. Holt, 12 Mod., 15. The defendant drew a bill on W., a merchant at Rotterdam, payable to H. within two usances and a half, namely : two months and a half; the custom was alleged, and assigned to plaintiff. Per Curiam; judgment for NON-ACCEPTANCE AND PROCEEDINGS ON. 425 place the burden of proof on the party that has been guilty of laches. 1 The drawer of a bill of exchange, payable after date, is not dis- charged by the want of notice of non-acceptance, where the bill has passed into the hands of a bona fide indorsee for value, who took the same before its maturity, having no knowledge of the dishonor. 9 The rule here yields to one of * superior impor- tance ; for it is considered of greater moment to the business community to protect the person who takes the bill in good faith and for value, than to enforce rigidly the rule requiring notice of the dishonor. To be sure, the principle operates to permit the holder, who has been guilty of laches, to transfer a right of reco- very that has been lost or forfeited by his negligence. But it often happens that the holder of negotiable paper transfers a perfect right of action, where he himself does not possess any that is avail- able. 3 This, however, cannot be done, in the instance just men- tioned, where the bill remains in the hands of the negligent holder 1 See authorities cited by Cowen, J., in Commercial Bank of Albany v. Hughes, supra. a O'Keefe v. Dunn, 1 Marsh., 613. The payee of a bill of exchange having pre- sented it for acceptance, which was refused, indorses it to the plaintiff for value, without giving notice of the dishonor, either to the drawer or to the indorsee. The latter presents it and it is again refused acceptance, of which the drawer receives due notice. Held, that the drawer was not discharged from his liability to the indorsee, by the payee's neglect to give notice of the previous dishonor. The bill was payable one month after date. Dallas, J.: "The nature of the contract is, that the drawer, by drawing the bill payable to the order of the payee, holds himself out as liable, in default of the drawee, and to all who shall come fairly into the possession of it. lie does not stipulate that it shall be presented for acceptance, nor does the law cast such an obligation on the payee ; he must, therefore, be content to rest in ignorance as to the fate of it, till it becomes payable." The only objection to this view of tho case is this, the holder having lost his remedy by laches, confers on the purchaser a right 'of recovery which he has not. On error, the judgment of the common pleas was affirmed, 5 Maule k Sel., 232. ' C Wend., 615; 2 Hill, 490; 20 John. R., G37. plaintiff First: The law of merchants is jus gentium, and part of the common law; and, therefore, we ought to take notice of it, when set forth in pleading. Tho law of merchants in this case is, that if lie who has such a bill lapse his timo, and do not protest or make his request, if any accident happen by this neglect, in prejudice to tho drawer, he hath lost his remedy against him ; but if such a thing had happened, it ought to have come of the other side: and not being so, wo must judge on the declara- tion. It is not necessary to show the custom of merchants, but it is necessary to show how the usance shall bo intended, because it varies as places do;" decided in the 3 Wm. and Mary. EDW. 54 426 BILLS OF EXCHANGE AND PROMISSORY NOTES. until after it becomes due ;' nor where the purchaser has know- ledge of the laches. 3 And it is to be further observed that some stress is laid upon the circumstance that, the bill being payable a certain length of time after date, the holder is not bound to pre- sent the same for acceptance until it becomes due : so that the drawer cannot complain of the delay. The necessity of giving the drawer notice of non-acceptance is created by the law of the place where the bill is drawn ; and hence no notice need be given where, as in Pennsylvania, the local law does not require a protest for or notice of non-accepance.' * On the contract as generally construed, the drawer of a bill of exchange is entitled to notice of non-acceptance or non-payment ; but there are certain exceptions to this rule which are not only consistent with it, but actually grow out of the reason on which it is founded. If the drawer has no funds, and 1 Roscoe v. Hardy, 12 East, 434. 3 Crossly v. Ham, 13 East, 498; Brown v. Davis, 1 Term R., 80. 3 Allen v. Merchants' Bank of N. T., 22 Wend., 215; Brown v. Barry, 3 Dallas R., 365; Clarke v. Russell, id., 415; S. C, cited 6 Serg. & Rawle, 358; 3 Kent's Com., 95, 1th ed. "The English law requiring protest and notice of non-acceptance of foreign bills, has been adopted and followed as the true rule of mercantile law in the states of Massachusetts, Connecticut, New York, Maryland, Virginia, North Carolina and South Carolina. But the Supreme Court of the United States, in Brown v. Barry, and in Clarke v. Russell, held that in an action on a protest for non-payment on a foreign bill, protest for non-acceptance, or a notice of non-acceptance, need not be shown, inasmuch as they were not required by the customs of merchants in this country, and those decisions have been followed in Pennsylvania ; protest for non- payment is sufficient. It becomes, therefore, a little difficult to know what is the true rule of the law merchant in the United States on this point, after such contra- dictory decisions. The Scotch law is the same as the English ; and it appears to me that the English rule is the better doctrine, and the most consistent with commercial policy." Mr. Justice Story states the law on this subject according to the English rulings; Story on Bills, § 273 and note, and intimates that the Supreme Court of the U. S., would now hold the rule as formerly laid down, " only upon the ground of the local law of Pennsylvania, as to bills drawn or payable there." And it ia very certain that this is the general rule in this country. As to inland bills, there is not much uniformity of legislation in the different states ; but as to foreign bills, there has been but little innovation on the common law. Watson v. Loring, 3 Mass., 557 ; Sterry v. Robinson, 1 Day's R., 11 ; Mason v. Franklin, 3 John. R., 202; 4 id., 144; Winthrop v. Pepoon, 1 Bay's R., 468; Philips v. McCurdy, 1 Harr. & Johns., 187 ; Thompson v. Cummings, 2 Leigh's R., 321 ; see Statutes of the different states, notes pp. 264-285 ; see also Glasgow v. Copeland, 8 Mis., 268 ; 4 How. Miss., 567 ; Riggs v. McDonald, 1 Ala., 641; Unitod States v. Barker, Paine, 156; 14 Mass., 11G; 2 Dull., 192; 1 Teates, 147 ; Deuniston v. Imbrie, 3 Wash. C. C, 396; London v. Howard, 2 Hayw., 332; 2 Marsh., 616. As to the statutes of Pennsylvania, see, ante, 268, note. NON-ACCEPTANCE AND PROCEEDINGS ON. 427 knows that he has none, in the hands of the drawee, and no right to expect that his bill will be honored, he is not entitled to notice of its dishonor. 1 Drawing under such circumstances, if not a fraud, as it was considered in one case, does not give the drawer a right to insist upon the rule requiring notice. 2 Some of the de- cisions to this effect are placed upon the ground that he is not injured by the omission; 3 *and others upon the principle that having no right to draw he is not in a position to insist upon a strict compliance with the terms of the contract raised or implied by law. 4 The mere fact that the drawer has no funds or effects in the hands of the drawee, is not alone sufficient to excuse the want of notice, if it appears that the drawer had a reasonable expectation that his bill would be accepted and paid. 5 In other words, the exception is subject to important qualifications ; and it has been frequently decided that where there are dealings between the parties and there is a fluctuating balance between them, or where the drawer has from any cause, reason to believe that he has at the time, or will have funds in the hands of the drawee, when the bill becomes due, he is entitled to notice ; and a fortiori, he is entitled to have the bill duly presented. 8 Drawing without funds, where there is no agreement or relation of business existing between the drawer and the drawee, authorizing the draft, is quite a different transaction ; for in this case the drawer 1 has not even a fair pre- tense for drawing, and no reason whatever can be assigned why he should be notified of a fact which he must have anticipated from the first 7 On the same principle, though a person draw on funds, yet if he withdraw them without giving any notice to the 1 "Warden v. Tucker, 7 Mass. R., 452 ; Eichelberger v. Finley, 7 ITarr. & Johns., 381; Lilley v. Miller, 2 Nott & McCord, 257, note; Conroy v. Warren, 3 John. Cas., 259 ; Murray v. Judah, 6 Cowen, 484 ; Mobley v. Clark, 28 Barb., 390, 392 ; 12 Abbt., 139. * Biekerdike v. Bollman, 1 Terra R., 405. This is considered the first case dis- pensing with the usual notice ; the drawer had no funds and knew he had none in the hands of the drawee, and the drawing of the bills was considered a fraud. Sec opin- ion of Ch. J. .SrKNX'ER, in Robinson v. Ames, 20 Jolin. R., 146. 1 Hubble v. Fogartie, 3 Richardson (So. Car.) E., 413. 4 6 WeaL, 309; 7 id., GO; 21 Pick., 327; 3 Ohio : 307. 1 FrctM b '- er^cutrix v. Bank of Columbia, 4 Cranch R., 141. ' Eegge v. Iri'.rpr-. 12 K:ist. 171 ; 2 Campb. R., 503; 3 id., 33-1; Brown v. MafTy, 15 East, 216; Rucker v. lliller, 16 Eaet, 43 ; Cariflge v. Pulton, i Maulo A Sclw. R., 220; Campbell v. Pettengfnj 7 (JteefcH, 120. T Baker v. Callr/bcr, 1 Wastt C. 0. It ., I'll ; 33 Penn. State, KM. 428 BILLS OF EXCHANGE AJND PROMISSORY NOTES. drawee that he has drawn on him, and intercepts and prevents other funds from coming into the hands of the drawee, and pro- vides no means of payment, he is not entitled to notice. 1 So, where the drawer of a bill forbids the drawee to pay it when pre- sented, and the latter so informs the payee and holder before it becomes payable, it is not necessaiy for the holder to present it for payment when due, or to give the drawer notice of the dishonor.* In cases like these, aside from the bad faith manifested, it •±51 ■ would * be idle to notify the drawer of an event which he has himself taken care to render inevitable. There is a great variety of cases in which the drawer is entitled to regular notice, notwithstanding he has at the time of drawing no funds or effects in the hands of the drawee : As where he draws in pursuance of a previous agreement, or on an understand- ing that the drawee is to advance on property to be consigned to him for sale, or in the anticipation of funds from other sources, or on the strength of an established course of dealing. 3 Take the case of a running account : the drawer is largely indebted to the drawee, but has effects in his hands to a much larger amount than the bill drawn. Lord Ellenborough : " If a man draws upon a house with whom he has no account, he knows that the bill will not be accepted ; he can suffer no injury from want of notice of its dishonor, and therefore he is not entitled to such notice ; but the case is quite otherwise where the drawer has a fluctuating balance in the hands of the drawee ; there notice is peculiarly requisite. Without this, how can the drawer know that credit has been refused to him, and that his bill has been dishonored ? It is said here, that the effects in the hands of the drawee were all appropriated to discharge his own debt ; but that appropriation should appear by writing, and the defendant should be a party to it. " 4 In a similar case, where the drawee was in funds at the time the bill was drawn, but the balance had shifted to the other side of the ledger before it was presented, the same decision was made.' 1 Valk v. Simmons, 4 Mason R., 113. ' Lilley v. Miller, 2 Nott & McCord, 257, note. If the drawer of a check stops the payment, he is not entitled to notice. Purchase v. Mattison, 6 Duer, 587 ; see, ante, 397-398. * 4 Cranch, 141 ; 20 John. R., 146. * Blackman v. Doren, 2 Campb., 503. His Lordship in. this case, regretted that notioo had ever been dispensed with. * ' r v. Maginnis, 7 East R., 359. At the trial it appeared that at the time of drawing the bill the defendant had effects in tho hands of the drawee, but to what NON-ACCEPTANCE AND PROCEEDINGS ON. 429 When a bill is drawn merely for disco ant, and without any expectation that it will be accepted and paid by the drawee, as where it is drawn and indorsed for the accommodation of „ „ 452 * the drawer, notice of non-acceptance is not necessary. 1 So where the drawer addresses his bill to the drawee at a particular place, and it appears that he never lived there, and that the drawer did not act fairly in the premises, it is very evident that he has no right to expect notice of non-acceptance. 2 Dealing in bad faith, by drawing upon a house on which he has no right to draw, or upon a man as residing at a particular place where he never did reside, justly deprives the drawer of the right to insist upon notice.' "Want of funds in the hands of the drawee is generally speaking no excuse for not giving notice to the indorser of a bill. " Had this action been brought against the drawers of the bill of exchange declared on, as they had no effects in the hands of the drawees, a want of notice could not have availed them. But an indorser is entitled to reasonable notice of a protest for non-acceptance, whether the drawer has effects in the hands of the drawee or not, for the purpose of enabling him to secure himself against the 1 Farmers' Bank v. Vanmeter, i Rand., 553. Where the purpose is not merely to fabricate paper for discount, the parties are to be treated as in other cases. Carter v. Flower, 16 Mees. & W., 743. Assumpsit on a promissory note by indorsee against indorser. The declaration alleged that the note had been indorsed to the plaintiff by the payee, and averred " that neither at the time when the note was made, nor after- wards, and before it became due, nor when it became due, and on presentment for payment, had the maker or payee any effects of the defendant in his hands, nor was there any consideration or value for the making of the note, of the payment thereof, or its indorsement by the payee to the defendant ; and that the defendant had not sustained any damage by reason of his not having had notico of the non-payment of the note. Special demurrer. Held, that as against an indorser the declaration was bad, for not stating a sufficient excuse of want of notice of dishonor; for it was consistent with its allegations, that the note might have been indorsed by the defendant for tho accom- modation of one of the prior parties to it, in which caso the defendant would bo enti- tled to notice of dishonor. 3 Cumming v. Fisher, Anthon, N. P., 1 N. a. 1 Dolfus v. Frosh, 1 Denio R., 367 ; Walwin v. St. Quintin, 1 Bos. & Pull., 652. amount did not appear; but when tho bill was presented for acceptance, and thenoe until presentment for payment he had not any. And the plaintiff was non-suited. This case is distinguishable from Valk v. Simmons, where the drawer withdrew his funds and intercepted so as to prevent others from coming into the hands of the drawee, < Mason, 113. 430 BILLS OF EXCHANGE AND PROMISSORY NOTES. drawer, if he should eventually be holden to pay the bilL" ' In ordinary cases the indorser is not acquainted with the particular relations subsisting between the drawer and the drawee ; and it is clear that * he is not in general affected by those relations.* It has, however, been held in some cases, that if the in- dorser know of the maker's absolute and recorded insolvency at the time of the note's falling due, that is enough; though nothing short of that will do. 3 And it has been decided in one case, that notice to the indorser of non-acceptance or non-payment need not be given, where the bill is indorsed for the accommodation of the drawer with no expectation that it would be honored. 4 But that was plainly a case of fraud, in which the indorser was impli- cated. In deciding it the court say : " with the exception of the cases in which it can be shown that they could not by possibility suffer any injury by the failure to give them notice, the drawer and indorser have in all cases a right to strict notice, unless they waive that right, or forfeit it by their own fraud. I do not find this ground of fraud very distinctly laid down as a reason for dis- pensing with notice ; but there are many cases in which it appears to have been the sole ground of the judgment, and in which the principle is distinctly alluded to." Fraud in the other parties to the bill does not deprive the in- dorser of his right to notice, where he is not privy to the fraud. 6 And the mere fact that the drawer has no funds in the hands of the drawee, though known to the indorser, does not deprive the latter of his right to insist upon the usual notice. 6 1 Warden v. Tucker, 7 Mass. R., 450. s Jackson v. Richards, 2 Caines R., 343. In this case the indorser of a note for the credit of the drawer, with knowledge of his insolvency, was held entitled to regu- lar notice. Gower v. Moore, 25 Maine, 16, is a like case, with the same ruling. * Clark v. Minton's admx., cited 2 Const. R., 682; Kiddell v. Ford, id., 678. * Farmers' Bank v. Vanmetcr, 4 Rand. (Virginia) R., 553. 6 Leach v. Hewitt, 4 Taunt., 731. " Norton v. Pickering, 8 Barn. & Cres., 610. A draws upon B for the accommoda- tion of C, and the latter indorses it for value to D. Neither A nor C has any effects in the hands of the drawee, and the bill is dishonored. Held, that the drawer was entitled to notice. Lord Tenterden: " It may be questionable whether it might not have been more conducive to the interests of commerce to have decided that the holder of a bill is not at liberty to give evidence of any circumstances to excuse the want of notice. Here the defendant does not seek to avail himself of circumstances dehors the bill. He being drawer of the bill, by the law of merchants, was entitled to notice of dishonor." The bill had been accepted. The above decision applies with Btill greater force in the caso of an indorser. Carter v. Flowor, 16 Mees. & "Wolsby, NON-ACCEPTANCE AND PROCEEDINGS ON. 431 * Where the bill is drawn for the accommodation of an ^ „ , 454: indorser, so that he has no remedy over against any one, and it so appears on the pleadings, it seems that no notice to him is required ; but it is otherwise where he also indorses for the accom- modation of a prior party, against whom he is entitled to recourse. 1 The death of the drawee may render a presentment for accep- tance fruitless and unnecessary, but does not dispense with the necessity of giving timely notice of the dishonor of the bill. 8 Neither does the death of the drawer or indorser discharge the holder from his duty to give the usual notice ; but the notice must be sent to the representatives, if the holder know or can ascertain who they are and their address. 3 If the holder does not know of the drawer or indorsees death, the notice should be given in the usual way ; * and though he knows of the indorsees death, he may give the notice in the usual manner in case he does not know who are the legal representatives of the deceased. 5 And where there are joint indorsers, not partners, one of whom is dead, it is incum- bent upon the holder to give notice to the representatives of the deceased ; and if he fails to do so, it seems that he loses his remedy against the survivor, on the ground that the latter is thereby de- prived of his right to contribution from the estate * of his # AKK co-indorser.* But if the surviving indorser enter into an arrangement with the maker, taking security from him for the payment of the note or bill, this will operate as an admission by him that the proper steps have been taken to charge both indorsers/ 1 16 Mees. & Welsby, 743. a Chitty on BiUs, 330 ; Byles on Bills, 40, 41. If the holder is not bound to take an acceptance of the representative to pay out of the estate, nor his personal acceptance, there is no ground for saying the holder is bound to present for acceptance. ' Cayuga Co. Bank v. Bennett, 5 Hill R., 236. 4 Merchants' Bank v. Birch, 17 John. R., 25. 1 Stewarts v. The Executors of Eden, 2 Caines' R, 121. e "Willis v. Green, 5 Hill R., 213. Joint indorsers stand upon the same footing as joint makers of a note, who are not partners. Shepherd v. Hawley, 1 Conn. R., 367. Notice is properly sent, addressed to the firm name, the bill being indorsed by the firm. 19 X. Y. Rep., 477-481. 7 5 Hill R., 235 j Tebbetts v. Dowd, 23 Wend., 379. 743. There must be notice or an excuse rendered for not giving notice, and tho ex- cuse must be shown in the complaint. Fitzgerald v. Williams, G Bing. N. C, 69. Notice means something more than knowledgo of tho dishonor. Brugh v. Leggo, 5 M. AW.. 418. 432 JBIIJLS OF EXCHANGE AND PROMISSORY NOTES. So an agreement made by the drawer of bills that are described in it as overdue, is an admission of due notice. 1 Neither does the bankruptcy or known insolvency of the drawee or maker form any excuse for a neglect to make presentment, or to give notice ; because many means may remain of obtaining payment by the assistance of friends or otherwise, of which it is reasonable that the drawer and indorsers should have the oppor- tunity of availing themselves. 2 There seems to be a stronger reason for insisting upon a demand and notice, where the promisor or principal debtor becomes insolvent after the indorsement or transfer f but the rule is of general application, and there appears to be no disposition to relax it. 4 Where the drawee cannot be found, or has absconded, it is sufficient to use due diligence to present the bill for acceptance or for payment ; provided the holder takes care to communicate the requisite notice to the indorser. 6 For though *the drawee have absconded or be a fictitious person, notice of dishonor must be given to the prior parties just the same, unless the holder chooses to take upon himself the burden of proving them parties to the fraud. 6 The case is very different where the drawer or indorser has absconded, or cannot be found : here it is enough if the holder use due diligence in giving the required notice. 7 What is due 1 Gunson v. Metz, 1 Barn. & Cres., 193. •Bayley on. Bills, ch. 7, § 1 ; Howe v. Bowes, 16 East. 112, and 5 Taunt., 30; Chitt-y on Bills, adds, "it is not competent to the holders to show that the delay in giving notice has not, in fact, been prejudicial." Esdaile v. Sowerby, 11 East, 114; but see 17 Wend., 94. 1 Crossen v. Hutchinson, 9 Mass. R., 206. 4 Sandford v. Dillaway, 10 Mass. R., 52 ; Farnam v. Fowle, 12 Mass., 89. It is no excuse for want of presentment and demand, that the promisors had failed. Granite Bank v. Ayres, 16 Pick. R., 392. Where the indorser has taken an assignment from the maker of all his property, notice is not necessary to charge him ; certainly not, if the assigned property be sufficient to pay the note, so that the payment will come, in fact, from the primary debtor. 2 Conn. R., 126; 2 Bay, 217 ; 9 Mass., 408; Barton V. Baker, 1 Serg. & Rawle, 334. 6 Ogden and others v. Cowley, 2 John. R., 274. The notice in such cases is the material tlnng. 2 Caines, 127. When a bill is payable in one place, and addressed to and accepted by the drawers in another, and no particular place of payment is epecified, the holder need not search for the acceptors. 13 John. R., 207. Notice of the facts will charge the indorser and drawer. RateluT v. Planters' Bank, 1 Sneed, 425, 555. 6 Trice v. Young, 1 McCord, 339; 4 Taunt., 731. 7 Carroll v. Upton, 2 Sand., 171; 3 Comst., 272. NON-ACCEPTANCE AND PROCEEDINGS ON. 433 diligence is a mixed question of law and fact ; but when the facts are ascertained, it is purely a question of law, 1 and is, as before observed, to be determined according to the law of the place where the bill was drawn, or the indorsement was made. 2 "When the party to be charged resides in the same city or town where the demand is made on the bill presented, notice must be personal, or left at his dwelling house or place of business. 3 In this state the rule has been changed by a recent statute. " Whenever the residence or place of business of the indorser of a promissory note, or of the drawer or indorser of a check, draft or bill of exchange, shall be in the city or town, or whenever the city or town indicated under the indorsement or signature of such indorser or drawer, as his or her place of residence, or whenever in the absence of such indication, the city or town where such indorser or drawer, from the best information obtained by diligent inquiry, is reputed to reside or have a place of business, shall be the same city or town where such promissory note, check, draft or bill of exchange is payable or legally presented for payment or acceptance, all ^notices of non-payment and of non-accep- tance of such promissory note, check, draft or bill of ex- change may be served by depositing them, with the postage thereon prepaid, in the post office of the city or town where such promissory note, check, draft or bill of exchange was payable or legally presented for payment or acceptance, directed to the indorser or drawer at such city or town."* If the drawer or indorser resides in a different place notice must be forwarded on the day of demand, or the day after, and by the next convenient mail using ordinary diligence, directed to and advising him of the protest. 4 In the case of a temporary removal, notice left at his last place of business will be sufficient ; " or if 1 Taylor v. Bryden, 8 Johns. R., 173; 11 id., 187; Bank of Utica v. Bender; 21 Wend., 643; Reemer v. Downer, 23 id., G20; 3 Hill, 520; 3 Comst., 272. M2 "Wend., 439. * Ireland v. Kip, 10 John. R., 490 ; Smodes v. Utica Bank, 20 John. R., 372 ; 4 Hill R., 129; Eddy v. Jump, 6 Duer, 492. * The act was passed April 17, 1857, and takes effect on the first of July next, but dGes not apply to paper bearing date prior to that time. This statute docs not dispense with the necessity of making diligent inquiry to ascertain the indorsees residence. Randall v. Smith, 34 Barb., 452. 6 11 John. R., 231; and 20 John. R., 372; Howard v. Ives, 1 Hill R., 2G3. no ia to send by the next practicable or convenient mail, on the day after dishonor; that is to say the first mail after the commencement of business hours. e 2 Caincs R., 121. Euw. 55 434 BILLS OF EXCHANGE AND PROMISSORY NOTES. both his house and place of business be closed during his absence, it is enough to put a letter in the post office addressed to him and enclosing the notice. 1 If the holder does not know where the drawer or indorser resides, he must make diligent inquiry to ascertain their residence ; having done so, by inquiring of the parties to the bill where that is practicable, and where it is not, by inquiring of business men and persons likely to know the residence and having no interest in stating it erroneously, he is authorized to act upon the informa- tion so acquired ; and though misled as to the fact, notice sent accordingly will be good. 2 And under the statutes of this as well as some of the other states of the Union, it is sufficient if such notice be directed to the city or town where the person sought to be charged resided at the time of drawing, making or indorsing the note or bill ; unless such person, at the time of affixing his signature to the instrument, specifies thereon the post office to v-.m which the notice is to be addressed. 3 *So that the holder 458 is here no longer bound to use diligence to ascertain the present residence of the drawer or indorser ; and it is enough if the notice be sent addressed to the town or city in which he 1 2 John. R., 274. a Seneca County Bank v. Neass, 3 Comst., 442; 2 Sand., 176; 1 John. R, 294; 16 id., 218; 5 Wend., 587; 21 Wend., 643; 2 Hill, 587. Due diligence by the holder or by his agent to ascertain the residence of one of the indorsers of a note, will not avail a prior indorser who has positive knowledge on the subject. Beale v. Parish, 20 N. Y. R., 407. Nor will the agent or notary's diligenco avail the holder, who knowing, neglects to inform the agent of the indorsees resi- dence or place of business. Lawrence v. Miller, 16 N. Y. Rep., 235. 8 2 R. S., 55, 3d ed. ; chap. 141 of Session Laws of 1835; see also 3 Comst., 444. Independent of the statute it is sufficient if the holder use reasonable diligence. Bur- mester v. Barron, 9 Eng. Law and Eq. R., 402. This was an action against the defen- dant as drawer of a bill of exchange, and the question of due notice was put in issue. The bill was drawn in London, and there was no other address of the drawer stated on the face of the bill ; and the plaintiff having proved the sending of notice of the dis- honor through the post office addressed to the defendant, "London," the court wero of opinion that this was evidence of due diligence and prima facie sufficient, though tho defendant proved that he lived at Chelsea, and did not receive tho notice, and notwithstanding his residence might havo been ascertained by inquiring of the accep- tor, "No. 27, Savillc Row," the bill being addressed to him in that manner. Though the indorser living in a city add under his indorsement the No. of his office, the party making the personal service must ascertain that that is still his place of business, and deliver the notice to the indorser or to some person found there ; or it should appear that that could not be done; the manner of the service is mate- rial, and must be such as naturally to bring the notice to the indorsees knowledge, Davenport v. Gilbert, 4 Bosw., 532. NON-ACCEPTANCE AND PROCEEDINGS ON. 435 resides, 1 or to the post office in an adjoining town where he is in the habit of receiving his letters and papers, provided he has not specified a different place.* "We have seen that delay in presenting a bill may be excused by illness or other reasonable cause or accident not attributable to misconduct in the holder ; 3 and Mr. Chitty says expressly that the sudden illness or death of the holder or his agent, or other acci- dent, may constitute an excuse for the want of regular notice to any of the parties, in case it be given as soon as possible after the impediment is removed. 4 And this is clearly in harmony with the general principles of the commercial law, which in no case requires the performance of an act that has been rendered impossi- ble through no fault of the holder. 6 The breaking out of a war, blocking up the usual channels of communication ; * the preva- lence of a malignant fever, that puts a stop to all business ; T and, in general, any such inevitable accident as prevents the giving of notice and * is not traceable to the neglect of the holder, ^ will excuse delay so long as the preventing cause con- tinues. 8 When it is said that the notice must be sent as early as the next day after the dishonor, the meaning is that it must be forwarded on the next business day. If the protest be made on Saturday, notice is properly sent on Monday by the first mail that closes after the commencement of the ordinary hours of business. 9 So if the protest be made on the third day of July, the notice will be sufficient if sent on the fifth, leaving the intermediate fourth out of the computation as a public holiday ; for the same reason if the fourth be the third day of grace, the demand of payment 1 Downer v. Remer, 21 "Wend., 10, holds that independent of the statute it ia enough to send notice to the town where the drawer or indorscr lives, unless it appoar that the holder knew that the notice should have been directed in a different manner there being three post offices in the town. a Montgomery Co. Bank v. Marsh, 3 Selden It., 481; 4 Barb. R., 324, * 7 Cowen R., 606, 704 ; ante, 392. 4 Chitty on Bills, 330. * 3 Wend., 488; 2 Smith, 222; Hilton v. Shepherd, G East R., 10; Tuno v. Saguo, 2 John. Cas., 1 ; Anthon N. P., 35; 1 McCord, 339. • 2 Smith, 222. T 2 John. Cas., 1. "3 Wend., 488; 6 East, 16. • Howard v. Ives, 1 Hill R., 203; Ilaynos v. Birks, 3 Bos. & Puil, 599; Wright v. Shawcross, 2 Barn. &. Aid., 501, note ; Rowe v. Tipper, 20 Eug. Law and Eq. R., 220. 436 BILLS OF EXCHANGE AND PROMISSORY NOTES. must be made on the day previous, the same as when it falls on Sunday. 1 So if the third day of grace fall on a religious festival, or solemn fast, such as Christmas or Good Friday in England, or Thanksgiving day in this country, the bill or note becomes due on the day preceding, and the festival or day of rest is to be ounted out of the calendar of business. 8 In stating the rule that the notice is to be transmitted on the day after the protest or dishonor of the 'bill or note, it is taken for granted that there is a regular mail, so that the notice may be sent as early as that. In respect to foreign bills, it frequently happens that the notice cannot be sent so promptly, for the reason that there is no mode of sending it at so early a day ; and conse- quently the rule laid down in such cases, is, that the holder must use reasonable diligence. 3 When an absolute acceptance is refused, and the drawee offers *460 a conditional or qualified acceptance, the holder has his * option, either to have the bill protested for non-accept- ance and notice thereof given to the drawer and indorsers, or to take the acceptance offered and rely upon the contract of the acceptor. 4 But it is clear that the party acting as the agent of the Ransom v. Mack, 2 Hill R., 5ST ; Cuyler v. Stevens, 4 Wend., 566; Lewis v. Burr, 2 Caines Cas. in Err., 195. J l Lord Raym., 743; 2 Caines R., 343; 6 Wheat., 102; 4 Wend., 566, 8 Pick. R., 8. What are to be considered holidays depends in most of the states, as in England, upon statutory enactments ; though several of them have been recognized as such at common law. 3 Bank of United States v. Carneal, 2 Peters R., 549; Story on Bills, §298; 8 Pick. R., 1. * Bayley on Bills, ch. 6, § 1 ; Chitty on Bills, 331. "If the drawee has offered a conditional or partial acceptance, or an acceptance at an extended period, or if any other person than the drawer offer an absolute acceptance, although the holder may bo willing to receive such offer, he must, if he intend to resort ultimately to the drawer and indorsers, give each of them notice of such offer, and this before he accepts the same ; and in such case if the holder will have the power of availing himself of it, he should state in his notice the terms of the acceptance offered; for a notice generally of non-acceptance would, if made with full knowledge of the facts, Bhow that he did not acquiesce in the offer and deprive him of the benefit of it. But it is said that a neglect to give notice where a conditional acceptance has been taken, is done away by the completion of those conditions before the bill becomes payable ; and a neglect where there is an acceptance as to part, and a refusal as to the residue, only discharges the persons entitled to notice as to the residue." Sproat v. Mathews, 1 Term R., 182. In another place Mr. Chitty says, it should seem that the holder ought to communicate the drawee's offer to all the parties, and obtain their consent before ho agrees to take a conditional or varying acceptance, or he may discharge NON-ACCEPTANCE AND PROCEEDINGS ON. 437 holder in presenting the bill, cannot safely take an acceptance which is not according to the tenor of the bill :' his safety and duty require him to obtain an acceptance according to the tenor of the bill, or to treat it as dishonored and give notice of non- acceptance to the drawer and indorsers. Failing in this, the latter are discharged, and the agent is responsible for the damages result- ing to the holder. 2 * A foreign bill dishonored, should be protested, and in- formation of the protest sent with the notice. 3 The protest is a formal and solemn declaration in writing made by a notary, giving a copy of the bill or referring to the original as annexed thereto, and stating that payment or acceptance has been deman- ded and refused, the reason given for the refusal if any, and the purpose and object of the protest. The same form is in general use in this country and in England ; and is itself the best ex- planation of the act that can be made. 4 Ordinarily the bill is 1 Walker v. The Bank of the State of New York, 13 Barb. R., G36. s 13 Barb. R., 636; 9 Wend., 46; 6 Metcalf, 13; 11 Wend., 573 ; 12 Conn. R., 303; 22 Wend., 215 ;' Commercial Bank v. Union Bank, 1 Kernan, 203. ' Rogers v. Stephens, 2 Term R., 713; Gale v. Walsh, 5 id., 239; Brough v. Per- kins, Lord Raym., 993. 4 Form of a protest for non-acceptance : United States of America, ) State of New Tork, [ ss : On the day of , in the year of our Lord, one thousand eight hun- dred and , at the request of A. B. ( bearer or holder, ) I, J. F. J., a notary public, duly admitted and sworn, dwelling in the city of Albany, in the state aforesaid, did present the original bill of exchange hereunto annexed, to E. F., the drawee therein named, for acceptance, who refused to accept the same. * Whereupon I, the said notary, at the request aforesaid, did protest, and by these presents do publicly and * The reason assigned for refusal should be inserted, when a reason ia given. them from liability. Id.. 300. Mr. Bayley states the law in substantially the same terms, and adds: "A neglect to give notice, upon the refusal of any thing more than a conditional acceptance, is done away by the completion of these conditions before the bill becomes payable; and a neglect, upon the refusal of any tiling more than a partial acceptance, discharges the persons entitled to it only from their responsibility as to the payment of the residue." Bayley on Bills, ch. 7, § 2. Mr. Story, after stating law in substance as laid down by Messrs. Chilly and Bayley, adds: "It should seem that notice would not of itself be sufficient, without a protest of the bill for non-acceptencc according to the tenor of the bill; nor unless, after notice, such parties adopted or acquiesced in the conditional acceptance; for it may mate- rially change the whole relations to, arid responsibilities on the bill; and each of them has a right to say, non in haecfoedera veni." Story on Bills, § 2-10. 438 BILLS OF EXCHANGE AND PROMISSORY NOTES. presented for acceptance in the first instance by the holder, or by his agent ; and if refused, it is then taken to a notary who is to present it again to the drawee for acceptance ; and if he then re- fuse, the officer is thereupon to make a minute upon the bill itself, consisting of his initials, the month, the day and year, and the reason if any be assigned, for non-acceptance, together with his charge. The making of this minute is usually called noting the bill, and is only a preliminary step — a memorandum for the use of the notary when he comes afterwards to draw up the protest : it is unknown to the law, and per se of no legal effect. 1 If there be no notary public at the place where the bill is dishonored, it may be protested by any substantial person of *the place, in the presence of two or more witnesses; provided only it is done according to the law or usage of the place where it is made. 2 In relation to inland bills, an early English statute prescribes the manner in which they may be protested, in certain cases, for non- payment, " by a notary public, and in default of such notary pub- lic, by any other substantial person of the city, town or place, in the presence of two or more credible witnesses, refusal or neglect being first made, of due payment of the same." 3 And the statute of Anne, passed shortly afterwards, allows a protest " in case of a refusal to accept, in writing, any inland bill amounting to the sum of five pounds, expressed to be given for value received, and paya- ble at days, weeks or months after date, in the same manner as in the case of foreign bills of exchange, and for which protest there shall be paid two shillings and no more."* Prior to that act, in- land bills were not protestable for non-acceptance ; and since its passage, though the holder may have them protested if he chooses, 1 Lcftly v. Mills, 4 Term R., 310 ; Rogers v. Stephens, 2 id., 713; 7 East, 359. a Ross v. Bedell, 5 Duer, 462; Bayley on Bills, ch. 1, § 2 ; Chitty on Bills, 333; Story on Bills, § 27G. 3 9 and 10 Wm. IIT, ch. 17, enacted in 1G98. This act applies to bills which on their face purport to have been given for value received, and are payable after date. 4 3 and 4 Anne, c. 9, § 4. huicnmly protest, as well against the drawer ( add and indorsors, if necessary, ) of the said hill, as against all others whom it doth or may concern, for exchange; re-exchange, and all cost, damages and interest, already accrued, and to be hereafter incurred, for want of acceptance of the samo. Thus done and protested in the city of Albany, aforesaid. In testimonium veritatis. ( L. S. ) J. P. J., Notary Public. NON-ACCEPTANCE AND PKOCEEDINGS ON. 439 he is not bound to do so, and is not subjected to any loss of either principal or interest by the omission. 1 In this state, " notaries public have authority to demand accep- tance and payment of foreign bills of exchange, and to protest the same for non-acceptance and non-payment, and to exercise such other powers and duties as, by the law of nations, and according to commercial usage, or by the laws of any other state, government or country, may be performed by notaries public." " " They may also demand acceptance of *inland bills of exchange, and ^. ao payment thereof, and of promissory notes, and may protest the same for non-acceptance or non-payment, as the case may require. But neither such protest nor any note thereof, made by any notary of this state, shall be evidence in any court of this state, of any facts therein contained, except in the cases specified in the next section."* A notarial certificate of protest in a foreign country or state, proves itself, and is sufficient evidence of the dishonor of a foreign 1 Burroughs v. Perkins, Holt, 121 ; Harris v. Benson, 2 Stra., 910; Lord Rayrn., 992 ; 3 Salk., 69 ; Windle v. Andrews, 2 Barn. & Aid., 696. To entitle the indorsee of an inland bill of exchange to recover interest from the drawer, it is not necessary to protest the same for non-payment. And notwithstanding the terms of the act seem to imply that the bill must be accepted in writing, a.construction was given to it that allowed and held a parol acceptance to be good. Lumley v. Palmer, 2 Stra., 1000, and Windle v. Andrews, 2 Barn. & Aid., 696. a 2 R. S., 382, § 50, 3d ed. * § 51. The next section has reference to the mode of proving protest and notice in certain cases, and is in these words : "§ 52. In case of the death or insanity of any notary public, or of his absence or removal, so that his personal attendance or his testimony cannot be procured in any mode provided by law, the original protest of such notary, under his official seal, upon such seal and his signature being duly proved, shall be presumptive evidence of the fact, of any demand of acceptance or of payment therein stated." " § 53. Any note or memorandum made by a notary public in his own hand writing, or signed by him at the foot of any protest, or in a regular register of official acts kept by him, shall in the cases specified in the last section, bo presumptive evidence of the fact of any notice of non-acceptance or non-payment having been sent or delivered, at the time and in the manner stated in such note or memorandum." §54. This section renders notaries public responsible civilly and criminally for any misconduct. "§ 55. In all actions at law, the certificate of a notary, under his- hand and seal of office, of the presentment by him of any promissory note or bill of exchange for accep- tance or payment, and of any protest of such bill or note for non-acceptance or non- payment; and of the service of notice thereof, on any or all of the parties to such hill of exchange or promissory note, and specifying the mode of giving such notice, and the reputed place of residence of the party to whom the same was given, and the post office nearest thereto, shall he presumptive evidence of the facts contained in such cer- tificate; but this section shall not apply to any ease in which the defendant shall annex to his plea, (answer) an affidavit denying the fact of having received notice of non-acceptance or of non-payment of such note or bill." Act of 1833, 2 R. S., 382, 3d ed., post, 585, 695. 440 BILLS Or EXCHANGE AND PROMISSORY NOTES. bill. 1 The custom of merchants requires that there should be a protest in case of the non-acceptance of a foreign bill of ex- change ; and the proper officer to make this protest is a notary public." Drawn up in the usual form, the certificate * of the notary should be authenticated by his seal of office: so executed, it is received in all courts, without any auxiliary sup- port, as evidence of the protest in the foreign state. 3 Whether it would be entitled to full credit without a seal, admits of question ; but it seems that if executed in the manner pointed out by the local law, it will be sufficient. 4 In common practice, the notary not only protests the note or bill for non-acceptance or non-payment, as the case may be, but also sends to or serves upon the drawer and indorsers due notice there- of;" and the general custom is that the notary includes in his certi- ficate a statement showing the service of notice of protest on the parties to the bill or note, "and specifying the mode of giving such notice, and the reputed place of residence of the party to whom the same was given, and the post office nearest thereto.'" But the certificate must be made so as to conform to the require- ments of the statute as modified by the act of 1835 : 7 it should show service of the notice in the manner pointed out by the words just quoted, altered so as to follow the new provision. 8 And it need not specially state by whom the notice was served or sent, the fact being stated in positive terms that it was served. The statute making the certificate of a notary, executed in the manner prescribed, presumptive evidence of the facts contained in 'Nichols v. "Webb, 8 Wheat, 333; Townsley v. Sumrall, 2 Peters, 179; Lonsdale v. Brown, id., 688 ; Bryden v. Taylor, 2 Harr. & Johns., 399 ; Chase v. Taylor, 4 id., 54 ; 5 Duer, 462. 8 Chauoine v. Fowler, 3 Wend., 173; per Marcy, justice; 3 John. E., 311. 3 Bank of Rochester v. Gray, 2 Hill R., 227, aud authorities there cited. 4 Idem ; 4 Mart. Louis. R., 283. In some of the states a seal is clearly not neces- sary. Bank of Manchester v. Slason, 13 Term., 334; Bank of Kentucky v. Pursley, 3 Monroe, 238. The notarial seal is prima facie evidence of the notary's commission to act in that capacity. Browne v. Philadelphia Lank, 6 Serg. & R., 484 ; Steward v. Allison, id., 324, 484; 5 Duer, 4G2. 6 Halliday v. McDougall, 20 "Wend., 81; Nichols v. Webb, 8 Wheat., 326. • The words quoted are those of the statute as contained in section fifty-five cited above, taken from the act of 1833 ; 19 Wend., 383 ; 24 id.. 230. T 2 R. S., 55, 3d ed. The section referred to provides for the service of notices by mail, where the party making or indorsing does not specify thereon the post office to which the notice is to be addressed. • Ketchum v. Barber, 4 Hill R., 224; 7 id., 444. NON-ACCEPTAXOE AND PROCEEDINGS ON. 441 it, is drawn in general terms that seem to be applicable to all nota- rial certificates, whether made by notaries of this or a foreign state. The late Mr. Justice Cowen, however, in one case declared it applicable to none but notaries of this "state, without ^ assigning any reason for that construction. 1 Mr. Justice Harris : " On the contrary, it seems to me that the legislature in- tended to make the statute applicable to all notarial certificates. I find nothing in the language or object of the act, which requires or justifies the restriction of its operation to the certificates of nota- ries of this state." * The provisions of the statute making notarial certificates pre- sumptive evidence of certain facts, has no application where the certificate is executed by a notary of this state, showing ^. &R ^presentment for acceptance or for payment, made beyond 1 The Bank of Rochester v. Gray, 2 Hill R., 227. 1 The Bank of Vergennes v. Cameron, 7 Barb. R., 143. This case did not turn upon the point in question; and so, of course, does not overrule the previous decision. The act referred to was passed in 1S33, and stands by itself, though printed with sections of the Revised Statutes relating to notaries of this state. A bill of exchange is drawn at Rochester, on a firm in Boston, at thirty days from date ; acceptance is declined, the bill is protested, and a certificate of protest for non- acceptance is drawn up in due form by the notary, stating the transmission of the proper notices to the drawer and indorsers t . Independent of this certificate there is no sufficient proof of notice to the defendant, an indorser. against whom the action is brought. These facts clearly present the question, whether the certificate of the notary making the protest in Massachusetts, is to be considered presumptive evidence of notice to the indorser under the statute ; and the decision of the court in the Bank of Rochester v. G-ruy, apparently decides that it is not. 2 Hill, 227. But it is evident the case did not turn upon that question; for it is stated in the report that the defend- ant had annexed to his plea an affidavit denying that he had received notice of protest, which, of itself, takes the case out of the statute. In Kirtland v. "Wanzer, 2 Duer Sup. Court R., 278, the court say: " As to our own statute, it has no application. As we understand its provisions, it is only to protests made within this state, and by our own notaries, that they can be applied." The action there was upon promissory note3, payable in New Orleans, which, in respect to protest, as well as ill other particulars, stand on the footing of inland bills. "Tho Btatutc of Louisiana, by its terms, makes tho certificate of the notary legal proof of the facts which it embraces, only in the courts of that state, and were its provisions not thus limited, so far from being under any obligation to obey, wo should bo bound to disregard them. There are many cases in which a foreign law must be followed as a rule of decision upon tho rights of the parties, but none in which it can be permitted to control and supersede our own rules of evidence. Setting aside tho statute, then, wa are clearly of opinion that the protests and certificates of the notary at New Orleans wore not evidence, cither at common law or under own statute. The law is settled, that it is only in relation to foreign bills of exchange, that the protest of a foreign notary can be admitted in evidenco, and the notes now in prosecution are certaiuljf not bills of exchange." Edw. 5(J 442 BILLS OF EXCHANGE AND PROMISSORY NOTES. the territorial limits of the state ; as where a notary commissioned and residing in New York, presents a note for payment in the state of New Jersey, and protests it in due form, and gives the usual certificate that notice has been given to the indorsers. 1 The notary can act officially only in the state where he is appointed. A certificate of the notary subjoined to the usual notarial certifi- cate and disconnected from it, stating the service of notice upon the drawer and indorser, is not presumptive evidence of the facts so stated ; a it is not drawn in the manner required by the statute.* But if the notary be dead, a minute made by him on the note or a memorandum entered by him in his book, is admissible evidence of protest or notice, according to its tenor : 4 so is a memorandum made by the clerk of a bank in the usual course of his employ- ment, whether as such clerk or in the retainer of a notary. 6 The notarial certificate of protest and notice does not satisfy the statute, unless it shows a presentment and protest by the notary himself; he cannot delegate his functions to another. The lan- guage of the act is explicit ; " the certificate of a notary under his hand and seal of office, of the presentment by him of any promis- sory note or bill of exchange for acceptance," obviously requires the act to be done by the officer himself, and not by a clerk or third person." And hence a certificate of protest and notice, stat- ing that the notary caused the note * or bill to be presented, is of no validity. Neither is his certificate of service of notice by mail of any force, unless the language used imports that the notary made the service himself, or knew that it was made. 7 It is to be observed that the eighth section of the act of 1833, 1 Dutchess Co. Bank v. Ibbotson, 5 Demo R., 110. It is to be borne in mind that bills drawn in one state on another are foreign bills. 20 Wend., 81, and cases there cited. 2 7 Barb. R., 144. The bank of Yergennes v. Cameron was the case of a memo- randum at the foot of the draft, stating the service of notices, and signed by the notary with his initials. ' Hunt v. Maybee, 3 Selden R., 2GG ; see terms of the section referred to, § 55. 4 Halliday v. Martinet, 20 John. R., 1G8 ; Hart v. Wilson, 2 Wend., 513 ; 6 id., 284; Nichols v. Goldsmith, 7 Wend., 1G0. 6 Sheldon v. Bcnham, 4 Hill R., 129. The memorandum of a notary's clerk showing service, will not be sufficient, unaided by his recollection, unless it show the time when the notice was served. Tayler v. Stringer, 1 Hilt., 377. 6 The Onondaga Co. Bank v. Bates, 3 Hill R., 53 ; Vandewall v. Tyrrell, Mood, i Malk., 87. The same question arose in Stewart v. Allison, G Serg. & Rawle, 324 ' 7 Lei^h, 179; G B. Monroe, Gl ; 4 How., Miss., 567 ; 6 B. Monroe, 626. T 4 Hill, R., 224; 7 id., 444. NON-ACCErTANCE AND PROCEEDINGS ON. 443 which forms no part of the Revised Statutes, does not apply where the defendant annexes to his plea " an affidavit denying the fact of having received notice of non-acceptance or non-payment' And by the Eevised Statutes, neither the protest of a promissory note or bill of exchange made by a notary in this state, nor his certificate, was evidence in any court in this state, except in cases where the personal attendance of the notary on the trial, or his testimony, could not be procured in any mode provided by law. And in such cases, whether happening from the death, in- sanity, absence or removal of the notary, the original protest of such officer under his official seal, the seal and his signature being duly proved, is made presumptive evidence of the demand therein stated ; and any note or memorandum in his handwriting or signed by him, at the foot of the protest or in his register of official acts, is in the cases specified presumptive evidence of notice of non- acceptance or non-payment, having been sent or delivered at the time and in the manner so stated. And hence it has been held that where the notary is dead, his original protest and certificate showing that the note in suit had been dishonored and notice thereof given to the defendant, are presumptive evidence of the facts stated, notwithstanding the defendant has denied by affidavit the reception of the notice. 1 A protest for non-acceptance made in England must be proved in the courts of that country by the notary who made it, and it will not, as in the case of a protest made abroad, prove itself: so held where a notarial protest, under seal was offered as evidence that a foreign bill of exchange had been * presented for # . rQ payment in England. 1 The same principle of evidence 1 McKnight v. Lewis, 5 Barb. It., 681. The case also shows that the administrator of the intestate notary may use his certificate as evidence in his favor, provided ho was competent to make the protest, &c, at the time of making it. In Maryland the notary's certificate is by statute made prima facie evidence of demand and notice. Act of 1837, ante, 270; Ricketts & WMttington v. Pendleton, 14 Md. R., 320. It is not proof of other facts. 15 id., 431. The notary cannot present by deputy unless authorized to do so by usage or by statute. Cribbs v. Adams, 13 Or , 597. The notary's certificate that ho went with the note to tho maker's place of business to demand payment, and found the same closed and no one there to answer respect- ing the note, is evidence of tho facts so stated, though tho place of presentment be not mentioned, liaunigardner v. Reeves, 35 IVnn. State It., 250, ante, 270. 1 Chesmer v. Nbyes, 4 Campb., 129. Lord Ellebbobottoh: "The protest may bo sufficient to prove a presentment which took place in a foreign country; but I am quite clear that the presentment of a foreign Mil in England must lie proved in tho same manner as if it were an inland bill or a promissory note." 444 BILLS OF EXCHANGE AND PROMISSORY NOTES. prevails in this country, except where it is modified by sta» tute. 1 The general rule in this country, as in England, is that inland bills of exchange and promissory notes need not be protested for non-acceptance or for non-payment.' In some of the states, as in this, the protest is permitted though not required ; in others, the act is a mere nullity, and the notarial certificate of no legal or binding force.* The common law * being the basis of the legislation of nearly all the states, the early statutes of England, in respect to notes and inland bills have been generally adopted with but slight modifications ; and these which are the most important in the least commercial states are evidently made 1 See note on a former page for a brief minute of the statutory enactments of tho different states relating to bills and notes. s 5 John. R., 375; 2 Hill, 227 ; 3 Selden, 26G; 2 Iredell (North Car.) R., 134. * The Union Bank v. Hyde, 6 Wheaton R., 572. The protest of an inland bill or promissory note is not necessary, nor is it evidence of the facts stated in it. On foreign bills it is the evidence of demand, and an indispensable step towards the legal notice of non-payment, in consequence of which the undertaking of the drawer or indorser becomes absolute. Young v. Bryan, 6 Wheat., 146, is to the same effect. Bank of U. S. v. Leathers, 10 B. Monroe (Ken.) R., 64. This case holds the same doctrine. " The protest of a domestic bill is not required by law, nor is the certificate of a notary of such protest of itself evidence of dishonor." See also Murray v. Clay- born, 2 Bibb. (Ken.) R., 300. The early cases in Kentucky hold a bill drawn in one state on another an inland or domestic bill. Lawrence v. Ralston, 3 Bibb., 102. Promissory notes though made in one state and payable in another, need not and cannot be protested, as foreign bills may. Kirtland v. Wanzer, 2 Duer N. Y. Sup. Ct R., 278; Smith v. Ralston, 1 Morris (Iowa) R., 87. Turner v. Greenwood, 4 English (Ark.) R., 44. Protest of an inland bill for non- acceptance or non-payment is not necessary — acceptance being refused, no demand of payment need be made. Willock v. Riddle, 5 Call (Virginia) R., 358, decides only that the penalty for not giving notice of the dishonor of an inland bill is the loss of interest and damages, and does not decide nor imply that a protest is necessary for that purpose. Hubbard v. Troy, 2 Iredell (Nor. Car.) R, 134. Protest of an order or inland bill of exchange is not necessary to enable the holder to recover principal and interest. Notice in duo time of non-acceptance or non-payment is all that is required for that purpose. Taylor v. Bank of Illinois, 7 Monroe (Ken.) R., 576. A bill of exchango drawn in Illinois by a resident of that state on another resident is inland, and the protest of a notary is not necessary, and of course not ovidenco of demand and non-payment In Ohio, the holder is by statute relieved from the necessity of procuring a notarial protest of bills drawn in one state upon the resident of another, except for tho pur- pose of claiming statute damages. Case v. Heffner, 10 Ohio, 180; McMurchey v. Rob- inson, id., 496. As to the proper manner of making and completing the act of protest, see Bailey v. Dozicr, 6 How. U. S., 23. NON-ACCEPTANCE AND PROCEEDINGS ON. 445 with the design of dispensing with every unnecessary form. Start- ing then with this proposition, that the protest of notes and inland bills is unknown to the common law, it is plain that they can be protested only by virtue of the statute laws of the different statea* So that in the absence of a statute law authorizing it, the protest is an idle ceremony." But though the protest be not necessary, notice of non-accept- ance must be given to the parties to be charged, stating in express terms, or bv reasonable implication, that the bill * has been „ _ 470 dishonored.' The notice must describe so as to identify the bill ; 4 must be so drawn as to show that the bill has been duly presented for payment or acceptance, and refused or dishonored ;* must be given in due time after the dishonor ; 6 must be given by a party to the bill, or by some one duly authorized to perform the act ; 7 and must be given according to the law of the place where the bill was drawn or the indorsement was made. 8 The notice need not be in writing, 8 and no particular form of words is necessary to be used ; but the language employed must be such as to convey notice to the drawer or indorser that the bill 1 Byles on Bills, 204; Chitty on Bills, 334. Promissory notes are generally placed on the footing of inland bills, as by the statute of Anne. 3 Byles on Bills, 204 ; " Foreign bills are very frequently protested, both for non- ftcceptance and non-payment ; but a protest is hardly ever made for non-acceptance of an inland bill, though it is sometimes protested for non-payment. It is conceived that a protest of an inland bill is unknown to the common law, and must, therefore, derive its efficacy from the above enactments; (9 and 10 Wm. Ill, c. 17, and 3 and 4 Anne, c. 9), from which it will follow that it is applicable only to such instruments as are therein described and that the steps therein required must bo taken. As the statute of Anne puts promissory notes on the same footing as bills, it should seem to authorize a protest, and such protest is accordingly sometimes made (in England)." Kyd, 97; Chitty on Bills, 335. "The protest for non-acceptance in the case of an inland bill is by no means necessary, and the want of it does not affect tho holdor'g right to the principal sum, as it would in the case of a foreign bill; and it is in prac- tice seldom made. An inland bill is in general only noted for non-acceptance, which noting, as already observed, is of no avail; and if not paid when due it is then noted, and wometimes, though not very often, protested for non-payment." 1 Hedger v. Stevenson, 2 Mee. k Welfl., 799; G id., 402; 1 Comst. R., 413. * Cayuga Co. Bank v. Warden, 1 Comst., 413. * Dole v. Cold, :> Barb. It., 490. * Jackson v. Richards, 2 Caines, 343; Griffin v. GofT, 12 John. R., 422; Jouningav. Roberts, 4 KllisA Blackburn's R., G15. ' 3 Wend., 173; 5 Cuvm, 303; 1 Hill, 2C3; 2 id., 451. •2 Sand., 171 ; 12 Wend., 439. * 4 Wend., 5CG. 446 BILLS OF EXCHANGE AND PROMISSORY NOTES. has been dishonored ; and to do this it is essential that the notice should describe the bill, and show either in express terms, or in words that necessarily convey information to the party notified, that acceptance or payment has been refused on due presentment. 1 Notice that the bill has been protested for non-acceptance, is suf- ficient ; a but notice that a note is due and has not been paid,' or that an accepted bill has not been paid, or has not been taken up, has been held insufficient. 4 The rule requires positive and dis- tinct notice of the dishonor; that is to sa}', notice of the facts showing or lairly implying that the drawee has refused to accept or pay the bill when presented for that purpose at the right time and place, or other acts done which are deemed equivalent.' The description of the note or bill contained in the notice should of course be carefully and accurately drawn ; but a * mis- description will not vitiate it unless the variance is such that under the circumstances of the case the notice conveys no sufficient knowledge to the drawer and indorsers of the identity of the particular note or bill which has been dishonored. And where the face of the notice itself shows an error in the statement of the amount, it may be shown in aid or explanation of the defect that there was no other note or bill in existence to which the descrip- tion contained in the notice could be applied. 6 Nevertheless it is ■ 1 Comst. R.,413. * Idem, and Mills v. Bank of U. S., 11 Wheat., 431. * 5 Barb. R., 400. 4 Hartley v. Case, 4 Barn. & Cres., 339; Strange v Price, 10 Ad. & Ellis, 125. 1 Gilbert v. Dennis, 3 Metcalf R., 495 ; Pinkham v Macy, 9 id., 174. * Cayuga County Bank v. Worden & Griswold, 1 Con Stock's R., 413 ; was an action against the defendants as indorsers of a promissory noto. The note was in the plain- tiff's bank at maturity, and protested for non-payment: it was given for six hundred dollars, payable to the order of the defendants at the bank, and the following notice was addressed to the defendants severally: $600. Cayuga County Bank, Auburn, May 3, 1845. Sir — Take notice that S. Worden's note for three hundred dollars, payable at this bank, indorsed by you, was this evening protested for non-payment, and tlie holders look to you for the payment thereof. P. B. Eaton', Notary Public. And it was proved on the trial, subject to objection, that the note in suit was given in renewal of one of the same description, and that this was the only note in the bank made by S. Worden, and indorsed by the defendants. The Circuit Judge held thattho notice was insufficient, a verdict was rendered for the defendants, and tho Supremo Court of the seventh district gave judgment accordingly. And tho Court of Appeals reversed the judgment. The head-notes of tho reporter^ Judge Comstock, are in these words: "Due presentment for payment and notice of non-payment are conditions precedont to the liability of an indorser of a promissory note. 'No precise form of words aro necessary in giving notice. It is sufficient if the NOX-ACCEPTAXCE AKD PROCEEDINGS ON. 447 incumbent upon * the holder to show affirmatively that the drawer or indorser has been duly notified of the dishonor of the bill in question ; and the rule demands that he should state the requisite facts in his notice, in such a manner as not to mislead the' party notified. 1 But it has been held in England that if there be more than one bill to which the notice may apply, it rests with the defendant to show that fact 3 The sufficiency of the notice, when there is no dispute about the facts, is a question of law to be determined by the court. 1 But where a notice sufficient on its face misdescribes the note or bill, the question whether the party notified could under the cir- cumstances of the case be misled by the defect, is one of fact and law.* And where there is a question of fact involved in the issue presented for trial, the jury are to pass upon it as in other cases.* 1 Shelton v. Braithwaite, 7 Mees. & Wels., 436; Messenger v. Southey, 1 Man. & Gr., 76; 1 Scott N. R., 180; Stockman v. Parr, 11 Mees. & Wels., 809. a 7 M. & W., 436. The subject will be more fully considered in a subsequent chapter. 8 Van Hoesen v. Van Alstyne, 3 Wend., 75; 5 Barb., 490; Ilemer v. Downer, 21 Wend., 10; 23 id., 620; 25 id., 277; 2 Hill, 587; 3 id., 520. * McKnight v. Lewis, 5 Barb. R., 681 ; 1 Comst,, 413 ; 11 Eng. Law and Eq. R., 599. 6 Shelton v. Braithwaite, 7 Mees. & Welsby, 436; decided in 1841. The notice in this case was in these words: "Dear sir: To my surprise, I have received an intima- tion from the Birmingham and Midland Counties' Bank that your draft on A. B. is language used is such as to convey, either in express terms or by necessary implica- tion, notice to the indorser of the identity of the note, and that payment, on dua presentment, has been neglected or refused by the maker. " Where a notice misdescribes the note in some particular, it may bo shown in aid of the defect that there was no other note in existence to which the description con- tained in the notice could be applied. " A notice of protest need not in terms state that a demand has been made upon tho maker. It is sufficient if it state that the note has been protested for non-payment.' In Piatt v. Drake, 1 Douglass R., 296, the Supreme Court of Michigan holds that a notice stating that a promissory note has been protested for non-payment, is not suf- ficient to charge an indorser. " Such a protest was unnecessary, and was no evidence of the facta necessary to charge the indorser. A notice by a notary, that at tho re- quest of il '• bolder, he had made such protest, was not a notice that payment of the note bad been demanded and refused, or that tho note had been dishonored. It only asserted that tho notary had declared it dishonored in tho form of a protest — an instrument intended for evidence of the facts alleged in it, but in this caso totally in- Bdmissible as evidence, and unavailable to charge tho indorser." In Millersh v. Ripperj 11 Eng. Law and Eq. R., 599, the notice described tho bill as drawn by tlio acceptor and accepted by tho drawer, and was held sufficient; and in QUI v. I 'aimer, 29 Conn., 54 the notice to tho indorser, which described the bill as drawn Ly you, was held sufficient, in the absence of proof that thcro was any other bill in existence to which the notico could apply. 448 BILLS OF EXCHANGE AND PROMISSORY NOTES. * The notice itself is to be construed by the court, like any other instrument in writing ; while the accessory facts or surrounding circumstances which are admissible in evidence, are properly matters for the jury to pass upon. Accordingly, where the notice describes a note and states that it has been " this day jjresented to the maker for payment and payment refused," ♦rithout giving any date, and no other evidence is introduced, the question is one of law to be determined by the court ; the notice is held insufficient. 1 So, if the notice state a demand of payment & day too soon or a day too late, it is as a matter of law defective.* The holder of a bill of exchange has a right of recourse to each of the prior parties who has been charged with due notice of its dishonor, and is at liberty to notify them all himself, so as to avoid the hazard of some of the parties being discharged, by the omis- sion of such notice. And this is the prudent and customary 1 Wynn v. Alden, 4 Denio, 163 ; post, 591, 592. * Ranson v. Mack, 2 Hill R., 537, and cases there cited. dishonored, and I have requested them to proceed on the same." Held, that if thero was more than one bill to which the letter could apply, it lay upon the defendant to prove that fact, in order to show its uncertainty. Held, also, that the letter was a good notice of dishonor. " The word dishonor is a technical word which intimates that the bill lias been pre- sented and refused payment." Parke, B. Stockman v. Parr, 11 Mecs. & Welsby, 809, decided in 1843. The notice described a bill of exchange as a note. Parke, B. : "I entertain the same opinion which I ex- pressed at the trial, that, in the absence of proof of the existence of any other bill, the notice of dishonor was sufficient. In this notice there is only one misdescription, the calling the instrument a note instead of a bill. It gives the true date of the instrument ; and the sum demanded is not stated to be the amount of the bill ; tho 531 6s. Gd. is made up of the amount due on the bill, and the notarial charges, which appeared on the notarial ticket. There was sufficient evidence of identity to go to the jury." See also Tobey v. Lennig, 14 Penna. St. R., 483; Kilgore v. Bulkley, 14 Conn., 362; Crocker v. Getchell, 10 Shepl., 392. It is essential that the notice should state the name of the maker of tho note. Home Ins. Co. v. Green, 19 N. Y. Rep., 518. But being numbered, the notice Reed not state the number of tho note, though there be several of tho same amount and date. Hayes v. Sliuler, 22 N. Y. Rep., 114. There being several notes of tho same amount and date, made and indorsed by the same parties, it is hold that a notice dated the day one of them matures describing the note falling duo on that day by the name of the maker, its amount and indorsement, and stating that it is protested for noi, payment, &c, is sufficiently descriptive and definito in form. Davenport, v. Gilbert, 4 Bosw., 532 ; S. C, 6 id., 179. The notice is sufficient, when the extrinsic facts aro Buch as to identify the note clearly; and when such facts are disputed, they may bo submitted to a jury. Cook v. Litchfield, 2 Bosw., 137 ; 5 Seld., 279. NON-ACCEPTANCE AND PROCEEDINGS ON. 449 course pursued in such cases. But if the holder is satisfied with the responsibility of his immediate indorser, there is no necessity for his giving notice to any previous party ; and if such notice be given by the other parties to the bill, the holder may recover thereon against any of them. 1 In other words, if the drawer or indorser of a bill of exchange receive due notice of its dishonor from any person who is a party to it, he is directly liable upon it to any subsequent indorser, although he may have received no notice *of its dishonor from him. 3 So that if the holder „ _ 47-i gives notice to all the parties liable to him on the instru- ment, it inures to the benefit of each indorser who stands behind him.' But the indorser receiving notice, cannot complain of the holder for omitting also to give notice to the prior parties liable on the bill ; for it is the business of each indorser to take care that the parties responsible to him are duly notified. His contract is to pay the bill, on condition that the bill is dishonored and due notice given to him of the fact* When the notice is sent by the holder to the last indorser, and by him to his indorser, and so on until the drawer is notified, each of the parties has the same time and is bound to exercise the same diligence in serving or forwarding the notice, as the law gives to and requires of the holder. 6 And it has been determined that where a bill or note has been transmitted by the holder to an agent for collection, and it is presented by the agent and dishonored, if the protest or other evidence of dishonor is transmitted by the agent to his principal, and by him seasonably sent to the indorser, it is sufficient, although the indorser does not in fact receive it so soon, as if it had been transmitted directly by the agent to the indorser.* The holder of a bill in New York sent it to a bank at Providence for collection, whence it was sent to another bank at Bristol (R. I.), where the acceptor resided. The notary there, after making demand and protest, returned the bill to the cashier of the Bristol Bank, who sent it by the next mail to the cashier 1 Mead v. KnRU, 5 Oowen It., .'503 ; Spencer v. Ballon, 18 X. Y. Rep., .rJT.- V 'Jameson v. Swinton, 2 Campb., 273; Colt v. Noble, ■> Mass., 107 ; Bank of Utica r. Smith, 18 John. E., 231. * Stafford v. Yates, 18 John. R.. 327. 4 5 Cowen R.. 303: Spencer v. Ballon. 18 N. Y. Sep., 321. » Bray v. Hadwen, 5 Manic k Selw., 88; Williams v. Smith, 2 Barn. &, Aid., 49G; Eaglo Bank v. Chapin, 3 Pick., 180. * Howard v. Ives, 1 Hill K., 203, nud cases thcro cited; bco 4 Ducr, 20C. El>W. 57 450 BILLS OF EXCHANGE AND PROMISSORY NOTES. of the Providence Bank, and the latter sent it by the next mail to his immediate indorser in New York. The objection was taken, that the notary should have given notice of non-payment directly to all the prior parties ; biit the court held it to have been given .,,„.. according to established commercial * usage. 1 The agent ~47o ... . to whom the bill is indorsed for collection, is a holder for the purpose of giving and receiving notice of dishonor ; and it is perfectly immaterial through how many hands the notice may have to pass, so only it be transmitted with reasonable diligence by each of the successive parties. 2 When a bill or promissory note is delivered to a bank for col- lection, it being the established custom for the bank in such cases to cause notice of dishonor to be given to all the indorsers, there is an implied contract on the part of the bank to give notice in the manner required by the usage and custom of the business.' Or a suit may be maintained in the nature of an action on the case, against the bank, for neglect to give notice to the indorsers, accord- ing to the usual course and practice of banks. And where a note or bill is delivered by the holder to his creditor as collateral secu- rity for a debt due, and the latter deposits it for collection, it has been adjudged that the general owner, or person beneficially inte- rested in having the duty performed or notice given, may recover any damages sustained by him in consequence of the neglect. 4 The collecting bank is responsible for the neglect of its agents ; and though it hands the paper over to a notary public, or sends it 1 5 Cowen, 303 ; 2 Hill, 457, per Cli. J. Nelson; Talon v. Shurtleff, 9 Mete, 581. To insure safety, the holder should instruct the collecting agent to mail the notice directly to the indorsers to be charged ; for, if the notice be sent to him, he assumes the risk of the conveyance; not receiving it, so as himself to make due service, tho indorsers are discharged. Clark v. "Ward, 4 Duer, 20G. The holder should also give to his agent all the knowledge he has, in respect to the residence of the indorsers ; for the agent's diligence to ascertain what he knows, will not avail the holder. Law- rence v. Miller, 1G N. Y. Rep., 235. 3 The Bank of the TJ. States v. Davis, 2 Hill R., 451. Each party has a day in which to give the notice ; but if one of the indorsers neglects to give notice to his indorser, the holder cannot take his place and give the notices, after the timo has elapsed for him to give notice, and recover thereon. The holder can recover on his own notice only when it has been given promptly and in the usual time. Rowo v. Tipper, 20 Eng. Law and Eq. R., 220; Harrison v. Ruscoe, 15 Mee. & W., 231; post, 622. * Smedes v. Utica Bank, 20 John. R., 372; S. C, 3 Cowen R., G62. This case turned on the question of consideration, in the Court of Errors. * McKinster v. Bank of Utica, 9 Wend., 46; S. C, 11 Wend., 473. NON-ACCEPTANCE AND PROCEEDINGS ON. 451 to another agent to be by him presented for acceptance or pay- ment and protested in case of dishonor, the liability of the bank covers whatever is necessary to be done for the purpose of charg- ing the parties to the bill or note. 1 And in this state it is settled that the bank receiving a bill or note for collection is answerable for the neglect of a notary public and * a foreign agent, as # . Jg well as for the default of its own immediate servants. 3 But the rule is not the same in all the states ; in some of them the bank is not liable for the neglect or misconduct of a notary public ; * and in others, it is not responsible for the default of a foreign agent/ There being no special agreement entered into between the parties and no local usage or general custom shown, the bank to which a note or bill is indorsed for collection, is bound to present the same for acceptance or for payment, and if the same is not accepted, or is not paid at maturity, to give due notice of the dishonor to the last indorser, and he to the next, and so on. 5 The deposit for collection creates an agency, and the duties of the agent are regulated and to be ascertained in the same manner as in the case of any other agency. If there be a special contract, the parties are to be guided by it ; and if it be the custom of business that the bank receiving the note for collection is to take the necessary steps to charge all the indorsers or parties to the instrument, the con- tract between the holder and the agent is presumed to have been made with reference to the custom.' In this way the cases are reconcilable on the same general principle. 7 1 Allen v. Merchants' Bank of N. Y., 15 Wend. It., 4S2; S. C., 22 id., 215. * 22 Wend., 215; Downer v. The Madison Co. Bank, G Hill, C48. * Bellemire v. BaDk of U. States, 4 Whart, 105; Tiernan v. Commercial Bank, 7 How. (Miss.), 648; Bank of Mobile v. Hoggins, 3 Ala., 20G; Agricultural Bank v. Commercial Bank, 7 S. & M., 592 ; 1 La. Ann. It., 13. * Phipps v. Military Bank, 8 Met., 70. This case assumes that a bank receiving from another bank a noto for collection, discharges its duty in the premises by de- manding payment and giving notice to the bank from which the note was received. East Haddam Bank v. Scovill, 12 Conn. It., 303; 3 Rich., 366. ■ 8 Metcalf It., 79 ; so held where a bank received from another bank a note for collec- tion, indorsed by the cashier of the latter, and enclosed notices for the several indorsers to the cashier by whom the same was so indorsed. Eagle Bank v. Ohapin, :: Pick., 180 i Mass., 107; Haynea v. Birks, 3 Bos. & Pull., 599; Hank of U. stair;-; v. Ooddard, ■ n, 366. * 20 John. It., 372; 3 Cowen, 003; 8 Met , 70; 23 Pick., 330 ; 3 Ala., 200; Thomp- son v. Bank of the State, 3 Hill 8. 0., 77; Riley, hi ; 6 Blackf. It, 22S 1 Hank of Orleans v. Smiih, 3 Hill R., 500; Commercial Hank of Penn. v. Union Bank of New York, 1 Kernan R., 203. and cases there cited. 452 BILLS OP EXCHANGE AND PROMISSORY NOTES. Notice of non-acceptance from a mere stranger is not sufficient ; #±1-* and where a foreign bill purports to have been protested * abroad by an officer unknown to the custom of merchants, it is necessary to show that the protest was made in the manner pointed out by the law of the country where it was made ; so held where a bill was protested for non-acceptance at Havre, by a huts- sier audiencer of the tribunal of commerce at that place, pursuant to the commercial code of France. 1 Though the notice of dishonor must in general come from the holder or his agent, or from a party to the bill, it will be good if given by an indorsee who has transferred it as collateral security for an existing debt ; for such a person has a direct interest in the bill, and a right of recourse to the parties liable thereon, when the instrument comes back into his hands. 8 Where a bill is drawn by one of several partners on the firm, m relation to the partnership business, 3 or wliere the drawers and acceptors are the same persons, no notice of protest need be given ; for in each of these cases the party to be charged has notice of the dishonor of the bill so drawn in the very act of dishonoring them.* The case is the same in principle, where one agent of a corporation draws a bill on another agent of the same corporate body, and, therefore, no notice need be given of its dishonor.* 1 Chanoine v. Fowler, 3 Wend., 173. The written laws of a foreign state must be proved here by an exemplification, and cannot be proved by the printed statute book of such state. 2 Wend., 411. The protest in Chanoine v. Fowler, was made in one of the ways directed by art. 173 and 174, of the Code of Commerce, but the Code was not properly proved. See Code of N. Y., § 426. 2 Cowperthwaite v. Sheffield, 1 Sand., 416 ; ante, 400. 3 Gowan v. Jackson, 20 John., 176: 1 Campb., 82; Fuller v. Hooper, 3 Gray, 334. 4 The Bank of Rochester v. Monteath, 1 Denio, 402. The rule is the same where the firm does business in several places ; Hill v. Planters' Bank, 3 Humph., 670 ; though they transact it under different names. Wright v. Hooker, 6 Seld. (10 N. Y. Rep.), 51 ; 1 Denio, 402; not so, where only part of the firm are members of the several branches. Dwight v. Seavil, 2 Conn., 654. b Ilasey v. White Pigeon Beet Sugar Co., 1 Doug. (Mich.) R., 193. In Indiana it is held that the holder of a draft drawn by the secretary on the treasurer of a private corporation, is bound to present the same. &c. ; English v. Trus- tees of Ashbury University, 6 Ind., 438 ; M. & M. R. R. Co. v. Dillon, 7 id., 404 ; as against the indorser it must be presented, and notice given ; not as against the cor- poration. 15 N. Y. Rep., 337; Bull v. Sims, 23 id., 570. Such a draft is not a bill of exchango, but a promissory note. 23 N. Y. Rep., 570 15 id., 337 ; 28 Barb., 300. NON-ACCEPTANCE AND PROCEEDINGS ON. 453 After a bill of exchange lias been dishonored for non-acceptance, it is not necessary to present the same for payment. 1 This is clear from the nature of the contract entered into by the drawer and indorsers, as well as from the authorities ; for the engagement of these parties is that the bill shall be accepted when duly presented for that purpose, and as soon as it is broken the holder acquires a right of action * thereon, on complying with the conditions of the contract. One of these conditions is that the bill be duly presented for acceptance, and the other is that notice of the drawee's refusal to accept be given to the drawer and indorsers. By omitting either of these acts, the holder loses his right of recourse to these parties who are thereby discharged. 8 But the laches of the holder may be waived, by a subsequent promise to pay the bill made by the drawer or indorser with knowledge that he has been discharged by the neglect of the holder. 8 For instance, if the drawer or indorser pay a part of the note or bill, or promise to pay it, knowing that'it has not been duly presented for acceptance or payment, or that timely notice of the dishonor has not been given, this is a waiver of the laches." 1 2 mil K., 227 ; 1G East, 105 ; Exeter Bank v. Gordon, 8 N". Hamp., 66. * 1 Comst., 321; 19 John. R, 391; 14 id., 114; 1 Comst., 413. ' Tebbetts v. Dowd, 23 Wend. R., 379. The subject will bo more fully considered in a subsequent chapter. «Sigersor±v. Mathews, 20 How. U.S., 496; Edwards v. Tandy, 36 N. H., 540; Leonard v. Hastings, 9 Cal., 236; Sherer v. Easton Bank, 33 Penn. State, 134; Curtis v. Martin, 20 111., 557; Myers v. Standart, 11 Ohio State, 29; not so where the promise is made in ignorance of the facts; Low v. Howard, 10 Cush., 159; Hill & Denio, 122; post, 633-636, 650-C55. 454: BILLS OF EXCHANGE AND PROMISSORY NOTES- ^CHAPTER IX. PRESENTMENT FOR PAYMENT, AND PAYMENT. Demand, ivhen necessary. As against the maker of a promissory note, or the acceptor of a bill of exchange, it is not necessary for the holder to aver or prove a demand of payment : a suit is a sufficient demand, as in other cases of a precedent debt or duty. 1 The drawee by accepting the bill, becomes the principal debtor, and thenceforth stands in the same relation to the holder as does the maker of a note. 2 "When the instrument is drawn payable generally, that is, with- out specifying any place of payment, the contract is clearly not the same thing as an undertaking to pay in a particular place ; for in many cases the place of payment enters into the very essence of the agreement between the parties. A promise to pay a given sum of money in the city of New York, imposes upon the promisor a different obligation from a promise to pay the same sum in London or in Calcutta. On this ground it was decided in England, after thorough and elaborate discussion, that an acceptance payable at a particular banking house in London, the bill being drawn on another place, is a special engagement ; so as to render it incum- bent upon the holder of the bill, in an action thereon against the acceptor, to aver and prove a demand of payment at the place „,™ named. 3 Of course the substance of the contract is the •180 * same, no matter where it is made ; and the promisor may 1 Foden v. Sharpe, 4 John. R., 183; Wolcott v. Van Santvoord, 17 John. R., 248 ; Caldwell v. Cassidy, 8 Cowen R., 271; Haxton v. Bishop, 3 Wend., 13; Green v. Goings, 7 Barb. R., 652; Bank of the U. S. v. Smith, 11 Wheat.. 171; Fenton v. Gon- dry, 13 East, 459. 2 4 John. R.. 183; 17 id., 248. 3 Rowe v. Young, 2 Bligh R., 391 ; 2 Brod. & B.. 105. The act of 1 and 2 Geo. IV, c. 78, passed in 1821, makes all bills accepted, payable at a particular place or iiouse, payable the same as if accepted generally ; unless the acceptance makes the bill payable at that "place only, and not otherwise or elsewhere." Howe v. Young, was decided the year beforo the passage of the statute. Turner v. Ilayden, 4 Barn. t Cres., 1. PRESENTMENT FOR rAYHENT. 455 discharge his stipulation at the place where he engaged to pay. But in this country the rule of pleading and evidence docs not require the holder to take any notice of the place of payment ; though the right of the promisor to fulfill his engagement at the place appointed is conceded in all the cases, both here and in England. 1 In this state, as we have already seen, the holder of a bill of exchange need not show a demand of payment of the acceptor, any more than of the maker of a note. It is the business of the ac- ceptor to show, that he was ready, at the day and place appointed, but that no one came to receive the money, and that he was always ready afterwards to pay. 2 The rule was the same in Westminster Hall at the time of its adoption here. In an action against the acceptor of an inland bill of exchange payable at the bank of Utica, where the question came up on a demurrer to a declaration, on the ground that it contained no allegation of a presentment at the bank named for payment, Chief Justice Spencer after reviewing the authorities on the subject, concludes " that the time and place of payment are merely modal, forming no essential part of the con- tract ; that it is incumbent on the defendant, whether the payee was at the place at the time appointed or not, to show in his defense that he was there ready and willing to pay, and that the payee did not come ; that the consequences of the absence of the payee, under such circimstances, unless he makes a subsequent special demand and there be then a refusal, are merely that he must be content with receiving the sum originally payable ; and if he sue without having made a special demand, he loses all claim to damages and costs, and will himself be subject to them. This I consider not only entirely equitable and just, as between the parties, but the old and settled law of the land." 3 The doctrine so laid down * has been generally followed in this country, 4 and applies with equal force where the action is against the maker of a promissory note payable at a particular place." If the place of payment be material to the promisor, it is for him to 1 Smith v. Thatcher, 4 Barn. & Aid., 200, and American cases cited above. a 4 John. R., 184. ' Walcott v. Van Santvoord, 17 John. R., 2-18. Mr. Justice Va\ Nkss dissented from the opinion pronounced in this case, holding a demand of tho maker and accen- tor necessary in order to charge them. See cases cited by him. 4 Crecne v. Goings, 7 Barb. R., 652; 1 Peters R., 604; 11 Wheat., 171; 3Riharf- eon EL, 311. • Caldwell v. Cassidy, 8 Cowen R., 271. 456 BILLS OF EXCHANGE AND PROMISSORY NOTES. take the necessary steps to secure the advantage resulting from the stipulation in that respect In other words, a demand at the place named is not a condition precedent, and need not be averred by the payee or holder of a note ; at the same time the maker is at liberty to plead his readiness to pay at the time and place appointed in bar of damages, though not in bar of the action. 1 Bank bills which are promissory notes in form and substance, were for a time spoken of in the courts of this state as forming an exception to the general rule; though no decision to that effect was formally made, 1 At length the question came up for adjudi- cation, and the court in passing upon -it, say: "bank notes are pro- missory notes, and actions founded upon them are governed by the same rules. The corporation being a person in law, has the same rights, and is subject to the same liabilities as an individual, unless the act of incorporation varies these rights and liabilities.' In relation to promissory notes, it is well settled that in an action on a note payable on demand, generally no demand need be „ n . n proved ; * the commencement of a suit is a demand. So 482 • ■ also in an action on a note payable at a particular place, on a particular day, it is not necessary to aver or prove a demand at the time and place ; but the readiness of the defendant is matter of defense. . It seems to follow that in an action on a note, (bank bill,) payable on demand at a particular place, no demand need be averred or shown; but if the defendant pleads that when the de- mand was made, that is, when the suit was commenced, he was ready at the place mentioned in the note to make payment, and brings the money into court, he discharges himself from interest and costs." * 1 Ruggles v. Patten, 8 Mass. R., 480; Fenton v. Gondry, 13 East., 47:!; Turner t. Harden, 4 Barn. & Cres., 1. Where the holder of a bill of exchange, accepted paya- ble at a bankers, but not made payable "there only," did not present it for payment, and the bank-er about three weeks afterwards failed, having had in his hands all that time a balance in favor of the acceptor exceedin;,- the amount of the bill. Held, that the latter was not discharged by the omission to present the bill fur payment, tho acceptance being in law a general acceptance; decided in 1825. In Fayle v. Bird, C Barn, k Cres., 531, which was an action on a bill of exchange drawn by plaintiff on, and accepted by the defendant, payable at a particular place; and held, that it was a general acceptance under the statute, and that it was not necessary to prove present- ment at that place. See stat. 1 and 2 Geo. IV, c. 18; decided in 1827. ' The Bank of Niagara v. McCrocker, 18 John. II., 493; The Jefferson Co. Bank r Chapman, 19 id., 322; 8 -Cow-en R., 271. ' The Bank of Utica v. Magher, 18 John. R., 341. * Haxtun v. Bishop, 3 Wend., 13; 15 Mass., 447. PRESENTMENT FOR PAYMENT. 457 The case is different where an action is brought by the holder on the half of a bank note that has been severed for safe transmis- sion by mail from one place to another; for here the owner of the bill has no right of action upon the instrument itself, 1 and is not entitled to recover the face of the note until he has shown himself the owner, and accounted for the lost or absent half. 2 And if he neglects to do this before bringing his action, it has been held that he cannot recover either interest or costs of suit. 3 When property is given in pledge or as collateral security for the pa} T ment of a promissory note, a demand of payment must be made before the pledgee can proceed to sell the security deposited with him. And the rule is the same, although the debt is payable presently and without demand, and notwithstanding, by the terms of the pledge, the creditor may sell at public or private sale, with- out giving notice to the debtor. 4 The object here is to give the owner an opportunity to redeem the pledge. 6 * Although a presentment for payment is not necessary for the purpose of perfecting or completing the liability of the acceptor of a bill or of the maker of a note, it is a condition precedent to the liability of the drawer and indorser. 8 The holder is required to perform two distinct acts in order to charge these parties, or what is the same thing, in order to convert the condi' tional contract made by them into an absolute undertaking. And hence a waiver of notice of non-paj^ment by an indorser does not, according to the law merchant, dispense with the demand itself T But a waiver of protest, where the term is evidently used in its popular acceptation, is a waiver of both demand and notice.* In one of the earlier cases the duty of the holder in presenting ' Hinsdale v. The Bank of Orange, G Wend., 378 ; Com. Bank v. Benedict, 18 B. Mon., 307, 50G. ' Bank of Virginia v. Ward. G Munf, 1GG; Farmers' Bank v. Reynolds, 4 Rand., 18G. ' 4 Rand., 18G. Iu Kentucky it is necessary to show on the trial a presentment of notes made payable at a bank, for payment, but it is not necessary to aver a demand in th» complaint. Bank of K. v. Ilickcy. 4 Litt., 225. 4 Wilson v. Little, 2 Comst. R., 443. * Edwards on Bailm., 250. The pledgee has no right to sell negotiable paper, unless the right be specially given him by tli'- terms of the pledge; 3 Duer GGO; 12 John., 14G; 1G N. Y. Rep., 392. • Cuyler v. Stevens, 4 Wend., 5GG; Cayuga Co. Bank v. Warden, 1 Corast. R., 413. Notice of non-payment to the drawer or indorser is also a condition precedent. * Berkshire Bank v. Jonc-J, 6 Mass. R., 524; Backus v. Shepherd, 11 Wend . 63J>. • Coddington v. Davis, 1 Comst. R., 18G. Edw. 58 458 BILLS OF EXCHANGE AND PROMISSORY NOTES. for payment is stated by Lord Mansfield in these words : " We are all of opinion that in actions upon inland bills of exchange, by an indorsee against an indorser, the plaintiff must prove a demand of or due diligence to get the money from the drawee (or acceptor,) but need not prove any demand of the drawer : and that in actions upon promissory notes, by an indorsee against the indorser, the plaintiff must prove a demand of or due diligence to get the money from the maker of the note. " ' The same rule applies with equal force to foreign as well as inland bills; 5 and includes within itself an exception in favor of those cases in which the holder is unable to make a demand, with the exercise of due diligence. 3 Mr. Justice Kent states the rule with the same qualification : " I have always understood the law to be well settled that the * drawer of a bill is only responsible after a default on the part of the acceptor ; and that the holder must first demand payment or use diligence to demand it of the acceptor, before he can resort to the drawer." 4 And the indorser, being a new drawer, is responsible on the same terms, whether his indorsement was made before or after the bill became due. 6 When the holder of a note that is overdue, transfers it by indorsement, it is to be con- sidered as a note payable on demand, and the demand and notice must be made within a reasonable time. 8 Where the n^iker of a note or the acceptor of a bill has ab- sconded, or cannot be found with the use of due diligence, a personal demand is out of the question ; and, in such cases, the former practice was to aver presentment and notice, as if the same had been made and given in the ordinary manner ; and it was held that evidence of due diligence in the holder, to obtain pay- 1 Heylyn v. Adamson, 2 Burr., CG9. This case shows that from inaccuracy in the previous reports, it had been inferred that a demand of payment was also necessary to be made upon the drawer. * Bromley v. Frazier, 1 Strange, 141. 3 2 Burr., 669. * Munroe v. Easton, 2 John. Cas., 75. 6 Berry v. Robinson, 9 John. R., 121. "The plaintiff was properly non-suited, for not proving demand of payment of the maker, and notice of his default to the indorser. Though the note was indorsed long after it was due, yet the indorsee took it subject to this condition. The indorsement, in every case where a drawer really exists, is a conditional contract to pay in the event of a demand, or due diligence to make a de- mand on the maker, and his default. It was equivalent, in this case, to an order on the drawer to pay the amount." * Van Hoesen v. Van Alstyne, 3 Wend., 75. This case seems to assume that the holder of such a note is not bound, as in other cases, to givo immediate notice of dis- honor. See 1 Cowen, 387 ; 3 id., 252 ; 3 Comst., 494. PRESENTMENT FOR PAYMENT. 459 ment, without an actual demand, would support the averment, and be received as equivalent to an actual presentation of it to the maker or acceptor. 1 But it has been suggested, with great pro- priety, that the averment should correspond with the fact — a susrorestion that has the force of law in those states where it is appropriate or necessary that the pleadings should be verified. 2 The fact that the maker of a note has absconded, does not at all affect the contract of the indorser : it operates only *upon. the question of diligence, in respect to the proper steps to be taken by the holder in order to charge him. Thus, where the objection was made by the defendants, who were sued as indorsers, that no demand had been made on the promisor, when the note became payable, Chief Justice Parsons, pronouncing the opinion of the court, says: "As to this objection, the facts are, that on the first day of grace, which was the last day of February, notice was left at the lodgings of the promisor, that the note would be due on the last day of grace, with a request to pay it then ; but it also appears that before that time it was known to the parties that he had absconded, and, when the note was payable, he was not to be found. The condition on which an indorser of a note is holden, is, that the indorsee shall present the note to the promisor, when due, and demand payment of it, if it can be done by using due diligence. Now, it appears that when the note, in this case, was due, it could not be presented to the promisor for payment, and that there was no neglect in the indorsees. We are all, therefore, satisfied that the indorsers are holden on the indorsement in this case, notwithstanding there was no demand on the promisor." * So, where the maker has removed from the state, or gone out of the country, after having made the note, the holder is excused from demanding payment of him personally.* The diligence de- 1 Stewart v. Eden, 2 Caines,-127; Williams v. Matthews, 3 Cowen, 2G2 ; Saunder- Bon v. Judge, 1 II. Bl., 510; Ogden v. Conley, 2 John. R., 274; Gist v. Sybrand, 3 Ohio, 307 ; Putnam v. Sullivan, 4 Mass., 45 ; G id., 449 ; 3 Met., 495 ; 4 Serg. &. It , 480; 4 Leigh 114. When the notary makes inquiry for the makers of a note at their last place of busi- ness, and diligently follows up the inquiry from the person to whom he is tliero referred as the agent of the makers, demanding payment of such supposed agent, and being by him informed that the makers are supposed to be out West, he uses due Adams v. Lelaud, 5 Bosw., -111. 1 Blakely v. Grant, 6 Mass., ::SG; see chap. 5, Code of Procedure. '' Putnam v. Sullivan, 1 Mass., 5:i ; Leffingwell v. White, l John. Cm., 99. * Widgery v. JIunroe, 6 Mass., 419; Anderson v. Drake, H John. I:.. Ill As to effect of debtor's removal on contract of guaranty, see ante, '_':;«. 460 BILLS OF EXCHANGE AND PROMISSORY NOTES. manded by the law does not require the holder to hunt, up an absconding debtor, or to follow one who removes from the state or country, in order to present his note for payment.' But where there has been no removal after the making of the note, the holder must present it for payment to the maker personally or at his resi- dence or place of business, no matter whether that be in the state where the note was made or in a foreign country. 5 The exceptions to the general rule requiring demand and notice have been mentioned in a former chapter.' When the * maker has absconded ; 4 when the maker is a seaman on a voyage, having no domicil in the state ; * when he has no known residence or place of business at which the note can be presented for payment ; ° and when he makes the note here and removes from the state, and takes up a permanent resident elsewhere, before it becomes payable, the holder is not bound to follow and search him out, for the purpose of making the usual demand of payment T It would be unreasonable to compel the holder to find an abscond- ing debtor, at the peril of losing his recourse to the indorsers ; or to follow a sailor on his voyage, or to seek out a person who has no fixed residence or place of business ; or to follow a person who resides and makes a note here, into another state or foreign country, in order to present the same for payment. Neither the payee nor the indorsee of a note could have anticipated the absconding, absence or removal of the maker; and it would not be just to oast upon him a new burden in consequence of this unexpected event* It is clear from what has been said, as well as from the adjudged cases, that neither the bankruptcy, ' insolvency, nor death of the 1 Galpin v. Hard, 3 McCord, 304; 14 John. R., 114. See, ante, 159. 5 Gilmore v. Spies, 1 Barb. R., 158 ; S. C, 1 Comst. R., 321. 8 See former chap. 3, "of forms, requisites, &c. ; " ante, 159. 4 1 Lord Raym., 443, 742 ; Putnam v. Sullivan, 4 Mass. R., 53 ; Lechman v. Jones, 1 Watts & Serg., 126; Ratcliff v. Planters' Bank, 2 Sneed, 425, 555. * Barnett v. Willes, 4 Leigh, 114. 8 Dennis v. Walker, 7 N. Hamp., 199 ; Whittier v. Graffam, 3 Greenl., 82. If the party have a residence here, a demand must be made at his residence. Putnam V. Sullivan, supra ; Duncan v. McCullough, 4 S. & R., 480. 7 McGruder v. Bank of Washington, 9 Wheat, 588; Anderson v. Drake, 14 John. R., 114; Gillespie v. Hanahan, 4 McCord R., 503; Reid v. Morrison, 2 Watts & Serg., 401; Wheeler v. Field, 6 Metcalf, 200; 3 Ohio R., 307; Louisiana State Ins. Co. v. Shamburgh, 14 Martin R., 511; Central Bank v. Allen, 16 Maine R., 41; Tay- lor v. Snyder, 3 Denio R., 151. • Foster et al. v. Julien, Amor. Law Reg., Vol. 1, New Scries. 362, 3C9; S- C, 24 N. Y. Rep., 28, 36. PRESENTMENT FOR PAYMENT. 461 acceptor of a bill, or of the maker of a promissory note, is of itself sufficient to dispense with the necessity of a regular demand of payment 1 But the insolvency of the * maker or accep- tor is often an important circumstance, with other evidence, 1 Galpin v. Hard, 3 McCord, 394. The necessity of demand is superseded in cases where the maker of a note or the acceptor of a bill has absconded or removed into a distant country ; but in other cases, where the drawee of a bill or the maker of a noto has removed from the place where the instrument represents him to reside, or where he did reside at the time it was drawn or made, the holder is bound to use every rea- sonable endeavor to find out whither he has removed, and if he succeed he must present it for payment, to charge the indorser. The circumstance of its being dated at a particular place does not make it payable at that place alone. Decided in 1825. Barton v. Baker, 1 Sera;. &, R., 334. If the drawer of a promissory note be known by the indorser to have been insolvent when the note was made and when it became due, the indorser is nevertheless entitled to notice of non-payment by the drawer. But if the indorser has accepted from the drawer a general assignment of his estate and effects, notice is not necessary. Decided in 1815. The Juniata Bank v. Hale, 16 Serg. & R., 157. The death of the drawer of a promissory note before it becomes due, and the taking out of letters of administration upon his estate by the indorsers and others, before the note comes to maturity, do not dispense with the necessity of notice to the indorsers, of non-payment by the drawer. Decided in 1327. Clair v. Barr, 2 Marshall's R., 255. Action against the indorser of a' promissory note ; Jvild, that the insolvency of the maker does not absolve the holder from his duty to use diligence in collecting the same of the maker, in the manner pointed out by the laws of Kentucky. Price v. Young. 1 McCord, 339. Action against the indorser of a note, the maker of which had died before it became due. and the excuse alleged for not making demand was, that there was no legal representative on whom demand could be made. Per Curiam. " Where a demand cannot bo made, the law does not dispense with notice. The circumstances which prevented it and the notice are still required. It was the duty of the holder in this case, admitting that a demand could not have been made, to have given the defendant notice in as short a period after having ascertained that the demand could not be made, as she could have been required to do, if a demand had been made. Suppose the demand had been made on the 26th of October, and no notice to the defendant had been given until the 10th or 15th of November could this have been considered a reasonable time, when the parties were so con- tiguous to each other as to have enabled the plaintiff to have given the notico in fiva hours, or at most in one day? I presume not. Tho law is express that th.o notice shall he L'iv.ii as soon as shall be conveniently practicable." 1 Nott & McCord, 4.'!8. Treadway v. Nicks & Johnson, 3 McCord, 195. Action against defendants as drawers. Held, that the complaint, which did not allogo presentment, non-payment and notice to the defendant!, was insufficient. Th" Oommeroia] Bank v. St. Croi.v Manufacturing Co., 23 Maine R., 2S0. This action was brought on three bills of exchange drawn by Smith, an agent of the defen- dants, on Oopeland, their treasurer, and accepted by him, and also indorsed in tho same manner by defendant!; and it was hold that the treasurer being the disbursing officer of the corporation, his knowledge that tho drafts in question had been dis- honored must be considered as notice to the defendants. Decided in 1848. Mooro v. Waitt, 13 New Hamp., 415. The drawer's liability is not changed by a 462 BILLS OF EXCHANGE AND PROMISSORY NOTES. tending to show a waiver of demand and notice ; ' just as the ab- sence or death of the maker or acceptor may be shown, by way of dispensing with the necessity of a formal or personal demand.' 1 Leonard v. Gary, 10 Wend., 504; Whitney v. Abbott, 5 N. Hamp., 378 ; Leffing- ■well & Pierpont v. White, 1 John. Cas., 99. a 1 MeCord, 339. notice, when the bill is drawn, that it will be discounted or left for collection at a certain bank in the vicinity, where the usage is not to make presentment when the bill becomes due, but to give notice to the acceptor, and drawer. Decided in 1843. Hunt v. Wadleigh, 26 Maine, 271. The insolvency of the acceptor of a bill or draft is no excuse for neglecting to present the same for payment. The transfer of a dishonored bill is equivalent to drawing a new draft on the acceptor payable on demand or at sight; and the holder must make demand within a reasonable time, and give notice of non-payment to the indorser as in other cases. A promise to pay with full knowledge of the holder's laches, made after the dishonor, will bind the promisor ; but will not bind him if made in ignorance of the facts. Whitney v. Abbott, 5 N. Hamp., 378. In this case, after it was ascertained by the parties that the makers of the note had failed, and before the note had become due, the defendant who was sued as an indorser told the plaintiff that the latter should have no trouble about it, that he, the defendant would pay it, and that he was going to procure the money to pay it: And it was held that this was equivalent to an abso- lute promiseto pay the note, and a waiver of demand and notice. Decided in 1831. Clibbs v. Cannon, 9 Serg. & R., 198. On a guaranty of a promissory note, drawn and indorsed by others, if the drawer and indorser are insolvent when the note be- comes due, this would prima facie be evidence that the guarantor was not prejudiced, and therefore the giving him notice of non-payment is in such case dispensed with. Decided in 1822. In Lawrence v. Ralston, 3 Bibb., 102, it was held that the absence of the defend- ant from his residence was no excuse for not giving him notice at his residence of the non-payment of a bill drawn on New York. The defendant was sued as an indorser of a bill of exchange drawn by Aaron Burr, in December, 1806, and the defendant was absent for some time, having gone down the river, and the notice of dishonor was not served till his return to his home in Louisville. In Camidge v. Allenby, 6 Barn. & Ores., 373. It appears that certain notes of the bank of Dobson & Co., were delivered in payment of the purchase money of somo goods, and that the bank failed on the same day in the afternoon, neither of the par- ties knowing of the insolvency of the bank at the time ; the notes were not circulated or presented for payment, but returned to the purchaser a week after the sale: Held, under the circumstances, that the vendor of the poods was guilt}' of laches, and had thereby made the notes his own, and consequently that they operated as a satisfaction of the debt. Decided in 1827. Esdaile v. Sowerby, 11 East, 114. Lord ELLENBOBOUGH, C. J.: "It is too late now to contend that the insolvency of the drawer or acceptor dispenses with the necessity of a demand of payment, or of notice of the dishonor. And as to knowledge of the dishonor by the person to be charged on the bill beinjr equivalent to duo notice of it given to him by the holder, the case of Nicholson v. Gouthit, is so decisive an autho- rity against that doctrine, that we cannot enter again into the discussion of it." Nich- olson v. GoutI.it, 2 II. Black., 009. Philpot v. tfryant, 3 Carr. & P., 244. It appeared in this case that the drawee PRESENTMENT FOR PAYMENT. . 463 "While in themselves neither of these facts or events works the slightest alteration in the terms of the contract by which the par- ties are respectively bound, each of them does or may vary tho mode of fulfilling the conditions precedent to the liability of the drawer and indorsers. If the maker of a note be dead, the „ -SHOO demand * should be made upon his legal representative ; * unless the note is payable at a particular place, and then it may be presented for payment at the place agreed upon between the parties. 1 And where the note falls due after the death of the maker and before any legal representative has been appointed, the demand may be made at the residence of the deceased, or if the house be closed, the note may be treated as dishonored, and notice given accordingly ; so in the case of a bill of exchange. 3 But the facts showing or dispensing with the * demand, must be proved „ by the holder or party seeking to recover upon the instru- ment. Proof that the defendant indorsed the note after and with knowledge of the maker's death, dispenses with*the necessity of a demand, especially where the law gives to the representative already appointed, a certain length of time for the settlement of the estate and for the payment of the debts of the deceased. 4 Where the house of the maker or acceptor is closed, it is the duty of the holder to make diligent inquiry for him ; 6 and in case he has removed to another residence in the same state, he is bound 1 5 mil R, 234; Shepherd v. Hawley, 1 Conn. R, 367. 5 Philpot v. Bryant, 3 Carr. & P., 244. ' 16 Berg. & R., 157 ; 5 Hill R., 232-236 ; 1 McCord, 339. The circumstances ■which dispense with the necessity of a demand, do not relieve tho holder from the duty of giving duo notice to the indorser. Landry v. Stansbury, 10 Louis. Rep., 484. Presentment to the personal representative of a deceased acceptor is sufficient; but it must be shown that the acceptor was dead, and that the party on whom the demand was made, was hi3 representative. The notary's certificate is not evidence of theso facts. "Weams v. Farmers' Bank of Maryland, 15 Md., 431. 4 Davis v. Francisco, 11 Missouri, 572; Hale v. Burr, 12 Mass. R., 86. Mr. Justico Story questions the decision in this latter case as not founded on principle. Story on Notes, £ 263 and note. ' Ellis v. Commercial Bank, 7 Howard ( Miss. ), 294. Tho holder should inquire for the acceptor in tho neighborhood. had died before the bill became due; and the objection was raised that the holder of this bill, which was payable afterdate, should have alleged presentment for acceptance ; but it was held not necessary, and that a bill accepted payable at No. 18, Bishops- gate street, was properly presented at that place for payment, notwithstanding tho death of the drawee. Decided in 1827. 464 . BILLS OF EXCHANGE AND PROMISSORY NOTES. to follow him and present the bill or note for payment. 1 The rule here is that the holder must exercise reasonable- diligence in order to find the party. 2 But if the note specifies the place of payment, *± or a bill be addressed to * the acceptor at a certain number of a street named, a presentment at the place indicated will be sufficient if made in the usual hours of business, though the place be closed and no person found there to give an answer res- pecting the bill. 3 In such a case, the place as well as the time of payment, is fixed by the agreement between the parties ; and it is the duty of the debtor to be there within the proper hours of business, ready to pay, either himself personally or by his agent Where a person goes abroad, leaving an agent at home autho- rized to accept bills, and he accepts one for him, the bill when due should be presented to the agent for payment ; * or if the acceptor go abroad after having accepted the bill, the presentment should be made at his residence or place of business, or to his known and general agent. 6 As against the drawer, where he has no ground to expect that fc iti his bill will be paid, and no effects in the hands of the 491 * drawee, a presentment of the bill for payment is not necessary to charge him. The defendant drew his bill on John Twist, payable six months after date ; and the complaint against him alleged that he had not at the time of drawing, nor at any time afterwards before it became due, any effects in the hands of the drawee, nor any reasonable grounds to expect that he would have any, or that the bill would be paid, and further that he had not sustained any injury or damage by reason of the bill's not having been presented for payment on the day it became due ; and a verdict having been rendered for the plaintiff, Lord Den- man, C. J., delivering the opinion of the King's Bench, said:' 1 14 John. R., 114; 19 id., 391 ; 2 Watts & Serg., 401 ; Wheeler v. Field, 6 Mete, 290; Packard v. Lyon, 5 Duer, 82. * Carroll v. Upton, 2 Sand.. 171 ; 5 Duer, 82. * De Wolf v. Murray, 2 Sand. R., 166; ante, 381, 399. 4 Phillips v. Astling, 2 Taunt., 206. * Cromwell v. Hinson, 2 Esp. R., 511. * Terry v. Parker, 6 Adolphus & Ellis, 502. The marginal noto to this case is in these words: "If the drawer of a bill of exchange have no effects in the hands of the drawee at the time of drawing the bill, and of its maturity, and have no ground to expect that it will be paid, it is not necessary to present the bill at maturity ; and if it be presented two days after and payment be refusod, the drawer is liable." The Dill in this case had not been presented for acceptance. Mobley v. Clark, 28 Barb, *90, 392. PRESENTMENT FOR PAYMENT. 465 "Many cases establish that notice of dishonor need not be given to the drawer in such a case ; and the reason assigned is, because he is in no respect prejudiced by want of such notice, having no remedy against any other party on the bill. This reason equally applies to want of presentment for payment, since, if the bill were presented and paid by the drawee, the drawer would become in- debted to him in the amount, instead of being indebted to the holder of the bill, and would be in no way benefited by such presentment and pajonent" It was accordingly held that want of effects will operate as an excuse for a failure to present for pay- ment, under such circumstances as will dispense with a notice of dishonor ; and the rule in arrest of judgment was refused. 1 *The duty of the holder to use diligence in presenting -.^ the bill for payment, necessarily implies an exception in favor of those unavoidable accidents which must prevent the party from doing it within the regular time.* Inevitable accident, supe- rior force, or a contagious disease that prevails so as to interrupt all business, will excuse a delay to present for payment so long as the preventing cause continues.' The true question in such cases appears to be, whether it was physically or morally impossi- ble for the holder to present the bill or note for payment in due time.* Mr. Justice Story mentions among the accidents that excuse delay, political events which interrupt intercourse between different countries, or different parts of the same country, the stop- page of the mail by ice or snow or freshets, the detention of a vessel by contrary winds, a loss of the bill by robbery, the sudden 1 The opinion contained the following criticism on two cases cited on the argument: "The case of De Berdt v. Atkinson, 2 II. Bl., 336, was an action on a promissory note against the payee and indorser, who had lent his name, knowing that the maker was insolvent; and it was held that he was not discharged by the note not having been presented till the day after it was due, and notice of dishonor not having been given for several days. But that case can hardly be supported, inasmuch as Iho defendant was not the party for whose accommodation the note was made; on tho contrary, he lent his name to accommodate tho maker. Neither is the case of Hap- ley v. Dufresne, 15 East, 275, an authority tho other way; for, although that was a. case of an acceptance for the accommodation of the defendant, Lord Ki.i.kxuouougu non-suited the plaintiff, because the bill was presented to r ; .tor's bankers aftor banking hours; yet that non-suit was set aside on (be ground <>f there being evidence »f a subsequent waiver; and the point, whether tho drawer was entitled to object to toe want of due presentment was not determined." a Patience v. Townley, 2 Smith, 223 ; ante, 392. s Tunno v. Lague, 1 John. Cas., 1 ; Story on Bills, § 308. 1 SchoQeld v. Bayard, 3 Wend., 488. Edw. 59 466 BILLS OF EXCHANGE AND PROMISSORY NOTES. death of the holder, or of his correspondent to whom the bill has been sent for presentment. 1 But it requires to be noticed that neither of these events will excuse a delay, which is not the direct and necessary consequence of the event or cause preventing the demand. For instance, the mistake of a clerk in the post office occasioning a delay in the transmission of a bill will form no excuse, if it also appears that the bill was sent in a wrong direction by the holder. On the same principle, if the bill or note is sent by mail at so late a day as to render it uncertain whether it will arrive in time, or if the holder die, or if a loss of the bill occur by robbery or otherwise, a sufficient length of time before it becomes payable, to give the holder or his representative an opportunity to make a regular demand, it is evident that he cannot allege either of the causes * mentioned as an excuse for delay. 1 Like a common carrier who may excuse or justify delay in the carriage of goods by such events as interrupt the navigation or prevent the transportation from being made within the usual time, the holder cannot interpose the excuse where his own negli- 1 Story on Bills, §§ 308, 309. 2 3 Wend., 488 ; The Windham Bank v. Norton, Converse & Co., 22 Conn. R, 213, decided in 1852. The holder is bound to use reasonable diligence in forwarding and presenting a bill or note for payment ; and the negligence of his agents is his negli- gence. But the holder of* a bill, who forwards it, say from New York to Philadelphia, by mail, in time to reach the latter place, is not answerable for the consequences of a mistake, made by a clerk in the post office at New York, by marking the mail bags designed for Philadelphia, for Washington, through which mistake they are carried forward beyond their destination, and do not come back to it until it is too late for presentment on the right day. The same general principle is applied here, that was adopted in Scholefield v. Bayard, 3 Wend., 4S8. In the latter case the holder had sent the bill to Liverpool when he should have sent it direct to London, and the mistake or negligence of the holder was treated as evincing a want of due diligence on his part. On the other hand, in the case above cited, the holder had sent his bill, by mail, direct to Philadelphia, in time to reach that place in season for a due presentment. Aborn v. Bosworth, 1 R. Island R., 401. This was an action against the drawer of a bill of exchange payable at sight, and declared upon as lost, and the plaintiff was allowed to prove the loss by his own oath, and then show its contents ; and the court^ in charging the jury, said: " As a general proposition it is not enough to prove loss; unless the bill was either destroyed, or so indorsed, or so left without indorsement, that the finder, or any subsequent holder, could not recover upon it. * * * * Another defense is the delay in making the demand upon the drawee, and the want of protest. The fact that the bill is lost, is an excuse for delay, but for no more tha» reasonable delay. The holder was bound to exercise reasonable diligence, and t< make a reasonable presentment of his claim as upon a lost bill." PRESENTMENT FOR PAYMENT. 467 gence has contributed to the delay. 1 Nor can he excuse a failure to present a note for payment by showing that a violent storm prevailed on the day it fell due, unless he shows that the roads were thereby rendered impassible, and thus proves that a demand could not, in fact, be made. 3 "Where a person enters into a contract, and in express terms undertakes the performance of a condition precedent, he will *not be excused or released from his undertaking by accident or inevitable necessity, without fault on his part.' By ivhom to be made. Notes and bills ought to be presented for payment by the holder, or by his authorized agent ; and a person to whom a note or bill is indorsed for collection, is to be regarded as a holder, for the purpose of making a demand and giving notice. 4 But an authority to demand payment Conferred on an agent, need not be in writing, 6 and need not be given in express terms ; 6 if the notary or agent have the paper in his possession, ready to be delivered up, his right to demand and receive payment will be implied. 7 A mere stranger cannot charge the parties by giving them notice of dishonor ; 8 but a party in possession of the paper, though it comes into his hands by accident, as by the death of an agent, may and ought to present it for payment, and give the usual notice of refusal.' And when a negotiable note or bill comes into the hands of any person under a blank indorsement, prima facie he is the holder, and entitled to demand and recover the amount due thereon. 10 1 Kdwards op Bailm., 523-526. Tho cases excusing a delay by tho carrier are referred to only as an illustration of this principle, that the excuse will not bo allowed in any case where tho party's own neglect brings the goods to be carried under tho operation of forces causing delay, nor will such an excuse be valid after the preventing cause has ceased to operate. 7 Barker v. Parker, 6 Pick., 80. * Carpenter v. Stevens, 12 Wend., 589; Oakley v. Morton, 1 Kernan R., 25, and cases there cited. 4 10 Mod., 28C; 5 East, 47C; Chitty on Bills, 3C5; 5 Cowon, 303; 1 Hill R., 2C3 ; 2 id., 451 ; post, 022. ■ Bank of Utica v. Smith, 231 ; Shod v. Bret, 1 Pick., 401. 8 Mem; and Hartford Bank v. Parry, 17 Mass., 95; 7 id., 48G; 9 id., 433. 1 Sussex Bank v. Baldwin, 2 Harrison, 487, and cases above cited. ' •'! Wend., 179; Jones v. Fort, 9 Bam. & Cres., 16 1. •Chitty on Bills, 365. 10 Ifaaraa v. Limb, 7 Cowcn R., 171. The case is tho samo who'i tho instrument is drawn payable to bearer. Sherwood v. Roys, 14 Pick., 172. 468 BILLS OF EXCHANGE AND PROMISSORY NOTES. Where the holder dies before the note or bill becomes due, it should be presented for payment by his legal representatives. 1 And so where the holder assigns his personal estate for the benefit of creditors, the presentment should be made by his assignee :' and on the same ground, trustees acting as a committee of an nsane person, and receivers appointed by authority of law, should take care to present, in due time, all *bills and notes belong- ing to the estate committed to them, for payment. 3 In brief, the receipt of a bill or note for collection,* as collateral security, 6 or on a sale of goods, 8 implies an undertaking from the receiver to the party to the instrument, who would be entitled to bring an action on paying it, or taking it up, to present the same in proper time for payment and take the necessary steps to charge the parties thereto. Where and to whom. In the next place, to whom and where should bills and notes be presented for payment? The same general rules prevail here as in the presentment of bills for accep- tance. 7 If the note be drawn, or the bill accepted, payable at large, that is to say, without specifying any place of payment, the instru- ment should be presented for payment to the maker or acceptor at his residence or place of business. 8 The exceptions to thia principle, in the case of removal from the state or country, or other cause preventing a presentment, have been noticed in a for- mer place.' The demand of payment is not a mere form ; it is an act neces- sary to be performed by the holder in order to charge the drawer and indorsees ; and accordingly, in an action against either of these parties, the plaintiff must allege a presentment to the maker 1 Byles on Bills, 159. » Jones v. Fort, 9 Barn. & Cres., 764. * In such cases the assignment operates as a transfer of the title, so that the receiver is to be regarded as a holder. * Bayley on Bills, ch. 7, § 1 ; 20 "Wend., 321. 1 Russell v. Hester, 10 Ala., 535 ; Foot v. Brown, 2 M'Lean, 369. 1 Tobey v. Barber, 5 John. R., 68 ; Jones v. Savage, 6 Wend., 658 ; Dayton v. Trull, 23 Wend., 345. 7 See former chapter on that subject; ante, 381, 399, 490. "Dcgrand v. Banks, 16 Louis., 461 ; 14 John. R., 114; 1 Conist., 321. Local statutes sometimes point out the mode of presenting and protesting negotiable paper, and these, of course, are to be examined carefully to determine the steps to be taken in particular cases. See notes on a former page. ' 9 Wheat., 598, and, ante, pp. 484-489. PRESENTMENT FOR PAYMENT. 469 or acceptor for payment. 1 But it is not necessary for him to prove in support of this averment that the paper was presented to the maker or acceptor personally ; a it * is sufficient, if shown to • . have been presented at his house or place of business.* "When a bill of exchange is addressed to the drawee at a partic- ular place and accepted in general terms, it is enough if the notary take the bill to the place designated and present it there for pay- ment within the usual hours of business ; and if the place be found closed, and no person there to give an answer respecting the bill, a certificate of such presentment will be sufficient proof of demand." "When a bill or note is drawn payable at a place named, it is essential to show, in an action against the drawer or indorser, a presentment at the place appointed. 6 This is so both in this country and in England where all acceptances are declared general by statute, unless made payable at a particular place and not else- where." The rule is that a demand must be made on the maker of a note on the day it falls due ; the exception is that when the note is payable at a particular place, such demand need not be made, if the holder or any one for him, i3 at the place with the note, so that he may receive the money and give up the note. 1 And hence,, a note made payable at a particular bank is sufficiently demanded, if left there for collection on the day it becomes due ; ' or if presented at the bank for payment on that day, within the time allowed by the custom of the bank for such presenta- #107 tion.' * The instrument being made payable at a specified 1 Jackson v. Henderson, 3 Leigh, 197; 7 Wend., 460; 2 Show., 180; 7 East, 231. ' Brown v. M'Dermot, 5 Esp. It., 2G5. Presentment to his book-keeper in his office, vhile he is absent, is sufficient; Dickinson v. Turner, 12 Intl., 223. ' 3 Denio, 145; 2 Hill It., 635; 2 Sand., 166; 15 N. Y. Rep., 575. 4 DeWolf v. Murray, 2 Sand., 166; 2 Hill R., 635; Hine v. Allely, 4 B. & Adol., 624; Wiseman v. Chiapella, 23 How. U. S., 368; ante, 381, 390. 6 Seneca Co. Bank v. Ncass, 5 Denio, 329; Woodworth v. Bank of America, 19 John. R., 391 ; 18 id., 315 ; 3 John. R., 207 ; Gibbs v. Mather, 8 Bing., 214. ' 8 Bin?., 214; Wilmot v. Williams, 8 Man. & Gr., 1017 ; 5 id., 310; 4 id., 7; 1 Moore k Seott, 387. 1 13 Mas:?., 558. B Nichols v. Goldsmith, 7 Wend, 160; post, 527, 528. • Wolcott v. Van Santvoord, 17 John. R, 218; Flint v. Rogors, 15 Maino R., 67 The presentment of a draft payable at a particular bank, to the cashier for paymeat at the bank, on the day it fell due, TjUl after business liours, who refused paymont because the acceptors had provided no funds, is Biimcieift. The'dbJectiOn that tho demand was not seasonable, that is to say, was not in business hours, comes too lato If it ia not made at the time of presentment. The cashier, in this case, whoso duty 470 BILLS OF EXCHANGE AND PROMISSORY NOTES. place, it is immaterial where the maker or acceptor resides ; and it is sufficient if the presentment be made at the place so named or otherwise agreed upon between the parties. 1 But if a note or bill drawn payable at a bank be not left or pre- sented there for payment at its maturity, the drawer and indorsers are prima facie discharged. 2 The note or bill being in the bank ready to be surrendered upon payment, dispenses with the neces- sity of making any formal demand ; and it is understood to be the custom of banks holding bills or promissory notes, payable at their own counter, to wait, on the day of the maturity of the note or bill until the close of business hours, and then, if the maker or acceptor does not come to pay and has no funds, to give notice of non-payment, without making any other demand. 3 If the bank is the owner of the note or bill, it will be presumed, in the absence of proof to the contrary, that the instrument was at the bank ready to be delivered up on payment ; which is all that the holder is bound to do. 4 So, if the person at whose house the note or bill is payable, be himself the holder, it is a sufficient demand if he examine his books, or in any other manner ascertain that no funds have been left for its payment ; and the failure of the acceptor or maker to appear and j:>ay the bill or note is * sufficient proof of a refusal to pay.' In all such cases the indorsers as well as the maker and acceptor, engage that payment shall be made at the place named for that purpose. 8 1 Smith v. Little, 10 N. Hamp., 526; Sanderson v. Oakey, 14 Louis. R, 373; Cen- tral Bank v. Allen, 16 Maine, 41 ; 11 Wheat., 171 ; 2 Peters, 543 ; 5 How. U. S., 69 ; 12 Mass., 172. a Folger v. Chase, 18 Pick., 63 ; post, 527, 528. 3 Gillett v. Averill, 5 Denio, 85 ; 2 Peters, 543 ; 6 Mass., 524 ; Tuckerman v. Hartwell, 3 Greenl., 147; Evans v. St. John, 9 Porter, 186. 4 18 Pick., 63. 6 2 IT. Bla., 509 ; 5 Denio, 85. 6 6 Mass., 525. it is to attend to business of this sort, was at the bank and answered the demand at the time it was made, and it appearing that the acceptors had provided no funds, the court held the demand sufficient. See Gamett v. Woocock, 1 Stark. R., 475; post, 527, 528. Church v. Clark, 21 Pick., 310. A note is due on demand, made at any time on the third day of grace but where a note is drawn payable at a bank, the effect of the contract is, that the note shall be paid at some time during the usual hours of business at such bank ; and there is no default on which an action can be commenced until the close of the hours of business. So held, where the action was commenced at one minute past 12 o'clock at night on the morning of the third day of grace. PRESENTMENT FOR PAYMENT. 471 In some instances it becomes the duty of the maker of a note and of the acceptor of a bill to make inquiries for the instrument, to the end that he may find and pay it on the day it is payable ; as where a note is made payable at a certain bank that ceases to exist, or at the counting room of a firm that is dissolved, before the note matures. 1 Neither the discontinuance of the bank, nor the dissolution of the firm can in any respect lessen the binding force of the contract entered into by the parties to the instrument ; and therefore it has been held in such cases, that the note may be presented for payment at the firm or bank doing business in the place of those which have been discontinued. 2 But where the 1 Central Bank v. Allen, 16 Maine; Sauderson v. Oakey, 14 Louis. R., 313; Roberts V. Mason, 1 Ala., 373. a Idem; Central Bank v. Allen, 1G Maine R., 41. The action was against the in- dorser of a promissory note. Per Guriam : " The maker had promised to pay it at a day and place certain. The place, the Branch Bank in Portland, was well known and understood at the date of the note. Before its maturity, that bank ceased to have a place of business in that city. It has been held that where a bill is drawn and accepted, payable at a particular house, going to that house with the bill on the day of payment, and rinding it closed, is a sufficient presentment. And we are inclined to the opinion that the Branch Bank having ceased to operate, if their banking house had not been occupied by a similar institution, presentment would have been excused. * * * But if the discontinuance of the Branch Bank of Portland has the same effect as if no place of payment had been appointed, we are of opinion that such dili- gence was used by the messenger of the holder, as excused a personal demand upon the maker. He testifies that he made diligent inquiry for his place of residence, which it appears had been at Portland, and was informed that he had gone into the Western country, and particularly that he had this information from the maker's brother, who had been connected with him in business. The answers he obtained upon these inquiries, were very clearly admissible as a part of the res gesta. The holder was under no obligation to send into the Western country to make demand, but the written demand of payment, left at Moorhead's, his former residence in Port- land, was sufficient." McGurder v. Bank of Washington, 9 Wheat., 503 ; Anderson v. Drake, 14 John. II., 114. In Sanderson v. Oakey et al., 14 Louis. R., 373, the action w;is against the- defendants as makers of a promissory note, payable to the order of "Joshua Fisher, at his counting-house in New York." The payee took Henry Fisher, his brother, into partnership before the note became due, and continued business in the samo place ; and the firm indorsed the note over to the plaintiff; and payment of the note was demanded at the counting room of the firm at its maturity; and it was held that the indorsement was valid and the demand properly made. In Roberts v. Mason, 1 Ala. R., New Series, 374, the action was against an Endorser of a promissory note "negotiable and payable at the office of discounl and deposit of the Bank of the United States, at Mobile." On the trial, proof was adduced to show that the office of discount and deposit of the Bank of the U. S., at Mobile, was sold out to the Bank of Mobile, and ceased to nave a place of business in that city be:pro the note matured; and evidence was also introduced, tending to show that one o'. tho 472 BILLS OF EXCHANGE AND PEOMISSOFwY NOTES. ~'i\, maker * resides In the same village or city, doubtless the 499 prudent course would be to present the note for payment in the same manner as if it had been drawn payable at large, especially where no bank or firm succeeds the other in the same room. Where a note is made payable at a bank, the demand of pay- ment must be made at the bank; it is not sufficient to show a demand made of the cashier. 1 But where a note is made payable at the makers dwelling house, and the same is presented to him personally for payment in the neighborhood, and he makes no objection to the place of demand, it is held sufficient." When a bill or note is drawn payable at either of two places, the holder may present it for payment at cither, and treat it as dishonored in case it is not duly paid. 3 So a note * or bill *500 • . . made payable in a particular city, where the maker or acceptor does not reside, specifying no place of payment, may be protested for non-payment, or treated as dishonored, and notice given accordingly ; a search for the party being unnecessary, where it is certain to prove unavailing. 4 If a note be made, or a bill be accepted by several persons who are not partners, a demand of payment must be made upon each, as in other cases, personally, or at his dwelling house or place of 1 Seneca Co. Bank v. Neass, 5 Denio, 329 ; S C, 3 Corast., 442 ; 6 Met,, 308 j 17 N. Y. Rep., 4G. a Baldwin v. Farnsworth, 1 Fairf., 414. * Beeching v. Gower, l'Holt, N. P., 313. "Where a note is made payable at either of the banks in a large city, where there are some twenty banks, it seems tho note is not payable at a place certain, and that it is the duty of the holder to notify the maker at which of them it will be left for payment. North Bank v. Abbott, 13 Fick., 4G5. 4 Mason v. Franklin, 3 John. R., 202, and Boot v. Franklin, id., 207; dimming t. Fisher, Anthon, N. P., 1. makers resided there all the time, or, at least, at the time the note became due, and had a known place of business there. The note having been presented at tho Branch of the Bank of the State of Alabama, at Mobile, and not elsewhere, it was held that the circumstances disclosed dispensed with the necessity of making a per- sonal demand of the makers, and that it was enough to present the note for payment at the place designated. "This being impracticable for the reasons already stated, was the holder bound to call on the makers for payment? Wo think not." The indorsors contract was to pay, in a certain event, and as that event was rendered impossible of performance by an event over which the holder had no control, it did not operate to interpolate a new condition into his contract. PRESENTMENT FOR PAYMENT. 473 business. 1 And if one of them dies before the day of payment arrives, the demand must be made upon his legal representatives.' But where a firm accepts a bill, and one of the partners dies before it becomes due, the presentment for payment should be made o the survivor, on whom, in the first instance, the liability of the firm devolves.' If, however, the bill or note is made payable at a par- ticular place, the death of a maker or acceptor does riot impose upon the holder any new duty ; it is enough if he present it for payment at the place appointed. 4 The contract of the indorser being raised or implied by law, is fixed and rendered certain by the act of indorsement; so that if a note payable generally, be indorsed and afterwards altered by the maker and made payable at a particular bank, and payment is accordingly demanded only at the bank, the indorser is discharged.' But a mere memorandum at the foot of a note, naming or appoint- ing a place of payment, is not a material alteration of the contract, and a presentment made according to such direction will be good." 1 Union Bank, &c., v. Willis, 8 Met., 504 a 5 Hill R., 234; Shepherd v. Hawley, 1 Conn. R., 307. s Cayuga Co. Bank' v. Hunt, 2 Hill, C:;5. In Ohio it has been held that the makers of a joint and several promissory note are to be considered Quoad hoc partners, so that a demand on 'one of them is sufficient. Harris v. Clark, 10 Ohio, 5. 4 Philpot v. Bryant, 3 Carr. & P., 244; 1 Moore & P., 754; 4 Bing., 717. * Wood worth v. Bank of America, 19 John. R., 391 ; 24 Wend., 374. e See cases cited and commented on by Ch. J. Spencer, in Bank of America v. Woodworth, 18 John. R., 316. It is a question of fact whether it be only a private memorandum, or an actual alteration of the note. 24 Wend., 3J4. Williams v. Waring, 10 Barn. & Crcs., 2, was an action of assumpsit on a promis- sory note by the indorsee against the maker. The note was drawn as follows : "31st January, 1827. Two months after date, I promise to pay A. B. 251, value received. J. Waring. At Messrs. B. & Co.'s Bankers, London." On the trial the objection was raised by counsel for defendant that the declaration should have described the note as payable at Messrs. B. & Co.'s, and should have alleged or proved presentment there for payment. Lord TJSNTERDEN: " In point of practice, the distinction between men- tioning a particular place for payment of a note, in the body and in the margin of tho instrument, has been frequently acted on. In the latter case it has been treated as a memorandum only, and not as a part of the contract; and I do not seo any siuTi- reaflon for departing from that course." Extra v. Russell, 4 Maule & Selw., 505. A memorandum made at tho foot of tho note, such as this, "at Messrs. B. C. & Co.'s Bankers, London," is no part of tho in itrument ; and hence it is a misdescription to describe tho note as if that formed a part of the note. Tuckerman v. Hartwell, 3 Greenl., 117. If tho place of payment is designated in a memorandum at the bottom, or if to the acceptance of a bill is added a particular place of payment, with tho assent of tho holder; such memorandum or qualification Enw. GO 474 BILLS OF EXCHANGE AND PROMISSORY NOTES. ±.~~. Such a. * memorandum, made merely as information to the 501 holder, is no more an alteration of the instrument, than the acceptance of a bill making it payable at a bank in the same place is a special acceptance. But we have seen that an acceptance of a bill making it payable in a distant place, is a special acceptance, because it postpones the time within which the drawer or indorser is entitled to be notified in case of dishonor : ' and on the same ground, it is clear that the maker of the note cannot, in any manner, appoint a distant place of payment, without the consent of the indorser, that will or may postpone the time within which the indorser has a right to know whether or not the note has been paid. 2 Neither has the payee a right to add to the note a memo- randum specifying the place of payment, without having the assent of the makers to the alteration ; for although it is not necessary in an action against the maker to allege a presentment for pay ment at the #-no pl ace specified, the inserting of a place of payment clearly affects the contract, by restricting or limiting the place at which the maker is at liberty to make a tender of payment' The result of the authorities appears to be this : if a note is drawn payable generally, and the holder or payee or maker inserts a place of payment so as to make it a part of the contract, the alteration is material ; and if done after indorsement without con- sent of the indorser, it will discharge the latter ; * while a memo- randum written subsequently to the indorsement, at the bottom of the note, forming no part of the contract, but naming a place of payment, affects no one but the party making it ; 6 and is not a stipulation that enters into the agreement made by the other parties 'Rowe v. Young, 2 Brod. & Bingh., 165; Wallace v. McConnell, 13 Peters, 136, and authorities there cited. 2 19 John. R., 391. 3 Nazro v. Fuller, 24 Wend., 374. * Rowe v. Young, supra; Bank of America v. Woodworth, IS John. R., 316, and 19 id., 391 ; and 24 Wend., 374; 10 Barn. &Cres., 2; 4 Maulo & Sel., 505; quere, by adding a new maker to a note, 23 Barb., 584. 6 Saunderson v. Judge, 2 II. Bl., 509; 4 Campb., N. P., 200; 3 Esp., 57 ; 7 East, 385. If the maker alter it, the indorser is discharged, but the maker is not; Haskell v. Champion, 30 Miss. (9 Jones), 13G. is part of the contract. And if only the name of the place be written at the bottom of the note or of the acceptance, it is for the jury to determine when, by whom, and for what purpose it was placed there. What is a material alteration ? See Chappell v. Spencer, 23 Barb., 584. PRESENTMENT FOR PAYMENT. 475 to the instrument As an appointment of the place of payment, it binds the maker when made by him; just as an acceptance paya- ble at a bank, renders a presentment at the bank sufficient. ' An unauthorized alteration of a general acceptance of a bill by the addition of a place of payment, discharges the acceptor, even as against a bona fide holder, subsequently taking the bill for value and without notice of the alteration : ' so held in England, notwith standing the statute before referred to making all acceptances general, unless otherwise specially expressed.' As between the maker and payee of a promissory note, a memo- randum written at the bottom on the face of the note, after it has been signed, but before its delivery, is to be considered as a part of the contract, in the same manner as if it had been included in the body of the note, or written over * the maker's signature ; 4 ^ and there is no reason why a person who afterwards indorses the note, should not be held responsible thereon according to the terms of the instrument 5 Mode of presentment. The mode of presenting bills and notes for payment has already been considered, in respect to the degree of diligence required, in finding the maker or acceptor, and what is deemed in law equivalent to a demand in certain cases. It remains for us now to consider the manner of presenting and demanding payment where there are no special circumstances qualifying the duty of the holder. 1 Treacher v. Hinton, 4 Barn. & Aid., 413. 3 Birchfield v. Moore, 3 Ellis k Blackburn's R., 683, decided in 1854. * Cowic v. TIalsall, 4 Barn. k Aid., 197, decided before the statute was passed; and M'Intosh v. Ilayden, \ Ry. k Mood., 362, and Taylor v. Mosely, 6 Carr. k Payne, 273; and Birchfield v. Moore, supra, decided after the act; see Gardiner v. Walsh, 33 Eng. Law and Eq. R., 162. It will not be presumed that an alteration by erasure or by interlineation apparent on the face of a note, which tends to diminish the rights of the party to whom it was given, was made after the note was executed. Bailey v. Taylor, 11 Conn., 631 j 22 Barb., 6-17 ; contra, Heflhcr v. Wenrich, 32 Pcnn. State, 423 ; and it lias been frequently held, though the authorities are not harmonious, that no such presumption will bo raised even where the alteration would inure to the advantage of the payee or holder of the note or draft. Agawam Bank v. Sears, 4 (J ray, 95; Stoner v. Ellis, 8 Ind., 152; Rankin v. Blackwell, 2 John. Cases, 198; Maybee v. Snifl'en, 2 K. D. Smith, 1, and cases there Cited. The English rule calls for explanation of the alteration from the party producing the bill or note. Johnson v. Duke of Marl., 2 Stark.. 27N; Knight v. dements, 8 AdoL k EL, 215- Henmanv. Dickinson, 5 Bing., 183; Clifford •» Darker, 2 Man. k Cr., 909. 4 Haywood v. Perrin, 10 Pick., 228. * Tappan v. Kly, 15 Wend., 362; 8 John. R., 485. 476 BILLS OF EXCTIAXGE AND PROMISSORY NOTES. In the first place, then, the demand may be made upon the maker or acceptor personally ; but must be made at a reasonable time and place. A demand in the street is not sufficient, unless the party on whom it is made declines wholly to pay, or offers something which is not a payment and does not object to the place on the ground that he is not there ready to pay. 1 The presump- tion always is that the maker or acceptor is prepared to pay at his residence or place of business ; 2 and if the notary meets him in the street and presents the bill or note for payment, and he offers to pay at his place of business, or at his residence, the notary is bound to give him an opportunity to do so." * For the same reason, where the drawees of a bill of exchange absent themselves from their place of business and make no provision for its payment, a presentment there to a clerk or book-keeper is a sufficient presentment to charge ' the drawer and indorsers. 4 The undertaking of the acceptor is to pay the bill at its maturity, on due presentment ; and that, as we have seen, may be made either at his place of business or at his resi- dence. 6 But it will not be good if made at his former place of residence, or at a store formerly occupied by him, unless there are other circumstances excusing a further demand. 6 1 King v. Holmes, 11 Penn. State R., 456. 9 The Branch Bank of Decatur v. Hodges, 18 Ala, N. S. R., 42, decided in 1849. 3 King v. Holmes, svjira ; M'Gurder v. Bank of Washington, 9 Wheat, 598. This case decides that a removal into another state or jurisdiction excuses a failure tomako an actual demand of payment ou the maker of a note. "A demand on the maker is in general indispensable ; and that demand must be made at his place of abode or place of business. That it should be strictly personal, in the language of the submis- sion, is not required ; it is enough if it be at his place of abode, or generally, at the place where he ought to be found." Decided in 1824. Louisiana Ins. Co. v. Shamburgh, 2 Martin's R. N. S., 511. This case decides that when the maker of a note cannot be found, payment must be demanded at his domicile if within the state. It was a case of removal from New Orleans to Plaquemine, in the same state, and the omission to present the note for payment was not sufficiently excused by showing diligence. Bellevre v. Bird, 4 id., 18G, is a similar case; the maker had removed from Baton Rouge to New Orleans, and a sufficient search, that is, due diligence was not used by the notary to find out the residence of the maker of the note. 4 18 Ala. N. S. Rep., 42; Dickerson v. Turner, 12 Ind., 223. 6 Moodie v. Morrall, 1 S. Car. R., 367 , Shed v. Onctt, 1 Pick., 413. " Freeman v. Boynton, 7 Mass. R., 483; Bond v. Farnham, 5 Mass. R., 170; Bene- dict v. Cafi'e, 5 Duer, 226. A removal out of the country, or out of the state, itself excuses a presentment and demand. 9 Wheat. R., 598. Nor will it be good if made of tho assignee of tho insolvent. Armstrong v. Thurs- ton, 1 1 Md., 148 ; 5 Duer, 226. PRESENTMENT FOR PAYMENT. 477 la the next place, it is necessary that the bill or note should be actually presented for payment; that it should be exhibited or shown to the maker or acceptor, and pa}mient thereof demanded. A demand made b}^ a person who has not the draft or bill in his possession, is insufficient. 1 A request of payment communicated to the maker of a promissory note, by letter through the post office, is not such a demand as the law requires : the holder or his agent should call on the maker and present the note and demand payment of it' The instrument itself should be produced ; 3 for the acceptor has a right to see the bill before he determines whether he will pay it or not ; and if he pays it, he has a right to have it delivered to him as a voucher in his settlement with the drawer. 4 And for the same reason, the maker of a promissory note is entitled to have it surrendered on payment. Being nego- tiable paper, neither the acceptor nor the maker is bound to make payment without receiving the note or bill as his voucher, or evi- dence that it is not outstanding in the hands of some other person.* * Drafts payable at sight show on their face that they are ^ to be presented for payment. Where the cashier of a bank that had received a draft as security for a loan, met Chase, one of the house upon which the bill was drawn, and informed him that the bank had the draft, upon which Chase told him that they Hhould not accept or pay it, the question arose whether this con- versation amounted to a presentment for acceptance ; and the court say : ' " The term presentment imports not a mere notice of the existence of a draft which the party has in his possession, but the exhibiting of it to the person on whom it is drawn, that lie may see the same, and examine his accounts or correspondence, and judge what he shall do; whether he shall accept the draft or not. Here there appears to have been nothing more than a casual meeting of the parties, and the conversation on the subject of the ' liussoa v. Lake, 4 How. U. S. Rep., 2G2. ■ Btuekert v. Anderson, 3 Whart, 11G; 9 Wheat, 503. ' Draper v. Clemens, 1 Miss., 52. 4 'I'lio Bank of Vergeunea v. Cameron, 1 Barb. It., 143, per Harris, J. 6 Smith v. Rockwell, 2 Hill R., 482. The hidorBer, tendering the amount due on a note, Ins a right to insist on its delivery to him. Wilder v. Seclyo, 8 Barb. It., 408. • Pall River Union Hank v. Willard, 5 Mete., 216. This ease also shows that tho holder is at liberty to agree with the drawer not to present a bill payable a certain time after date, until it becomes due, notwithstanding the same has been indorsed for the accommodation of the drawer. He has a right to emit presenting it, and ho may agree to do so. 478 BILLS OF EXCHANGE A5D PEOMISSOHT: 'XOT£». draft ensued. If this had been communicated, it would h&re created no obligation on the part of the indorser to make present payment, and consequently such conversation imposed no present duty on the holders, as to the other parties to the bill." These remarks were made in an action brought on a bill payable six months after date, where it was not the duty of the holder to pre- sent the same for payment until it became payable. The duty of the holder in presenting a draft for acceptance, manifestly, is not governed by rules or rather circumstances so urgent as those that attend the presentment and demand for pay- ment : ' in the former case, the time within which the act may be done is not precisely fixed, while in the latter, the day of payment cannot be delayed, nor can the holder in any case wait till the r following day to find the acceptor or receive * his answer to the bill, as he may do when he merely presents it for acceptance. 2 In other words, the holder is under a necessity of presenting the bill for payment on the very day it becomes due, if he wishes to charge the drawer and indorse rs ; and is not at liberty to leave the bill with the drawee .on the day it becomes due, until the following day, before protesting it for non-payment, notwithstanding it has not been previously presented for accep- tance. 3 According to Mr. Chitty, the bill or note should not be left in the hands of the drawee or maker without immediate actual payment in money ; at least if it be, the presentment is not considered as made until the money is called for ; 4 and though it has been deci- ded that neither the holder nor a banker, acting as agent, is guilty of neglect by giving up a bill to the acceptor upon his delivering to them his check on another banker, 6 that doctrine may now be questionable ; and he adds, that most of the London bankers, on presenting a bill for payment in the morning leave a ticket where 1 Mr. Justice Story intimates an opinion that this distinction is founded more in courtesy than in duty; but allows that in practice the holder has greater freedom, in calling again to find the drawee when he is not at home, and in waiting for his deci- sion, than can be exercised in presenting bills and notes for payment. Story on Bills, § 350. 2 Bank of Washington v. Triplctt, 1 Peters R., 25; Mitchell v. Degrand, 1 Mason R.. 170. s Montgomery Co. Bank v. Albany City Bank and the Bank of tho State of New York. 8 Barb. R., ?>9G; S. C, 3 Selden R., 459; 12 Abbt., 139. 4 llayward v. Bank of England, 1 Stra., 550. * Russell v. Ilankey, 6 Term R., 13. The practice of notaries in New York is to take nothing in payment of bills or notes but money or a certified check. PRESENTMENT FOR PAYMENT. 479 it lies due, declaring that "in consequence of great injury having arisen from the non-payment of drafts taken for bills, no draft can in future be received for bills, but that the parties may address them for payment to their bankers, or attach a draft to the bill when presented." 1 Receiving a check on a bank in payment of a draft or note, would not extinguish the latter, in the absence of any intention to give the maker or acceptor a further credit ; 3 but a surrender of the note or bill would embarrass the holder in his attempt to recover on the instrument, 3 and a delay to * protest the „„ • 507 same for non-payment on the day it became payable would discharge the drawer and indorsers. 4 Hence it is evident that the notary or agent for collection, cannot with safety surrender the note or draft on receiving a check for the amount ; and that if he does so, he ought to ascertain promptly whether the check will be honored, so that in case it is not he may nevertheless protest the note or draft for non-payment, and give regular notice of its dis- honor to the parties to be charged thereon. The form of the notarial certificate shows sufficiently the man- ner in which the presentment and demand for payment should be 1 Chitty on Bills, 369. a The People v. Howell, 4 John. R., 29G ; 5 John. R., 68 ; Olcott v. Rathboiie, 5 Wend., 490. If a check be left with a hank to pay a note not yet due, and the bank charges the check to the drawer, on his account becoming good some days after the note matures, this is a payment of the note ; Pratt v. Foote, 5 Seld., 463. But if a bank at which a note is payable, by a mistake charge it to the maker assuming that his account is good, this is not a payment, provided the mistake is rectified in time to charge the indorsers; Irving Bank v. Wetherald, 34 Barb., 323; and though it fail to do that, it may hold the paper as a purchaser; Union Bank v. Griffin, 4 N. Y. Leg. Obs., 344; if the account afterwards becomes good, it is a payment, 1 Kern., 203. Where, as between the banks in Albany, the custom is in presenting commercial paper held by one of the banks payable at another, not to require or receive payment in money upon presentation of the paper, but to take it back certified good by tlio officer of the bank where it is payable ; and the paper is included in tho settlement between the banks on the day following and treated as an obligation of tho bank certifying it; the certification binds tho bank to pay the note or bill ; it creates an Obligation similar to that which a bank incurs by certifying a check; Meads, receiver, v. Merchants' Bank of Albany, heard before Judge Johnson", Referee, and just deci- ded by the court of Appeals; see also 16 N. Y. Rep., 125, ante, 406. In New York city, the custom seems to be to certify tho paper paid; Sec Irving Bank v. Wetherald, 34 Bait... 323. * 2 Hill It., -182: 7 Barb., 143, * 3 Selden R., 459- 8 Barb., 496; 11 N. Y. Rep., 203. 4:80 BILLS OF EXCHANGE AND PROMISSORY NOTES. made. 1 But though the rule be general, requiring that a promis sory note, a draft or bill of exchange be exhibited to the makei or acceptor when the demand of payment is made, there are excep- tions to the rule, some of -which we have already noticed, 1 and others that deserve to be mentioned. Thus, where the maker of a promissory note went to the store of the holder on the last day of grace, where the note was, and stated that he was unable to pay, and should not pay the note, and wished the holder to notify the indorser ; the court were of opinion that this was a sufficient demand and refusal to constitute a dishonor of the note. 3 To render the demand good, the party making it should have the note with him ; and the demand ought to be so made that this fact should appear : 4 otherwise the maker may well refuse to pay, on the ground that he has a right to have his obligation or note, or to see it canceled, when he is called upon to discharge it. 6 The possession of the note is evidence that the person making the demand, is authorized to receive the money and deliver up the ^ note. 6 So, if payable at a particular place, * the note must be left or sent there, ready to be surrendered up on payment.' When a note or bill has been lost, the presentment may be made by copy, or by a statement in writing describing the instrument ; 8 but the demand of payment should be accompanied by a sufficient tender of indemnity against any future liability thereon, so as to render the maker safe in paying it. 9 In due form, the holder should present a copy or description of the lost instrument, proof of the loss, and an ample indomnity, to the maker or acceptor in place of the note or bill, and demand payment thereof: in short, he should do all that he would be bound to do, in order to recover on the same in an action at law or in equity ; 10 and a tender of 1 See the form given on a former page, showing that the note or bill must be exhi- bited, and Story on Bills. § 276, and note, post, 550-552. 2 See authorities cited, supra, in reference to demand where notes or bills are made payable at particular places. 3 Gilbert v. Dennis, 3 Metcalf, 495 ; Belmont Bank v. Patterson, 17 Ohio, 78. 4 Freeman v. Boynton, 7 Mass., 483. * Idem, per Parker, J. * Shed v. Bjrett, 1 Pick., 401. T Shaw v. Reed, 12 Pick., 132. " Hinsdale v. Miles, 5 Conn. R., 331 ; Posey & Coffee v. The Decatur Bank, 18 Ala. K. S. R., 802. * Smith v. Rockwell, 2 Hill R., 482; 7 Barn. & Cres., 90 ; 3 Cowen R., 303 ; 7 Mass., 186. ltt 18 Ala. K S. R., 802; 5 Conn. R., 331 ; 2 Hill R., 482. PRESENTMENT FOR PAYMENT. 481 indemnity should also be made to the indorser at the same time, so that he may be in a situation to pay the demand at any time, and look to the principal debtor. 1 Where there is a local custom or usage of business, the parties entering into a contract to be performed where the custom prevails, are supposed to make their agreement with reference to it ; so that, in substance, where the terms used do not negative that intention, the usage being known to the parties, is incorporated into and made a part of the contract between them. 2 Upon this ground a usage of banks has been sanctioned judicially in Massachusetts and some of the other states of the Union, dispensing with the necessity of formally presenting inland bills and notes for payment. 3 The usage appears to be this : when the note or bill is about to become payable, a messenger of the bank holding it, or in which it is deposited for collection, delivers a notice to the maker or „ ... ' x '509 * acceptor, or leaves it for him at his place of business, stating the bank where the note or bill is to be found, naming the day on which it will become payable, and requesting payment accordingly ; and in case he fails to come to the bank and pay the bill or note within the usual hours of business on the day named, that being the last day of grace, a mere notice is then sent to the makers and indorscrs of non-payment, and the paper is considered dishonored. 4 But this species of demand is allowed only where 1 Smith v. Rockwell, 2 Hill R., 4S2. ■ 4 Term R., 581 ; 3 Comst. R., 322 ; G Hill R., 157. s 4 Maps., 215; G Mass., 410; Whitwell v. Johnson, IT Mass., 440; Shovo v. "Wiley, 18 Pick., 558; North Bank v. Abbott, 13 Pick., 4G5 ; Central Bank v. Davis, 19 Pick., 373; Maine Bank v. Smith, 18 Maine, 90. * The Boston Bank v. Hodges, 9 Pick., 420; Maine Bank v. Smith, 18 Maine R., 99. "A written notice, demanding payment of the two lirst notes named, was sent at the proper time, to the dwelling house of the maker, but the notes remained in tho bank. The residence of the maker was in the city. The plaintiffs were permitted to introduce evidence, that such was the invariable usage of the bank, respecting inland bills and notes; and that the maker and defendant had done business at the bank;" and it was held that the evidence was proper, and that the usa ■ • 1" Lag proved tho demand was proper. Contra. Bank of Maryland v. Duvall, 7 dill f payment was made on the 28th of August, (bur years after; and the objection using taken that the demand should have been made on the 29th, the point was fully considered by the court, and the demand made on the 28th was held good. The four years expired on the day of the date, four years afterwards, and the addition of the three days of grace brings it to the 28th. PRESENTMENT FOR PAYMENT. 487 which is the thirteenth day after the acceptance. 1 And when a bill is drawn payable so many months after date or after sight, the computation is made by the calendar, and without counting the days of grace, the bill will become due on the day of the month corresponding with the day of the date or acceptance ; that is to say, if the bill be dated or accepted on the tenth of the month, it will mature or become due on the tenth. Thus, if dated or accepted on the tenth of February, payable two months thereafter, it will become due on the tenth of April, or on the thirteenth, adding the days of grace. 1 But when a bill is drawn payable one month after date, in a month longer than the succeeding one, the computation is not carried into the third month: for instance, on a bill dated the thirtieth or thirty-first of January, and- payable one month after date, the time expires on the last day of February, whether that have in it twent} r -eight or twenty-nine days. So, if dated on the twenty-ninth, or thirtieth, or thirty -first of August, and payable six months after date, it will fall due on the last of February, and including days of grace, on the third of March. 3 1 9 Henry v. Jones, 8 Mass. R., 453. Per Curiam : " Where a note is payable a certain number of days from the date or from the day of the date, the day of the dato is to be excluded from the computation. Iu the case at bar, the note was made payable in sixty days, without adding, as is customary, from the date. But the inten- tion is apparent, and the court will supply the omission." In this state, by the act of 1857, checks and drafts on banks and bankers are payable as drawn, without any days of grace. 3 17 Mass. R., 94; 2 Verm., 129. ' Wagner and another v. Kenner, 2 Robinson (Louis.) R., 120. This action was brought against the defendant as indorscr of a promissory note dated the 31st of September, 1839, payable six months after date, and protested on the 3d of April, 1840; and the only question made in the case was, whether the protest was made in time? Maktix, J., delivering the prevailing opinion of the court, says: "The compu- tation of bills or notes drawn one or more months from date is made according to the Gregorian calendar, that is to say, from the day of the month it bears date, to tho corresponding day of the month of its maturity, without any attention to long and short months. For instance, a note drawn on the 28th, 29th, 30th, or 31st of Janu- ary, and due a month from date, will be due tho 28th of February, if tin.' year be not bissextile, because the month of February has no other corresponding day ; those drawn on the 28th or 29th of February and duo one month from date, will be due on tho 28th or 29th of March, because the corresponding days are found in the month or March. A bill drawn tho 31st of March, and due one month from date, will be due on the 30th of April; and, on tho other hand, one drawn on the 30th of April, will be payable on the 30th of May. and not the 31st. Thismodoof calculation facilitates greatly the ascertaining of the day of tho protest, and the commutation of interest. It is extremely simple. * * * A majority of tho court concurring in this opinion, it is therefore ordered that the judgment of tho lower court bo 488 BILLS OF EXCHANGE AND PROMISSORY NOTES. * It was formerly customary to draw foreign bills of exchange payable at one, two or more usances ; but more recently the practice lias become general to make them payable at so many months or days after date or sight, as in the case of inland bills. 1 The term usance designates the time which is allowed by the usage or custom of countries, between which bills are drawn, for their payment: and though 'sufficiently definite, is not so uni- versally understood as the computation of time by days and months. Moreover, bills so drawn are subject to this further disadvantage ; the usance varies between different places and coun- tries, so that the contract does not show upon its face when it falls due. In other words, courts cannot take j udicial notice of foreign usances that vary according to the custom of business established between different places ; and therefore it is necessary to aver and prove the duration of the usance at which the bill in question was drawn payable. 2 * The table given by Mr. Chitt} r , copied in the note below, shows how much diversity in this respect exists in the usages and course of trade between different cities ; and may serve to explain the superior convenience of the modern practice.' 1 Chitty on Bills, 370 ; Byles on Bills, 160; Bayley on Bills, ch. 7, § 1. 2 Buckley v. Campbell, Salk.. 131 ; see Smart v. Dean, 3 Keb., G45. 3 A usance between London and places mentioned below is as follows : Amsterdam is one calendar month after date: America, North, is said to be sixty days : Altona, Antwerp, Brabant, Bruges, Geneva, Germany, Hamburgh, Holland and the Netherlands, Middleburgh, Paris, Rotterdam, Rouen and Zealand, is one calendar month after date: Berlin and Frankfort-on-the-Maine, 14 days after acceptance : Cadiz, Lisbon, Madrid and all Spain, 2 calendar months after date : Genoa, Leghorn, Italy, Milan, Palermo, Rome, Venice, and Zaute, 3 calendar months after date : Constanti- nople, Smyrna and West Indies, 31 days after date: Oporto, 30 days after date: Sweden, 75 days after date. Bayley on Bills, ch. 7, § 1, says : A usance between this kingdom and Amsterdam, Rotterdam, Hamburg, Altona, Paris, or any place in France, is one calendar month from the date of the bill; a usance between us and Cadiz. Madrid and Bilboa, two; a usance between us and Leghorn, Genoa or Venice, three. Where it is necessary to divide a month upon a half usance, which is the case where the usance is either reversed, and that there be judgment for the defendant." The judgment of the court proceeded on the assumption that the note was dated on the 30th or last day of September, and the computation was made on that basis. See 2 John. R., 203 ; 2 Li Raym., 1079; 3 Cowcn, 252; 4 Mass. R., 53. Blanchard v. Hilliard, 11 Mass., 88, recognizes tho usage of a bank at which the maker and indorser were accus- tomed to do business, not as rules for the decision of the court, but as evidence of their assent to the usage, and tho notice left at the maker's place of business on the day the note became due, mentioning the third day of grace as the day of pay- ment, was held sufficient. PRESENTMENT FOIl PAYMENT. 489 There is another element to be taken into account in the com- putation of the time when bills and notes become due, known as days of grace. At an early period these were in fact what the words imply, an indulgence or respite granted to the acceptor as a matter of favor; ' but they have at length ripened into a right as clear and definite as any conferred by the positive stipulation of the parties. So that for all practical purposes, a bill or note enti- tled to days of grace becomes due at the same time and in the same manner as if these days were added to the time it has to run, and the instrument drawn without grace. 1 The Code Napoleon abol- ishes them altogether, and leaves the parties to fix the day of payment without any reference to a rule, couched in words that have now legitimately only a historical meaning. 3 * In computing the time when a note or bill becomes „ '' 518 due, the days of grace are added ; and what shows most conclusively that there is now no idea or notion of favor connected with them, is the fact that interest is charged and allowed for them just the same as if they formed a part of the note or bill itself.* Days of grace have the same origin as usances, and like them vary in number in different places. In this country and in Great Britain, three days are allowed as days of grace, to be counted exclusive of the day on which the bill or note falls due, and inclu- sive of the last da}' of grace ; unless the last day happens to fall on a Sunday or on a general holiday or day of rest, and in that case the note or bill becomes due on the day preceding. 6 And in the absence of proof to the contrary, our courts always presume that the same number of days arc allowed by way of grace in 1 Story on Bills, § 333. * Ilogan v. Cuyler, 8 Cowen R., 203. The maker, as well as the indorscr of a pro- missory note, is entitled to days of grace. 2 Cowen 11., 112. * Commercial Code, art. 135, " all days of grace, of favor, of usage, or local custom. for the payment of bills of exchange, are abolished." Art. 1S7, extends the same pro- vision to promissory notes. . * Bank of Utjca v. Wager, 2 Cowen R., 712. "To every practical purpose, there- fore, the days of grace arc a part of the note itself." 6 1 John. Cas., 328; 2 Caincs, 213; 4 Pal, 127; 5 Bing., 451; 4 Yerger, 210; 10 Ohio, 507; 1 Minor, 295; 3 N. Hamp., 14; 2 Verm., 129: 7 Gill & John., 78; 9 retera, 33 ; 4 Met, 203; 2 Hill R., 587 ; 12 John. R., 423; 13 id., 430: 3 Wend., 456. one month or three, the division, notwithstanding tho difference iu tho length of the months, contains fifteen days. These usances are calculated exclusively of the day of tho date of tho bill Cliitty on Bills, 373. Edw. C2 490 BILLS OF EXCHANGE AND PROMISSORY NOTES. other countries ; ' that is to say, they decide according to the law as it stands here, unless the party claiming the benefit of the for- eign law proves it, like any other fact tending to modify or estab- lish his right of action. 4 But when properly proved, the law of the place where the bill or note is made payable, prescribes the number of days of grace allowed, and the mode in which they are to be calculated.' A bill drawn on Paris, or any other place in France, is not entitled to any days of grace ; 4 while a bill drawn on Berlin is entitled to three days, and a foreign bill drawn on Spain is generally entitled to fourteen days' grace. 6 1 Dollfus v. Frosch, 1 Denio, 367. a Thompson v. Ketchum, 8 John. B., 189 ; Cowen & Hill's Notes to Phil. Ev., 1136, 7, 8, and cases there cited. Wood v. Corl, 4 Met., 203; 3 Kernan K., 290. ' 1 Denio, 367; Kyd, 8; Cliitty ou Bills, 376; Story on Notes, §§216, 247. * See the article of the Code quoted above. 6 Mr. Chitty, giving the modern usage, says: "The number of these days varies, according to the ancient custom or express law prevailing in each particular country. In the former edition of this work was given a table of the days of grace allowed in the time of Beawes, but various alterations were introduced by the Code Napoleon, and, therefore, the following table, acknowledged to be most accurate, is substituted : Altona. Sundays and holidays included, and bills falling due on a Sunday or holiday must be paid, or in default thereof, protested on the day previous, 12 days. America. 3 days. Amsterdam and Antwerp. Abolished since the Code Napoleon, none. Berlin. When bills, including them, do not fall due on a Sunday or holiday, in which case they must be paid or protested the day previous, 3 days. Brazil. Bio Janeiro, Bahia, including Sundays, &c, as in the last case, 15 days. England, Scotland, Wales and Ireland, 3 days. France. Abolished by the Code Napoleon, livre 1, tit. 8, § 5, pi. 135 ; 1 Pardess, 189. Ten days were formerly allowed. Pothier, pi. 14, 15; none. Fronhfort-on-the-Maine. Except on bills drawn at sight, Sundays and holidays not in- cluded, 4 days. Genoa. Abolished by the Code Napoleon, none. Hamburg. Same as at Altona, 12 days. Ireland. 3 days. Leghorn. None. Lisbon and Oporto. 15 days on local, and 6 on foreign bills; but if not previously accepted, must be paid on the day they fall due, 6 or 15 days. Palermo. None. Petersburgh. Bills drawn after date are entitled to 10 days' grace, those drawn at sight to only 3 days, and those at any number of days after sight, none whatever. But bills received and presented after they are duo are nevertheless entitled to 1 days' grace. In these days of grace arc included Sundays and holidays, as also tho day when the bill falls due, on which days they cannot be protested for non-pay- ment, but on the morning of the last day of grace, payment must be demanded, and if not complied with, the bill must be protested before sunset, 10 or 3 days. PRESENTMENT FOR PAYMENT. 491 * The effect of a local custom in regulating the number of . . 519 days of grace has given rise to some discussion. The Su- preme Court of the United States decided in one case that where a note is made for the purpose of being negotiated at a bank, whose custom, known to the parties, it is to demand payment and give notice on the fourth day of grace, the custom forms a part of the law of the contract ; * and have followed that decision by another to this effect, that when a note is made payable or negotiable at a bank, whose invariable usage it is to demand payment and give notice on the fourth day of grace, the parties are bound by the usage, whether they have a personal knowledge of it or not." And the decision was placed upon the ground of an implied agreement between the parties to be governed by the usage of the bank at which they have *made the security negotiable. 3 On the # „ on other hand, it has been adjudged in this state that evidence 1 Rentier v. The Bank of Columbia, 9 Wheat, 582. The question arose in respect to a long standing usage in the District of Columbia. * Mills v. The Bank of the United States, 11 Wheat., 431. ' Bank of Washington v. Triplett & Neale, 1 Peters R., 25. Chief Justice Mar- shall, delivering the opinion of the court in this case, says: "The demand was niado on the fourth day after that mentioned on the face of the bill, as the day of payment The defendants in- error insist that if the bill was never presented for acceptance, pay ment ought to have been demanded on the day mentioned on its face. If this be so, then it ought to have been demanded on the third day afterwards, which is the last day of grace. The allowance of days of grace is a usage which pervades the whole commercial world. It is now universally understood to enter into every bill, or note of a mer- cantile character, and to form so completely a part of the contract, that the bill does not become due, in fact or in law, on the day mentioned on its face, but on the last Rotterdam. Abolished by the Code Napoleon, none. Scotland. 3 days. Spain. Vary in different parts of Spain, generally 14 days on foreign and 8 on inland bills ; at Cadiz, only 6 days' grace. When bills are drawn at a certain date, fixed or precise, no days of graco are allowed. Bills drawn at sight are not entitled to any days of grace ; nor are any bills unless accepted prior to maturity; 14 days, but van r . Trieste. 3 days on bills drawn after date, or any term after sight not less than 1 days, or payable on a particular day: but bills presented after maturity must be paid within 24 hours. Sundays and holidays are included in the days of graoe ; and if the last day of graco fall on such a day, payment must be made or tho bill pro- tcKti'l "ii the first following open day, 3 days. Venire. days, in which Sundays, holidays and tho days when the bank is .shut, are not included, C days. Vienna. Same as at Trieste, 3 days. Wale*. :: days. 492 BILLS OF EXCHANGE AND FROMISSOKY NOTES. of a local usage in the city of New York, cannot be given for the purpose of showing that a draft drawn upon the cashier of a bank and accepted by him, payable at a certain time after datp, is not * entitled to days of grace. 1 The question arose on a draft or bill of exchange drawn in Detroit, on the cashier of the Oakland County Bank, Michigan, payable at the Phoenix Bank, in the city of New York, sixty days after date, the action being brought against the defendant for negligence in not presenting the same for payment on the third day of grace ; and the offer was to prove that by the usage and custom of banks, bankers and mer- chants in the city of New York, the instrument was a mere bank check, payable without days of grace, and that consequently there had been no negligence on the part of the notary in treating it as a bank check. The ruling of the court upon this state of facts has been reaffirmed by the Court of Appeals, in a recent case, where it was held that a usage of banks in the state of Connecticut could not be received in evidence to show that an instrument in the form of a check, payable, at a future day, is not entitled to days of grace. 9 • ' Woodruff v. The Merchants' Bank of the City of N". Y., 25 Wend., 673; S. C, 6 Hill R., 174. " Bowen v. Newell, 4 Selden R., 190. The check was drawn in this form : " $2,000. New York, October 5th, 1849. Cashier of Thompson Bank, pay Zeuas Newell, or order, two thousand dollars on the 12th inst." "Whether days of grace are to be allowed or not, depends upon the question whether the instrument is payable on demand, or at a future day." day of grace. A demand of payment, previous to that day, will not authorize a pro- test or charge the drawer of the bill." (The bill had been drawn at Alexandria, on a person residing in Washington, and demanded according to the usage at the latter place, on the fourth day of grace.) "The usage by wliich questions of thi3 sort are governed, is different in different places. It varies from three to thirty days, and the usago of the place on which tho bill is drawn, or where payment is to be demanded, uniformly regulates the number of days of grace wliich must be allowed. This bill being drawn on a person residing in Washington, and being protested for non-payment in tho same place, is, according to the law morchant, to be governed by the usago of Waslungton." Tho usage of the banks in the District of Columbia, to make demand on the fourth day of grace, applies only to notes negotiated by the bank. Notes left iu bank for collection are due on the third day of grace. Hill v. Norval, 3 McLean, 583. This, however, is a change from the former usage. Cookendorf v. Preston, 4 How. U. S., 317. The tendency to adopt local usages in place of the general rule of commercial Jaw- has been materially checked by recent decisions. 15 id., 539; 4 Selden R., 190; but the law of the place of payment governs. Bowen v. New?ll, 3 Kcrnan R., 290; S, C, 2 Duer R., 584, and authorities there cited by Judgo Duer. PRESENTMENT FOR PAYMENT. 493 *It is, however, well settled that the law of the place .. where a draft is made payable is to govern, in respect to the allowance of grace upon a bill of exchange or check drawn in one state upon another. 1 And it is now declared by statute, that such a draft or check, drawn on a bank or banker in this state, is not entitled to days of grace. 2 A promissory note payable at a certain length of time after date, when made by a bank, is called a post note ; and it has been held- in Massachusetts, under a statute allowing days of grace on all negotiable notes, orders and drafts payable at a future day certain, that no usasre of banks or business men can be allowed to control the settled law of the state, or to take from such, a note the days of grace allowed by statute. 3 But where it is uncertain whether or not days of grace are to be allowed, a collecting agent acting in tfood faith and with reasonable skill is not responsible for a mis- sake made with respect to a doubtful question of law. 4 Thus, when a bank receives a note for collection, it is bound to use reasonable skill in making the collection, and for that purpose is bound to make a reasonable demand on the promisor, and in case of dishonor to give due notice to the indorsers, so that the security of the holder shall not be lost or essentially impaired by the dis- charge of the indorsers. 6 Like any other agent, such bank is bound to the use of reasonable skill and ordinary diligence. By reasonable skill, is understood such as is ordinarily possessed and exercised by persons of common capacity, engaged in the same business or emplo} T ment ; and by ordinary diligence is understood that degree of diligence, which persons of common prudence are accustomed to use about their own affairs.' As a general rule, every man is bound to know the *law; but consummate „ skill and absolute knowledge of the law cannot be expected of men engaged in the ordinary transactions of business, and is not required 7 1 liowen v. X< m H. :; Kernan It., 290. '■ statute of 1857. : M •chanics' Bank at Baltimoro v. Merchants' Bank at Boston, 6 Metcalf, 13; Per- kins v. Franklin Bank. 21 Pick. It., 483. 1 i M'-t. -:.ir. 13. 1 Fabcus v. Mercantile Bank, 23 Pick. R., 330. * Per Oil. J. Shaw, 6 Met., 20. The same rule applies to attorneys, Gilbert v. Williams, 8 Mass., 51 ; to insurance brokers. Chapman v. Walton, 10 Bine;., 57; to factors, Leverick v. Meigs, 1 Cow., G15 ; and to surgeons, Searo v. Prentice, 8 Kast, 348. ' It seems to be sufficient, if the agent on a doubtful qucstiou of law follows the prevailing practice, G Met., 32. 494 BILLS OF EXCHANGE AND PROMISSORY NOTES. Checks, drafts and notes payable on demand are not entitled to any days of grace ; while notes, bills and drafts, foreign as well as inland, drawn payable at sight are by the law merchant entitled to the usual days of grace, though the form of the instrument does not appear to contemplate any delay. 1 By a statute just passed, all bills of exchange or drafts, drawn pa} r able at sight, at any place within this state, are deemed due and payable on presentation, without any days of grace being allowed thereon. And all checks, bills of exchange or drafts, appearing on their face to have been drawn upon any bank or upon an}^ banking association or individual banker, carrying on banking business under the act to authorize the business of banking, which are on their face payable on any specified day or in any number of days after the date or sight thereof, are deemed due and paya- ble on the day mentioned for the payment of the same, without any days of grace being allowed ; and it is not necessary to protest the same for non-acceptance. 2 1 Chitty on Bills, 376 ; Story on Bills, § 342 ; id. on Notes, § 224 ; Colman v. Sayei, 1 Barnard B. R., 303 ; Bayley on Bills, ch. 7, § 1 ; Selw., N. P., 344, 7th ed. ; Smith's Mercantile Law, 244; 6 C. & P., 320; Cribbs v. Adams, 13 Gray, 597. 4 Act "in relation to commercial paper," passed April 17, 1S57. Session Laws of New York. The statute is as follows: The People of the State of New York, represented in Senate and Assembly, do enact at follows : § 1. All bills of exchange or drafts, drawn payable at sight, at any place within this State, shall be deemed due and payable on presentation, without any days of grace being allowed thereon. § 2. All checks, bills of exchange or drafts, appearing on their face to have been drawn upon any bank or upon any banking association or iudividual banker, carrying on banking business under the act to authorize the business of banking, which are on their face payable on any specified day or in any number of days after the date or sight thereof, shall be deemed due and payable on the day mentioned for the pay? ment of the same, without any days of grace being allowed, and it shall not be no* cessary to protest the same for non-acceptance. § 3. Whenever the residence or place of business of the indorser of a promissory note, or of the drawer or indorser of a check, draft or bill of exchange, shall be in the city or town, or whenever the city or town indicated under the indorsement or signature of such indorser or drawer, as his or her place of residence, or whenever in the absence of such indication, the city or town where such indorser or drawer, from the best information obtained by diligent inquiry, is reputed to reside or have a place of business, shall be the same city or town where such promissory note, check, draft or bill of exchange is payable or legally presented for payment, or acceptance, all notices of non-payment and of non-acceptance of such promissory note, check, draft or bill of exchange may be served by depositing them, with the postage thereon prepaid, in the post office of the city or town where such promissory note, check, draft or bill of exchange was payable or legally presented for payment or hcceptanco, directed to the indorser or drawer, at such city or town.* § 4. This act shall take effect on the first day of July next, but shall not apply to ♦The statute does not dispense with the necessity of making diligent inquiry to ascertain the indorser's residence. Randall v. Smith, 34 Barb., 452. * It deserves to be mentioned in this connection that pro PRESENTMENT FOB PAYMENT. 495 missory notes, being made negotiable by statute, are not placed upon the footing of bills of exchange in all the states, and are not generally entitled to days of grace, in the absence of any statutory law on the subject. 1 In some of the states, as noticed in a former chapter, notes made payable to order or bearer, at a bank, are made negotiable in the same manner as inland bills, leaving other common notes of hand out of the range of the com- mercial law. 2 In others, as in this state, the statute gives to pro- missory notes, in writing, for the payment of money, drawn in a negotiable form, the same effect, and makes them negotiable in like manner as inland bills of exchange, according to the custom of merchants. 8 In others still, the statute declares them nego- tiable, without giving to them the usual incidents of negotiable paper. 4 *As a general rule, notes that are not negotiable are not „ *525 entitled to days of grace. 6 This class of notes comprehends such as are not drawn in negotiable terms, 6 such as are payable in specific articles, 7 and such as neither the statute law nor any recognized and established custom has rendered negotiable. If entitled to days of grace by custom and not by virtue of statute law, the custom must be proved affirmatively. 8 As we have before observed, the days of grace, when allowed, in reality form a part of the time during which the note or bill has 1 Ante, pp. 264-284, note; Norton v. Lewis, 2 Conn. R., 478; Sharp v. "Ward, 7 Ham. [part 1st] (Ohio) R,, 223 ; Jones v. Fales, 4 Mass., 245 ; Shepherd v. Hall, 1 Conn. R., 329; 6 Pick., 80; Backus v. Danforth, 10 Conn. R., 297. a Pickard v. Valentine, 1 Shep. (Maine) R., 412; McDonald v. Smith, 2 id., 99; Rea v. Dorrance, 6 Shep., 137; Branch Bank at Montgomery v. Goffncy, 9 Ala., 153; Goddin v. Shipley, 7 B. Mon., 575. 1 2 R. S., 52, 3d ed.; 6 Met., 13; 21 Pick., 483; 3 Cowen, 252. 4 See notes giving a brief abstract of the statutes of the different states on a former page. * 10 Conn. R., 299; Salter v. Burt, 20 Wend., 205; 2 Conn. R., C9 ; 3 Hawks, 4C5. • 10 Conn. R., 297; 2 Conn. R., 69. ' Hardeman v. Cowan, 10 S. & M., 486. 8 7 B. Mon., 575. any bill3 of exchange, checks, drafts or promissory notes bearing dato prior to that time. Drafts upon banks payable a certain number of days after date, must bo presented for payment the very day they becomo due, under the act of 1857, and notice of dis- honor given to the drawer; but a failure to present may bo excused by showing pre* Burnptivcly, that the drawer had no funds. Ransom v. Wheeler, 12 AIM., 139. 496 BILLS OF EXCHANGE AND PEOMISSOEY NOTES. to run ; as a consequence of this, the negotiability of a note is as perfect and unrestricted daring those days as before their com- mencement j 1 and no action can be brought upon the instrument until the third day has expired. 2 The bill or note is dishonored as soon as payment is refused on a. demand made at a suitable hour on the third day of grace ; and it is held, in the state of Massachusetts, that a suit may be brought on the note on the very day it becomes due, after demand and notice. 3 And an opinion to the same effect has been expressed in the state of ^ Maine. 4 But it is admitted on *all hands that the maker of a note and the acceptor of a bill is entitled to the usual hours of business on the third day of grace in which to make pay- ment, and that where a note is not drawn payable at a particular place, or at a bank, a demand of payment may be made upon the maker at his residence at any time before the usual hours of rest ; 1 The Savings Bank of New Haven v. Bates, 8 Conn. R., 505. 1 Osborne v. Moncure 3 Wend., 170 ; Thomas v. Shoemaker, G Watts &, Serg., 179; Bevan v. Eldridge, 2 Miles, 353 ; Wiggle v. Thompson, 11 S. & M., 452. 3 Shed v. Butt, 1 Pick., 401. Where the notice of dishonor is given to an indorser through the post office, the notice is considered as given as soon as it is so deposited. See cases cited in this case. City Bank v. Cutter, 3 Pick., 414. 4 In Greeley v. Thurston, 4 Greenl. (Maine) R., 479, it was held that "bills of exchange and negotiable notes should be paid on demand, if made at a reasonablo hour on the day they fall due ; and if not then paid, the acceptor or maker may bo sued on that day; and the indorser or drawer also, after notice given or duly for- warded. The facts were these : The action was assumpsit brought against the maker on a promissory note, and the writ was issued between four and five o'clock in the after- noon of the last day of grace, and was served the next day. And although the court intimated the opinion above expressed, they conclude by saying: "But notes of hand and bills of exchange, like other instruments, are not suable until the day of maturity be passed, unless demanded on that day. The failure to pay on such demand, consti- tutes a breach of the contract and a dishonor of the bill or note, by the usage and custom of merchants. The necessity of a demand on that day, prior to the institution of an action, is clearly deduciblc from the opinion of Mr. Justice Buller (in Leftloy V. Mills, 4 D. & E., 170), and from the cases cited, decided in Massachusetts. In the case before us, it does not appear from the statement of facts that the note was demanded of the defendant prior to the commencement of the action ; we must therefore decide, in accordance with the principles before stated, that it was prematurely brought." In Lunt v. Adams (5 Shep. [Maine] R., 230), a demand of payment was made by the payee on the maker of a note at eight o'clock in the morning of the day on which it be- came payable; and a suit immediately commenced thereon, was held prematurely brought. The doctrine held in Massachusetts has been adopted in some of the other states. Coleman v. Ewing, 4 N. Hamp., 241 ; Wilson v. Williinan, 1 Nott & McCord, 440 Dennie v. Walker, 7 N. Hamp., 199; 4 Huuiph., 241. PEKSEXTMENT FOR PAYMENT. 497 and that for the purpose of presenting a note or bill for payment, the proper hours of business range through the whole day down to bedtime in the evening. 1 Upon what principle, then, can it be affirmed that the maker or acceptor is not entitled to make pay- ment at any time on the third day of grace during the usual hours of business ? The contract is reciprocal, and the credit clearly does not expire until the time limited by the contract has fully elapsed. 3 For the purpose of charging the drawer and indorser, the holder is authorized to demand payment at any seasonable hour on the day when the bill or note becomes payable ; but * the * r9 y demand does not give or perfect the holders right of action against either the maker of a note or the acceptor of a bill of exchange. 3 In respect to bills and notes drawn pa3 r able at a bank, the engagement of the parties is that payment shall be made during the usual hours of business, or banking hoars, on the day when the same become payable ; * but if an officer or agent of the bank be found there to receive or refuse payment at a later hour in the day, the. presentment will be sufficient as we have seen to charge the indorsers, and there is no reason for saying that a pay- ment so made will not discharge the contract. 6 According to the law as laid down in this state and followed in many others, "the demand upon the maker should be made on the third day of grace, and within a reasonable time before the expira- tion of the day ; 8 and if he then refuses payment, the holder has done all that is incumbent upon him to do, and may treat it as a dishonored bill, so far as immediately to give notice to the indorser ; but still I apprehend the maker has the whole of the day to pay 1 The Cayuga County Bank v. limit, 2 TTill II., 035. Hopping v. Quin, 12 Wend., 517. In this case an attorney who brought an action on the last day of grace, was held guilty df either ign'oVaffce' ot negligence; and that he could not recover against his client for such fruitless services. See Hart- ley v. Case, 1 Carr. .-. course the maker * or acceptor is justified in paying the note or bill to such holder. Ordinarily, neither the maker of a note nor the acceptor of a draft or bill that has been negotiated, can know of his own know- ledge the signatures of the indorsers ; and therefore if the bill or note purports to be properly indorsed, and the maker or acceptor pays it on presentment, and it afterwards turns out that one of the indorsements was a forgery, and that the party presenting it had no title to the instrument, this is a payment through a mutual mis- take of facts in respect to which both parties are equally bound to inquire, and the money paid may be recovered back. 8 But the drawee is bound to know the signature of the drawer; and if he accepts or pays the bill, it is an admission on his part that the sig- nature of the drawer is genuine ; and though it afterwards proves to be a forgery, he cannot compel the person to whom he paid the bill to restore the money, unless that person be in some way impli- cated in the fraud. 3 This rule, however, does not require the drawee to know the handwriting of the body of the bill ; and though that be altered by a forgery, increasing the amount and changing the name of the payee, still if the drawee pay the same by mistake, without knowledge of or reason to suspect the altera- tions, that is to say, without being guilty of any negligence in not discovering the forgery before paying the bill, he is entitled to recover back the money so paid. 4 1 Mottram v. Mills, 1 Sand., 37. The opinion in this case contains a full and hand- some review of the authorities on tho point stated in the text. And Leavitt v. Put- nam ( id., 199), shows that an indorsement not negotiable in terms, of a negotiable note does not terminate its negotiability ; and that tho effect is the same whether tho indorsement be made before or after due. 3 Comst., 494; 14 Gratt. ( Va.), 1. 3 1 Hill R., 287. In this case the name of tho payee indorsed on tho noto was a forgery. * Price v. Neal, 3 Burr., 1354; Wilkinson v. Lutwidge, 1 Strange, 648. 4 The Bank of Commerce v. The Union Bank, 3 Comst. R., 230. Tho dr»ft in this case was altered from $105 to $1,005, and the name of the payee from "J. Durand" to "J. Bennet," and the bank of Commerce paid the bill to the Union Bank, and within two days after demanded a return of the money. PAYMENT. 511 It has been held in England that where a bill is accepted paya- ble at a banker's, and he pays the bill when presented, and on the day afterwards discovers the acceptance to be a forgery and gives notice of the fact to the party to whom the payment was made, he cannot recover back the money so paid. And the decision is placed upon the ground that the holder is entitled to know upon the day when the bill falls due, whether * it is honored or dishonored, „ , . 54:'^ so that he may take the necessary steps to secure his recourse to the prior parties. 1 But the authority of this case has been doubted in this state, and the question raised whether the indorsers are entitled to strict notice, where only a reasonable delay is caused in this manner. 2 Where the party paying does not act as the agent of the drawee or acceptor, so that he is under no greater obligation to know the handwriting of the parties to the bill than the holder himself, he is entitled to recover back the money paid on a forged bill : so held where a person took up and paid certain bills for the honor of an indorser, who was his correspondent, and on the same morning ascertaining that the bills were not genuine, the names of drawer, acceptor and indorser being forgeries, gave immediate notice to the party to whom the pajmient was made, and demanded to have the money repaid. The mistake of fact in this case, was consid- ered as mutual between the holder and the party paying for honor.' A case of a similar character has been lately decided in this state. The draft purported to have been drawn by the cashier of the Canal Bank of Cleveland, Ohio, payable to the order of E. S. Moore, and addressed to the American Exchange Bank in New York city, and was indorsed to the Bank of Kutland for the face of the bill by a man calling himself Moore, whose residence was 1 Cocks v. Masterman, 9 Barn. & Crcs., 902. The banker in this case acts as the agent of the acceptor, and the acceptor knows whether the acceptance be valid or not; can the acceptor by acting through an agent vary his legal liability? But the decision was not placed directly on this point. 2 1 Hill R., 291, 293. 3 Wilkinson v. Johnson, 3 Barn. & Cres., 428. Per Curiam: "Wo think the pay- ment in this case was a payment by mistake and without consideration to a person not wholly free from blame, and who ought not, therefore, in our opinion, to retain the money. * * The person thus called upon ought certainly to satisfy himself tlint the name of his correspondent is really on the bill; but still his attention may reasonably be lessened by tho assertion, that the call itself makes to him in fact, thou.'/h no assertion be made in words; ami the fault, if ho pays on a forged signa- ture, is not wholly and entirely his own, but begins ut least with the person who thus calls upon him." 512 BILLS OF EXCHANGE AND PROMISSORY NOTES. tmknown, and who was not seen or heard of afterwards. The draft was sent forward through a bank in Troy to the defendants for collection, and was received by * them on Saturday, and presented for payment by their notary to the American Exchange Bank on the same day ; and pa} r ment was refused for want of funds. On Monday morning, the plaintiffs who were cor- respondents of the Canal Bank at Cleveland, called at the office of the notary, where the draft was, and left a check for the amount, (but did not see the draft in consequence of the absence of the notary,) and left word to have the draft sent to them. On the following day the plaintiffs went again to the office of the notary,' saw the draft and immediately pronounced it a forgery, and there- upon demanded of the defendants a return of the money paid on the check : this being refused, an action was brought for the recovery of the same, plaintiffs obtained a verdict and the judg- ment pronounced thereon by the Superior Court of the city of New York, was affirmed by the Court of Appeals. 1 Bronson, Ch. J. : " The drawee of a bill is held bound to know the hand- writing of his correspondent, the drawer ; and if he accepts or pays a bill in the hands of a bona fide holder for value, he is concluded by the act, although the bill turns out to be a forgery. If he haa accepted he must pay ; and if he has paid, he cannot recover the money back. This is an exception to the general rule, that money paid under a mistake of fact may be recovered back. The excep- tion is fully established ; but I do not see that it applies to this case. As the plaintiffs intervened and paid the bill for the honor of the supposed drawers, I do not doubt that the exception would have applied to them, as well as to the drawees, had they seen tha bill before they parted with their money : but they had not seen it" On the question of notice, the chief justice proceeds : " There # was, in truth, no use in giving notice of the * dishonor of the bill, with the view of charging any party to it. The defendants only had it for collection, and wanted no recourse. Notice to the supposed drawers could serve no purpose, because 1 Goddard & St. John v. The Merchants' Bank, 2 Sand., 247 ; S. C, 4 Comst, 147. The draft was as follows: " $1,000. Cleveland, Ohio, August 28, 1847. Canal Bank — Pay to the order of E. S. Moore, one thousand dollars, value received, which place to the account of S. II. Mann, Cashier. To American Exchange Bank, N. Y. No. 214." The man, calling himself Moore, indorsed the draft to the Bank of Rut- land for one thousand dollars, and disappeared ; and tho draft was sent to the Farmers' Bank of Troy, and by that bank was forwarded to New York, so that Mooro was the only party to whom recourse could be had thereon. PAYMENT. 513 the bill was a forgery ; and Moore, the payee who forged the bill, was answerable to the Bank of Rutland, which he had defrauded without notice." The dissenting opinion, concurred in by two of the judges, holds it to be the duty of the drawee to ascertain that the signature of the drawer is genuine before paying the bill ; and that the person who intervenes and pays for the honor of the sup posed drawer is equally bound to see and examine the bill, and decide for himself as to its being genuine. Where the person receiving payment on a forged bill has no recourse to any other party thereon, or has the same right of action, notwithstanding the want of notice, the question of laches does not arise. Thus, where the drawee accepts and pays a bill drawn pay- able to the order of a fictitious person, or to the order of a real person who never had any interest in the bill and whose name has been forged upon it by the drawer ; the bill being negotiated in that condition, and none of the parties but the drawer having any knowledge of the forger} r ; the drawee and acceptor cannot recover back the money. The title to the bill passes in the same manner as if it had been drawn payable to a fictitious person, or to bearer ; and inasmuch as the acceptor has no recourse to the prior parties, he has no right to recover back the money so paid. 1 1 Coggill v. The American Exchange Bank, 1 Comst. It., 113. The following are the remarks of Mr. Chitty on the subject, p. 431 : " With respect to payment, by mis- take, of bills or notes, where there has been forgery, the decisions and opinions havo been contradictory. It seems, however, clear, on principle as well as authority, that a drawee of a bill, or a banker acting for his customer, cannot, in case he pays a bill where the drawer's signature has been forged, or where the sum has been fraudu- lently enlarged, without fault of the drawer, debit the drawer with the sum so paid without his authority, or recover the amount from him. But there are many con- flicting decisions upon the question, whether the party paying shall be allowed to recover back the money from the person to whom he has inadvertently paid. It has been contended, that if the party paid was a bona fide holder, ignorant of the forgery, then he ought not to be obliged to refund under any circumstances, although he could not have enforced payment, and although he had immediate notice of the forgery, oecause the drawee was bound to know the handwriting of the drawer, and the genuineness of the bill, and because the holder, being ignorant of the forgery, ought to have the benefit of the accident of such payment by mistake, and not be compelled to refund. But, on the other hand, it may be observed that the holder who obtained payment cannot be considered as having altogether shown sufficient circumspection; he might, before ho discounted or received the instrument in payment, have made more inquiries as to the signatures and genuineness of the instrument, even of tho drawer or indorscrs themselves; and if he thought lit to rely on the bare representa- tion of tho party from whom he took it, there is no reason why ho should profit by the accidental payment, when the loss had already attached upon himself, and why he should be allowed to retain tho money, when by an immediate notico of tho forgery EdW. 05 514 BILLS OF EXCHANGE AND PEOMISSORY NOTES. * Where a brink pays a forged check or a check that haa upon it the genuine signature of its customer but has been fraudulently altered to a larger sum, it cannot debit the drawer with the sum so paid without authority. 1 But if a bill or check be drawn in so careless and improper a manner as thereby to ena- ble a third person to practise the fraud, the customer, and not the bank, must bear the loss. 3 #~ An * A draft that has not been accepted, and a bank check, should not be paid after notice from the drawer counter- manding the authority, nor after the death of the drawer which is a revocation of the authority. 3 But if the bank pay without 1 Hall v. Fuller, 5 Barn. & Cres., 750; Scholey v. Ramsbottom, 2 Campb., 485; Morgan v. The Bank of the State of New York, 1 Kern. R., 404. 2 Young v. Grote, 4 Bing., 228. A customer of a banker delivered to his wife cer- tain printed checks signed by himself, but with blanks for the sums, requesting his wife to fill up the blanks according to the exigency of his business. She caused one to be filled up with the words "fifty pounds two shillings," the fifty being com- menced with a small letter and placed in the middle of a line ; the figures 50Z 2s. were also placed at a considerable distance from the printed L ; in this state she delivered the check to her husband's clerk to receive the amount, whereupon he inserted, at the beginning of the line in which the word fifty was written, the words " three hundred and," and the figure 3 between the L and the 50, and the bankers having paid the 350Z 2s., it was held that the loss must fall on the customer, on the ground that the person who carelessly furnishes another with the means of committing a fraud must bear the consequences of the act. On the same principle, where it is the custom to deliver out bills left for acceptance to the person who calls for them and describes them by a particular private mark, if the clerk of the party leaving a bill, by his conduct enables a stranger to discover the mark, in consequence of which the bill is delivered out to him, the owner of the bill loses it. Morrison v. Buchanan, C Carr. & R, 18; ante, 438, note. 3 Chitty on Bills, 429, 430. ho is enabled to proceed against all other parties, precisely the same as if payment had not been made, and, consequent!}-, the payment to him has not, in the least, altered his situation, or occasioned any delay or prejudice. It seems, that of late, upon questions of this nature, these latter considerations have influenced the court in determining whether or not the money shall be recoverable back ; and it will be found on examining the older cases, that there were facts affording a distinction, and that upon attempting to reconcile them, they are not so contradictory as might, on first view, have been suspected. The party paying under a mistake of material facts may recover back the amount paid. Chester v. Bank of Kingston, 10 N. Y. Rep., 336. The bank taking a check drawn on another and giving the payee money for it, may recover back the amount from the payee if the check is dishonored, and may do so jaat tli" same where the check is drawn on another branch of the same bank. Wood- laud v. Fear, 90 Eng. Com. Law, 519. PAYMENT. 515 knowledge of the drawer's death, it seems the money cannot be recovered back, and there is no reasonable ground for holding the payment invalid. 1 For the authority of an agent is presumed to con- tinue until terminated by notice brought home to him ; and the bank on which a check is drawn, having funds, is bound to pay the draft The person transferring a negotiable note or draft, whether by indorsement or delivery, impliedly guarantees the title to it, unless the transfer be made under such circumstances as to show clearly that the purchaser took it at his own risk." And hence the person who obtains money or goods on the instrument, or procures it to be discounted, is bound to refund what he has received, in case it proves to be a forgeiy.' But if the transfer is made without in- dorsement, the person transferring it is liable only to his immediate assignee — he is not a party to and is not liable on the bill. 4 The general rule of law is that if a party pay money under a mistake of law he cannot recover it back ; but if he pay money under a mistake of the real facts, and no laches are imputable to him (in respect of his omitting to avail himself of the means of knowledge within his power), he may recover back such money. On this principle it has been held that an indorser, who having been discharged by the laches of the * holder, pays a bill ^_ under a misrepresentation of the facts, is entitled to recover back the money so paid, especially where he has been prejudiced by the laches of the holder. 6 So where the holder of a post-dated check, knowing the drawers to be insolvent concealed that fact and the circumstance of the check's being post-dated, and drew the money on it, with knowledge that the drawees had no funds 1 Tate v. Hilbert, 2 Ves., jun., 118 ; 24 Wend., 210. * Ante, 188, 291; Jones v. Hyde, 5 Taunt., 488; Bruce v. Bruce, 5 id., 495 ; Ellis v. Wild, C Mass., 321; Harris v. Bradley, 7 Ycrg., 310; 2 John. R., 455; 5 Conn. R., 71. * Fuller v. Smith, 1 Car. & P., 197; llerrick v. Whitney, 15 John. R., 240. 4 Ward v. Evans, Ld. Raym., 928 ; Enly v. Lye, 15 East., 7. ' Milnes v. Duncan, G Barn. & Cros., G71. Thero was no direct misrepresentation of tlie facts in this case, but the holder assumed a fad \vhi<0i appeared to bo but was not true. See Chester v. Hank of Kingston, 16 N. Y. Rep., 838. A mistake in certifying a note as paid, thro being in fact not sufficient funds, and a mistake in stamping the note paid on tho strength of the oertifloate, may bo recti- fied on tho same day within timo to protest tho note. Irving Hank v. Wctherald, 31 Barb., 323. 516 BILLS OF EXCHANGE AND PROMISSORY NOTES. of the drawer but were expecting some that day, the party eo pay- ing was allowed to recover back the money paid. 1 Where a person places money in the hands of an agent or banker to pay a particular draft, and the latter by mistake pays another draft of the same description, the party making the deposit cannot recover back the money from him to whom it has been paid. The identical money is not traceable, and there is no privity of con- tract between the depositor and the party receiving payment.' Much less can an action be sustained to recover back the money paid, where the only mistake made consists in the payment of one instead of another draft drawn by the same person and of a simi- lar amount. 3 Where the holder of a note or bill has made a general assign- ment for the benefit of his creditors, or where his property has been transferred by operation or due process of law, or where he has become or been legally declared incompetent for the transaction of business, the maker or acceptor knowing the fact should be careful to make payment to the party entitled to receive it. 4 If the holder die, payment should be made to his personal represen- tatives ; ' and if he become * insane, it should be made to his committee or guardian. 8 In other words, while the general rule is that the payment should be made to the party having the property in the bill or note, or to his agent, it should not be made to a person who has not the legal capacity to release or discharge the contract. At what time. In respect to the time when a bill or note should be paid, it is to be observed that payment means payment in due course, and not by anticipation ; and that if a negotiable note or bill of exchange be paid before its maturity, and not surrendered, and afterwards come into the hands of a bona fide holder, it is a 1 Martin v. Morgan, 3 Moore, 635. The mistake of an indorser who pays a bill after having been discharged by the laches of the holder, does not give him any rem- edy against a prior indorser discharged by the same neglect. Roscoe v. Hardy, 12 East, 434. 3 Rogers v. Kelly, 2 Campb., 123. 1 Bogart-v. Nevius, 6 Serg. & Rawle, 3G1; Dey v. Murray, 9 John. R., 171. 4 Wilson v. Allen, 6 Barb., 542; 4 Denio, 80; 1 Sand., C20; 4 Paige, 479; Kelly*. Cowing, 4 Hill, 266; Clark v. Yale, 12 Wend., 470. *Chittyon Bills, 394. • Leonard v. Leonard, 14 Pick., 280. PAYMENT. 517 valid security in his hands. 1 In a case presenting this state of facts, Lord Ellenborougii says : " Had the bill been due before it came into the plaintiff's hands, he must have taken it with all its infirmities. In that case, it would have been his business to inquire minutely into its origin and history. But receiving it before it was due, there was nothing to awaken his suspicion. I agree that a bill paid at maturity cannot be reissued, and that no action can afterwards be maintained upon it by a subsequent in- dorsee. A payment before it becomes due, however, I think does not extinguish it any more than if it were merely discounted. A contrary doctrine would add a new clog to the circulation of bills of exchange and promissory notes ; for it would be impossible to know whether there had not been an anticipated payment of them. It is the duty of bankers to make some memorandum on bills and notes which have been paid ; but if they do not, the holders of such securities cannot be affected by any payment made before they are due. While a bill of exchange is running, it remains in a negotiable state. I cannot limit its negotiability the last few days before it becomes due, more than the first few days after it is drawn." 3 _ ,„ *The reason here assigned why a bill or note should not 519 . be paid before its maturity, would not apply where the maker or acceptor took up and canceled the paper; for in such a case it could not afterwards come into the hands of a bona fide holder. But there is still another reason why negotiable paper should not be paid until its maturity: if paid before, contrary to 1 Ayer v. Hutchinson, 4 Mass. R., 372; White v. Kibling, 11 John. R., 128; David v. Miller, 14 Graft., 1. * Burbridge v. Manners, 3 Camp., N. P. R., 193. In White v. Kibling, supra, tho indorsee took the note before maturity with notice of a previous payment, and it was held that he took it subject to such payment. In Brown v. Davis, 3 Term R., 80, tho question was, whether a payment before the indorsement, and after the note fell due, could be proved, and it was holdcn that it might. In Churchill v. Suter, 4 Mass., 161, Parsons, Ch. J., says, " The circulation of negotiable paper is extremely useful to trade, aa it multiplies commercial credit, and the notes pass from man to man as cash. Any rule of law, tending uuuecessarily to repress this circulation, is thereforo against public policy." A premature release of the acceptor of a bill, will bavo no effect upon the right of the indorsee to recover thereon, unless notice thereof is brought home to him, that is Jb say, unless ho took tho bill with notice. Dodd v. Edwards, 2 OaiT. ft Payne, 602. The party taking paper that is overdue, i pre umed to take it with notice; Iiowen v. Thrall, 28 Vt., 382; 29 id., 82; subject to prior payments thereon; Bond v. Fitz- patrick, 1 Gray (Mass.), 89; actual notice has tho same effect. Otis v. Adams, 41 Maine, 258; 18 111., 392. 518 BILLS OP EXCHANGE AND TKOMISSORY NOTES. the usual course of business, the party paying will be held bound to take more than ordinary care that the payment be made to the true proprietor. Thus, if a check be paid the day before it bears date, and it turn out to have been lost and paid to the wrong person, the banker may be compelled to pay it again to the true owner. 1 The acceptor of a bill, whether inland or foreign, and the maker of a promissory note, should pay it on demand made at any time within business hours on the day when it becomes payable ; and if it be not paid on such demand, the holder may instantly treat it as dishonored. 3 But the maker or acceptor has, as we have seen, the whole of that day in which to make payment ; and though he should in the course of the day refuse payment, and thus entitle the holder to give notice of dishonor, still if he makes payment afterwards and on the same day, it will be sufficient, and will render the notice of dishonor of no avail. 3 The engagement of the indorser being an undertaking that the note or bill shall be paid at maturit}^, he of course becomes liable to an action as soon as the credit given to the maker or acceptor has expired.* * How made. Payment of negotiable notes and bills must always be made in money. 6 If drawn payable in any thing else, they are not negotiable, and are not governed by the rules applicable to the payment of negotiable paper. For instance, a note made by a farmer payable in farm produce, without specifying any time or place of payment, is payable on demand made at the farm of the debtor; and in an action against the maker, it is necessary to show a refusal to pay on such demand. 8 The same principle applies where a merchant gives his note payable in goods, or a mechanic gives his due-bill payable in work ; the goods must be demanded of the merchant at his store, and the work must be required of the mechanic at his shop. 7 1 Da Silva v. Fuller, cited by Chitty on Bills, 260, 395. The bank that pays a check prematurely, does not thereby appropriate the drawer's funds ; it is a payment without authority. Goodin v. Bank of the Commonwealth, 6 Duer, 7G; Parsons v. North, 13 East, 51G; Brewster v. McCardlo, 8 Wend., 478. 2 Eaynes v. Birks, 3 B. & P., 599; 4 Term R., 170. 5 Osborne v Moncure, 3 Wend., 170 ; 2 Cowen, 166. Mr. Bylcs on Bills, 175, states the rule with the same qualification. See 6 Watts k Serg., 179. 4 Signers v. Lewis, 2 Dowl. P. C, 181; 1 Crom., M. & Etta, 370; 4 Tyrw., 847. 6 Howard v. Chapman, 4 Car. & Payne, 503. • Lobdell v. Ilopkins, 5 Cowen R., 516; Wilmouth v. Patton, 2 Bibb (Ken.) R, 280; Mason v. Brings, 16 Mass., 453; Campbell v. Clark, 1 Hemp., 67. 7 5 Cowen, 518; Rice v. Churchill, 2 Denio, 145. PAYMENT. 519 It frequently happens in the ordinary course of business that the holder of negotiable notes and bills of exchange, or his agent, takes in payment checks or bank bills in lieu of money ; indeed, it would be quite impracticable to act uniformly upon the principle of demanding strictly what the law allows, namely, payment in money. And yet there is no absolute safety in anything short of that. If the holder takes payment in bank bills, it may turn out that the bank has failed ; and if he takes a check it may be dishonored. Suppose then the holder of a note, on its becoming due, takes the check of a third person and surrenders the note, expecting to receive the money on the check, is this a payment of the note ? The law answers, no ; it is not a payment unless expressly received as such, or unless the circumstances clearly show that such was the understanding of the parties. 1 Nevertheless, taking the check imposes upon the party receiving it the duty of using diligence to obtain the money on it; and if he be guilty of laches in this respect, whereby the * drawer is injured, it will operate as a payment and discharge. 8 Moreover, where there are indorsers on the note surrendered, the taking of a check may ope rate prejudicially to the holder; for when the indorser is called upon to pay, he has a right to demand a delivery of the note. Hence it is not advisable to accept a doubtful or uncertified check in payment of a bill or note, though it does not operate as' an extinguishment of the indebtedness. 3 Suppose, again, the holder of a note or bill takes bank bills in payment, and it turns out that the bank issuing them had failed before they were received ; is this such a payment as will extin- guish the liability of the party making it? According to the decisions of this state, the answer is, it will not. 4 Such bills are often of no more value than forged or counterfeit bills ; and it is well settled that these are no payment, unless the party receiving neglects to return them without any unnecessary delay. 6 It is a 1 Olcott v. Rathbono, 5 Wend., 490; Keen v. Dufrcsne, 3 Serg. & Rawlo, 233 ; Rus- sell v. Hankley, 6 Term R., 12 ; 9 John. R., 310; M' In tyro v. Kennedy, Childs & Co., Amer. Law Reg., 433; May No. of 1857; ante, 193, 194. 1 Cromwell v. Wing, 1 Hall, 56; ante, 198-200. * Ward v. Evans, 12 Mod., 521 ; 2 Show., 395 ; Powell v. Roeho, cited by Chitty, 6 Esp., 70. * Lightbody v. Ontario Co. Bank, 11 Wend. R., 9; Bee, also, tho cases there cited; ante, 205-207. » 2 John. R., 455; Thomas v. Todd, C Hill R., 340. In Scruggs v. Gass, 8 Yerg., 175, it was held that payment made and received In tlie notes of a bank that had failed, but was supposed to be good, is valid. See, also, 2 Porter, 280 ; ante, 200. 520 BILLS OP EXCHANGE AND PEOMISSOKY NOTES. case of mistake by both parties — the one paying and the other receiving a bank bill, supposing it to be good and genuine, when, in truth, it was the bill of a broken bank or counterfeit. The custom of merchants requires that the holder of a bill shall present the instrument, at its maturity, to the acceptor, demand payment, and, upon receipt of the money, deliver up the bill;' if he departs from this custom, and especially if he takes a draft on a banker, or any other security, whereby the time of payment is extended, though only till the next morning, the drawer and # indorsers will be discharged. But *if the time of payment is not extended and the holder retains possession of the bill, so that he is ready to surrender it on payment to the drawer or indorser, and the demand, protest and notice are made and given in due time, there is no reason why the taking of a check on a bank as a means of obtaining the money on the bill, should operate to discharge any of the parties thereto. 3 On the same ground the receipt of bank bills in payment of a note or bill would operate as a discharge of the drawer and indor- sers, notwithstanding the bills received instead of money were absolutely valueless, in case of any delay in the time of demanding payment, or other conduct of the holder by which the drawer or indorser is deprived of the opportunity of paying and taking up the note or bill, and having immediate recourse thereon to the parties liable to him.' Bank bills are not money, though they circulate as such in the ordinary transaction of business, by the mutual consent of the parties delivering and receiving them in payment. As between the holder and the maker of a note or the accep- tor of a bill, the same principle applies as in the case of any other indebtedness ; and it is well established that the taking of a note or draft or check is no payment, unless the parties make it such 1 Hansard v. Robinson, 7 Barn. & Cres., 90. This case decides that an indorsee cannot recover against the acceptor, at law, without producing and surrendering the bill, though the bill be lost after its maturity. 8 Barb. R., 408. 2 Story on Bills, §119, seems to express a contrary opinion. But Mr. Chitty says, "Payment is frequently made by a draft on a banker; in which case, if the person receiving the draft do not use diligence to get it paid, the person from whom he received it, and every other party to the bill will be discharged, but not otherwise, unless the holder expressly agreed to run all risks ; for a banker's check is not money." 8 Ontario Bank v. Lightbody, 13 Wend., 101 ; Story on Notes', § 502. An agreement betwesa the holder and maker of a note, making the receipt of bank bills operate as payment in the place of money, manifestly can have no effect whatever upon the con- tract of the indorser. *553 PAYMENT. • 521 by express and positive agreement. 1 A note of the debtor, though receipted as cash, is not an absolute payment; nor is the note of a third person, unless it be expressly accepted as payment. 1 But the creditor receiving *a draft drawn by his debtor on a third person, may make it his own by his laches, or by taking some other security in its stead. 3 When bills are taken in payment of a debt, and the creditor sues on the original consideration, payment of the bill will be presumed until the contrary appear. 4 And when a creditor takes from his debtor a check on a bank or a negotiable note, he cannot recover on the original consideration without showing the cheek to have been dishonored, or surrendering the note to be canceled. 6 A check drawn payable to the order of the creditor and indorsed by him, produced by the debtor, is evidence of the payment of so much money ; 6 and proof of the delivery of the check to him in payment of the debt, though payable to bearer, and the production of it by the drawer will raise the presumption that the person to whom it was delivered received the money on it. 7 At common law, where the payee or holder of a promissory note or bill of exchange appoints the maker or acceptor his exe- cutor, the debt is discharged ; and therefore no action at law can be maintained on the note or bill, even by a person to whom the acceptor has indorsed it. 8 But in equity the executor is account- able for the amount of his debt as assets, in case it is required for the payment of the creditors of the deceased ; if not so required the debt is discharged.' The creation and acceptance of the trust 1 5 John. R., GS; 7 id., 311 ; 9 id., 310; 15 id., 22-1; 8 id., 389: G Barb., 24 1 ; 5 W.nd., 490; 5 Deuio, 360; 3 Comst, 1G8; 7 Abbt., 259 ; Berry v. Griffin, 10 Md., 27. s Tobey v. Barber, 5 John. R., G8. Such a receipt may be explained or even con- tradicted. St. John v. Purdy, 1 Sand. R.. 9; 5 Wend., 85. ' Southwick v. Sax, 9 Wend., 122; Nixsen v. Lyell, 5 Hill, 4GG; White v. How- ard, 1 Sand. R, 81 : 23 Wend., 315. 4 Duflield v. Creed, 5 Esp. R., 52; Miller v. Ritz, 3 E. D. Smith, 253. * nolmes v. D'Camp. 1 John. R.. 34; 10 id., 104; 15 id., 217; Perce v. Davis, 1 Mood. & Rob., 3G5 ; or the check of another; Melutyre v. Kennedy, 29 Penn. State, 448. The bank stamp paid on a check may bo explained, by showing that it was mad* by mistake. Seott v. Betts, Hill & Denio, 3G3. * Egg v. Barnet, 3 Esp. R., 19G. T Aubert v. Welsh, 4 Taunt., 293 ; 4 Esp. R, 9. * Freakley v. Fox, 9 Barn. & Crcs., 130; Berry v. Usher, 11 Vcs., 87. The rulo is different under the statutes of this state. T Story on N I I ; Marvin v. Stone* 2 Cowen,'781 ; Decker v. Miller. 2 Paige Ch. R., L49; Gardner v. Gardner, 7 id., 112; 22 Wend., 52G. Edw. G6 622 BILLS OF^ EXCHANGE AND PROMISSORY NOTES. operate as a release or extinguishment of the debt, or the action for it, upon the ground that such must have been the intention of . the testator ; because, by making the debtor an executor, he vol- *~k± imtar ^y * destro} r s the only remedy or means by which the debt can be collected. And the consequence is the same, if the debtor is a co-executor with others; for one executor can- not sue another. 1 In this state, it is provided by statute that the naming of any person executor in a will shall not operate as a discharge or be- quest of any just claim or debt due from him to the testator.' Application of payments. If a debtor owe his creditor several debts upon distinct causes, and pays him a sum of money, he (the payer) has a right to say to which debt or debts the money shall be appropriated, provided he directs this at the time of pay- ment ; but if he does not so direct, the creditor may apply it as he pleases. 3 "Where there are two demands, and the debtor pays a sum exactly equal to one of them, it will be considered as having been paid in discharge of that. 4 If one be due, while the other is not, the payment applies to the former. 6 In respect to indefinite payments, there are numerous and con- flicting decisions. In a case of considerable interest, decided in this state, Chancellor Walworth states the law on the subject in these terms : Some of the fundamental principles of the civil law appear to have been adopted everywhere, and to admit of no doubt : 1. If both debts are due at the time of the partial payment, the debtor is at liberty to apply the payment to which he pleases, if his intention is manifested at the time of the payment ; subject to # this restriction, * however, that the creditor is not obliged to receive a partial payment of any particular debt, of which the whole is due at the time the offer of payment is made. 1 Per Sutherland, Justice, in Marvin v. Stone, supra. The qualification to the rule is based on this reason ; the law will not allow a voluntary release to deprive credi- tors of their just claims. 8 R. S., 146, 3d ed. ' Mann v. Marsh, 2 Caines' R., 99 ; Edwards on Bailm., 233 ; Reed v. Boardman, 20 Pick., 441; Mitchell v. Dull, 4 Gill & John., 3G1; Logan v. Mason, 6 Watts & Serg., 9; Washington Bank v. Prescott, 20 Pick., 339; Van Rensselaer v. Roberts, 5 I'enio, 470 ; Sherwood v. Ilaight, 26 Conn., 432. * Robert v. Garnie, 3 Caines' R., 14; Stone v. Seymour, 15 Wend., 19. 1 Bacon v. Brown, 1 Bibb, 334; Seymour v. Sexton, 10 Watts, 255; McDowell v Canal Co., 5 Mason, 11. PAYMENT. 523 2. Where the debtor neglects to manifest his intention as to the ap- plication of the payment, at the time it is made, the creditor may, at the time he receives the money, apply it to which debt he pleases, unless the debtor objects; the creditor manifesting his intention at the time, either in the acquittance which he gives, or in some other way. 3. If a partial payment is made, on account of debts, one part of which consists of the principal, and the other of interest or compensation due for the use of the capital of such debts, so much of the payment as is necessary to satisfy the inte- rest, or arrears then due, shall be first applied for that purpose, and the residue only shall go to reduce the amount of the principal debt These rules prevailed in the Roman or civil law, and are now the settled law of France, Spain, Holland, Scotland, England, and the United States." l There is a class of cases in which the courts have shown a dis- position to make the application of payments, unappropriated by either party, upon principles of equity, with a view to all the cir- cumstances, without laying down any settled and uniform rule." 1 Stone v. Seymour, supra, and authorities there cited. The Chancellor cites, with approbation, the principle laid down by Chief Justice Marshall, in Field v. Holland, 6 Cranch, 27, that the debtor, by omitting to make the application himself, tacitly sur- renders the right to the creditor, and enables him to apply the payment in such man- ner as he shall think proper, provided such application is not inequitable ; and that if he omits to make the appropriation, the court upon whom the exercise of the power devolves, should make the application upon equitable principles. See, also, Cow- perthwaite, v. Sheffield, 1 Sand. R., 41G, where the opinion of the Chancellor is quoted with approbation. 5 Mills v. Fowkcs, 7 Scott's R., 44-1 ; 5 Bing. N. C, 455. Where a creditor has two several demands against his debtor, one barred by the statute of limitations, and the other not, a part payment, to take the case out of the operation of the statute, must be expressly made on account of the older debt. But, in* me absence of any express appropriation by the debtor, at the time of making it, the creditor is at liberty to appropriate the payment towards satisfaction of that portion of the debt which the statute would bar. Tixdal, C. J., declares, in this case, that the rule of the civil law, to apply a payment to the most burdensome debt, is not recognized by the common law, and Chat where both of the parties omit to make the appropriation, the law applies the payment to the earlier items in the account; and cites Goddard v. Cox, 2 Str., 1194, and several other cases. Philpott v. Jones, 2 Ad. & E., 41. In this case, where the creditor had two de- mands, one a legal and collectible debt, and the other for spirits on which the law him no cause of action, and the debtor made a general payment without specify- ing on which account, it was held that the creditor lias a right to apply it to the payment of the last mentioned debt. Contra, 11 N. llamp., 4.'il ; and Rohan v. Han- son, 1 1 Cush., 41. In Peters v. Anderson, 6 Taunt., 500, where two debts were due to tho plaintiff, one on a covenant, tho other on a simple contract, and payments had been made 52-i BILLS OF EXCHANGE AND PROMISSORY NOTES. * Where there are no special circumstances shown, calling for equitable consideration, and general payments are made that are not applied by either party, the law will make the appli- cation ; and in doing so, will apply the payment to the extinguish- generally on account, the plaintiff was permitted to ascribe those payments to the defendant, for which he had the worse security. The same rule was held in Bosan- quet v. "Wray, 6 Taunt., 597, where the creditor was permitted to apply a general payment to the discharge of a prior purely equitable debt, and sue at law for tho later legal debt. Smith v. Loyd, 11 Leigh (Virginia) R., 512. Where there are several debts duo from the debtor to the creditor, and general payments are made without specifying on which account, and no appropriation is made by the creditor, there is no settled rule of application ; and the court, in such a case, will apply the payments according to the justice of the particular case, with a view to all the circumstances ; if the debts are all due, the payments are to be applied so as to extinguish the debts according to priority of time. Decided in 1841. Merrimack Co. Bank v. Brown, 12 N. Hamp., 321. The principles of equity respect- ing the application of payments are recognized in proceedings at law, as far as the nature of the proceedings will admit. And where the creditor holds a mortgage to secure two or more notes, on some of which the mortgagor is principal alone, while on one he is a joint principal with another person, the creditor cannot apply the pro- ceeds of a sale under the mortgage, in payment of the whole of the joint note, to the prejudice of the sureties on the other notes. The law, in this case, applies the mort- gaged property to the payment of the debt of the mortgagor. Decided in 1841. In Moss v. Adams, 4 Iredell's Eq. R., 42, there being payments made on different accounts, but no appropriation of them by either party, the court applied them to that debt for which the creditor's security was most precarious. The same rule was acted on in Jones v. Kilgore, 2 Rich. Eq. R., 63; see, also, Baine v. Williams, 10 Smedes A Marsh., 113. In this state where payments on a running account are not specifically applied by the parties, equity will apply them to the earliest items, even though the creditor haa security for those items, and none for the later ones. Truscott v. King, 2 Selden R., 147. TJpham and others v. Lefavour, 11 Met., 174. The rule that payments are to be applied to the earliest items of debt, does not apply where the creditor having the right to do so actually makes a different appropriation; and the creditor may apply a payment to a debt that is not secured where he is not prohibited from doing so by any established rule of appropriation. Decided in 1846. Caldwell v. Weutworth, 14 K Hamp., 431. If a debtor pays money on an illegal demand, such as a demand for spirituous liquors illegally sold, ho cannot afterwards insist upon the payments being applied to a legal debt duo to the samo person ; but where he makes no application the payment will bo applied to the lawful instead of the unlawful debts. Decided in 1843. Postmaster General v. Furber, 4 Mason R., 333. WTicrc there is a running account, and payments are made upon it, they are to bo applied to extinguish antecedent items on the debit side. It is tho first item on tho debit sido of the account that is dis- charged or reduced by the first item on the credit sido. Tho samo rule waa applied in Aliston v. Contee, 4 Harr. & John., 351. PAYMENT. 525 ment of the oldest debt. 1 If the intention of the party entitled to make the application can be ascertained, or fairly inferred from the facts disclosed, it has been held in one case that the applica- tion should be made according to such presumed intention ; and this is certainly good law where the intention has been evidenced in due time by some act of the * party. 3 Otherwise it is no more than sajdng that the application shall be made for the °° benefit of one or the other of the two parties, in the discretion of the court If the understanding of both of the parties can be ascertained, the application becomes a matter of agreement, and no longer requires a judicial appropriation ; so if the debtor declares on what account the payment is made, or if he waives that right, and the * creditor applies the payment to either of the . . *55S accounts, it is no longer open for controversy. In making the application of general payments the creditor is bound to respect the rights of a surety. For instance, if the creditor holds a mortgage as security for the payment of several 1 Faircliild v. Holly, 10 Conn. R., 175: The United States v. Kirkpatrick, 9 Wheat., 720; Meggot v. Mills, 1 Ld. Raym., 28G; Simson v. Ingham, 2 Barn. & Cres., C5 Clayton's case, 1 Meriv., 584. G10; Brooke v. Enderly et al., 2 Brod. & Bing., 70 4 Mason R., 333; 4 Ilarr. & John. R., 351; Truscott v. King, 2 Selden R., 147 Tierce v. Sweet, 33 Penn. State, 151 ; dishing v. Wyman, 44 Maine, 121. 2 Bank of Portland v. Brown, 22 Maine R., 295. In the case of an involuntary payment, the debtor has no right to direct how the payment shall be applied. " Arc- there any facts in this case from which we can infer what must have been the inten- tion of the plaintiffs, as to the application of the payment obtained by them ? The four thousand dollar note was due to the plaintiffs absolutely. The two thousand and eighty dollar note, indorsed by the defendant, and on which this action is brought, was held by them as collateral security merely. Now other considerations being equal, and it does not appear that they were not, it would seem to bo presumable that the plaintiffs would apply the payment in the first instance to a not'' absolutely due to them, rathor than to one transferred to them as collateral security only. We ar ■, Hi irefor ■. led to the conclusion that the plaintiffs are entitled to recover." There being no direct application of payments, they are to be appropriated according presumed intention of the parties, to be collected from all the facts. Chitty r. Naish, 2 DowL P. C, 511; Brazier v. Bryant, 3 id., 477. Emery v. Tickart, 3 Vt., 15. When payments are not applied by the payer at the time, i.or by the payee afterwards, the court are to make the application, according to the understanding of the parlies, when that can he ascertain! >i' fact, and determined by the jury upon the evidence, under the direction of the court. * 559 526 BILLS OF EXCHANGE AND PROMISSORY NOTES. notes, one of which is made by the debtor and a third person jointly, and two of which are guaranteed by a surety, he cannot appropriate the proceeds of the mortgaged premises to the pay- ment of the joint note solely. 1 But when a bond is given for a public officer, conditioned that he shall faithfully pay over such moneys as may come into his hands in that capacity, the surety cannot require that subsequent payments shall be applied to the credit of his principal on a former term, to the prejudice of sure- ties on a new bond. 1 And in all such cases, where the parties themselves have omitted to make any specific appropriation of payments, the law will appropriate them according to the justice and equity *of the case, for the benefit of both parties, including sureties and guarantors. But as a general rule, an}- application made by the party, entitled at the time to make such application, is binding upon all the parties. 3 Where a person is indebted individually and also jointly with another, to the same man, on two separate accounts, and pays money to him without specifying on which it is to be applied, the creditor is at liberty to apply the payment, other things being equal, to the joint or several debt, as he may choose.' 4 But when there are distinct demands, one against persons in partnership, and another against only one of the partners, if the money paid be the money of the partners, the creditor is not at liberty to apply it to the payment of the debt of the individual ; that would be allow- ing the creditor to pay the debt of one person with the money of others. 5 When a person has two demands, one for goods sold recognized by law, the other arising on a usurious loan forbidden by law, and an unappropriated payment is made to him, the law will af ter- 1 12 N. Hamp., 321; see also Cage v. Her, 5 Smedes & Marsh., 410; and Donally v. Wilson, 5 Leigh, 329. a 15 Wend. R., ID. ' Allen v. Culver, 3 Denio, 284. In this case the creditor holding a guaranty for the payment of rent, and having another account with his tenant, included the rent in the account rendered, and it was held that the guarantor was entitled to insist upon the appropriation so made. Once legally made, the application binds both parties. Thayer v. Denton, 4 Mich., 192 ; Chancellor v. Schott, 23 Penn. State, G8. * Yan Rensselaer's Ex'rs v. Roberts, 5 Denio, 470; Baker v. Stackpole, 9 Cowen, 420, 436. 6 Thompson v. Brown, 1 Moody & Malkin, 40 ; Jones v. Perkins, 29 Miss. ( 7 Cush-X 139. PAYMENT. 52? wards appropriate it to the demand which, it acknowledges, and not to the demand which it prohibits. 1 There is, however, a clear distinction between an illegal debt and one that has been barred by the statute of limitations ; for in respect to the latter, it is held that the creditor may appropriate a general payment to such a demand, and the rule of law is to appropriate such payments to the earliest debt. 4 On the same principle, the creditor is permit- ted, in England, to apply a general payment on an unstamped bill * of exchange, notwithstanding he holds another # stamped bill on which the law gives him a right of action. 3 There are cases in which the creditor, having an election in respect to the appropriation of payments and exercising it, is held to waive a right secured to him by law ; as when a firm holds a bond as security for advances to be made for a correspondent, and one of the firm dies, leaving a balance due secured by the bond, and the survivors take in a new partner and continue the same account with the correspondent until the latter has advanced a sum sufficient to cancel the original indebtedness, while incurring a further indebtedness ; by this appropriation of subsequent pay- ments the bond is discharged.' 1 1 Wright v. Laing, 3 Barn. & Cres., 165. See the case put by Ch. J. Abbott, illus- trating the principle of appropriation applicable to such circumstances. Rohan v. Han- son, 11 Cush. (Mass.), 44. 8 Mills v. Fowkes, 7 Scott's R., 444; 5 Bing. N. C, 455. * Biggs v. Dwight, 1 Man. & Ry., 308. But in this case there was evidence from which an agreement between the parties so to apply the payment, might have been inferred. 4 Bodenham v. Purchas, 2 Barn. & Aid., 39. A bond was gi^en to the several per- sons constituting the firm of a banking house, conditioned for the repayment of tho balanco of an account, and of such further sum as the bankers might advance to tho obligor ; one of the partners dies, and a new partner is taken into tho firm ; at that t.me a considerable balance is due from the obligor to the firm; advances are after- wards made by the bankers, and payments made to them on account, by tho obligor ; tho latter is credited by the new firm with the several payments, and charged with tho original debt and subsequent advances as constituting items in one entire account, and the ba'lance duo at the time of the partner's death is considerably reduced, and that reduced balance, by order of the obligor is transferred by the bankers to tho account of another customer, who, with his assent, is charged with the then debt of the obligor. The person so charged having become insolvent, the surviving partners of the origi- nal firm brought their action .upon the bond. Held, that as they had not originally treated it as a distinct account, but had blended it in the general account with other transactions, they were not at liberty so to treat it at a subsequent period; and that having received in different payments a sum more than sufficient to dischargo tho debt due upon tho bond at tho time of tho death of tho deceased partner, the bond was to bo considered as paid. Baylky, J.: "I cannot distinguish thi3 in principlo from 528 BILLS OP EXCHANGE AND PROMISSORY NOTES. ^. *But the election or appropriation by the creditor is not made by an entry in his own private books, and is not lost to him in such a case until notice of the appropriation has been communicated to the opposite party. Thus, for example, a bond was given by country bankers to the several persons constituting the firm of a London banking house, conditioned for remitting money to provide for bills, and for the repayment of such sums as the London bankers might advance on account of persons consti- tuting the firm of the country banking house, or any of them, associated or not with other persons. One of the partners in the country bank died, a considerable balance being then due to the London bankers. It was the course of business between the two houses for the London bankers to send in to the country bankers monthly accounts of receipts and payments. In the month fol- lowing the death of the deceased partner, the London bankers received sums in payment more than sufficient to discharge the balance then due ; but during the same time they advanced money on account of the country bankers to an equal amount. In the first instance the London bankers entered in their books all receipts and payments made after the death of the deceased partner to the account of the old firm, but they did not transmit any account to the country bankers until two months after the death of the deceased partner, and then they transmitted two distinct accounts ; one the account of the old firm, made up to the day of the death of the partner ; and another, a new account, containing all pay- ments and receipts subsequent to that time : Held, that the entries in the books of the London bankers did not amount to a complete appropriation by them of the several payments to the old account, such appropriation not being complete until it was communicated to the party to be affected by it; and therefore that the London bankers, notwithstanding these entries, were entitled to apply the payments received subsequently to the death of the deceased part- ner to the debt of the new firm. 1 1 Simson v. Ingham, 2 Barn. & Cres., 65. Clayton's case. The decisions in the courts of law do not break in upon the distinc- tion there taken. The principle established by thoso decisions is this, that where there are distinct accounts and a general payment, and no appropriation made at tho time of such payment by the debtor, the creditor may apply such payment to which account he pleases; but where the accounts are treated as one entire account by all parties, that rule does not apply." Abbott, J. : ,; Presumably it is the sum first paid in that is first drawn out. It is the first item on the debit side of the account which is dis- charged or reduced by the first item on the credit side." See Clayton's case, 1 Mer., 572. PAYMENT. 529 The same doctrine has been held in this state. Thus, where 562 lhe purchasers of certain leased premises brought an " :f action , against the defendant as guarantor of the covenants con- tained in the lease, and sought among other things to recover the rent thereof, and it was shown that the plaintiffs having other dealings to a large amount with the tenant, kept with him a run- ning account in which the rent was regularly charged as it became payable, and that no demand for the payment of the rent was made in any other way, it was held that the rendering of an account current containing such charges for rent amounted to an election on the part of the plaintiffs to appropriate the credits therein to the payment of the debit side of the account in the order of time in which the items were charged. 1 An election once made and communicated to the opposite party, is binding upon the party making it. So where one of the several partners dies, and the partnership is in debt, and the surviving partners continue their dealings with a particular creditor, and the latter joins the transactions of the old and the new firm in one entire account, the payments made from time to time by the surviving partners must be applied to the old debt ; for here it is to be presumed that all the partners have con- sented that it should be considered as one entire account, and that the death of one of the partners has produced no alteration whatever. 2 * Where the drawer of a bill accepted for his accornmo- # dation, procures it to be discounted by his bankers, and 1 Allen v. Culver, 3 Dcnio, 284. a Per Mr. J. Bayley, 2 B. & ft, 72. The continuance of the account is a mode of consenting that the credits shall be applied in payment of the debits in the order aa charged and credited. Strange and others v. Lee, 3 East, 485. Where a bond by A. reciting that B. in- tended to open a banking account with C. D. and E. as his bankers, was conditioned for payment to them of all Bntns from time to time advanced to B. at tin: banking house of C. D. and E. IMd, that on C.'s death such obligation ceased, and did not cover future advances made after another partner was taken in: and that I'... who was Indebted to the house at C.'s death, having afterwards paid off the balance which was applied at the time to the old debt incurred in C.'s lifetime, A. was wholly discharged from his obligation. Decided in 1803. Williams v. Griffith, 5 Mce. & Wels., 300. Where in an i etion C'0. * Myers v. Well.'.-:, 5 Hill R., 463, and 1-VIIows v. I'rentiss, .'! Denio, .012. * Story on Notes, § 411 ; Ohitty on Hills, 408-411 An agreement rntdc by the holder of a bill, with a stranger, to give the acceptor lime, the stranger agreeing to see it paid, and time being given, does not discharge the drawer. Krazcr v. Jordon, 92 Eug. Com, Law, 303. 534 BILLS OF EXCHANGE AND PEOMISSOKY NOTES. them all ; and hence the inclorser is said to be in the nature of a surety. So that when the holder enters into an agreement with the maker or acceptor, founded on a good consideration, giving him time for payment, the contract operates as a release of the ^. drawer and indorsers. 1 But a contract not *based upon a valid consideration, does not have the effect of a release ; for delay under such a contract is, in the eye of the law, merely gratuitous. 2 1 7 "Wend., 290 ; 17 "Wend., 501 ; Gould v. Robson, 8 East R., 576; Philpot v.Briant, 4 Bing. R., 717. The acceptor died before the bill became due, and his executrix asked for time and promised, verbally, in that case, to pay the bill out of her own income, and time was given without the knowledge or consent of the drawer, who was the defendant. Best, C. J. : "A creditor, by giving further time for payment, undertakes that he will not, during the time given, receive the debt from any surety of the debtor, for the instant that a surety paid the debt he would have a right to recover it against his principal. The creditor, therefore, by receiving his debt from the surety, would indirectly deprive the debtor of the advantage that he had stipu- lated to give him. If the creditor had received from his debtor a consideration foi the engagement to give the stipulated delay of payment of the debt, it would be injus- tice to him to force him to pay it to any one before the day given. If, to prevent the surety from suing the principal, the creditor refuses to receive the debt from the surety until the time given to the debtor for payment, by the new agreement, the surety must be altogether discharged, otherwise he might be in a situation worse than he was in by his contract of suretyship. If he be allowed to pay the debt at the time when he undertook that it should be paid, the principal debtor might have tho means of repaying him. Before the expiration of the extended period of payment, the principal debtor might have become insolvent. A creditor, by giving time to tho principal debtor, in equity, destroys the obligation of the sureties ; and a court of equity will grant an injunction to restrain a creditor who has given further time to the principal, from bringing an action against the surety. This equitable doctrine courts of law have applied to cases arising on bills of exchange. The acceptor of a bill of exchange is considered as the principal debtor ; all the other parties to the bill are sureties that the acceptor shall pay the bill, if duly presented to him on the day it becomes due, and if he does not then take it up, that they, on receiving notice of its non-payment, will pay it to the holder. If the holder gives the acceptor further time for payment, without the consent of the drawer or indorsers, he discharges them from all the liability that they contracted by becoming parties to the bill; but delay in suing the acceptor will not discharge the drawers or indorsers, because such delay does not prevent them from doing what, on receiving notice of non-payment by the acceptor, they ought to do, namely, pay the bill themselves. The time of payment must be given by a contract that is binding on the holder of the bill : a contract, with- out consideration, is not binding upon him ; the delay in suing is, under such a contract, gratuitous ; notwithstanding such contract, he may proceed against the acceptor when he pleases, or receive tho amount of the bill from the drawer or indorsers. As the drawer and indorsers are not prevented from taking up the bill by such delay, their liability is not discharged by it ; to hold them discharged under such circumstances, would be to absolve them from their engagements without any reason for so doing." * Philpot v. Briant, 4 Bing. R, 717; McLemore v. Powell, 12 "Wheat. R, 554; 1 Bos. & Pull., C52 ; Walsh v. Bailey, 10 John. R., 180. PAYMENT. 535 The holder, says the court, has the dominion of the bill at the time ; he may make what arrangements he pleases with the acceptor ; but he docs that at- his peril ; and if he * thereby alter the situation of any other person on the bill to the prejudice of that person, he cannot afterwards proceed against him. As to the taking part payment, no person can object to it, because it is in aid of all the others who are liable upon the bill : but hero the holder did something more: he took a new bill from the acceptor, and was to keep the original bill until the other was paid. This is an agreement that in the meantime the original bill should not be enforced : such is at least the effect of the agreement ; and therefore I think time was given." 1 The agreement to give time has the same effect whether made before or after the drawer or indorser has been charged with notice of non-payment." But most of the cases presenting the question, have been decided in reference to contracts extending the time of payment made after the bill or note became due. 3 It is manifest, however, that the principle applies with equal if not superior force to contracts giving time to the maker or acceptor before the drawer and indorsers have been charged with notice. In like manner, a contract made with the drawer of a bill or with the prior indorser of a note or bill, will have the effect to discharge all subsequent indorsers; 4 but will not operate as a 1 Gould v. Robson, supra; Hill v. Bostick, 10 Yerg., 410; 5 Hill, 463. The payee and first indorser of a note, at its maturity gave his own note in renewal, •Jidorsed and secured by a pledge of stock to obtain an extension of time, and the acceptance of the new security extending the time of payment was held to discharge the second indorser. Kelty v. Jenkins, 1 Hilt., 73 ; Piatt v. Stark, 2 ITilt., 399. An agreement to extend the time, will not be presumed from the act of taking a bill or note payable at a future day. Taylor v. Allen, 3G Barb., 294. Giving time to one of two sureties does not discharge the other; but quere if it doeS not, where as hero time is given to the maker, the other being an indorser of the note. Draper v. Wild, 13 Gray, 580. a Hubbly v. Brown, 1G John. R., 70, presented a case where the agreement was made after the maturity of the note. Myers v. Wells, was tho same, 5 Hill, 4G3; Smith v. Beckett, 13 East, 18G. In this -case the note was drawn payable ou demand, and iudorscd by the defendant for the maker's accommodation; and the maker placed it in the hands of the plaintiff, his banker, as security for advances, and at the end of six months the plaintiff renewed his advances on the note without the knowledge or consent of the defendant, and the defendant was held discharged. Sec Story on Notes, § 413. 'See the authorities above cited; 1G John. R., 70; 9 Cowen, 190; Noblo v. hia creditors, 19 Martin, 9; Bank of United States v. Hatch, G Peters, 260; 7 Pick., 391 j Mottram v. Mills, 2 Sand. R., 189. 4 Newcoinb v. Rayner, 21 Wend., 108. 536 ' BILLS OP EXCHANGE AND PEOMISSORY NOTES. release of the maker or acceptor. 1 As between the first and sub- sequent indorsers, the former is regarded in the light of principal ; he stands behind them upon the paper, and is bound to take it up, in case of the default of the maker. The * contracts of * 5/0 the several indorsers are like so many links in a chain, and if the holder consent to dissolve the first, the chain is no longer capable of binding either of the parties. 3 So long as the holder makes no valid and binding agreement for delay, he is at liberty to use every endeavor to secure the pay- ment of the bill or note ; he may receive part payment ; 3 he may take new securities ; 4 he may negotiate for delay ; 6 he may receive and transmit propositions to the indorsers for an extended credit ;' and he may voluntarily forbear to bring an action against any or all of the parties as long as he can do so without coming into con- tact with the bar raised by the statute of limitations. The reason why the holder may not enter into an agreement giving one of the prior parties time to pay the note or bill is, that such an agreement works a prejudice to 'the subsequent parties; 1 and hence if it be clearly shown that the holder in giving a stipu- lation for delay, acted for the benefit of all the parties liable on the note, the stipulation will not discharge the indorser. Thus, if the holder in an action against the maker of a note, takes from him a relida and cognovit, with a proviso that no execution shall issue on the judgment which is entered thereon immediately, until a subse- quent day ; and it appear that judgment could not have been recovered any sooner, the indorser is not thereby discharged. 8 Neither will the taking of a confession of judgment in any form impair the rights of the holder, unless he gives a stipulation to withhold the execution for a greater length of time than would have been required to recover the judgment unincumbered by any agreement. 9 In England, it has been held no defense in an 1 North American final Co. v. Dyett, 7 Paige CL P., 9; S. C, 20 Wend., 570. 2 Smith v. Knox, 3 Esp. P., 46; English v. Parley, 2 B. & P., 61. s 8 East, 57G; James v. Badger, 1 John. C, 131 ; Kenedy v. Mott, 3 M'Cord, 13 J Lynch v. Reynolds, 16 John. R., 41. 4 Fring v. Clarkson, 1 Barn, k Cres., 14. 6 Hewitt v. Goodrich, 2 Car. & P., 403. • Foster v. Juridson, 1G East, 105. 7 9 Cowen R., 194; 1G John. R., 41. 8 Hallct v. Holmes, IS John. R.. 28. * Sizer v. Heacock, 23 Wend., 81 ; Mohawk Bank v. VanFTorne, 7 Wend., 117. The creditor who has made an agreement with the principal debtor, without con- Bent of the surety, to extend the time of payment for a usurious consideration paid at paymext. 53" * action against the drawer of a bill that the plaintiff had ,,__ . . 571 in a former suit against the acceptor, consented to a judge's order that upon the payment of the principal and interest, on a certain future day, all further proceedings should be stayed, other- wise judgment to be entered ; it not appearing that such future day was posterior to that on which judgment could have been obtained against the acceptor. 1 It is scarcely necessary to say that an agreement made by the holder with the principal debtor, extending the time of payment, or even releasing him from his liability, will not discharge the drawer or indorser if he assents to the arrangement ; and therefore if the holder and indorser of a note execute to the maker a general release, containing a proviso that nothing therein contained shall be construed to impair any collateral security held by either of the creditors, the indorser is not thereby discharged." So, if the holder receive from the acceptor of a bill an offer of new security with a promise to pay by installments, and communicates the proposition to the drawer, who assents to it, the arrangement made accordingly will not impair the rights of the holder. 3 So, also, if the holder give time to the maker or acceptor, and the drawer or indorser afterwards promises to pay, with knowledge of the fact, he is precluded from taking advantage of the indulgence so granted. 4 If the drawer be consulted and his assent be given before any arrangement is made, he is a party to the contract extending the time of payment, and cannot complain of the delay. 5 A release of a debt or liability given on a good consideration, 1 Kennard and another v. Knott, 4 Man. & Gr., 474; Michael v. Myers, 6 Man. & Gr., 702. An agreement to give time, it seems is not enough to discharge an in- dorser, provided it be made on a condition, and time is' not in fact given. Price v. Edmunds, 10 Barn. & C, 578. •Seymour v. Minturn, 17 John. R., 170; Gloucester Bank v. Worcester, 10 Pick., 628; Parsons v. Gloucester Bank, 10 Pick., 533; 16 Ind., 91. • Clark v. Devlin, 3 Bos. & Pull., 3G3; Free v. Kierstead, 1G Ind., 91. 4 Stevens v. Lynch, 12 East, 38. 6 Hill v. Johnson, 3 Car. & P., 45G; Smith v. Iluwkius, 6 Conn., 444. the time, cannot avail himself of the usury as against the surety, to show the agreement invalid. Draper v. Trescott, 29 Barb., 40J ; La Purge v. Hertcr, 5 Sold., 241. If tli« crodit bo either extended or shortened, the surety ia discharged. Ueuderson v. Marvin, 31 Barb., 297. Edw. 08 538 BILLS OF EXCHANGE AND PROMISSORY NOTES. „^„^ extinguishes the indebtedness ;' but a release without * con- 572 sideration and not under seal, is void. 8 And hence an agreement made by a subsequent inclorser, not under seal, that he will not look to the first indorser for payment is without conside- ration and void. 8 And for the same reason a written release of the maker, given without consideration, will not discharge an indorser, whose liability has been fixed.* Where one of the makers of a promissory note adds to his signa- ture the word surety, the hold* is bound to treat him as such, and cannot vary the terms of the contract by extending the time of payment, or otherwise, so as to increase the risk of the surety without discharging him. But a naked promise to give the prin- cipal debtor further time will not have the effect to discharge the surety. 6 The rule is the same as we have already stated it, in reference to drawers and indorsers. Where time is given to the principal debtor, by a valid agreement, which ties up the hands of the creditor, though it be but for a single day, it is quite clear that the surety is discharged. The principle is the same whether the time be long or short. The creditor must be in such a situation that when the surety comes to be substituted in his place by pay- ing the debt, he may have an immediate right of action against the principal. 8 An extension of credit to the debtor for one day, discharges the surety as effectually as if made for one year.' Taking security from or giving time to one of several joint makers of a note or acceptors of a bill, does not discharge the others. 8 Indeed, it has been doubted whether one of the several 1 Lewis v. Jones, 4 Barn. & Cres., 506, 515, note. * Jackson v. Stackhouse, 1 Cowen, 122 ; Strong v. Holmes, 7 Cowen, 224; 11 John, 175. A new consideration gives effect to a release not under seal. Kellogg v. Richards, 14 Wend., 116. The payment of money before it is due, is a valid consideration for an agreement to extend the time of payment as to the balance. Newsam v. Finch, 25 Barb., 175; 21 Wend., 640. Not so where the money is due; Osgood v. Whittlesey, 20 How. Pr., 72; Reynolds v. Ward, 5 Wend., 501. ' Keeler v. Bartine, 12 Wend., 110. 4 Crawford v. Millspaugh, 13 John. R, 87. 6 Reynolds v. Ward, 5 Wend., 501, and cases there cited. 6 Bangs v. Strong, 7 Hill R., 250 ; 10 Paige, 11 ; Bower v. Tierman, 3 Denio, 378. This case closely resembles that of Price v. Edmunds, and is decided differently, 10 B. & C, 578 ; see also Barker v. McClure, 2 Blackf., 14. T Fellows v. Prentiss, 3 Denio, 512. • Bedford v. Deakin, 2 B. & Aid., 210 ; Perfect v Musgrave, 6 Price, 111. In equity a valid agreement made by the holder of a note with the principal maker of it (it being signed by two others in form as sureties), without their consent, extend- PAYMENT. 539 makers of a note will be permitted to prove that he was in fact a surety, where there is nothing on the paper to *show that ^ he signed as such, in order to let in evidence that he has been discharged by the giving of time to the principal. 1 The ob- jection to it is this, that it is parol evidence to show that the contract was really conditional. As between the immediate parties and a subsequent holder taking the note with knowledge of the relation subsisting between the makers, the evidence seems to be admissible." But where the payee takes a note without knowing that one of the makers signed it as surety for the other, and especially where the note has passed into the hands of a person taking it without knowledge of that circumstance, there is no ground on which to allow testimony varying the nature of the contract expressed on the face of the instrument. 3 In respect to 1 Price v. Edmunds, 10 Barn. & Cres., 578. s Nichols v. Parsons, 6 N. Hamp., 32; Grafton Bank v. Kent, 4 N. Hamp., 221, McGee v. Prout, 9 Metcalf, 547 ; Suydam v. Westfall, 2 Denio, 205 ; ante, 535. The party taking a note signed jointly by two persons, with knowledge that ono of them signs it in fact for the accommodation and as surety for the other, discharges in equity such surety by a valid agreement with the principal maker extending the time of payment^ unless the surety consents to the agreement ; and though the con- tract contained in the note cannot bo varied by parol in equity any more than at law, the relation of the parties as principal and surety on the note and the holder's know- ledge of that relation may be shown by parol. Pooley v. Harradine, 7 Ellis & Black., 431, decided in 1857. Chester v. Bank of Kingston, 16 N. Y. Rep., 336, 343. Of course giving time to the surety maker does not discharge the other. Manley v. Bry- cott, 75 Eng. Com. Law, 45. * Sprigg v. Bank of Mount Pleasant, 10 Peters, 257 ; Patterson v. Patterson, 2 Penn. R., 200 ; Townsend v. Riddle, 2 N. Hamp., 448. The bona fide indorsee of a bill received by him for value without notice when so received that it was accepted for the accommodation of the drawer, has the right to treat the parties thereto as liable thereon in the manner and order and to the sarao ing the time of payment, will discharge such sureties, though the agreement is not made until after a judgment has been recovered on tho note against all tho makers. Boughton v. Bank of Orleans, 2 Barb. Ch., 458; Bangs v. Strong, 10 Paige, 11 ; S. C, 7 Ilill, 250. The fact that tho note was signed by one of the parties as surety may be proved by parol. La Fargo v. Hester, 3 Denio, 157; 4 Barb., 346, and 11 id., 159; Carpenter v. King, 9 Met., 511. It appears to be conceded that the relation of princi- pal and surety continues after judgment ; Eubbell v. Carpenter, 5 Barb., 620; S. O, 1 Bold., 171; and the remark of RtTGOLBS, Ch. J., 5 Seld., 245; Chester v. Bank of Kingston, 16 N. Y. Rep., 336. When- the obligation of the sureties is joint and sev end, the discharge of otic does not release tho other from the payment of his proper proportion of the demand. Eingensmith v. KlingeMmith, 31 Penn. State EL, 460; but see Nicholson v. Revill, 6 Nev. & M., 192; S. 0., 4 Ad A El., 676; the principal assenting to it, is not discharged ; People v. Calr, 1 Denio, 120. 54:0 BILLS OF EXCHANGE AND PROMISSORY NOTES. his principal, the person signing in that manner may undoubtedly show that he was in truth a surety ; but in respect to the creditor or holder of the note there is no reason why he should be allowed to stand in any better condition than an accommodation acceptor of a draft. 1 Several sureties who successively sign a note at the request of the principal, without communication with each other, are bound on the failure of the principal to contribute equally to the payment of the note. 3 The word surety added to the signature of a maker is evidence that he did not give the note for value received by him ; 3 and when the last of several signers adds to his name surety for the above, he does not become liable to contribute. 4 At common law if the holder of a joint and several promissory note, discharges one of the makers by erasing his name from the * 574 instrument, it is a discharge of all. 6 But a part * payment by one of the promisors does not operate to discharge the rest, provided the holder has not extinguished the contract." Accordingly, when the holder of a note releases one of several joint makers, excepting from such liability as he may be under to the indorsers, those indorsers cannot, in an action against them by such holder, set up such release in discharge. 7 The doctrine on the subject results from the contract : joint debtors must be jointly sued ; if a less number than the whole be sued, that is a matter which may be pleaded in abatement. 8 In 'Fentum v. Pocock, 5 Taunt, 192; 12 Serg. & Rawle, 382; 5 Taunt, 551; see Robison v. Lyle, 10 Barb., 512; ante, 535. 4 Norton v. Coons, 2 Seld., 33. 3 Bank of Orleans v. Barry, 1 Denio, 116; 10 Barb., 512. The word surety added to the last signature does not legally imply that relation to each of the previous signers. Sisson v. Barrett, 2 Comst, 406 ; 13 Wend., 400. 4 Harris v. Warner, 13 Wend., 400; 27 Barb., 474; ante, note 535. * Nicholson v. Revill, 4 Ad. & EL, 676; Chetham v. Ward, 1 Bos. & P., 630. 6 Ruggles v. Patten, 8 Mass., 480. ' Stewart v. Eden, 2 Caines' R., 121. 8 Robertson v. Smith, 18 John. R., 459; 8 Mass. R., 480. The partner who makes a note in the firm name, which is in terms joint and several, may be sued alone upon it Snow v. Howard, 35 Barb., 55. extent as their positions upon the bill legally imply ; and such holder's release of the drawer with knowledge that the bill was accepted for his accommodation, will not discharge the acceptor. Howard Banking Co. v. Wolchman, 6 Bosw., 280 ; ante, 635. A.ud it is well settled that one who takes for value from, is vested with the rights of, a buna fide holder. Britten v. nail, 1 Hilt., 528, 532. PAYMENT. 541 an action against joint debtors, it is necessary to show a joint sub- sisting indebtedness in all of the defendants ; and in assumpsit, the plaintiff must show a subsisting liability on the part of all the defendants as promisors, unless some of them have been dis- charged on a defense of a personal nature, such as infancy. 1 And where, as respects any of the defendants, the right of action is gone or suspended, their joint liability being at an end, the other defendants may avail themselves of this suspension or discharge, whether it be produced by the act of the party, or by operation of law at the instance and by the act of the creditor." In this state joint debtors and the individual members of a part- nership that has been dissolved, are now authorized by statute to make a separate composition or compromise with any one or all of the creditors of the firm or of the joint debtors, and are permitted to take a note or memorandum in writing exonerating them from their liability, without impairing the right of the creditor to pro- ceed at law or in equity * against such of the partners or # -»» joint debtors as have not been discharged. 3 "Where a bill of exchange is accepted for the accommodation of the drawer, the holder does not discharge him by giving the accep- tor further time for payment ; for here the drawer is ultimately liable to pay the amount secured by the bill, and does not stand in the light of a surety. 4 Nor will an agreement with the drawer, giving him time for payment, discharge the acceptor for his accom- modation. 6 So in respect to a promissory note, if made for the accommodation of the payee, delay granted to him will not clis charge the maker. 8 If the holder of a bill compound with, and release the acceptor, without having the assent of the subsequent parties, he thereby releases them from their liability, although he may have acted wisely for the interest of the parties concerned ; for the law does not make him the agent of the drawer and indorsers to decide Bareness and another v. Thompson and another, 5 John. R., 1G0. Tho action in this case was on a joint and several promissory note, and ono of tho defendants pleaded infancy, and a verdict rendered for him and against the other defendants, was sustained. 2 Chctham v. Ward, 1 Bos. & Pull., 630. Here, ono of the makers of a joint and several bond was appointed executor of tho obligee, and tho right of action was held ■(upended and discharged. 14 Wend., 221 ; 2 Barb. Oh., 632; 2 Oonut, 512. *2R. B., 61,3ded. 4 Collott and others v. BCaight, 3 Campb., 281 ; Diversy v. Moor, 22 111., 330. 6 Eenison v. Cooke, :s Campb., .'JG2. • Nichols v. Morris, :; Barn. & Ad., 11. 542 , BILLS OF EXCHANGE AND PROMISSORY NOTES. whether or not it be expedient to compromise with the principal debtor. 1 But the holder may prove the bill under a commission of bankruptcy, against the acceptor, and receive his dividend, without discharging the subsequent parties ; for here the acceptor is discharged not by the act of the holder, but by the act of the law ; and there is a marked distinction between receiving a divi- dend under the compulsion of a judicial proceeding, and volunta- rily taking part payment in satisfaction of the debt. 8 Receipts. Where a part payment is made on a negotiable note or bill, the party paying should take care to have a receipt indorsed upon the instrument ; otherwise he may be compelled to pay it over *~7« a o am to a bona fide holder. 3 But *the maker of a note or due bill which is not negotiable may safely pay money on it to the payee, where he has no notice or reason to suppose that it has been assigned. 4 When paid in full on the day it falls due, it should be surrendered or canceled, so that the maker may not afterwards be compelled to prove that it has been satisfied. 6 The acceptor of a bill, on being called upon for payment, is entitled to have the bill surrendered to him as a voucher ; and the maker of a negotiable note stands in the same relation ; neither of them can be compelled to pay, unless the holder produces and offers to deliver up the instrument, or tenders a sufficient indem- nity, where it has been lost. 6 And the indorser, paying a note, has a right to demand that it be surrendered to him. 7 Some of 1 Lewis v. Jones, 4 Bam. & Cres., 507; ex parte Wilson, llVes., 410; Douglass v. White, 3 Barb. Oh., 621. 3 Kenworthy v. Hopkins, 1 John. Cas., 108 ; 3 Bos. & Pull., 61. A composition made with the acceptors under seal, giving them time and agreeing to discharge them on receiving a part of the debt, with a proviso that it shall not prejudice the holder's remedies against any other parties to the bill, does not discharge the drawer and indorsers ; Sohier v. Loring, 6 Cush., 537; Kearsley v. Cole, 16 Mees. & Welsh., 128. A like composition with the indorser of a note made for his accom- modation, does not discharge the maker; Nichols v. Norris, 3 Barn. & Adolph., 41. And an agreement by the holder of a negotiable note never to sue the maker and not to call on the indorser for nine months, suspends, but does not destroy the claim against such indorser; Hutchins v Nichols, 10 Cush., 299, ante, 570. 3 Cooper v. Davies, 1 Esp. R, 463; Manhattan Co. v. Reynolds, 2 Hill R, 140. In this case it was held that payment to the payees of a negotiable note was no defense- in an action brought by an indorsee holding it as collateral security. See also Carr v. Lewis, 20 N. Y. Rep., 138. 4 Meghan v. Mills, 9 John. R., 64; Anderson v. Van Allen, 12 id., 343. * Rosa v. Brotherton, 10 Wend., 85 ; Smith v. Van Loon, 16 Wend., 659. 6 Hansard v. Robinson, 7 Barn. & Cres., 90. T 8 Barb. R., 408. PAYMENT. 543 earlier cases go as far as to countenance the idea that the acceptor is also entitled, under the custom of merchants, to a receipt from the holder. 1 And Mr. Justice Story intimates the opinion that the maker of a note is, upon general principles, entitled to claim it as matter of right. 2 The general doctrine is that the debtor is bound to pay the debt he owes unconditionally, and that he cannot impose any terms upon the creditor. This is evident from the English statute and the decisions that have been made under it. 3 By section four of that act, the person from whom the money is due may provide the stamp, and on payment require the receiver to give him a receipt, and pay the amount of the stamp duty ; and if the receiver refuses, he becomes liable to *a penalty of ten pounds. ^^ But it has been held, under this statute, that a plea of tender is not supported by proving that the defendant took a sum of money out of his pocket and said to the plaintiff: " If you will give me a stamped receipt, I will pay you the money." Abbott, C. J. : " This is no proof of tender : the offer of money must be unconditional." 4 In effect this decision takes it for granted that the debtor is bound absolutely to pay the debt, though a receipt be refused ; his remedy for the refusal being the penalty imposed by the statute. 6 But it is usual to give a receipt on the back of bills, and it is said to be the duty of bankers to make some memorandum on bills and notes that have been paid ; so that they may not after- wards come into the hands of any person as business paper." The more common practice among bankers and banking institutions is to mark them with an arbitrary sign, indicating that the note or 1 Mendey v. Carreroon, 1 Lord Raym., 142. In this action, which was brought by one of the indorsers, who had taken up the bill, the plaintiff was nonsuited, notwith- standing he produced the bill and protest, " because he could not produce a receipt for the money paid by him to G. (a subsequent holdor), upon the protest, as the cus- tom is among merchants, as several merchants, upon their oaths, affirmed." 1 Story on Notes, § 452. 1 43 Geo. Ill, c. 126. 4 Laing v. Header, 1 Carr. & Payne, 257; see, also, Greon v. Croft, 2 II. Bla., 30. * Wood v. Hitchcock, 20 Wend., 47. This caso shows the manner in which the tender should bo made. 2 Denio, 198 ; 14 Wend., 221. • Burbridgo v. Manners, 3 Campb., 193. The surrender of a note to the maker is a cancellation of it, that being the intent of the act. Edwards v. Campbell, 23 Barb., 423. *578 D44 BILLS OF EXCHANGE AND PROMISSORY NOTES. bill has been paid or charged over to the account of the person for whom the payment was made. 1 A receipt, not specifying by whom the payment was made, indorsed on the back of a bill, is presumptive evidence that the bill was paid by the acceptor. 8 But the signature of the person signing the receipt must be proved, and it must appear to be that of a person entitled to receive payment ; 3 and it *has been held, the evidence must show that the bill has been in cir- culation after acceptance in order to raise the presumption of pay- ment by the acceptor, on the mere fact that he produces it. 4 But this ruling was made in a case where the accommodation acceptor was seeking to recover for money advanced for the drawer. A receipt indorsed on a note or bill may be contradicted or explained like any other receipt for money paid ; and if drawn in general terms without stating from whom the money was received, evidence may be given to show that the payment was made by the drawer for the purpose of establishing the right of his indorsee to recover thereon against the acceptor. 6 1 Watervliet Bank v. White. 1 Demo, 608. 5 Scholey t. Walsly, Peake Cas., 25. The action was brought by the drawer against the acceptor, and the plaintiff produced the bill. 3 Pfiel v. Van Batenberg, 2 Campb., 439; Cole v. Blake, Peake, 179, decides that if on a tender being made, the creditor insists on receiving a larger sum of money, he can- not afterwards object to the formality of the tender on account of the debtor having required a receipt. But no objection was made to the giving of a receipt, and Lord Kenyon said that it had been determined that a party tendering money could not, in general, demand a receipt for the same. In Cooper v. Davies (1 Esp., 473), which was an action by the indorsee against the drawer or maker of a promissory note, the plaintiff was allowed by Lord Kexton to recover money paid on the note before indorsement, it being shown that the plain- tiff had no notice of such payment. In Egg v. Baruett (3 Esp., 196), it was decided by the same judge that "to provo payment of a debt due by the defendant to the plaintiff, a banker's check, drawn by the defendant on his bankers, and which appeared to have been received by the plain- tiff, is evidence, to go to the jury, of the payment." Aubcrt v. Walsh and another, 4 Taunt., 293 ; the delivery of a check requires explanation to make it evidence of a dabfe Ingram v. Craft, 7 Louis., 82. "The possession of a joint note, by one of the drawers, with a receipt of payment by the holder or indorsee indorsed on it by tha person entitled to receive it, is prima facie evidence of the liability of the other drawer to refund one-half of the note." Mercer v. Cheese, 4 Man. & Gr., 804. Action for work and materials ; plea that tho defendant and others were jointly indebted, and that one of the persons indebted had given to the plaintiff a bill of exchango therefor ; held, a good answer, as raising a. prima facie defense. Decided in 1842. 4 2 Campb., 440. 4 Graves v. Key, 3 Barn. & Adol., 313. PAYMENT. 545 In respect to promissory notes and drafts which are not negoti- able, the maker and acceptor cannot refuse to pay on the ground that they are not produced and ready to be surrendered. 1 The assignee of such paper takes it subject to whatever defense the maker or acceptor may have to it, as against the payee ; 3 and the rule is the same where the note is negotiable, but is transferred without indorsement 3 * And there is substantially the same reason for giving ^„ 7Q to the debtor a receipt or acquittance for money paid on account, as for the payment of a note which is not negotiable ; both of them are assignable, and both are taken by the assignee subject to the equities existing between the immediate parties to them.* The party paying clearly has no right to demand such a receipt as may raise a presumption of a general settlement ; if he pays a particular debt he cannot demand a receipt in full of all demands :" neither is it always safe for him to take a receipt in full of all accounts, since the taking of such a receipt warrants the inference of a settlement of accounts on both sides, and may subject him to the burden of explaining or contradicting the receipt. 6 But the well known practice among business men recognizes it as a reasona- ble thing that the party receiving money in payment of a debt, or to apply on an account, should give to the party paying a memo- randum acknowledging the fact, as the most appropriate and con- venient evidence of payment. In the case of judgments and mortgages, which are an incumbrance upon real estate, the law prescribes the manner in which they shall be satisfied and canceled of record ;' while in regard to those of an inferior degree the statute of limitations comes in to supply the place of fugitive and perishable testimony. When a creditor receives from a debtor his negotiable note for 1 Wain v. Bailey, 10 Adol. & El., GIG; Rolt v. Watson, 4 Bing., 273; 10 John. R., 104; 3 Wend., 3-14; 12 id.. 113. 1 Hill v. McPherson, 15 Miss., 204. * 9 Barb. R., 214. 4 N. Y. Code of Procedure, §§ 111, 112, 113. 6 Thayer v. Brockett, 12 Mass., 450, 20 Wend., 47. 9 Alvord v. Baker, 9 Wend., 323. . The giving of B note is prima facie proof that all claims of the maker against the payee were adjusted, and that the note was given for the balance dne, Lake v. Tyscn, 6 N. Y. (2 Seld.), 461 ; De Freest v. Bloomingdalc, D Denio, 301 ; 8 K D. Smith, 527. T 2 R. H., 489, 48% \'A <• Q every legal requisite, misdescribes the note or bill to which 1 Per Ch. J. Nelson, in Aymar v. Sheldon, 12 Wend., 439; Carroll v. Upton, " Sand. R., 172. " The law of the place where a bill is drawn governs as to the mode and place of the notice of non-acceptance and of non-payment to be given to charge the drawer ; and a different usage prevailing at the place where the drawee resides, or the bill is presentable, will not be admitted to control the drawer's liability." S. C, on appeal, 3 Comst., 272. " 1 Comst. R, 413 ; Hartley v. Case, 4 Barn. & Cres., 339 ; Reedy v. Seixas, 2 John. Cas., 337; 9 Wend., 279; 9 Peters, 33; 11 Wheat., 431; 23 Wend., 620; 14 Conn., 363; 10 Shep., 392; ante, 470-472; post, 593-600. ' Cuyler v. Stevens, 4 Wend., 566 ; Glasgow v. Prattle, 8 Missouri R., 336; Phillips v. Gould, 8 Car. & Payne, 356 ; ante, 470. 4 Hartley v. Case, supra ; Abbott, Ch. J. : " There is no precise form of words necessary to be used in giving notice of the dishonor of a bill of exchange, but the language must be such as to convey notice to the party what the bill is, and that pay- ment of it has been refused by the acceptor." Tho letter in this case, written by an attorney, contained a demand of payment of the sum of 150?, clue on a draft by Mr. Case on Mr. Case, to prevent the necessity of law proceedings, and was held insuffi- cient notice, because it did not show tho bill to have been dishonored. Bank of Alex- andria v. Swan, 9 Peters U. S. Rep., 33. The misdescription complained of in this case, is in the amount of the note. The note is for $1,400, and the notice describes it as for the sum of $1,157. In all other respects the description is correct; and in the margin of the oote is set down the figures 1457, and tho special verdict finds that the note in question was discounted at tho bank as and for a note of |1,-157 • and the question is, whether this was such a variance or misdescription as might reasonably mislead the indorser as to flic note, for payment of which ho wa.s held responsible. And it was held that the variance w.is net material, it being shown by the special verdict that the bank held no other note made and indorsed by tho same persons. Mills v. The Bank of U. S., 11 Wheat., 431. Tho notice in this case, in describing the 556 BILLS OF EXCHANGE AND PROMISSORY NOTES. it refers, it is to be determined as a question of fact, or with reference to the circumstances of the case, whether the defendant could be misled by the misdescription. 1 And for the purpose of solving this question it may be shown, in aid of the defect, that there was no other note in existence, to which the description contained in the notice could be applied. 2 Proof of such accessory facts may be given, because they go to show that the indorser was duly notified ; and the evidence is not objectionable on the ground that it tends to vary the terms of a written instrument, because the notice may be legally either written or verbal, and the proof is not given to vary the terms of the notice. There have been several cases where, upon a misdescription of a bill or note in the notice, it has been left to the jury to pass upon the question of identity, and say whether the drawer or indorser had been misled ; 3 and there are other cases where it has been held that the sufficiency of a written notice is a question of law to be disposed of by the court ; 4 so that the doctrine on the subject is not perfectly settled. ^ *But it appears to be well settled that an immaterial variance between the description contained in the notice and the bill or note referred to, will not vitiate it. To render the variance fatal, it must be such that under the circumstances of the 1 McKuight v. Lewis, 5 Barb. R., 681; ante, 471. 3 Cayuga Co. Bank v. Warden, 1 Comst. R., 413. In both of these cases, the amount of the note was mis-stated in the notice; so in Reedy v. Seixas, supra; 2 Sel- den R, 19. 3 Reedy v. Seixas, 2 John. Cas., 337; Bank of Rochester v. Gould, 9 Wend., 279; Smith v. Whiting, 12 Mass. R., 6; 5 Barb., 681; 1 Comst. R, 413; Downer r. Remer, 21 Wend., 10; S. C, 23 id., 670, and 25 id., 277 ; 2 Bosw., 137. 4 Mills v. Bank of U. S., 11 Wheat, 431 ; Bank of Alexandria v. Swan, 9 Peters, 33 ; Beauchamp v. Cash, Dow. & Ry. K P. Cas., 3 ; Ransom v. Mack, 2 Hill R., 587 ; ante, 471, 472, note, and post, 593. note, stated it to be dated 20th Sept., 1819, whereas it bore date 20th of July, 1819 ; and it was held that the jury were correctly charged that if they found there was no other note payable in the office at Chilicothe, where this note was payable, drawn by the same men and indorsed by the defendant, the mistake in respect to the date would not impair the defendant's liability, and the plaintiir would be entitled to recover. Cayuga Co. Bank v. Warden, 1 Comst, 414. The note in this case was for $G00 und the notice described it as a note for three hundred dollars, but had the figures " 1500 " written on the margin, and it was shown that this was the only note in the bank made and indorsed by tho same parties ; and this evidence was held competent. Kilgoro v. Bulkley, 14 Conn. R., 362. The notico is good, if the indorser be nr misled by it. PROCEEDINGS ON NON-PAYMENT, NOTICE. 55i case, the notice conveys no sufficient knowledge to the indorsers of the identity of the particular note or bill which has been dis- honored. 1 The circumstances then, are a proper subject of in- quiry ; and a dispute arising in respect to these, necessarily carries the question to the jury. 3 If the notice describe a promissory note correctly, so far as it goes, mentioning simply the makers' names, the amount and the indorsees name, the court will not infer the existence of other notes to which the description might apply and thus render the notice uncertain. 3 But clearly the existence of other notes bearing that description might be proved, so as to vitiate the notice; on the same principle that permits proof of the non-existence of other notes by way of rendering the notice certain in its application to the note in suit.' 1 1 Mills v. Bank of U. S., supra; Bank of Alexandria v. Swann, supra; 1 Comst., 417; 5 Seld., 289; ante, 472 and note. So in pleading, a variance in the description of the note in one particular, e. g., the time of payment, is not material, unless it has actually misled the opposite party. Chapman v. Carolin, 3 Bosw., 45G. 2 McKnight v. Lewis, supra; and Cook v. Litchfield, 2 Bosw., 137. * Youngs v. Lee, 2 Kernan R., 551. The notico in this case was in these words: " New York, October 7. 1851. Mr. Charles M. Lee, Rochester, N. Y. Sir: Pleaso to take notice that a promissory note, drawn by Bell & Goodman, for $1,000, indorsed by you. is protested for non-payment, and the holders. look to you for payment thereof. Your obedient servant, A. R. Rogers, Notary Public." And it was held good, though it did not contain so many descriptive particulars as it might, the description being irue so far as it went. 4 Cayuga Co. Bank v. Warden, supra; Shelton v. Braithwaite, 7 M. & W., 436; ante, 472 and note. A few of the cases on the subject may serve to illustrate the law. Reedy v. Sexias, was a case of misdescription; the note produced on the trial was for $1,2 1G and 50 cents; at the bottom of the note were the figures 1,216 dollars and 52 cents, and tho note was described by the notary in tho notico as given for the latter sum. The judge left tho question to the jury, whether the note produced and the one described and intended by the notico were the same. On a motion to set aside the verdict found under such direction, the court say, " The law does not prescribe any form of notice to an indorscr. It is not, perhaps, requisite to specify the amount of the note. The notice was sufficient to put the defendant on inquiry, and to prepare him to pay it or defend It is enough if the jury was satisfied that the notico referred to tho game note intended by tho plaintiff, and was so understood by tho defendant. It was incumbent on tho defendant to show some uncertainty in tho notice, tending to mis- lead him; as other notes indorsed by hinj under similar circumstances." 2 John. Cas., 337. In Smith v. Whiting, 12 Mass., C, the mistako in tho notice was that ,it described the note as made by Jotham Cushing, when it was in fact made by Jotliam Cu-shmnn ; and it was admitted that there was no note in Die bank pving the notice indorsed by the defendant. Held, that it was properly left to tho jury to decido, whether he 558 BILLS OF EXCHANGE AND PROMISSORY NOTES. * A mis-statement of the notary in the notice in regard *591 ... . to an act done by him, is a different matter. For instance, if the notice bear date on the third day of grace and state that the must not have known that the notice referred to the only note, which, it seems, lay ia the bank, on which he was liable as promisor or indorser. In the Bank of Rochester v. Gould, 9 "Wend., 279, the note was given by George Fisher for $375, and the notary in his notice stated it to be a note for $457.50, that sum being the aggregate of principal and interest; and there was no other note of Fisher's indorsed by the defendant held by plaintiff. Held, that the charge to the jury that if they believed that the defendant knew what note it was that had been protested, or had not been misled by the notice, they ought to find a verdict for the plaintiff", was correct. In Downer v. Remer (21 Wend., 23 id., 670; 25 id., 277), there was a similar mis- take ; the notice stated the amount to be $999.52 instead of $599.52, which was the true amount, and the jury decided that the defendant was not misled by the error; the Supreme Court decided as in the case above, but the Court of Errors reversed that decision, and, as there was another question involved in the case, it is not certain on which of the points the decision turned in that court. Where the notarial record states that the demand of payment was made at a bank, without naming the hour, the presumption will be that the demand was made in banking hours. Fleming v. Fulton, G How. Miss., 473. Ross v. Planters' Bank, 5 Humph. (Tenn.), 335. Where the notary makes a mis- take as to the date of the note in the notice furnished to the indorser, the mistake may be corrected on the trial. The copy of the note on the back of the protest showed the date 22 Nov., 1844, which had not yet arrived, instead of 22 Nov., 1S43, which was the true date. Rowan et al. v. Odenheimer et al., 5 Smedes & Marsh., 44. The notice described the note as being for one dollar less than the true sum ; held, sufficient to uphold tho verdict against an indorser. Moorman v. The Bank of Ala. (3 Porter), 12 Ala,, 353. The protest described the name of a subsequent indorser as Pyron, and the bill produced showed his name to be Byron ; and the notice was held sufficent. If there be more than one bill to which the notice may apply, it lies on the defend- ant to prove that fact. Shelton v. Braithwaite, 7 M. & W., 436; ante, 472, and note. If a note be improperly called a bill it is no objection to the notice. Messenger v. Southey, 1 Man. & Gr., 76; 1 Scott, N. R,, 180; nor if a bill be improperly called a note. Stockman v. Parr, 11 M. & W., 809. But a notice directed to an indorser de- scribing the bill as draion by him is defective, though every indorser is in tho nature of a new drawer. Beauchamp v. Cash, 1 D. & R., N. P. C, 3 ; this case is overruled by Mellersh v. Ripken, 11 Eng. Law and Eq. R., 599. A notice of dishonor sent by the indorsee of a bill of exchange to the drawer, stated the amount of the bill correctly, but erroneously described it as drawn by the acceptor and accepted by the drawer. Held, a sufficient notice. Beauchamp v. Cash, 1 Downing & Ryland, 3, is not followed. Seo also Gill v. Palmer, 29 Conn. R., 54; ante, 472. Cook v. Litchfield, 5 Selden R., 279 ; this action was brought against the defendant as indorser of four promissory notes, at nine, ten, eleven and twelve months after date, each bearing the same date and being given for $740 ; tho only difference be- tween them being in the time they had to' run. And tho following notice was PROCEEDINGS OX NON-PAYMENT, NOTICE. 559 note in question was last evening protested for non-payment, or if the notice bear date on the fourth day of July, and state that paymenv of the note had been that day demanded and refused, it is not a question to be submitted to the jury whether or not the indorser has been misled by the mistake. 1 There are decisions to the contrary, holding that the notice is sufficient if it does not mislead the party, and allowing the *jury to determine that as a question of fact. 3 But there is a clear distinction between an informal and an insufficient notice, between a notice which is defective in the description of the note or bill, and one which does not show that the paper has been dishonored. If the notice states a presentment which is too late or premature, it is equivalent to notifying the drawer *or indorser that he is ^ . discharged ; it certainly does not inform him that the paper has been dishonored. 3 The fact to be communicated in some form is, that the note or bill has been dishonored by the default of the acceptor or pro- misor ; and this may be done in any language which conveys the information to the indorser in terms or by reasonable implication. If the note or bill be payable at a bank, it is the duty of the 1 Ransom v. Mack, 2 Hill R., 587 ; see, also, De La Hunt v. Higgins, 9 Abbt., 422. s Ontario Bank v. Petrie, 3 "Wend., 456. The draft in this case fell due ou Sunday, the 31st of August; was presented on the 30th, and the notice dated on that day, being a printed blank filled up with names and amount, stated that it was protested for non-payment last evening. Crocker v. Getchell, 23 Maine R., 392. In this case the notice stated that the note became due this day and is protested for non-payment, whereas it became duo and was protested the day previous, and the notice was held sufficient, it being such as under the circumstances could not mislead the party to whom it was directed. 1 Ransom v. Mack, supra; Ontario Bank v. Petrie is overruled ; and Judge Bronson intimates that the doctrine previously held in this state in respect to receiving testi- mony in aid of a defective notice has fallen with it. But in that particular the recent cases are against him. 2 Hill R., 587 ; 1 Comst., 417; 5 Barb., .081 ; Wynn v. Alden, 4 Denio, 1C3. In this case the notice stated that the note had been this day presented for payment,. and payment refused, and was not dated at all. Held, defective. adjudged sufficient in respect to the note which first fell duo and was protested. "New York, Jan. 5th, 1850. $740 and interest. Please to take notice that a promis- sory note made by J. L. Carew, for $7-10, with interest, dated April 2d, 1849, indorsod by you, was on the day that the samo became duo,. duly protested for non-payment, and that the holders look to you for the payment thereof." Tho other notices, which were in tho same words, with tho difference of date, except that in two of them the amount of interest was stated in tho margin, wcro held Insufficient; reversing tho judgment of tho N. Y. Suporior Court, 5 Sand., 330. These last notices described die first note as accurately as they did either of tho others. See S. C, 2 Bosw., 137. 560 BILLS OF EXCHANGE AND PROMISSORY NOTES. maker or acceptor to come there and pay it on the last day of grace ; and if lie does not, a notice stating the date and terms of the note, showing that it has become due, and averring that it is unpaid, is equivalent to a notice of dishonor. 1 But such a notice is clearly not sufficient where the instrument is drawn payable at large ; for in this case a statement that-it has not been paid is entirely con- sistent with the fact that it has not been dishonored. 2 There being no dispute about the facts, the sufficiency of the notice is a question of law ; and where it is given in writing, the construction of the notice belongs to the court 3 * When the notice conveys the necessary information in express terms, describing accurately the note or bill, no question can arise in respect to the contents and sufficiency of the notice. But when it is defective on its face in consequence of not showing that the paper has been dishonored, or when the information conveyed in the notice is to be implied from the language employed, it is for the court to pronounce upon the sufficiency of the notice as a matter of law. 4 And in doing this the court gives to the words 1 The notice in Smith v. Whiting, was of this description, 12 Mass., 6, but no ques- tion was raised in regard to its sufficiency. 3 Met., 505. 8 Gilbert v. Dennis, 3 Metcalf, 495. The opinion by Chief Justice Shaw, in this case, is a pattern of style and legal reasoning. Dole v. Gold, 5 Barb., 490. The notice which was held insufficient in Gilbert v. Dennis, was in these words: "Boston, May 4, 1838. Mr. Lewis Dennis. Sir : I have a note signed by C. E. Bowers, and indorsed by you, for seven hundred dollars, which is due this day and unpaid. Payment is demanded of you. C. C. Gilbert." And it was held insufficient because it did not, by necessary implication or reasonable intendment amount to an averment or intimation, that payment had been demanded and refused, or that the note had been otherwisa dishonored. 3 Met., 50G. The notice in Dole v. Gold, 5 Barb., 490, was as follows : "Buffalo, Sept. 8th, 1847. Dear Sir: A note of $22.50, made by Andrew Cole, and payable to your order, and indorsed by you, is due this day, and has not been paid. You will therefore take notice that I am the owner and holder of said note, and look to you for the payment of the same. Tours, &c, C. R. Gold," and was held insufficient for the same reason. The indorser must be notified that the note was duly presented for payment, when it became due; notice of non-payment is not sufficient; Pahquisque Bank v. Martin, 11 Abbt., 291. See also Armstrong v. Thurston, 11 Md., 148. 8 Spencer v. The Bank of Salina, 3 Hill, 520; Dole v. GoJd supra; and 3 Met., 495. * In Ransom v. Mack, supra, the notice stated a presentment for payment one day too late, and the court decided, as a question of law, that the notice was defective. In Dole v. Gold, the notice did not show that the note had been dishonored ; it only stated that the note had not been paid. So in Gilbert v. Dennis, the notice did not state that the note had been dishonored ; it stated merely that it was due and unpaid, and that the holder looked to the indorser for payment ; and in each of Ik** (nse» the question arising on the notice was decided aa one of law. Ante, 473. PROCEEDINGS ON NON-PAYMENT, NOTICE. 561 used their ordinary and common signification, construing the lan- guage in reference to its accustomed meaning when applied to similar subjects, and with reference to the terms of the note or bill and the time and place at which it is payable. Thus, if the notice inform the indorser that a note or bill has been protested for non-payment, the italicised word is to be under- stood in a popular sense and as used among men of business. In a strict technical sense the term is not applicable to promissory notes, and means only the formal declaration drawn up and signed by a notary ; but it has acquired by usage a more extensive signi- fication, and when used in its popular acceptation includes all those acts which are by law necessary to charge an indorser. 1 Ac- cordingly where the instrument is one on which the law authorizes a protest, notice that it has been protested for non-payment is equivalent to an averment that it has been presented for payment, and that payment thereof has been refused ; for the presumption is that the protest was regularly made, and the protest * when ^_ Q - made in regular form avers a presentment and dishonor of the note or bill. 8 Hence a statement in the notice that a bill of exchange or a promissory note has been protested for non-payment, implies demand and refusal ; 3 and in the case of a foreign bill, the protest of a notary not only presupposes a proper demand and refusal to pay. but is also the evidence of these facts. We have said the notice to the indorser should state expressly or by necessary implication that the bill or note has been dis- honored ; perhaps it would be quite as accurate to say that the notice should inform the indorser that the note or bill has been dishonored, and that it is immaterial whether this information be conveyed in express words or in terms that fairly and reasonably 1 Coddington v. Davis, 3 Denio, 16 j S. C, 1 Comst. R., 186. This case turned in part on a question of waiver, and the letter containing the waiver was in these words, "Please not protest T. B. Coddinton's note, due 2d February, for ten thousand dollars, and I will waive the necessity of the protest thereof; " and the court construed tho language in its general sense. 1 Mills v. The Bank of U. S., 11 Wheat., 431 ; Stockon v. Collens, 9 Carr. k rayne, 653; 1 Comst. R., 411; 9 Wend., 279; 2 Kernan, 551. Piatt v. Drake, 1 Doug. Mich. R, 296, holds that a notice of the protest of a note for non-payuieut is not su(Ticicnt; 4 Mich., 391. ' Spies v. Xewbery, 2 Doug. Mich. R., 425. TLis was a foreign bill; and it was held that tho term protest used in tho notice implies demand and refusal. Saltmarsh v. Tuthill, 13 Ala. (Xew Series) R., 390. A statement in tho notice that a bill of exchange lias been protested for non-payment, implies that it has been duly presented for payment. Ed\v. ^l 562 BILLS OF EXCHANGE AND PE0HISS0EY NOTES. imply that the instrument has been presented for payment and dishonored. In some of the English cases the rule that "the notice given to the indorser should state expressly or by necessary implication that the bill has been dishonored," appears to have been applied with great strictness : l while more recently the deci- #^Qfl s ^ ons *show a disposition to seize hold of any word in the notice that may reasonably sustain the inference that the note or bill has been dishonored. 3 And though the rule itself ^ _q 7 has not * been changed, it is very evident that its rigor has been sensibly modified, and that the courts of England feel it incumbent upon them to construe such notices with fairness and 1 Hartley v. Case. 4 Barn. & Ores., 339, was decided in 1825. The letter intro- duced as notice contained a demand of payment of the sum of £150, due on a draft by Mr. Case on Mr. Case, to prevent the necessity of law proceedings : And Abbott, Ch. J., decided it insufficient, saying "there is no precise form of words necessary to be used in giving notice of the dishonor of a bhl of exchange, but the language must be such as to convey notice to the party what the bill is, and that payment of it has been refused by the acceptor. Solarte v. Palmer, 1 Bing., 530, decided in the Exchequer Chamber in 1831, and affirmed in the House of Lords, in 1834, 1 Bing. N. C, 194, involved the question as to the sufficiency of a notice contained in the letter of an attorney to the indorser to this effect: "A bill for 683/, drawn by K. on J. & Co., and bearing your indorse- ment, has been put into our hands by A. with directions to take legal measures for the recovery thereof, unless immediately paid to us." And the notice was held in- sufficient, the court using this formula to express the rule, " the notice should at least inform the party to whom it is addressed, either in express terms or by necessary implication, that the bill has been dishonored, and that the holder looks to him for payment of the amount." Following this decision the English courts held succes- sively the following notices insufficient, namely, a notice describing a note as falling due yesterday and returned unpaid, and asking for the amount (Boulton v. Welsh, 3 Bing. N. C, 688; 4 Scott, 425), and a notice fully describing a bill and speaking of it as lying due and unpaid at my office (Phillips v. Gould, 8 C. & P., 355), and a notice describing a bill and saying that it is not paid, and that Mr. Price, as indorser, is called upon to pay the money, which is expected immediately (Strange v. Price, 10 Ad. & Ell., 125), and a notice saying that the bill I took of you, III 2s. Gd., is took up, and 4s. Gd. expenses ; and the money I must pay immediately. 4 Messenger v. Southey, 1 Man. & Gr., 76. 3 The following have been held sufficient notices of dishonor : "A bill drawn, &c, due yesterday, is dishonored and unpaid; and I am desired to give you notice thereof to request that' tho same be immediately paid." Woodthorpe v. Lawes, 2 M. & W., 109. " The bill for £ — , drawn by you, is this day returned with charges, to which your immediate attention is requested." Grugeon v. Smith, 6 Ad. &, Ell., 499. "I am desired by Mr. Hedger to give you notice that a promissory note, &c, became due yesterday, and has been returned unpaid, and I have to request that you will please remit the amount thereof with Is. Gd. noting, &c." Iledgcr v. Steavenson, 2 M. & W., 199. "Tour noto has been returned dishonored." Edmonds v. Cates, 2 Jurist, 183; PEOCEEDINGS ON NON-PAYMENT, NOTICE. 563 liberality, giving to the language used the meaning appropriated to it by the common sense of business men ; on the same principle that requires the terms of a contract to be read and understood in their usual and ordinary signification. 1 1 Coddington v. Davis, 3 Demo R., 16; S. C, 1 Comst. R, 18G. Shelton v. Bratkwaite, 1 M. & "W., 436 ; Stocken v. Collin, 9 C. & P., 653 ; S. C, 7 M. & "W, 515, are to the same effect. "James Courts acceptance due this day is unpaid, and I request your immediate attention to it." Bailey v. Porter, 14 M. &> "W, 44. The latter cases clearly do not hold the rule so strictly as those which shortly after followed the decision in Solarte v. Palmer. "Where the notice contains any expres- sion indicating that the bill has been noted, or where it is stated to have been dishon- ored, it is now held sufficient ; indeed, Lord Campbell, C. J., does not hesitate in a recent case to express his regret that the decision in Solarte v. Palmer was ever made, and says expressly that it has caused much confusion. Li Strange v. Price, 10 Adol. & Ellis, 125, Lord Denman says: "I havo some doubt as to the reasoning on which the decisions in Hartley v. Case and in Solarte v. Palmer have turned ; but the decision in the latter case, as was observed in the Court of Exchequer, is binding, and I think it authorizes our saying here that the notice is not sufficient. As in Solarte v. Palmer, so here the notice does not convey full infor- mation that the bill has been dishonored. In all the cases, where such notices have been held defective, it might have been said that they furnished a reasonablo impli- cation of the fact ; but clearly, that is not sufficient ; the notice must bo a positivo statement that the bill has been accepted and dishonored. In cases where the strict rule has been thought not applicable, there have been circumstances connected with the notice which showed that the necessary implication did arise." This decision was made in 1839. Everard v. "Watson, 1 Ellis & Blackburn R., 801, decided in the Court of Queen's Bench, at the Easter Term, in 1853. The notice in this case was in these words: ""Wo beg to acquaint you with the non-payment of William Miles's acceptance to James "Wright's draft of 29th December last, at 4 months, 501, amounting with expenses to £50 5s. Id., which remit us in course of post without fail, or pay to Messrs. Kverards & Co., Lynn." A verdict having been found against the defendant, ono of several indorsers, the causo was argued before the court in banc on the sufficiency of the notice. Lord Campbell, C. J.: "The law merchant requires that, to charge a drawer or indorser, there must bo notice given to him that the bill has been presented and dishonored, and that ho is looked to for payment. I think such a notice as that now before us satisfies all these requisites. Tho indorser is made acquainted with the non-payment, and that 5s. Id. expenses havo been incurred ; and lie is desired tG remit the money, or pay it to a party named. Is there any human being possessed of common understanding, who will not learn from this tho facts that tho bill has been presented, that it has been dishonored, and that tho party addressed is looked to for payment. How could tho 5s. IS. expenses be incurred, except by noting, upon tho bill being presentod and dishonored? * * * I confess my regret at the decision of Solarte v. Palmer; it has caused much confusion. It is, however, a deci- eiost office in that place : and it was held that a notice deposited in that office and addressed to him, was not sufficient to charge him. In Clay v. Oakley, 5 Martin N. S., 139, the notice was left in the post office at Alex- andria, directed to the indorser at that place ; and the court held it to be insufficient. In the Bank v. Rowell, 6 id., 508, the indorser lived three miles from the town of Baton Rouge, at which post office the notice was deposited, and it was determined not to be sufficient, although it was proved the indorser was in the habit of sending the servant regularly for letters, and that they seldom remain in the office longer than forty-eight hours. Timins v. Delisle, adms., 7 Blackf, 4-47, holds a contrary doctrine. The note was payable at the branch of the State Bank at Vincennes, and the intestate who was an indorser on it lived about three miles from town, but came to the post office at that place for his letters, and the notice addressed to the defendant as administrator and deposited there for him, was held sufficient. Remington v. Harrington, 8 Ham. (Ohio) R., 507. The defendant lived near the post office in Cleveland ; he rented a box ; his letters and papers were put into it. This notice, directed to the defendant, was deposited in his box between four and six o'clock in the afternoon of the last day of grace on the note, and after its protest. The defendant called at the office once a day or more frequently for his letters, and if sent by Sartwell, they were delivered to his barkeepers or himself. On these facta the case was left to the jury, and a verdict for the plaintiff having been rendered, the court refused to set it aside. Jones v. Lewis, 8 Watts and Serg., 14. In this ease the note was protested in Pitts- burgh, and notice to the defendant, an indorser, was given by depositing it in the post office in that city addressed to him; the defendant living beyond the Mononga- hela river, contiguous to but out of the city limits, and having a box at the post office and receiving liis letters there; and it was held good service. PROCEEDINGS ON NON-PAYMENT, NOTICE. 569 post office where the drawer or indorser usually receives his letters and papers. 1 The design of the notice is to bring the information it contains home to the indorser; and for this reason, when the notice is sent by mail it is to be directed to the post office nearest the party to whom it is addressed ; 3 unless he is in the habit of receiving his letters at another post office, in which case it may be transmitted to him at the latter place, without any regard to the limits of the city or town. 3 And where he resides in one town and ' does business in a neighboring village or city, and rect*ves letters at the post office nearest to his residence and also at * his „ place of business, a notice of protest may be sent to him at the latter place.* '604 1 Per Broxson, J., in Ransom v. Mack, supra. * 11 John. R., 232. * Reed v. Payne, 16 John. R., 218; Hunt v. Fish, 4 Barb. R., 324. If the indorser remove to another town, but still continue to receive his letters at the post office where he formerly resided, the notice may be sent to him at that place. * Montgomery Co. Bank v. Marsh, 3 Selden R., 481. There does not seem to be any reason why, in this case, the notice may not be addressed to the indorser at either place, unless he has indicated the post office to which it is to be sent, on the paper. Downer v. Remer, 21 Wend., 10. See Statutes of 1835, page 152. Bank of the TJ. S. v. Oarneal, 2 Peters R., 543. The action was on a promissory note, dated at Cincinnati. August 22, 1820, payable to the defendant, or order, at the office of discount and deposit of the Bank of the United States, at Cincinnati, and the bank was the holder of the note when it became due. The other facts are stated in the opinion of the court, as follows: "The defendant, Carneal, resides in Campbell county, in the state of Kentucky. The note became due on the 24th of October, 1820, and on the next day the notary put a sealed notice of the protest and non-pay- ment into the post office in Cincinnati, directed ( to Thomas D. Carneal, Campbell County, Kentucky,' the postage on which was not paid. At that time Carneal's residence in Campbell county, was without the limits of any post town, and about two miles from Cincinnati, across the river Ohio; and his residence was well known to the officers of the bank, as well as the post master at Cincinnati. The county seat of Campbell county is Newport, where there is a post office, about three miles distant from Carneal's resilience, the river Licking being between them ; and there is also another post office at Covington, below the river Licking, about two miles distant from his residence. In October, 1820, the mails from Cincinnati passed once a week only, through Covington, and three times a week through Newport. Carneal was in the habit of receiving letters at the Newport office, as well as at the offices in Coving- ton and Cincinnati. He was in the habit of receiving all the letters directed to him at Cincinnati, at the office in that place, and had given orders to the post masters to detain all such letters there until ho called for them. He visited Cincinnati very fre- quently and almost daily, having business and being a director of a bank located at that place. The post master was in tho habit of sending letters directed to him, in Campbell county, l/y the Covington mall, whenever he observed the address, unless, as was sometimes the case, he called for the letters at tho office before the Coving- ton mail was sent. Cut other letters directed generally to Campbell county, when Euw. 72 570 BILLS Of EXCHANGE AND PROMISSOET NOTES. The statute of this state, passed in April, 1857, allows notice of non-payment or non-acceptance to be served on the drawer or indorser of negotiable paper, whenever his residence or place of business, as ascertained on inquiry, or designated on the paper is in the city or town where the note, draft or check is presented for payment or acceptance, by depositing the same in the post office, addressed to him there, with the postage thereon prepaid. 1 Another statute of this state provides that, " in all cases where a ■*■ 605 notice of non-acceptance of a bill of exchange or *non-pay- ment of a bill of exhange, promissory note or other nego- tiable instrument, may be given by sending the same by mail, it shall be sufficient if such notice be directed to the city or town where the person, sought to be charged by such notice, resided at 1 This statute does not dispense with the necessity of using diligence to ascertain the indorsees residence ; nor does it apply where the indorser resides in another place. Randall v. Smith, 34 Barb., 452 ; 32 id., 542. the place of residence of the party was unknown, were sent by the post master to Newport. The notary himself, when he put the present notice into the post office at Cincinnati, supposed that Carneal received all his letters at that office. The first mail which left Cincinnati for Newport, after the deposit of this notice, was on the 26th of October ; and the first which left for Covington, was on the 28th of the same month There is no evidence in the case that the letter in question went either by the mail, of the 26th, to Newport, or, by that of the 28th, to Covington. The de fendant, Carneal. has not produced the letter, if it were ever received by him ; and the circumstances afford a strong presumption that it might have been received at Cincinnati." Upon these facts the court were of opinion that the instruction to the jury as in case of a nonsuit, was improperly given, and made the following among other remarks : " It is difficult to lay down any universal rule, as to what is due diligence in respect to notice to indorsers. Many cases must be decided upon their own particular circum- stances, however desirable it may be when practicable, to lay down a general rule. When notice is sent by mail, it is sufficient to direct it to the town where the party resides, if it is a post town. If it is not, then to the post office or post town nearest to his residence, if known. But the rule, as to the nearest post office, is not of univer- sal application, for if the party is in the habit of receiving his letters at a more distant post office, or through a more circuitous route, and that fact is known to the person sending notice, notice sent by the latter mode will bo good. And where the party is in the habit of receiving his letters at various post offices, to suit his own convenience or business, it may bo sufficient to send it to either. Tho object of the law in all these cases is to enforce the transmission of the notice by such a route as that it may reach the party in a reasonable time. This doctrine is fully recognized by this court in the case of the Bank of Columbia v. Lawrence, decided at the last term." 1 Peters, 578. The same doctrine is held in this state, independent of the statute of 1835. 3 Comst. R., 442; 3 Kernan R., 549, with similar qualifications. Catskill Bank v. Stall, 15 Wend., 364. PROCEEDINGS ON NON-PAYMENT, NOTICE. 571 the time of drawing, making or indorsing such bill of exchange, promissory note, or other negotiable instrument, unless such per- son, at the time of affixing his signature to such bill, note, or other negotiable instrument, shall, in addition thereto, specify thereon the post office to which he may require the notice to be addressed." ' Under this provision the only inquiry incumbent upon the * holder to make, is as to the residence of the drawer or indorser, and when that is ascertained the notice of protest should be directed accordingly. Any rule imposing upon the holder a different obligation would be burdensome and materially affect the circulation of commercial paper. The party is deemed to receive his letters through a post office in the town in which he resides, and if he desires to receive them elsewhere, he should indi- cate it by affixing the desired direction to his signature. 2 "Where the party entitled to notice resides in one place, transacts business in another, and receives letters in each, and notice is to be given by mail from a third place, it may be directed either to his place of residence or business. 3 The law is indifferent between the two places \ but it is not indifferent as to the mode of service. If the indorser has a known residence at the place where the note falls due, and does business in a neighboring city where he spends most of his time, it is held that the holder is not at liberty to elect between personal and mail service, between leaving the notice at his residence and sending it by mail away from his residence to his place of business. 4 In those cases where the law permits ser- vice by mail, the indorser takes the risk of miscarriage and of all accidents which may prevent the due transmission and delivery of 1 2 R. S., 55, 3 ed. There are similar statutes in several of the other states. If the indorser indicate the place and mode of serving the notice in his indorsement, it will be sufficient to serve in that manner and place. Baker v. Morris, 25 Barb., 138. 5 Seneca Co. Bank v. Neass, 3 Comst. R., 442. The defendant was sued as the in- dorser of a promissory note, payable at the plaintiff's bank, which was at Waterloo, Seneca county. The defendant lived in the town of Fayette, adjoining Waterloo, but usually received his letters at the latter place; and the notice was sent addressed to him in the town where he resided, there being no place named on the note. The result of the decision is stated in the text, in the language of Mr. Justice Pratt. * Bank of Geneva v. Howlett, 4 Wend., 328 ; Montgomery Co. Bank v. Marsh, stipra. * Van Vechten v. Pruyn, 3 Kernan R, 549. The indorser resided at Catskill, doing business as a lawyer in the city of Xew York, usually arriving there on Monday evening and leaving there on Friday evening; and his dwelling house in Catskill was very near the bank where the note Ml due and was protested. The excellent opinions delivered in the case by Justices Johnson- and Cohstock, proceed upon the ground that the holder is bound to adopt that mode of service which is the most certain to bring the notice home to the indorser. 572 BILLS OF EXCHANGE AND PKOMISSOFwY NOTES. the notice; 1 and for this reason the law as * recently pro- nounced, does not allow the holder to serve by mail in any case where he has an opportunity to make a service that is more certain and safe. But this reasoning of the Court of Appeals will not apply since the enactment of the statute passed at the last session of the legislature. Where the residence of the drawer or indorser is known, and the notice may be transmitted by mail, the service is completed by enclosing the notice in a letter or envelope and depositing the same in the post-office properly addressed and pre-paid. 3 The convey- ance being of a public character, is practically as safe and expedi- tious as the exigency of business requires ; and it would be unreasonable to oblige the holder to transmit the notice by a spe- cial messenger, or to incur the risk of sending ii by a private hand where there is a regular mail, or to prove that it was actually car- ried by the mail in due time and delivered to the person to whom it was addressed. Hence the law pronounces it sufficient to enclose the notice, and put it into the post office directed to the right per- son and place. 3 But the holder is at liberty to send the notice by a private conveyance if he chooses to do so ; 4 and there are cases in which he may be under the necessity of adopting that course. And it has been held that where it is necessary to send the notice by a special messenger to ensure its delivery within a reasonable time, the holder may recover the expenses incurred by that mode of giving notice. 5 1 Dickens v. Beal, 10 Peters' R., 572, and authorities there cited. 5 John. R., 375; Shed v. Brett, 1 Pick., 401 ; Jones v. Lewis, 8 Watts & Serg., 14. 2 Idem ; Bank of Columbia v. Lawrence, 1 Peters, 578 ; 3 Kernan R., 555. 3 Kufh v. Weston, 3 Esp. R., 54 ; Saunderson v. Judge, 2 Hen. Bla., 509 ; Darlishier v. Parker, 6 East, 8, 9; 2 Smith, 195. 4 Bancroft v. Hall, Holt C. N. P., 476. Per Mr. Justice Batlet: " Notice must be given in time, but all a man's other business is not to be suspended for the sake of giving the most expeditious notice. He is not bound to write by post as the only conveyance, or to send a letter by the very first channel which offers. He may write to a friend, and send by a private conveyance." It is enough if the notice arrive by as early a day, though at a later hour, than it would have arrived by mail. Jarris v. St. Croix Manuf. Co., 23 Maine R., 287. 5 Pearson v. Cranlan, 2 Smith's Rep., 404. The judge left it to the jury to saj whether the sending by a special messenger was done wantonly or not ; and it appeared that the letter possibly would not have reached the defendant for a fortnight, as he lived out of the usual course of the post. On a verdict for the amount of the bill and expensos, Lord Ellenborougii observed "that it was rightly left to the jury, if itwaa left to them to say, whether the special messenger was necessary, aud also whether the charge was necessary." PROCEEDINGS ON NON-PAYMENT, NOTICE. 573 * In the case of a foreign bill, it is sufficient to send the „„„ 60S notice by the first regular ship bound for the place to which it is to be sent 1 If there is an established conveyance by a lino of packets or steamships running directly to the place, the notice must go by the earliest vessel leaving, if the holder have time after the dishonor, to write and forward the notice. If there be a communication by mail, the notice should be forwarded by it or in such a manner as to arrive at as early a day, as if it had been so sent" And if there be no mail and no direct and regular com- munication, the notice should be sent by the safest and most expeditious conveyance. 9 Where the service of notice is made by mail, it is incumbent upon the holder to take care that the letter be accurately directed ; and if any delay occurs through his neglect in this particular, it will discharge the party entitled to notice. If the holder know that the indorser is dead and that his will has been proved, and have the opportunity to ascertain who are his executors, it will not be sufficient to send a notice addressed to the deceased at his late residence. 6 But the notice will be good if addressed to the indorser at his residence, if his death be not known to the holder ; 8 or if it be not known and not easily ascertained whether he left a will or whether any administrators have yet been appointed. 7 Where there is nothing on the face of a bill or note indicating particularly the residence or address of the drawer or indorser. it is enough to send the notice addressed to him generally at his place of residence or business ; 9 if he * designate the place # rf)C . where the notice is to be sent by writing it under his name, 1 Muilman v. D'Eguino, 2 lien. Bla., 5G5. * 12 Maine R., 287; Kufh v. Weston, supra ; G Mass. R., 316 ; 9 id., 139 ; G Wheat., 102. * Darbishire v. Parker, supra; Story on Bills, §§ 286, 287. 1 Ksdaile v. Sowerby, 11 Bast, 117; Sehofield v. Bayard, 3 Wend., 488. * OayUgfl Co. Bank v. Bennett, 5 Hill It., 236. ■ Merchants' Bank v. Birch, 17 John. R., 25; Vinderman v. Guldin, 34 Penn. State, :.i. 7 Sir- wart v. Eden, 2 Caines' Rep., 121. 8 Mann v. Moors, Ryan & Mood., 249. In this action, which was brought against the defendant as the drawer of the bill, the letter containing the notice was put into the post office at London, addressed to the defendant "Manchester." Abuott, Ld. Ch. J.: 1: I am of opinion that this was sufficient notice of the dishonor of tho bill. If the drawer of a bill of exchange dates his bill ' London,' I think a notice of dis- honor by letter addressed to him, London, will be sufficient." In Walter v. Haines, id., 149, the action being against an indorser, tho same Judge recpiired further proof. 574 BILLS OF EXCHANGE AND PROMISSORY NOTES. the notice should be sent to the place specified. 1 In other casea the general rule undoubtedly is, that the holder must use the same degree of diligence and care in directing a letter inclosing a notice as a prudent man would use in ascertaining and writing the address upon other letters of business of similar importance. 11 When the holder does not know and cannot, on diligent inquiry, ascertain the drawer or indorser's residence or place of business, reasonable and due diligence is tantamount to actual notice. 3 Thus, where a bill dated in New York, was drawn on a firm resid- ing there, by the defendants, residing in Petersburgh, Virginia, and on payment being refused, the clerk of the notary made diligent inquiry after the defendants, at the banks in New York and else- where, and the information was that they resided in Norfolk, and he sent the notice addressed to them at that place ; it was held that due diligence had been used and the notice was sufficient. 4 So where a bank, on discounting a note or bill, inquires of the person presenting it as to the residence of the indorser, and sends the notice to the place named by him, this is due diligence and sufficient to charge the indorser, though he never resided there, or has removed to another place. 6 So where the notary, being igno- * rant as to the residence of the first indorser, applies * for information to the second indorser, and being told that he resides in a particular town, sends the notice there ; it is held that the notary is warranted in acting upon the information so obtained, and that this is reasonable diligence. 6 1 Morris v. Husson, 4 Sand. R., 93; see also the statute cited above; 10 Peters R., 580. See also Baker v. Morris, 25 Barb., 138 ; ante, 605. Notice of non-payment on demand is properly served by sending it addressed to the indorsee at the place where he holds himself out as residing, though he resides in another place ; Lewiston Falls Bk. v. Leonard, 43 Maine, 144. 2 Clarke v. Sharpe, 3 M. & W., 166; 4 Wheat., 438; 12 East, 433. 3 Dickens v. Beal, 10 Peters R., 572 ; ante, 457. 4 Chapman v. Lipscomb, 1 John. R., 294. The holder's diligence will not avail a prior party who knows the drawer or indor- ser's residence ; nor will the agent or notary's diligence avail the holder who knows the indorser's residence ; Beal v. Parish, 20 N. Y. Rep., 407 ; Lawrence v. Miller, 16 id., 235. 8 Bank of Utica v. Davidson, 5 Wend., 587 ; Bank of Utica v. Bender. 21 Wend., 643. If the agent of the indorsers give the information as to their place of resi- dence, they are of course bound by the adt. Catskill Bank v. Small, 15 Wend., 364; 18 id., 466. Each successive indorsee is presumed to known the residence of his immediate indorser and of prior parties; Lawrence v. Miller, 16 N. Y. Rep., 235. 8 Ransom v. Mack, 2 Hill R., 5S7 ; Carroll v. Upton, 2 Sand. R., 171; S. C, 3 Comst., 272; Beal v. Parish, 20 N. Y. Rep., 407. Whether there has been due diligence is to be determined from all the circumstances of the case. PROCEEDINGS ON N0N-rAY3IENT, NOTICE. 575 It is not essential that the notice should be brought home to the indorser, nor that it should be directed to the place of his residence. It is enough that the holder of a bill makes diligent inquiry for the indorser and acts upon the best information he is able to pro- cure. If after doing so, the notice fail to reach the indorser, the misfortune falls on him, not on the holder. There must be ordi- nary or reasonable diligence — such as men of business usually exercise when their interest depends upon obtaining correct infor- mation. The holder must act in good faith, and not give credit to doubtful intelligence when better could have been obtained. 1 o v *The principle to be extracted from the authorities is, that if the notary inquire of persons who, from their con- nection with the transaction are likely to know the residence of the indorser, and are not interested to mislead the notary, and he 1 21 "Wend. R., 645. Where the holder or notary applies to a man worthy of belief for information, and is answered distinctly that the indorser resides at a given place, he is not bound to push the inquiry further; for ordinary diligence can require no more than that the inquiry shall be pursued until it is satisfactorily answered. Per Mr. Justice Broxsox, in Bank of Utica v. Bender. Chouteau v. Webster, 6 Metcalf R., 1. The general rule is that the notice must bo so given and at such place, that it will be most likely to reach the indorser promptly. The defendant in this case, who was sued as indorser of a note payable in New York, resided permanently in Boston, but his actual residence at the time the note was dishonored, October, 1837, was in Washington, and a notice sent to him at that place was held sufficient ; his residence being at Washington during the session of Congress, as a Senator from Massachusetts. Bank of Columbia v. Lawrence, 1 Peters, 578 ; 2 id., 553 ; Bank of TJ. S. v. Lane, 3 Hawks, 453. If the party's residence be part of the time in one place and part in another, the notice should bo sent where he is most usually to be found. McLean v. Waters, 9 Dana R., 99. But it is sufficient to send the notice to the drawer or indorser's general residence or domicile, where no direction has been given by him in respect to it. Marr v. .Johnson, 9 Yerger, 1, 6; 2 Caincs R., 121. If the indorser have in fact no residence or placo of business when the note matures, no notice is necessary in order to charge him. Tunstall v. Walker, 2 Smcdes ,t Marsh, 038. But if he have a residenco and place of business, though ho may have been absent from it a considerable time, the notice should bo left either at his residence or place of business. Pierce v. Pendar, 5 Met., 353. Where the holder knows of the death of the indorser, but cannot with reasonable diligenco ascertain who are his le^al representatives, it will bo sufficient to send the notico directed to the indorser. Barnes v. Reynolds, 4 IIow. Miss., 114. In several of the states, promissory notes are not governed by tho law merchant; and in most of these it is incumbent upon the holder to use diligenco in tho attempt to collect the same of the maker by brjpgfng a suit thereon within the time and m tho manner pointed out by statute. Pcrrin v. Broadwoll, 3 Dana, 590 ; Oldham v. Bengan, 2 Litt., 132; Morton v. Frink. 5 Day, 530; Leo v. Lovo, 1 Call. R., 497 ; Morgan v. Tipton, .; McLean, 339 ; Haggerty v. Bradford, 9 Ala., 507 ; Dorsey v. lladlock, 1 Blackf., 113, 532. See notes to a former chapter. 576 BILLS OP EXCHANGE AND PKOMISSOEY NOTES. acts on the information thus obtained, it is clue diligence on hia part. 1 Where the inquiry cannot be made of any of the parties, the notary should go among the business men of the place, and make a thorough inquiry at places of public resort, and among such persons as would be most likely to know the residence of the indorser. 8 Merely making inquiry at the post office or in a public bar-room, of persons whom he cannot remember, is not enough. But if he is told distinctly by a credible person who has no inte- rest to mislead him, where the indorser or drawer resides, he has a right to assume and act upon the information as true. 8 There is a slight presumption that the drawer of a bill or the maker of a note, resides at the place where the paper is dated ; 4 but it is not sufficient to send notice to the place where the bill is dated, if the drawer reside elsewhere, and no inquiry be made. 6 In respect to the indorser, no * presumption whatever arises as to his place of residence, from the date of the bill or note. 6 Where the indorser's residence is known to the indorsee of a bill or note, the latter is not bound to institute inquiry to ascer- tain whether the indorser may not have removed to another place before the paper fell due ; for, as he has no reason to expect such an event, no considerations of diligence would naturally prompt him to make any inquiry in relation to it. Accordingly, where the place of an indorser's residence is established at the time when a note, having the usual time of bankable paper to run, is dis- counted, and is at such a distance from the place of payment as to repel the presumption that a removal (in case it happens before the note falls clue,) would come to the knowledge of the holders, and no actual knowledge is brought home to them, a notice of demand and non-payment directed to such place of resi- dence is sufficient, although the indorser has, in fact, in the mean- 1 Rawdon v. Redfield, 2 Sand. R, 178. This is the rule stated by Ch. J. Oaklet, who had had as much experience in the trial of commercial cases as any other judge in the country. a Spencer v. The Bank of Salina, 3 Hill R., 520; ante, 457. 3 Idem; 2 Sand., 178; 21 Wend., 643; 2 Hill, 587. 4 3 Hill, 521 ; 3 Denio R., 145 ; Carroll v. Upton, 3 Comst. R., 274. Broxsom, Ch. J. : " The fact that the bill purported to have been drawn at Washington city, where the notice was sent, furnished very little, if any, evidence that the drawer resided at that place ; and did not dispense with the necessity of inquiring for his residence.* • Lowry v. Scott, 24 Wend., 358; Hill v. Varrell, 3 Greenl., 232; 3 Hill, 520. 8 Idem; see Bank of Utica v. Davidson, 5 Wend., 587. PROCEEDINGS ON NON-PAYMENT, NOTICE. 577 time, become a resident of another place. 1 The good sense of this rule has received here the sanction of a general statute, expressly rendering it .sufficient to send the notice to the indorser, at the place where he resided when the indorsement was made. 2 Where there is no dispute about the facts, the question whether there has been due diligence or not belongs to the court as mattei of law, and not to the iury. 3 If the evidence *is doubtful „ ,„ or contradictory, it is for the jury to decide under instruc- tions from the court.* The same rule in respect to diligence applies, whether the notice is given by mail or otherwise ; the holder is bound to use reasonable diligence to communicate the notice to the drawer or indorser. If the parties reside in the same city or place, the in- dorser or drawer must, under the law merchant, be personally notified of the dishonor of the bill or note, either verbally or in writing; or a written notice must be left at his dwelling house or place of business. 6 But where the notary calls at the dwelling house of the indorser, at the regular time and at a seasonable hour, to serve the notice, and finds the house shut up, the doors locked and the family absent from town, he is not bound to call a second time, nor is he under any obligation to leave a written notice. 4 So, where a cashier called at the counting house of the drawer, 1 Tho Bank of Utica v. Phillips, 3 Wend. R., 408. The opinion of the court was • olivered in this case by Mr. Justice Marcy. 5 id., 587. ' Tho Bank of Utica v. Phillips was decided in 1829, and the statute was passed in 1835 ; see 2 R. S., 55, 3d ed. ; see Seneca Co. Bank v. Neass, 5 Denio, 329. 1 Bank of Utica v. Bender, 21 Wend., 643 ; Remer v. Downer, 23 Wend., C20; and 3 Hill R. u 520. " When all the facts are ascertained, what is due diligence in making inquiries for the residence of the drawer, is a question of law. But due diligence in the aggregate, includes both fact and law. When a witness swears to due diligence In making inquiries, ho speaks of two things : first, that there was some diligence, which is a matter of fact; and, second, that there was due and sufficient dili- gence, which is matter of law." 3 Comst. R., 274. 4 7 Peters R., 200; 10 id., 580. It is a mixed question of law and fact, and liko other questions of that nature must be submitted to the jury to decide under tho direction of tho court. Davis v. Ilerrick, G Ham., 55 ; Nash v. Harrington, 1 Aik., 39. 8 The post master being the indorser of a bill, notice left at the post offico will bo eufficient to charge him. Cook v. lienick, 19 111., 598; ante, 601, 602. 8 Williams v. Tho Bank of tho U. S., 2 Peters R., 90. The notary called at tho house of tho defendant, William', who lived in Cincinnati, on the right day, found it shut up, and the door locked; and on inquiry of the nearest resident, he was informed that the defendant and family had left town on a visit; whether for a day or week, or month, he did not know, nor did he inquire. Under our repent statute, quere, should he not deposit a notice in the post office? Edw. 73 578 BILLS OF EXCHANGE AND PROMISSORY NOTES. for the purpose of giving him notice of dishonor, found the out- ward door open and the inner one locked, and knocked and made noise enough to have been heard if any one had been there, and no person answered the call ; it was held that this was due dili- gence, though no written notice was left there and none put in the post office. 1 The principle of the decision is, that the count- ing house of the drawer is the place where the holder is entitled to look for him during the usual hours of business, so that the omission to give the notice is not occasioned by the want of diligence in the holder, but by the neglect of the party entitled to notice. 8 *Of course the circumstances are to be considered in 614 determining whether the mere act of going to the door of the counting house and knocking for admission and finding no one there, shall operate to dispense with notice altogether, or only to extend the time of giving it. 3 If all the facts and circumstances together show a diligent and faithful effort to serve the notice, and that the failure to serve it in due time arose from the absence of the party entitled to notice, it will be sufficient to charge the drawer or indorser. Thus, where the notary calls at the boarding house of the indorser and does not find him there, it is sufficient to leave the notice for him with the master of the house or with a fellow boarder to be handed to him ; 4 and where the indorser's dwelling house and place of business are both closed up, and no one can be found at either place to receive the notice, it is abun- dantly sufficient to deposit the notice in the post office addressed to him. 6 And under the recent statute it is sufficient in this state 1 Crosse v. Smith, 1 Manle & Selw., 5-45. s If a party to a contract, who is entitled to the benefit of a condition, upon the performance of which his responsibility is to arise, dispense with, or by any act of his own, prevent the performance, the opposite party is excused from proving a strict compliance with the condition. In Ogden v. Cowley, 2 John. R., 214. The notary finding the indorser's house shut up, and being told that he was out of town, enclosed and deposited a notice addressed to him, in the post office ; and it was held good service. 3 Allen v. Edmundson, 2 Ex. Ch. Rep., 719. 4 Stedman v. Gouch, 1 Esp. R., 4. In this case the notice loft with the woman who kept the boarding-house was held good. In the Bank of the U. S. v. Hatch, 6 Pet. R., 250, a notice left with a fellow boarder to be delivered to Hatch, was adjudged good. 6 Ogden v. Cowley, 2 John. R., 274; see Miles v. Hall, 12 Smedes & Marshall, 332. The notice is properly served, when it is left at the indorser's placo of business, with a person, apparently in charge, representing him ; Mechs. Banking Association v. Place, 4 Duer, 212; but the party making the service is bound to ascertain that the office, store or counting house where he leaves the notice, is the indorser's pre- sent place of business ; Davenport v. Gilbert, 4 Bosw., 532. PROCEEDINGS ON NON-PAYMENT, NOTICE. 579 to deposit the notice in the post office, properly addressed and pre-paid, without making any effort to serve it on the drawer or indorser personally. Time of serving notice. Notice of dishonor cannot be given until after a demand and refusal of payment ; l though it is not neces- sary that the party giving the notice should have, at the time, personal knowledge of the fact of dishonor. 2 In * general ..„„„ . ... . *615 terms, the notice must be given within a reasonable time after the dishonor ; but the law determines with great precision what is reasonable time. A notice given the day the bill or note becomes due, is not too soon ; for though payment may still be made within the day, non- payment on presentment is a dishonor. 3 And where the third day of grace falls on Sunday, the presentment for payment and notice of non-payment may be made and given on Saturday, which is in that case the last day of grace. 4 But the holder is not bound to give notice on that day, nor on Sunday ; and it will be in time if given on the Monday following. 6 For the rule requiring the notice to be served on or before the next day, means the next business day. 6 So that if the note or bill be dishonored on the third day of July, it will be sufficient to give the notice on the fifth, 7 or on the day following a general holiday, when that comes on the next day after the dishonor. 8 "Where the parties reside in the same place, notice to the drawer or indorser on the day of the dishonor and after it, or in the course 1 Jackson v. Richards, 2 Caines R., 343. A premature notice is a nullity. Bank of Del. Co. v. Bramhall, 38 Penn. State, 135. ' Jennings v. Roberts, 4 Ellis & Blackburn's R., 615. If the notice unequivocally asserts the fact of dishonor, it 13 immaterial to the party notified whether the person giving it acted upon his own personal knowledge or not. ' Bainbridge v. Manners, 3 Campb., 193; Youngs v. Lee, 2 Kernan R., 551. In Cook v. Litchfield, 5 Sand. R., 330, the notice was dated on the day of dishonor in the same manner as in Youngs v. Lee; Corf v. M'Comb, 1 John. Cas., 328 ; Linden- berger et al. v. Beall, 6 Wheat. R., 104; Coleman v. Carpenter, 9 Barr, 178. 4 Bussard v. Levering, 6 Wheat. R., 102; 5 Cond. R, 18; 4 Wend., 566. ' 2 Caines R, 3 13 ; Williams v. Matthews, 3 Co wen R., 252, 262 ; Howard v. Ives, 1 Hill R., 263; Farmers' Bank of Bridgeport v. Vail, 21 N. Y. R., 485. 9 Hayncs v. Birks, 3 Bos. & Pull., 599 ; Church v. Barlow, 9 Pick., 517 ; Wright v. Shawcross, 2 Barn, k Aid., 501. I tylei v. Stevens, 4 Wend . 506. But if, one of tin • indorsera receive a notice of dishonor on the fourth day of July, it must bo ■erved or sent forward on the day fol- lowing, or it will be too late. Farmer \ . Rand, 16 Maine (4 Shop.), 453. 1 Idem; 1 Hill, 263. See statute of 18 19. 580 BILLS OF EXCHANGE AXD PROMISSORY NOTES. of the next succeeding day, is reasonable, is in time ; l but the notice is not in time unless it be given so as to reach the party residing in the same place, on the day * succeeding the dishonor. If sent by the penny post, as it may be in Lon- don, it must be deposited in time to be delivered on that day.* Lord Ellenborough : " Where the parties reside in London, each party should have a day to give notice. I have before said, the holder of a bill of exchange is not, 07nissis omnibus aliis negotiis, to devote himself to giving notice of its dishonor. It is enough if this be done with reasonable expedition. If you limit a man to the fractional part of a clay, it will come to a question how swiftly the notice can be conveyed. A man and horse must be employed, and you will have a race against time. But here a day has been lost. The plaintiff himself had notice on the Monday, and does not zxye notice to his indorser till Wednesday. If a party has an entire clay, he must send off his letter conveying the notice, within post time of that clay. The plaintiff only wrote the letter to the defendant on Tuesday. It might as well have continued in his writing desk on Tuesday night, as be in the post office. He has clearly been guilty of laches by which the defendant is discharged." ' It follows that the person who puts the letter into the penny post on the day when it ought to be received, must show affirmatively that it was deposited in time to be received on that day. 4 So, where the holder sends notice to the indorser residing in the same place, by a private hand, it must be served before the expi- 1 Grand Bank v. Blanchard, 23 Pick., 305. Such a notice is in time, though it be the custom of the bank to give notice on the day of dishonor. Smith v. Mullett, 2 Campbell, 208; Scott v. Liflbrd, 9 East, 347; Williams v. Smith, 2 Barn. & Aid., 500. 2 Doebree v. Eastwood, 3 Carr. & P., 250 ; Walters et al. v. Brown, 15 Ifd., 285. 3 Smith v. Mullett, supra ; Scott v. LifFord, 9 East, 347. This action was brought by the indorser against the drawer. The plaintiff had placed the bill in the hands of Down & Co., his bankers, and they, on the fourth of June, when it became due, pre- sented it for payment, and it was dishonored. On the fifth they returned it to the plaintiff, who gave notice through the penny-post to the defendant on the sixth. Lord Ellexborough: "I cannot say that the holder on the return of the bill dishonored ia bound, omissis omnibus aliis negotiis, to post off immediately with notice; if reasona- ble diligence is used, it is sufficient." See Tindall v. Brown, 1 Term, Iffl ; Bryden v. Bryden, 11 John. R., 187. 4 Fowler v. Hendon, 1 Tyr., 1002. The post mark is not conclusive evidence of th« time when a letter is mailed. Stocken v.«Collins, 7 Mee. & W., 515 ; S. C, 9 C. & P., 653 ; 38 Eng. Cora. Law Rep., 273. Tho holder is not answerable for the delay of the penny post. PROCEEDINGS ON NON-PAYMENT. NOTICE. 58) ration of the day succeeding the dishonor. 1 And * it is not . *fi1 7 at all material in what manner the service is made, if the notice actually reaches the party in due time ; 2 that is to say, on the right day and within the customary hours of business, having respect to the usages of the place.' "Where the parties do not reside in the same place, the notice of dishonor must be put into the post office early enough to go by the mail of the day succeeding the last day of grace ; 4 unless the mail of that day is closed at an unreasonably early hour, or before early and convenient business hours. 6 The law does not require the 1 Bancroft v. Hall, Holt C. X. P., 476 ; Jameson v. Swinton, 2 Taunt., 224; S. C, 2 Campb., 373. When the notice is sent by mail to a private agent, he must serve it immediately; Sewall v. Russell, 3 Wend., 276. " Bank of Columbia v. Lawrence, 1 Peters, 578 ; see also Tunnies v. Delisle, 1 Blackf., 447 ; Remington v. Harrington, 7 Ham. ( Ohio ), 506 ; Jones v. Lewis, 8 Watts & Serg., 14. * 9 Wheat., 587 ; 2 Burr., 669 ; Cayuga Co. Bank v. Hunt, 2 Hill R., 635. A notice left at the office of an attorney on the evening of the day is sufficient to charge him. Stanley v. Bank of Mobile, 23 Ala., 652 ; so a notice left at the room of a member of the Legislature during the session is good. Grayham v. Sangstone, 1 Md., 59. When left at the indorser's place of business, in his absence, the notice should be handed to the clerk. Rives v. Parmley, 18 Ala., 256. 4 Lenox v. Roberts, 2 Wheat., 373; Bank of Alexandria v. Swann, 9 Peters, 33; 2 Hill R., 451 ; Mead v. Engs, 5 Cowen, 303. * Lawson and Covode v. The Farmers' Bank of Salem, 1 Ohio State, N". S., 206. Decided in 1853. The rule a3 laid down in this case is, that in order to charge tho indorser living in another place or state, the notice must be deposited in the post office in time to be sent by tho mail of the day succeeding the day of the dishonor, providing the mail of that day be not closed at an unreasonably early hour, or before early and convenient business hours. Fullerton et al. v. The Bank of U. S., 1 Peters, 605, 618; Eagle Bank v. Chapin, 3 Pick., 180, 183; Talbot v. Clark, 8 Pick., 51; Carter v. Bailey, 9 X. Hamp., 559; Farmers' Bank of Maryland v. Duvall, 7 Gill & John., 79; Freeman's Bank v. Perkins, 18 Maine R., 292 ; Mead v. Engs, 5 Cowen R., 303; Sewell v. Russell, 3 Wend., 276; Brown v. Ferguson, 4 Leigh, 37; Dodge v. Bank of Kentucky, 2 Marshall, G10 ; Hickman v. Ryan, 5 Littell, 2-i ; Hartford Bank v. Stedman, 3 Conn., 489; Brenger v. Wightmah, 7 Watts & Serg., 204; Tounsley v. Springer, 1 Lou. R., 222 ; Bank of Natchez v. King, 2 Rob., 243 ; Brown v. Turner, 1 Ala. R., 752; Lockwood v. Crawford, 18 Conn., 363. In Lawson and Covode v. The Farmers' Bank of Salem, supra, the draft fell duo on tho 27th July, 1848, at Pittsburgh, and tho mail left there at 10 A. M., on tho next day, closing at ten minutes past nine ; and it was held incumbent on the holder to forward the notice by that mail. In Hawks v. Salter, 4 Bing., 715, where tho bill van dishonored on Saturday in a place where the post went out at half-past nine in torning, it wan held nt to send a letter by the following Tuesday morning's post. 1 M" . - : . i'.. 750; Bray v. Hedwen, 5 M. A- SeL, 68. Downs v. Planters' Bank, 1 8medes & Marsh (Miss.), 261. When the notice is sent by mail, it must, at furthest, bo put into the post office in time to go by the mail of tho 582 BILLS OF EXCHANGE AND PROMISSORY NOTES. ^ holder to * give the earliest possible notice of the dishonor it requires of him only an ordinary and reasonable diligence. If the notice be sent by the usual route, it will be sufficient, though it might have arrived sooner if sent by another. 1 If there be two mails leaving on the same day, the first closing before the common hours of business, it is sufficient to transmit the notice by the second. 2 Indeed, the holder is not bound to send off the notice by a mail that closes before the usual hours of business begin, even if there be no second mail leaving on that day. 3 The question in each case is, whether the holder has used ordi- nary and reasonable diligence ? And it is very evident that the usages of the place are to be considered in determining what is ordinary and reasonable diligence. Where a notice is sent to a bank, and the mail bringing it arrives in the evening at five o'clock, it is no want of diligence in the officers of the bank if the notice -X- 619 be not received until the * next morning ; because the busi- ness of the day is by general custom closed at an earlier hour. 4 On the same principle the time at which the business of the day begins, among commercial men, is to be considered in deciding at how early an hour the notice must be mailed. 1 Bank of Utica v. Smith, 18 John. R, 231. 2 Howard v. Ives, 1 Hill R., 263. 3 Chick v. Pillsbury, supra ; and Deminds v. Kirkman, supra. * Mead v. Engs, 5 CoWen, 303. next day succeeding the protest, if there be a mail which goes on that day, and if not, then by the first mail which goes afterwards. The holder need not put the notice in the office on the same day the note is protested, but he must on the next day, in time for a mail of that day, unless it leaves at an unreasonably early hour. Deminds v. Kirkman, id., 644. When the mail leaves before sunrise in the morning, & i that it must have been closed the night before, the notice need not be sent by it, for that is an unreasonably early hour. Lockwood v. Crawford, 18 Conn. R., 373. The notice must be given on or before the next day after the dishonor; and it is incumbent upon the holder to show affirma- tively that the notice was given in due time. Chick v. Pillsburj'', 24 Maine R., 458. The note in this case was protested in the city of New York, and notice thereof put in the post office in that city on the next day, directed to the defendant at his residence, Bangor, Maine, " between twelve o'clock at noon and eight o'clock at night ; " and it was proved that there was only one mail a day by which the letter could be sent, and that this mail went out at seven o'clock in the morning, closing at six. And it was held that the notice was trans- mitted with due diligence. PROCEEDINGS ON NON-PAYMENT, NOTICE. 583 The holder is not bound, in any case, to send off the notice on the day of the dishonor j 1 nor is either of the indorsees bound to transmit the notice to his indorser on the day he receives it. Each party has a day for giving notice f that is to say, he has the whole of the day on which the uote or bill is dishonored, or the whole of the day on which he receives notice thereof, to pre- pare his notice for the parties liable to him. Abbott, Ch. J. : " It is of the greatest importance to commerce that some plain and precise rule should be laid down, to guide persons in all cases, as to the time within which notice of the dishonor of bills must be given. That time I have always understood to be, the departure of the post on the day following that in which the party receives intelligence of the dishonor. If, instead of that rule, we are to say that the party must give notice by the next practicable post, we should raise, in many cases, difficult questions of fact, and should, according to the different local situation of parties, give them more or less facility in complying with the rule. But no dispute can arise from adopting the rule I have stated." 3 Taken with the qualifications already stated, this is unquestion- ably the general rule in this country as well as in England ; though it was formerly considered necessary that the notice should be transmitted by the next convenient or practicable post, leaving after its receipt.* All things considered,* the rule, as now #< , 9ft settled, is but a slight modification of that which prevailed 1 Bank of Alexandria v. Swan, 9 Peters, 33; Howard v. Ives, 1 Hill R., 2G3; Hart- ford Bank v. Stedman, Conn. R., 484 ; Farmers' Bank of Maryland v, Duvall, 7 Gill & John., 79; Whitwell v. Johnson, 17 Mass., 449; Carter v. Burley, 9 N. Hamp., 559; Dodge v. Bank of Kentucky, 2 Marsh., 610. 1 Bray v. Hadwen, 5 Maule, 68. 1 2 B. & Aid., 49G. * In Darbishire v. Parker, which was an action on an inland bill, 6 East, 3, 10, Mr. Justice Lawrence states the rule in these words : " The general rule, as collected from Tindal v. Brown, 1 Term R., 167, and other cases, seems to be with respect to persons living in the same town that the notice shall be given by the next day ; and, with regard to such as live at different places, that it shall be sent by the next post. But if in any particular place the post should go out so early after the receipt of the intelligence as that it would be inconvenient to require a strict adherence to the gene- ral rule, then, with respect to a place so circumstanced, it would not be reasonable to require the notice to bo sent till the second post. Considering the immense cinula- tion of paper in this kingdom, it is very material to have some general rule by which men may know how they are to act in those cases; leaving parties in particular cases, where compliance with sucli rule cannot be reasonably expected, to account for their non-compliance with the strict rule." Lord ElXBHBOBOUOE, C. J., observes in the Baino case, "Thero appears to mo con- 684: BILLS OF EXCHANGE AND PROMISSORY NOTES. at an earlier da} T . The material change is found in the new modes and facilities of communicating intelligence, and in the frequent ar- rival and departure of mails. When the mail seldom left any place oftener than once a day, the rule that notice must be sent by the next post after intelligence of dishonor of the bill was received, did not practically require any greater degree of diligence than must be observed under the rule now established. 1 But when at length business had so much increased, and communications by mail had become so much more frequent, it became necessary to lay it down as a rule that the party receiving notice *is not bound to send it forward on the same day. 2 A careful examination of the decisions, with reference to the order of time in which they were made, shows this to have been the process by which the rule was liberalized and made to accommodate itself to other business affairs of life. 3 1 The rule was at no time so strict as to require the notice to be sent forward at all events by the very next mail after its receipt. Mead v. Engs, supra; though it was stated in terms that seemed to imply as much. The opinions delivered in Darbishire v. Parker, recognizing the rule as previously held, point out very clearly the necessity of modifying it, so as to make it accommodate itself to the business affairs of life. That case was decided in the Court of King's Bench, in 1805. 2 Scott v. Lifford, 9 East. 347 ; Bray and others v. Hadwen, 5 Maule & Set, 68. 3 Scott v. Lifford, was decided in 1808. holding that where the indorsee of a bill of Qxchange lodged it with his bankers who presented it for pa3 T ment on the fourth, siderable difficulty in laying down any certain time within which notice must at all events be given. The general direction indeed of Marins and other writers, is to send notice of the dishonor of a bill by the next post, where the parties do not live in the same place; and the same was said in Tindal v. Brown; and yet in tliat case it was considered sufficient if notice were given the next day, where the parties all lived in the same town. If notice must at any rate be communicated by the next post after it is received, it must often happen that the party will not have a day, or anything like a day, to give it in; for the post may go out immediately or very soon after the letter of advice arrives. There must therefore be some reasnvable time allowed, and that too, accommodating itself to other business affairs of life; other- wise it is saying that a man who lias bill transactions passing through his hands must be nailed to the post office, and can attend to no other business, however urgent, till this is dispatched. But if there be a reasonable time between the coming in and going out of the post on the same day, as in this case four or five hours may be con- tended to be, allowing for reasonable diligence in other concerns as well as in this, it would be a material question, if neatly raised, whether the party were bound to com- municate by the next post the intelligence he had received by the post on the same day." The doctrine of this case is approved in Mead v. Engs, 5 Cowen R., 303, but with a qualification that diligence does not require the neglect of other duties in order to forward the notice by the very next mail. PROCEEDINGS ON NON-PAYMENT, NOTICE. 585 *622 * The result of the authorities then is, that the holder of a bill or note is bound to dispatch the notice of dishonor by mail on the day after default is made in payment of it, unless the mail closes at an unreasonably early hour ; that an indorser is bound to use the same diligence in sending it forward on the day after he re- ceives it ; and that neither of thein is obliged by law to send it forward on the very day the bill is dishonored, or the notice received. When it happens, as it does sometimes, that no mail leaves on the day after notice is received, or the paper is dishonored, it is when it was dishonored, and on the fifth returned it to the indorsee, who gave notice to, the drawer on the sixth, the notice was reasonable. Bray and others v. Hadwen, 5 Maule & Selw., 68, was decided in the Court of King's Bench in 1816, and Lord Ellexborough, C. J., delivering the opinion there, says : It has been laid down, I believe, since the case of Darbyshire v. Parker, as a rule of practice, that each party, into whose hands a dishonored bill may pass, should be allowed one entire day for the purpose of giving notice ; a different rulo would Eubject every party to the inconvenience of giving an account of all his other engage- ments, in order to prove that he could not reasonably be expected to send notice by the same day's post which brought it." The exact point decided was that the party receiving notice at eight or half-past eight o'clock in the morning was not bound to send it forward by a mail leaving at twelve. "Williams- v. Smith, 2 Barn. & Aid., 497, decided in 1819, lays down the rule as Etated in the text. In Hawks v. Salter. 4 Bing., 715, decided in 1828 ; a bill was dishonored on Satur- day, in a place where the post went out at half after nine in the morning, and Ch. J. Best expressed the opinion of the court that it was sufficient notice of dishonor to send a letter by the following Tuesday morning's post ; thai the holder was not bound to mail tho notice, early enough to go by the Monday morning's mail. 1 Mooro & Payne's R., 750. Geill v. Jeremy and another, 1 Moody & Malkins' &-, 61, decided at Nisi Prius, in 1827. In this case the plaintiff received notice at^is residence near Cherley, in Lan- cashire, by the post at nine o'clock in the morning of Thursday, and the post left tho village at six that evening; but the plaintiff rtd not write by that post which would have reached London on Saturday ; and as there was no mail leaving on Friday he did not send tho notice forward till Sat»rday. Lord Tenterden, C. J. : " In these cases it is of great importance to have a fixed rule, and not to resort to nice questions of the sufficiency, in each particular «asc, of a certain number of hours or minutes. The general rulo is, that tho party nw. 74 586 BILLS OF EXCHANGE AND PEOJLISSORY NOTES. sufficient to put the letter in the post office in time to go by the next mail ; for it is immaterial whether in the meantime the notice lies in a public or private office. 1 For the purpose of giving notice, a bank or banker, with whom a bill or note is deposited for collec- tion, is to be considered as a distinct holder, and has a day to give notice to his customer ; while the customer has another day in which to give notice to the antecedent parties." The rule is the same, though the paper be transmitted through several banks indorsed from one to the other for collection: 3 each of them * i s to ^ e re g ar ded as a party to the paper for all the purpo- ses of receiving and giving notice to charge the prior parties, just the same as if the property in the bill or note had been trans- ferred for value. And it has been held in England that where a bill of exchange is indorsed from one to another branch of the same bank, each of the branch banks is to be considered a distinct holder, and is entitled to the usual notice of dishonor. 4 The holder should give notice of dishonor to all the parties to whom he intends to look for payment, 6 but it is enough for him to send or give due notice to his indorsers for the purpose of charging the party indorsing the bill over to him ;° and it is the business of each indorser to take care that the party responsible to him is duly notified 7 "Whether there be few or many indorsers, the duty of each is the same : if the notice be transmitted from one indorser to another in the inveise order of their indorsements, and one of 1 Geill r. Jeremy, supra ; Chick v. Pillsbuiy, supra. a Bray v. Hadwen, supra; Robsonv. Bennett, 2 Taunt., 388; Langdale v. Trimmer, 15 East, 291 ; Howard v. Ives, \ Hill 3., 263. The Farmers' Bank of Bridgepo* v . Vail, 21 N. T. Rep., 485, 487. 3 Mead v. Engs, supra; Bank of tnited States v. Davis, 2 Hill R., 451 ; Haynes v. Birks, 3 Bos. & P., 599 ; Robson v. Be^ett, supra; Colt v. Noble, 5 Mass. R., 167 ; as . to effect of laches in one of the parties, see ante, 475. * Clodo v. Bayley, 12 Mees. & Welsb., i.\, A bill of exchange was indorsed to a branch of the National Provincial Bank of England, at Port Madoc, who sent it to the Pwllheli branch of the same bank, who in-lorsed it to the head establishment in London : Held, that each of the branch establishments were to be considered as inde- pendent indorsers, and each entitled to the usual i ti co of dishonor. 5 Dabree v. Eastwood, 3 Carr. & P., 250; 9 Petei^ 33. • Lenox v. Roberts, 2 Wheat., 377. T Morgan v. Wood worth, 3 John. Cas., 89; Bank of TJtica v. Smith, 18 John. R., .30 ; 2 mil R., 451. The holder has the right to give notice to sucn of tho'ndorsers as he chooses to look to for payment, it being incumbent upon each indorser t notify those responsible to him. Spencer v. Ballou, 18 N. T. Rep., 327; Baker v. Morris, 25 Barb., 138, Struthers v. Blake", 30 Penn. State, 139; Pate v. State Bank or Indiana, 3 lad., 176. PROCEEDINGS ON NON-PAYMENT, NOTICE. 587 them sends it forward on the day he receives it, and a prior indorser lets it lie over one day too late, the latter cannot excuse his neg- lect by showing that the holder or one of the subsequent indorsers had used greater diligence than was required of him, so that alto gether there had been no more time consumed in giving the notice than the law would have allowed if each party had mailed the notice on the next day. The over diligence of one will not supply the want of diligence in another. 1 * Where a bill of exchange passed through the hands of five persons, all of whom resided in London or the neigh- borhood, and the bill being dishonored when it fell due, the holder gave notice on the same day to the fifth indorser, and he on the next day to the fourth, and he on the next day to the third, and he on the next day to the second, and he on the same day to the first, the court were of opinion that due diligence had been used ; 8 indeed, the first and last of the notices were given a day sooner than was requisite. There being, as in this case, a succession of notices between the holder and the drawer of the bill, want of dili- gence in either of the parties breaks the chain of notice and discharges the prior parties ; for no recovery can be had thereon against an indorser or drawer who has not been duly notified. 8 In respect to foreign bills, the safest course is to send the notice of dishonor to a drawer or indorser abroad by the next regular mail, if there be an established communication by mail f and if 1 Manchester Bank v. Fellows, 8 Foster (N". H.), 302 ; Turner n Leach, 4 Barn. & Aid., 451; Brown v. Ferguson, 4 Leigh, 37, 50; Simpson v. Turney, 5 Humphreys, 469; 8 Porter, 258; Rowe v. Tipper, 20 Eng. Law and Eq. U., 220. Green, on the 12th of July, 1851, drew his bill of exchange on Knight & Co., payable to his own order four months after date, for value received. Gre?n indorsed the bill to the defendant, and the defendant then indorsed it to Able/, and Abley then indorsed it to the plaintiff. And on the question of notice, the ^roof was that the bill was dis- honored for non-payment on Saturday, the 1 5th of November ; that on Monday, the 17th, the plaintiff gave due notice of dishonor to Abley; that Abley gave no notice to the defendant, but that the plaintiff on the Iffth gave notice to the defendant; and it was held that the notice was too late. The plaintiff, when ho relies upon his own notice, must show that it was given in the nsual time. Ilarrison v. Ruscoe, 15 Mee. one of tbe members, if given before *tbe fact of dissolu- 632 • tion bas been made public, is notice to all ; 4 for tbe part- nership still subsists for the purpose of winding up the business and closing tbe concern, 6 and each may be understood to act as the agent of the rest until notice of the dissolution has been made public. 6 On the same principle, notice to a general agent, or to an agent who has authority in the premises, will be the same as notice to his principal. 7 As a general rule, the failure to give the drawer or indorser due notice of non-payment, discharges him. The presumption of law 1 Cayuga Co. Bank v. Bennett, 5 Hill R, 236. 5 Barnes v. Reynolds, 4 How. (Miss.), 114 ; Dabney v. Stidger, 4 Smedes & M., 749; Planters' Bank v. White, 2 Humph., 112. Notice addressed to the "legal represen- tative " of the deceased indorser, to the place of his last residence, is good. Pillow v. Hardeman, 3 Humph., 538 ; the holder not knowing the name of the representa- tive ; see also Boyd v. City Savings Bank, 15 Gratt. (Va.), 501. 3 Cooke v. Bank of Tennessee, 9 Humph., 51 ; Dabney v. Stidger, 4 Smedes & M. T 749; 5 Hill R., 232; Goelet v. McKinstrey, 1 John. Cas., 405; 2 id., 374; Grant v. Shurter, 1 "Wend., 148. 4 Nott v. Downing, 6 Lewis, 684. 6 Murray v. Mumford, 6 Cowen, 441. 6 Byles on Bills, 37-39. A dissolution of the partnership cannot retroact upon the contract of indorsement ; and, under that, a notice to one of the firm is notice to all. Is not notice to one of them, after the dissolution, good notice to all, notwithstanding the holder knows of the dissolution? It has been held that it is. Coster, Robinson & Co. v. Thomason, use, &c., 19 Ala,, new series, 717. When a bill indorsed by a partnership is dishonored after dissolution of the firm, notice of protest to any one of the late partners is sufficient to bind all. Decided in 1851. Notice of dishonor is properly served by mail, addressed to the name of the firm indorsing a bill at their residence, indicated under their signature, though the firm has been since dissolved. Troy City Bank v. Lauman, 19 N. Y. Rep., 477, 481. Brown v. Turner, 15 Ala. (New Series) R., 832. When a firm having accepted a bill dissolve partnership before it becomes due, it is enough to demand payment of one of them, or of his agent, where they are both absent. Decided in 1849. 1 Incorporated companies can only act through their agents, and where they are entitled to notice-, it is well served upon their known and recognized agents. PROCEEDINGS OX NON-PAYMENT, NOTICE. 595 is, that he is injured by the want of notice J 1 that the drawer is de- prived of the opportunity which he ought to have had to withdraw immediately his effects from the hands of the drawee ; a and that the indorser is prevented from taking prompt measures to obtain and enforce payment of the note or bill. 3 And this presumption is so strong and uniform as to exclude proof that the drawer has not been injured, in all cases, except those in which the evidence is offered to bring the case within one of the recognized exceptions to the general rule. 4 We are, in the next place, to consider some exceptions to the gene- ral rule, or what will excuse the omission to give due notice of dishonor. * An agreement made by the drawer or indorser, before #flQQ dishonor, waiving notice of non-payment or waiving the pro- test of a bill or note, will render him liable thereon just the same as if due notice had been given. 5 And any conduct on the part of the drawer or indorser, calculated to, and actually inducing the holder to omit serving him with a regular notice, will have the same effect. Thus, where it was proved that a few days before the bill became due the drawer called at the counting house of the holder, and being asked the place of his residence, replied that he had no regular residence, that he was living among his friends, and would call and see if the bill was paid by the acceptor ; this was held to dispense with notice, and throw upon the drawer the duty of inquiring whether the bill was met at maturity. 6 So, where the indorser of a note called upon the holder just before it became due, and informed him that the maker had absconded, and said that, being indemnified for his responsibility, he would give a new note for the amount, which was assented to, and during the negotiation between them the note fell due ; it was held that, the pending negotiation superseded the necessity of a demand of payment and of notice. 7 So, where the indorser negotiates for time a few days before the note falls due, and offers to give his 1 Chitty on Bills, 435 ; Whitfield v. Savage, 2 Bosw. & Pull., 280. J Commercial Bank v. Hughes, ] 7 Wend., 91. * Phillips v. Thompson, 2 John. Ch. R., 418. * Dennis v. Morris, 3 Esp. R., 158. See Commercial Bank v. Hughes, supra. •Codington v. Davis, 1 Comst. R., 186; Sigorson v. Mathews, 20 How. U. S., 496. * Phipson v. Eneller, 1 ( .'am ph., 2S6i * LefflngweU ft Pierpont v. White, 1 John. Cas., 99; Lary v. Young, 8 Eng. (13 A-rk.), 401. 596 BILLS OF EXCHANGE AND PROMISSORY NOTES. own note for the amount, and promises unconditionally that the note indorsed by him shall be paid, telling the holder to give himself no uneasiness about it, the indorser will not be permitted to insist upon the want of demand and notice. 1 Where the omission to give notice is fairly attributable to the in- erference of the indorser ; as where he writes a letter to the holders just before the note falls due, advising them that it will not be met at maturity by the makers, and that he has taken security from the first indorser, and concludes by requesting indulgence ; M ' , he is not allowed to take advantage *of the omission. 2 But a promise made by an indorser on the day the note falls due to indorse a renewal note, which does not induce the holder to omit giving him due notice, does not preclude the indorser from insisting upon the want of demand and notice; as where the maker being absent, the last indorser called at the bank by which the note was held on the day it became due, and observing that the note had " come round," proposed that it should be renewed for a part of the amount on the return of the maker, and the note was not pro- tested in consequence of a mistake of the derk in regard to the day when it fell due. 3 In a word, the indorser may waive the con- dition of his liability ; but it must be done understandingly, or his acts must be such as fairly to mislead the holder by inducing him to believe that such waiver is intended. A waiver of notice or of protest, made in express terms by a drawer or indorser, is to be read like any other instrument ; and its terms are to be construed so as to give effect to the intention of the parties, as expressed in the language used. A stipulation by the indorser of a note to waive notice of dishonor, dispenses with the necessity of giving him notice, but does not dispense with the demand itself. The two acts are perfectly distinct, and each is a condition precedent to the holder's right of recovery.* But where the indorser of a note requests the holders not to protest it, and 1 Leonard v. Gary, 10 "Wend., 504; Bruce v. Lytle, 13 Barb. R., 163. Any words by the indorser, waiving demand and notice before dishonor, will render a formal demand and notice unnecessary. Russell v. Cronkhite, 32 Barb., 282. It is held in Louisiana that a waiver of protest is not a waiver of notice. Ball v. Greand, 14 La. An., 305. 2 Spencer v. Ilarvey, IT "Wend., 489 ; Curtis v. Martin, 20 111., 557. 3 Cayuga Co. Bank v. Dill, 5 Hill R, 403 ; Pridoaux v. Collier, 2 Stark. R., 57. The discharge of prior indorsers works a serious prejudice to the last indorser; and it cannot be supposed that ho intended to waive a demand which was one of the steps necessary to charge them. 4 Backus v. Shipherd, 11 "Wend., 629; 6 Mass. R, 524. PBOCEEDINGS ON NON-PAYMENT, NOTICE. 597 waives the necessity of protest thereof, it has been adjudged that this is a waiver of both demand and notice ; on the ground that the term protest when used among men of business includes all those acts which are by law necessary to charge an indorser. 1 A waiver of demand or notice, made by the drawer or indorser, is not a new contract — it is only a waiver of one of the conditions precedent to his liability, and does not therefore* require any consideration to support it. s A verbal or written com- munication to the holder, dispensing with the necessity of demand or notice, will be sufficient. 3 And it has been held competent for the holder to prove by parol testimony an agreement made at the time the note was signed and indorsed, that payment was not to be demanded at maturity, by way of showing a waiver of demand and notice. 4 An agreement made by the payee and indorser with the maker of a note, to pay and take it up amounts to the same thing, and inures to the benefit of his indorsee. 5 Where the indorser writes a waiver of demand and notice over his signature on the note, his contract becomes absolute ; he is 1 3 Denio R, 16 ; 1 Comst. R, 186 ; Union Bank v. Hyde, 6 Wheat., 572. 5 Barclay v. "Weaver, 19 Penn. State R., 396, decided in 1852. * Jones v. Fales, 4 Mass. R., 245. It is competent for the indorser to waive the condition implied by law for his benefit; and where he knows the general usage of the banks, in making demand and giving notice at the place where the note is made, indorsed and payable, he is presumed to lave waived a formal demand and notice, or to have consented to be bound by the usage. Widgery v. Munro, 6 Mass., 449 ; 9 id., 159. Drinkwater v. Tibbetts, 5 Shep. (17 Maine) R., 16. The defendant in this case indorsed the note as follows : " Holden without notice. Joshua Tibbetts." And this was held a sufficient waiver of notice, and -,he plaintiff was allowed to prove by parol a waiver of legal demand of payment. Barton v. Baker. 1 Serg. & Rawle, 334. The fact that the person indorsing a pro- missory note knows the maker to be insolvent, does not dispenso witlf the necessity of giving him notice of non-payment, it is no' a waiver of notice. But if the indorser takes from the maker a general assignment of his estate and effects, notice is not necessary. Taunton Bank v. Richardson, 5 Pick., 436. Where the indorser of a note promises to take care of the note when it comes due, and directs the cashier of the bank to Bend the usual notice given to the maker to him, which is done accordingly, it has been held that this is a waiver of regular demand and notice. So held in Massachu- setts, where the custom substitutes a notice to the maker to call and pay the note at ink in place of the usual demand of payment. 6 Wheat., 572; 1 Comst. R., 186; 20 How. U. S., 496. * Barclay v. Weaver, supra. "The duty of demand and notico is not a part of the contract, but i.-( merely a step in the remedy which may bo waived by tho indorser." ■ Marshall v. Mitchell, 35 Maine EL, 221; 34 id., 227. An agreement made between the holder and indorser of a note before it maturos, extending the time of payment, is a waiver of demand and notico; Amoskeag Bank V. Moore, 3'i N. II., 539. 598 BILLS OF EXCHANGE AND PROMISSORY NOTES. bound to pay the note, as unconditionally as if lie bad signed it as maker. 1 More accurately speaking, it puts him *in the same situation as if the demand had been made and notice of dishonor given in due time." A waiver of notice, made before dishonor, cannot be proved under an allegation of due notice : in other words, the complaint must state the facts constituting the cause of action on which the plaintiff seeks to recover. 3 Where the want of notice cannot possibly operate to the injury of the drawer or indorser, the omission to give it will not discharge him. 4 Nevertheless, we have seen that the holder is not at liberty to show, in a given case, that in point of fact the drawer or indor- ser has not suffered by the laches of the holder. 6 To allow each case to turn upon the question of fact, whether or not the indorser had been injured by the want of notice, would abolish the rule and change the very nature of negotiable paper. The law, there- fore, which prescribes the rule, pronounces also upon the exceptions to *it, and specifies the classes of cases in which notice need not be given. 1 Woodman v. Thurston, 8 Cush., 157. 2 Day v. Rjdgeway, 17 Penn. State R., 303. 3 Burgh v. Lcgge, 5 Mees. & Wels., 418. This case decides that an agreement made by an indorser of a note with the holder, before dishonor and notice, dispensing with the notice, must be alleged specially; that it cannot be proved under an allega- tion of due notice. The facts were these, the indorser called on the holder on the day one of the bills became payable, and en the day before the other became due, and told him the bill in question would not be paid, and that it was not worth while to trouble him with a two-penny post letter ;o give him notice, as it was not worth the money, and he would bring the holder some money on Monday following, in part pay- ment of the two bills. Murray v. King, 5 Barn. & Aid., 1G5, vas an action on a bond conditioned for the _ ayment of a bill of exchange, in case it should not be paid by the acceptor at matu- rity; and it was held that in an action on the bond, it was not a good plea that the bill had not been presented for payment and that no notice of non-payment had been given to the drawer. Bruce v. Lytic, 13 Barb. R., 163, This was an action against the indorser of a promissory note, who had taken an assignment from the makers a short time before the note fell due; but the decision turned on the express promise made by the defen- dant the day before the third day of grace, to come up and pay the note. The assigned property proving insufficient, the cause was decided on the principle, that where the necessary steps to fix an indorser are preyented by sonic act of the latter which pute the holder off his guard, the holder is excused. See the authorities there cited. 4 Commercial Bank v. Hughes, 17 Wend., 04. • Dennis v. Morrice, 3 Esp. R., 158. PROCEEDINGS ON NON-PAYMENT, NOTICE. 599 If the indorser lias taken full and ample security against the liability incurred by him, he is not entitled to notice ; because he cannot be prejudiced by the want of notice. 1 So, where he has taken from the maker an assignment of all his property real and personal, he is not entitled to notice, for the same reason. 2 It is not enough to show that the indorser has taken security from the maker, such as a mortgage or a partial assignment, to indemnify him against his liability :' it must appear that he has taken an ade- quate security, or an assignment of the whole property belonging to the parties to whom he has a right of recourse. 4 The object of notice is to put the indorser on his guard and enable him to secure his indemnity from the maker or prior indorser ; and where that has been fully accomplished, so that the indorser has obtained everything which notice was intended to enable him to obtain, he is liable without notice. 5 If, as first indorser of a promissory note, he has taken a. general assignment of all the property of the makers, for the express purpose of meeting his responsibilities, the rule requiring notice does not apply ; because the reason of the rule has ceased to operate." In the language of Chief Justice Nelson, 7 " the mere precau- tion, *by an indorser, of taking security from his principal, # ,,„ Q has never been adjudged to operate as a dispensation of a regular demand and notice ; it is, no doubt, a common occurrence, yet such effect has never been imputed to it. There must be some- thing more, such as the taking into his possession the funds or property of the principal, sufficient for the purpose of meeting the 1 Comey v. Dacosta, 1 Esp. R., 302. 3 Mechanics' Bank of N. Y. v. Griswold, 7 Wend., 1G5; Bond v. Fairham, 5 Mass. R., 170 ; Brown v. Moffey, 15 East, 222 ; Barton v. Baker, 1 Serg. & Rawle, 334. * Marshall v. Mitchell, 34 Maine R, 227; Holman v. Whiting, 19 Ala., 703 ; Bruce v. Lytle, 13 Barb. R., 1G3. 4 Seacord v. Miller, 3 Kernan R.. 55, decided in Court of Appeals in 1855. 6 Kramer v. Sandford, 4 Watts & Serg., 328 ; Lewis v. Kramer, 3 Md., 2C5. ' 7 Wend., 1G5. Although the fact that the indorser of commercial paper has taken security for his indorsement, doe3 not dispense with a demand upon the maker, still his declaration to the holder, on the day of dishonor, that the maker cannot pay, and has mado an assignmect, and therein preferred him (the indorser), and mado him sure 00 the paper, will render a. demand and notice of non-payment unnecessary. Taylor v French, 4 E. D. Smith, 45£. 7 Spencer v. Harvey, 17 Wend., 489. The note in this case was mado by John J. Leonard and Russell Austin, for $1,700, payable to the order of Silas Austin, one year after date, and indorsed by the payee to Charles R. Harvey, and by him to Charlos Butler, and by him to the plaintiffs ; and it was shown that tho makers and the first 600 BILLS OF EXCHANGE AND PROiHSSORY NOTES. payment of the note ; or he must have an assignment of all the property, real and personal, of the makers, for that purpose. The notice is dispensed with when funds are received, upon the ground that the object for which it is required to be given, namely, to enable the indorser to obtain indemnity from his principal, has already been attained. Partial or doubtful security falls short of this, and leaves the reason of the rule requiring notice in full force." l "When a bill is accepted for the accommodation of the drawer, it is obvious that the latter cannot be injured by the want of notice of non-payment, or that he cannot suffer any legal damage in consequence of not receiving notice. 8 On the same ground, when a note is made for the accommodation of an indorser, who is ultimately holden to pay it, it is clear that he can lose nothing from the failure to receive the usual notice of dishonor. 3 Being the principal debtor, he has no recourse to any other party to the instrument ; and hence there is no more reason for giving him, qo than there is for *giving the maker of a note or the acceptor of a bill, notice of non-payment. But the accommodation drawer or indorser is entitled to strict notice, notwithstanding the contract implied by law on the part of the person for whose accom- modation the draft was drawn or the indorsement made, to indem- nify him against his liability. 4 As to all the other parties to the 1 Spencer v. Harvey, supra, and Seacord v. Miller, supra. In this latter case it was ahown that the indorser had taken from the maker a chattel mortgage, conditioned that if the mortgagor paid the note, the transfer was to be void ; but it was not shown that the security was sufficient to indemnify him, and ho was held entitled to notice of dishonor. 2 Sharp v. Bailey, 9 Barn. & Cres., 44. In this case, it was held that the circum- stance of the drawer's having drawn the bill payable at his own house, was evidence of its being an accommodation acceptance, in which case notice of dishonor was unnecessary. Evans v. Norris, 1 Ala. R., n. 5, 511 : Ross v. Bedell, 5 Duer, 462. 3 French's Executrix v. The Bank of Columbia, 2 Peters Cond. R., 64; 7 Wend, 168 ; Torrey v. Foss, 40 Maine, 74. 4 Shirly v. Fellows, 9 Porter, 300 •, Holland v. Turner, 10 Conn. R., 308. One who indorses a bill as surety is entitled to notice of its dishonor, although it be given for the purpose of raising funds for a company in which he (as well as the holder of it) is a shareholder. Maltass v. Siddle, 95 Eug. Com. Law, 494. indorser had confessed a judgment to Harvey, to indemnify him against ihe payment of the note, on which execution had been issued and levied on the farm of the first indorser, said to be worth some $6,500 ; but it appeared that a bill in jquity had been filed by a third person claiming an interest in the farm, and, also, by the first indorser and one of tho makers, against Harvey, for relief from the judgment, and it was held that Harvey was discharged for want of notico of dishonor. PROCEEDINGS ON" NON-PAYMENT, NOTICE. 601 instrument, his rights and duties are the same as in the case of business paper. 1 The party for whose accommodation he draws the bill or indorses the note may be insolvent, without depriving him of the means of recovering the amount due thereon : on pay- ing the bill or note he will become the holder of it, and have his recourse to the prior parties, to those who are mediately as well as to those who are ultimately bound to pay. For this reason he is entitled to notice, just the same as if he had become a party to the paper in the usual course of business. 4 *There is another well established exception to the general rule, that notice of the dishonor of a bill must be given to the drawer, namely, where he has no funds or effects in the hands of the drawee. 3 But to this exception there are some important modifications : If the drawer has made or is making a consignment to the drawee, and draws before the consignment comes to hand •* or if the goods are in transitu, but the bill of lading is omitted to be sent to the consignee, or the goods are lost ; 5 or, if the drawer has any funds or property in the hands of the drawee, or there is 1 Church v. Barlow, 9 Pick., 547 ; Terry v. Parker, 6 Ad. & EL, 502, 508 ; Oxford Bank v. Davis, 4 Cush., 188. a Cory and others v. Scott, 3 Barn. & Aid., 619. Where a bill was drawn for the accommodation of an indorsee, and neither such indorsee nor the drawer had any effects in the hands of the acceptor: Held, that a subsequent indorsee in order to en- title him to recover against the drawer, is bound to give notice of non-payment. Norton v. Pickering, 8 Barn. & Ores., 610; Holland v. Turner, supra; Church v. Barlow, supra, and Shirley v. Fellows, 9 Port., 300. In De Berdt v. Atkinson, 2 Hen. Bla., 236. which has been overruled, it was held that where a person indorsed a note knowing the maker to be insolvent, and that the money to be obtained on the note was to be raised on his credit, he is not entitled to notice. In Brown v. Maffey, 15 East, 216, one of the indorsers of a bill for the accom- modation of the last indorser, was held entitled to notice ; but it appeared that he did not know that the drawer had no effects in the hands of the drawee* at the time he indorsed the paper. In the Farmers' Bank v. Vanmeter, 4 Rand., 553, it was held that one who indorses a bill for the accommodation of the drawer without any expectation that it will bo honored, is not entitled to notioo ; on tho ground that the transaction is fraudulent and designed to create a false credit. Contra, Buck v. Cotton, 2 Conn., 126; Crossen v. Hutchinson, 9 Mass., 205; 10 id., 52; Farnum v. Fowlo, 12 id., 89; Granite Bank v. Ayers, 16 Pick., 392; nightower v. Ivy, 2 Porter, 308; Jackson v. Richards, 2 Caines' Rep., 343; Homes v. Bowes, 16 Fast, 112; Groton v. Dallheiin, 6 Greonl. R., 466 ; Story on Bills, § 346. * Bickcrdike v. Bollman, 1 Term R., 405, is tho loading case on this point. 4 Per Lord ELLBW90HOUGH, 0. .T.. in Legge v. Thorpe, 12 East, 175. • Bunker v. HttTer, 1G East, 43; 3 Oampb., 217. Edw. 76 602 BILLS OF EXCHANGE AND PROMISSORY NOTES. a fluctuating balance between them in the course of tlieir trans- actions ;' or if there is a running account between the drawer and the drawee, and the latter has been in the habit of accepting the bills of the drawer without regard to the state of their accounts ;* or if the drawer has a reasonable expectation that the bill will be paid, he is entitled to notice of dishonor.' In all such cases *the drawer is considered as justified in drawing, as so far having a right to draw that the transaction cannot be denominated a fraud. And where the drawing is a fair commercial transaction, in which the drawer has a reasonable expectation that his bill will be honored, he is entitled to the same notice as a drawer with funds, or authority to draw without funds. 4 Previous dealings between the drawer and the drawee are not sufficient to authorize the former to entertain a reasonable expec- tation that his bill will be accepted and paid. 6 His expectation must be based upon an established relation of business, which gives him a right to anticipate that his bill will be paid. It is not 1 Brown v. Maffey, 15 East, 216, 221. 5 12 East, 175. * Claridge v. Dalton, 4 Maule & Sel., 226. The drawer in this case had no funds in the hands of the drawee, and no effects except that he had supplied him with goods upon a credit which did not expire until long after the bill became due; and the bill which was payable two months after date, was not paid on presentment to the drawee. Lord Ellexeorough, C. J.:*" I accede to the proposition that where there are any funds in the hands of the drawee, so that the drawer has a right to expect, or even where there are not any funds, if the bill be drawn under such circumstances as may induce the drawer to entertain a reasonable expectation that the bill will be accepted and paid, the person so drawing it will be entitled to notice." Le Blaxc, J. : " Every new case makes one regret that the rule in Bickerdike v. BoUman for dispensing with notice was ever introduced; but while that rule remains we must act on it. I perfectly agree that it is not necessary that the drawer should have effects or money iu the hands of the drawee, either at the time when the bill is drawn, or when it becomes due. Eor if the bill be drawn in the fair and reasonable expectation that in the ordinary course of mercantile transactions it will be accepted or paid when due, the case does not range itself under that class of cases of which Bickerdike v. BoUman is the first." Bailey, J., considered the rule referred to established on good foundation, but said it extends only to cases where the party has no effects, or is not likely to have effects, nr has no expectation that he will have any. In all other cases the drawer is entitled ♦o notice, and this is required in order that he may withdraw forthwith out of tho »aods of the drawee such effects as he may happen to have, or may stop those which ho U in the course of putting into his hands. And it was held by the unanimous decision of the court, that the defendant, the drawer, in this case, was not entitled to notico. 4 Dickens v. Beal, 10 Peters, 572 ; French v. Tho Bank of Columbia, 4 Cranch, 153. • Dolfus v. Frosch, 1 Denio, 367. PROCEEDINGS ON NON-PAYMENT, NOTICE. 603 enough that he has supplied the drawee with property on a credit, if it appear that the credit would not expire until after the bill became due. 1 It is not enough that he has formerly had funds in the hands of the drawee, if it appear that he had none at the time, and none in expectancy, and made no arrangement to meet the draft 1 But where the drawer acts upon a fair presumption, he is entitled to notice notwithstanding it turns out that he had in fact no funds on which to draw ; as where he draws upon consignments of goods made from time to time, and the want of funds to meet the last bill proceeds from a fall in the price of them.* The English decisions narrow and limit the exception to cases where the drawer had no effects in the hands of the acceptor or drawee at any time during the currency of the * bill, and would have no remedy against the acceptor or any other person on being compelled himself to pay the bill/ If he have effects in the hands of the drawee at any time before the bill matures, he is entitled to notice, though they be not sufficient to meet the bill.' If he have funds in the hands of the drawee at the time of drawing, he is entitled to notice, though the balance may afterwards vary and be turned into the opposite scale, provided he has acted fairly under all the circumstances.* In this country, the exception has not passed under review in so great a variety of cases ; but it is usually stated in substantially the same terms. If the drawer of a bill has no funds or assets in the hands of the drawees, or expectation of funds, or any arrange- ment or agreement with them to accept the bill, he cannot ordi- narily suffer any injury for the want of notice, and he is not 1 Claridge v. Dalton, supra. 8 Valk v. Simmons, 4 Mason, C. C. U. S., 113. * Robinson v. Ames, 20 Jolin. R, 146. * Orr v. Magennis, 7 East, 359. It is not necessary that the drawer should havo a remedy on the bill, to entitle him to notice of dishonor; nor is it essential that he should have a right of action against the drawee in consequence of his refusing to accept or pay the bill ; it is enough if he draws with a reasonable expectation that the bill will be paid. Blackham v. Doren, 2 Campb., 503 ; Bagnall v. Andrews, 7 Bing., 217. The drawer had been sending goods to the drawee for sale, and the bill in this case was drawn and accepted without either party's knowing the state of the account between them ; but it turned out that the drawer was at the time indebted to the defendant, the drasvee and acceptor; and it was held that the bill could not be con- sidered accommodation paper. 4 Thaekray v. Blackett, 3 Campb., 164 * Orr v. ktageatkis, supra; but of course this must depend upon circumstances, and npon the question whether he has acted upon a reasonable expectation that his bill would bo paid; Valk v. Simmons, supra. 601 BILLS OF EXCHANGE AND PKOMISSORT NOTES. entitled to it. 1 Mr. Justice Story states it in these words : " if the drawer has no right whatsoever to draw the bill, or no reasonable ground to expect the bill to be accepted, he is not deemed entitled to notice of the dishonor thereof, for it was his own fault to draw the same ; and, correctly speaking, he cannot be said to have suffered any loss by the want of notice. Thus, for example, ordi- narily, if the drawer draws the bill, without having funds in the hands of the drawee, or expectation of funds, or any arrange- ment* or agreement on the part of the drawee to accept the bill, he will not be entitled to notice, and not be discharged by the want thereof" 2 1 Oliver v. The Bank of Tennessee, decided in 1S50 ; 11 Humph. (Tenn.), 74 ; Mobley v. Clark, 28 Barb., 390, 392. 8 Story on Bills, § 311. Mr. Chitty sums up the authorities as follows : " If, at any time between the drawing of the bill and its presentment and dishonor, the drawee had some effects or property of the drawer in his hands, though insufficient to pay the amount, he will nevertheless, in general, bo entitled to notice of the dishonor, and the laches of the holder will discharge him from liability ; for this case differs from that where there are no effects whatever of the drawer in the hands of the drawee at the time, because the drawer must then know that he is drawing upon accommo- dation, and without any reasonable expectation that the bill will be honored ; but if he have some effects at the time, it would be dangerous and inconvenient, merely on account of the shifting of a balance, to hold notice not to be necessary ; it would be introducing a number of collateral issues upon every case upon a bill of exchange, to examine how the accounts stood between the drawer and the drawee, from the time the bill was drawn down to the time when it was dishonored. For the same reason, if the drawer of a bill of exchange, when it is presented for acceptance, has effects in the hands of the drawees, though he is indebted to them in a much larger amount, and they without his privity have appropriated the effects in their hands to the satis- faction of the debt, he is entitled to notice of the dishonor. Nor is actual value in the hands of the drawee at the time of drawing, essentially necessary to entitle tho drawer to notice of dishonor of the bill ; for circumstances may exist which would give a drawer good ground to consider he had a right to draw a bill upon his corres- pondent ; as, where he had consigned effects to him, to answer the bill, though they may not have come to him at the time the bill was presented for acceptance ; to which may be added the case of bills drawn in respect of other fair mercantile agree- ments. So, it is no excuse for not giving notice to the drawer that he had in fact no funds in the hands of the drawee, if he had made provision to have such funds there, and might reasonably expect they were there: as, when a bill was drawn in respect to a cargo shipped by the drawer to this kingdom, and in tho hands of a broker, who was to pay the proceeds to the drawee to enable him to take up the bill, in which case notice was held requisite. And, therefore, where the drawer had sold and shipped goods to the drawee, and drew a bill before they had arrived, and tho drawee not having received tho bill of lading, refused to accept the goods because they were damaged, and who refused to accept the bill, it was decided that tho drawer was dis- charged for want of notice. But, if the vendor of goods sold upon credit, draws upon the purchaser a bill, which would bo due long before the expiration of the stipi lated credit, he is not entitled to notice of dishonor; because he had no reasonab! *645 PROCEEDINGS ON NON-PAYMENT, NOTICE. 605 *Where the drawer would have a remedy in respect of „ the bill against some other party, he is, as we have said, entitled to notice, although he has no funds in the hands of the drawee ; as, where he drew the draft for the accommodation of another person, and an action thereon was brought against the drawer by a subsequent indorsee. He has a right to notice in this case, because he has a remedy over against the person for whose accommodation he drew the bill. 1 So, the drawer *of a dishonored bill is entitled to notice, although he has no funds in the hands of the drawee and has had no busi- ness transactions with him, if he draws at the suggestion of a third person who is indebted to him, and informs him that the 1 Norton v. Pickering, 2 Barn. & Ores., 610; action by the indorsee against the drawer. The bill was drawn by A., payable to his own order two months after date, upon B., for the accommodation of C, who indorsed it for value to D. But the bill had beeu accepted, though without any funds or effects in the hands of the drawee. Lord Te.vterden', C. J. : "I think the case of Cory v. Scott (3 B. & A., 619), was pro- perly decided, and that it must govern the present case. It may be questionable whether it might not have been more conducive to the interests of commerce to have decided that the holder of a bill is not at liberty to give evidence of any circumstance to excuse the want of notice. Here the defendant does not seek to avail himself of any circumstance dehors the bill. He being the drawer of the bill, by the law of mer- chants, was entitled to notice of dishonor. The plaintiff does not attempt to get rid of the law merchant, for he says the acceptor had no effects of the drawer in his hands. I think the defendant was entitled to notice of dishonor, and that the non- suit was right." The rule is the same in this country. Shirley v. Fellows, 9 Porter, 300 ; Evans v. Norris, 1 Ala., 511 ;. Reid v. Morrison, 2 W. &S., 401; Sherrod v. Rhodes. 5 Ala., 683. expectation that the drawee would honor the lull, but on the contrary, a pretty clear assurance, that it would be dishonored. And in one case, it seems to have been sug- gested, that the want of notice is no defense, where the defendant had not at the time the bill became due, sufficient effects, although he had such when the bill was drawn; as where the party, having £712 at his banker's, accepted a bill for £300, payable there, but when due, he had only £41 ; in which case notice to him was con- Bidered unnecessary ; but the decision proceeded on the ground that an acceptor is not entitled to notice, and, therefore, cannot be relied upon as altering the general rule. Where the drawer of a bill of exchange had no effects in the hands of the acceptor, from the time of the drawing till it became due, but the acceptor had re- ceived from the drawer, prior to this bill on which the action was bronght, accep- tances of the drawer, upon which ho had raised money, some of which acceptances had been returned dishonored, and others were outstanding, it was held that the drawer was entitled to notice of dishonor of tho bill. And it should soem, that although the drawer or other party may not have advanced money or goods to the drawee, yet if he has deposited short bills, or policies, or even title deeds, in his hand", or has accepted cross bills, and had reasonable ground to expect that tho drawee would accept or pay in respect thereof, he is entitled to notieo of tho dis- <506 BILLS OF EXCHANGE AND PROMISSORY NOTES. drawee is owing him, the third person, and that the draft will be paid ; for here the drawer has reasonable ground to expect that the bill will be honored 1 The drawer's want of funds in the hands of the drawee, from the date of the bill until it become payable, is, prima facie, a suf- ficient excuse for not giving him due notice of dishonor ; and if he does not prove that he has sustained damage from the want of notice, he is answerable, though he received no notice of the non- payment. 2 As in other cases, so here, *the rules of pleading are the test of what the law is ; and it has been held, in an action against the drawer, not necessary that the declaration, alleg- ing the want of effects as an excuse for the omission to give him 1 Lafitte v. Slater. 6 Bing., 623. 3 Fitzgerald v. Williams, 6 Bing. New Cases, 63. This was an action against the drawer of a bill of exchange ; and the declaration alleged that the defendant made his bill payable to his own order two months after date, directed to T. W. Ware, and in- dorsed the bill to the plaintiff; that the drawee did not pay the bill when presented to him at maturity ; and further averred that the defendant, the drawer, had no funds in the hands of the drawee at the time the bill was drawn, nor at any time afterwards before it became due ; that the defendant had no reasonable ground to expect that he should have effects in the hands of the drawee, or that the drawee would be provided with funds with which to pay the bill ; that there was no consideration for the drawee to accept or pay the bill ; and that the defendant had not sustained any damage for the want of notice. The defendant's pleas denied the due presentment of the bill, and alleged want of notice of dishonor and damages in consequence. On trial a ver- dict was found for the plaintiff, after which an application was made for a new trial. Tindal, C. J. : " The plantiff having averred as an excuse for not giving notice of the dishonor of the bill, that the defendant had no funds in the acceptor's hands, assigned a sufficient excuse if he had stopped short there ; for if the defendant had no funds in the hands of the acceptor he was not damnified ; if he was, after the issue he has taken upon the whole allegation, the proof would have come more properly from him." Maule, J. : " The plea puts in issue what is immaterial ; and as the defendant did not prove that he had sustained any damage from the want of notice, there can be no reason for disturbing the verdict." S. C, 8 Scott R., 271. "If the defendant had no funds in the hands of the accep- tor, he was not damnified. At all events, the burden of proving that he was, rested upon him." Coltman, J., said the want of funds was, prima facie, a sufficient excuse for not giving notice of dishonor. honor." Chitty on Bills, 444. The authorities cited are these, Orr v. Magennis, 1 East, 359; 3 Smith, 328; Blackham v. Doren, 2 Campb., 503; Hammond v. Dufrene, 3 Campb., 145; Thackray v. Blackett, 3 Campb., 164; Leggo v. Thorpe, 11 East, 115; 1 Campb., 310; Walwyn v. St. Quinton, 1 Bos. & P., 654; 2 Esp. r 515; ex parte Wil- son, 11 Ves., 411; Robins v. Gibson. 3 Campb., 334; 12 East, 175; Rucker v. Hiller, 1G Kast, 43; 3 Campb., 217, 334; Claridge v. Dalton, 4 Maule k Sel., 226; Smith V. Thatcher, 4 Barn. & Aid., 200; Spooner v. Gardner, Ry. & Mood., 84; ex parte Heath, 2 Ves. & Bea., 240; 2 Rose, 141. PEOCEEDINGS ON NON-PAYMENT, NOTICE. 607 notice, should deny that the drawer had any reasonable expecta- tion when he drew, or during the currency of the bill, that he would have assets at the time of its maturity in the hands of the drawee, and that there is no distinction in this respect between a bill of exchange and a banker's check. 1 So in this state, the party suing the drawer of a draft or check, dishonored for the want of funds, must allege all the facts constitut- ing his cause of action ; and every fact which the plaintiff must prove to enable him to maintain his suit, and which the defendant has a right to controvert in his answer, must be distinctly averred; and every such averment must be understood as meaning what it says, and consequently is only to be sustained by evidence which corresponds with its meaning. If the plaintiff relies upon facts dispensing with presentment or notice, such as absence of effects in the drawee's hands, or a countermand of payment by the drawer, he must allege them specially in his complaint* The indorsees right to notice is not at all affected by the drawer's want of funds or effects in the hands of the drawee ; 3 ^unless „ _ . „ . . 6-i7 the act of drawing be fraudulent and the indorser implicated in the fraud.* And it has been held that one who without con- sideration, but without fraud, indorses a bill in which both the holder and acceptor are fictitious persons, is entitled to notice. " The indorser undertakes to pay, if those who ought to pay do not ; therefore he is entitled to notice, that he may have his remedy against them." * The law on this subject is founded on a reason of public expe- diency. There is nothing more important than that, in questions 1 Thomas v. Fenton, 5 Dowling & Lowndes Pr. R., 28. Per Curiam: "In an action against the drawer of a bill of exchange, a want of notice of dishonor is excused by an allegation that there were no effects in the hands of the drawee at the maturity of the bill ; that it was an accommodation acceptance, and that the drawer has sustained no damage by the want of notice." But this was said with reference to a declaration allegiug the want of funds from the time the draft was drawn till it became due. 3 Garvey v. Fowler, 4 Sand. R., 605. The drawer who stops the payment of his check, is not ontitlod to notico of ?ta dishonor or non-payment; Purchase v. Mattison, 6 Duer, 587 ; Jacks v. Darrin, 3 E. D. Smith, 557 ; nor is lie where lie has no funds on the day it is payable ; Coylo v. Smith, 1 id., 400 ; So if the drawer of a draft who has no funds and no reason to ex- pect that ho will have any in the hands of the drawoe, no right to draw ; Miser v. Trovintfer, 7 Ohio, N. S, 281 ; Blankenship v. Rogers, 10 Ind., 333. ' Wilks v. Jacks, Peake, 202 ; French v. Tho Bank of Columbia, 4 Cranch, 153. 4 Farmers' Bank v. Van Motor, 4 Rand., 553. • Leach v. ITowitt, 4 Taunt., 730. 608 BILLS OF EXCHANGE AND PROMISSORY NOTES. of a general mercantile nature, there should be a uniformity of decision, and although the justice and equity of the rule requiring notice, may not, in some cases, be perceived, where the payee has purchased a bill, and it is drawn in good faith, and no conceivable loss has happened by the want of notice ; yet as there may be cases where, though there were no funds in the hands of the drawee, the drawer may be injured by the want of notice, it is better that the rule on the subject should be general and uniform throughout the mercantile world. 1 Ignorance of the party's residence will excuse deky in giving him notice, when the time is consumed in the use of diligence to acquire the necessary information. Lord Ellenborough : "It would be very hard, when the holder of a bill does not know where the indorser is to be found, if he lost his remedy by not communicating immediate notice of dishonor of the bill ; and, I ihink, the law lays down no such rigid rule. The holder must not allow himself to remain in a state of passive and contented igno- rance ; but if he uses reasonable diligence to discover the residence of the indorser, I conceive that notice given as soon as this is dis- covered, is due notice of the dishonor of the bill, within the usage and custom of merchants." 2 The principle here laid down may *be illustrated by an adjudged case: The traveler of A., a tradesman, received in the course of business, a promissory note, which he delivered to his master without indorsing it, and the note having been returned to A. dishonored, the latter not knowing the address of the next preceding indorser, wrote to his traveler, who was then absent from home, to inquire respecting it ; and it was held that A. was not guilty of laches, although several days elapsed before he received an answer and gave notice to the next party, it appearing that he had used due diligence in ascer- taining the address of the indorser and in giving him notice after he had ascertained it.' 1 Per Ch. J. Spexcer in Robinson v. Ames, 20 John. R., 150; see, also, the opinion of Ch. J. Marshall in French v. The Bank of Columbia, supra. 3 Bateman v. Joseph, 2 Campb., 463 ; S. C, 12 East, 433. The question of diligenco was in this case left to the jury, which is not now done where there is no dispute about the facts. 3 Baldwin and others v. Richardson, 1 Barn. & Cres., 245. Where a delay occurs in ascertaining the residence of a party to a bill of exchange, as where it becomes necessary to write to another party to obtain the address of the drawer, it is sufficient if no time be lost in forwarding it after the information is received; Dixon and others V. Johnson, 29 EngLaw. and Eq. R., 604, decided in 1855. PKOCEEDIXGS OX X0X-PAY3IEXT, NOTICE. 609 "We have already seen that the exercise of due diligence is equivalent to actual notice, 1 and that the holder or indorser who acts upon credible information — information on which he has a right to rely, in giving notice of dishonor, retains his right of re- course, notwithstanding he may have been misled in regard to the residence of the party to be charged. 2 In other words, the liability of the drawer or indorser is fixed by the exercise of such diligence as the law requires in this respect. And where the holder acts in good faith, giving notice to an indorser through the post office, addressed to him at the place where he resides, according to the best information that can be obtained ; it has been adjudged that the holder is not bound to give a new notice on discovering that he has been misled in respect to the indorsees place of residence. In delivering this opinion, the court say : " We have already said that the liability of the indorser was fixed by the notice sent to Nottingham. The plaintiffs had acquired aright of action against him by this notice, and might have brought their suit the next day. Could that right be divested by the information #A / Q * which was subsequently given to them ? "We think not, and that all of the cases in relation to this subject imply the con- trary. The books are fall of cases where mistakes of this kind have been committed, and suits afterwards brought when the residence of the party was discovered. Yet it does not seem to have been supposed in any of them that a second notice was neces- sary, nor are we aware that any such point has ever been raised. Yet if a notice thus given, after diligent inquiry, is not equivalent to actual notice, knowledge subsequently obtained would be a defense to the action, even if the holder had brought suit before he learned what was the nearest or usual post office of the defendant." s Delay in giving notice may also be excused, by the circumstance of the day on which the holder should regularly have given the notice being a public festival, on which he is strictly forbidden by his religion to attend to any secular affairs. 4 "The law merchant respects the religion of different people. For this reason we are not obliged to give notice of the dishonor of a bill on our Sunday ;" 1 2 imi R., 578; 3 id., 520; ante, GO!), et seq. 7 Aspinwall v. Meyer, 2 Sand. R., 178; Carroll v. Upton, 2 id., 171, and cases there cited; 3 Comst., 272; Harris v. Robinson, 4 Howard U. S. R., 345; ante, 457, notes. * Lambert et al. v. Ghiselin, Howard U. S., 552, decidod in 1850. 4 Lindow v. Unsworth, 2 Campb., C02 ; Chitty on Billa, 451. Edw. 17 610 BILLS OF EXCHANGE AND PBOMISSOEY NOTES. and the Jew is excused from giving notice on a day, during which his religion does not permit him to attend to any sort of busi- ness. 1 Delay may also be excused, if a state of war interrupts the com- munication and prevents the transmission of notice ; a if the holder or his agent suddenly fall sick or dead, inducing a delay ;' or if the mails be interrupted and stayed by a superior force, or by an accident which is not attributable to the fault of the holder.* As a general rule, the indorser of a note not negotiable is not entitled to the usual privilege of an indorser of negotiable *paper ; he stands in the relation of principal and not surety to his indorsee, and has no right to insist upon a previous demand of the maker, and notice of non-payment. 6 As he cannot be charged upon the usual contract implied in the case of nego- tiable paper, it is said an absolute guaranty may be written over his indorsement, upon which a recovery may be had against him.* But where a person writes his name on the back of a promissory note, and may be charged thereon as an indorser, he agrees that he will pay the note to the holder, on receiving due notice that the maker, on demand made at the proper time, has neglected to pay it ; and the case is not open to any intendment. 7 If a third person writes his name on the back of a negotiable note, before the same has been indorsed by the payee, the presumption of law is that he intends to assume the liability of a second indorser. But where he indorses a note payable to a particular person, or bearer, before the same has been delivered to the payee, he is chargeable thereon as first indorser, on the usual conditions precedent, of demand and notice. 8 1 This is different from saying that a holder must present a note made by a Jew, and falling due on a Saturday, or on a Jewish festival, on the day previous, at his peril. Story on Bills, § 340; ante, 529, 530. 3 Hopkirk v. Page, 2 Brock., 20 ; Griswold v. Waddington, 16 John. R., 438. s See former chapter : Of proceedings on non-acceptance ; ante, 458, 392-399. * 22 Conn. R., 213, in connection with 3 Wend., 488. 6 Seymour v. Van Slyck, 8 Wend., 403 ; Plimley v. Westloy, Bing. N. C, 249 ; 2 Scott, 423; 1 ITodges, 324, S. C. But the authorities on the subject are not uniform. Parker v. Riddle, 11 Ohio, 102 ; Long v. Smyser, 3 Clarke (Iowa), 366. • 8 Wend., 422; 12 John. R., 159; 17 id., 326; or the indorser may be held liable as a maker. 10 Barb. R., 402; Wilson v. Ralph, 3 Clark (Iowa), 450. T Seabury v. Hungerford, 2 Hill R., 80 ; Labron v. Woram, 1 Hill R., 91 ; see MooM V. Cross, 23 Barb., 534 ; Cottrell v. Conklin, 4 Duer, 45. ' Dean v. Hajl, 17 Wend., 214; ante, 274, 230. PROCEEDINGS ON NON-PAYMENT, NOTICE. 611 When the fact appears that there has been laches on the part cf the holder, a subsequent promise by the indorser to pay the bill, will not render him liable, unless it also appears that the promise was made with full knowledge of the fact that he had been discharged by the laches of the holder. 1 But, on proof of a promise by the indorser, with knowledge that he was not liable on the bill, the holder may recover : not, however, on the ground that the indorser is bound by the promise, as matter of contract, for it wants consideration ; but on the ground that a promise amounts to a waiver of the objection that the proper steps have not beeri taken to charge *the indorser ; a and the same rule 651 • applies in respect to the drawer. By this it is not meant that it must appear that the drawer or indorser knew the law of the case when he made the promise ; it is enough if he be shown to have made the promise with knowledge of the facts ; for he can- not defend himself upon the ground of his ignorance of the law when he made the promise. 3 ■ A promise to pay made under a misapprehension of fact, is no waiver of the consequences of laches ; 4 nor is a promise made in ignorance of a material fact a waiver ; as where the drawer or indorser promises to pay without knowledge that no notice has been sent 6 In other words, where the drawer or indorser has been discharged by the laches of the holder, and that fact appears, there 1 The indorser's promise to pay, made with knowledge that the note was not pre- sented for payment, but in ignoranco of facts material to a full understanding of his rights and obligations, is not a waiver of demand and notice. Low v. Howard, 10 Cush., 159. The evidence must be clear to establish a waiver. Oswego Bank v. Knower, Hill & Denio, 122. 8 Per Bronsox, J., in Tebbetts v. Dowd, 23 Wend., 379. On the trial, a witness for the plaintiff testified that a few days after the check became due he met Tebbetts the indorser and told him that the check had lain over, and that ho ought to take it up: that Tebbetts answered, that he know that the check had been dishonored, and had lain over, and said that lie would arrange it in a few days; that lie had received part of the money for which the check was given, and that ho must and would see tho check taken up, and promised to take up and pay it. On this evidence a motion for a nonsuit was made and denied, after which the jury found a verdict for tho plaiutiff in the Superior court of New York city, and tho case came up on appeal, and tho judg- ment below was affirmed. ' Stevens v. Lynch, 2 Campb., 333; S. C, 12 East, 38; Reynolds v. Douglass, 12 Peters' R., 497; Ladd v. Kennoy, 2 N. If., 340; Boyd v. Cleveland, 4 Pick., 525; and tho long array of authorities cited by Mr. Justice Cowen in Tebbetts v. Dowd, iupra. * Goodall v. Dftlley, 1 Term It., 712; Bletuard v. Hurst, 5 Burr, 2C72. • Crain v. Colwell, 8 John. R., 381 ; ante, note, C50. 612 BILLS OF EXCHANGE AND PROMISSORY NOTES. must be, in order to render him liable, clear proof that the promise was made with a fall knowledge of all the facts and circumstances. 1 The distinction drawn by Mr. Justice Cowen between a waiver of admitted laches and presumptive evidence of due notice, appears to be well sustained. 3 At all events, it is clear that much stronger proof is required to charge the indorser, where it appears that the holder has been guilty of laches, than is necessary where *fl"9 ^ iere * s no evidence of notice *or want of notice except that which is furnished by the drawer or' indorsees acknow- ledgment or promise to pay. 3 If it be shown that the holder has been guilty of laches, it must also appear that the promise was made with full knowledge of them, or it will not bind the party making it. 4 But if no laches are shown, a promise to pay is pre- sumptive evidence of due notice. 5 A conditional promise to pay is not of itself sufficient evidence of notice or waiver of notice. The cases go to this point only ; that if, after the dishonor of a bill, the drawer distinctly promises to pay, that is evidence from which it may be inferred he has re- ceived notice of the dishonor ; because men are not prone to make admissions against themselves ; and, therefore, when the drawer promises to pay, it is to be presumed he does so because he knows the acceptor has refused. 8 The promise is not direct evidence of 1 Spurlock v. Union Bank, 4 Humph. ( Tenn. ) R., 336. 5 23 Wend., 383; ante, 633-636. s Miller v. Hackley, 5 John. R., 376. A declaration made to a third person by the indorser, to the effect that the want of notice would make no difference with him, he should do what was right, is not a sufficient waiver of demand and notice. Olendorf v. Swartz, 5 Cala., 480. 4 Duryee v. Dennison, 5 John. R., 248 ; Thornton v. Wynn, 12 Wheat., 183 ; ante, 478, 650, 651. 5 Lundie v. Robertson, 7 East, 231. An indorsee three months after the bill be- came due, demanded payment of the indorser, who first promised to pay it if ho would call again with the account, and afterwards said that he had not had regular notice, but as the debt was justly duo ho would pay it. Held, that tho first conversation being an absolute promise to pay the bill, was, prima facie, an admission that the bill had been presented to the acceptor for payment in due time, and had been dishonored, and that due notice had been given of it to the indorser, and superseded the necessity of other proof to satisfy these averments in the declaration. Decided in 1806. Dorsey v. Watson, 14 Missouri, 59. When the drawer of a bill promises to pay it after it has been dishonored, the legal presumption is that he has been duly notified ; and the promise made a long time after, dispenses with the necessity of any proof that he has received notice of protest for non-payment. Decided in 1851; ante, 478, 651, and, post, 653-655. 9 Jones v. O'Brien, 26 Eng. Law and Eq. R., 283. The action here was by tho indorseo tgainst the drawer, of a bill of exchange; and there being proof that the defendant PROCEEDINGS ON NON-PAYMENT, NOTICE. 613 the fact ; *but in the language of Mr. Justice Bayley, where a party to a bill or note, knowing it to be due, and knowing that he was entitled to have it presented when due to the acceptor or maker, and to receive notice of its dishonor, promises to pay it, this is presumptive evidence of the presentment and notice, and he is bound by the promise so made. 1 Part payment, a separate agreement to pay the bill or note, and an unqualified acknowledgment of liability, made by the drawer or indorser, are equivalent to a direct promise of payment, and are evidence from which the jury may infer dishonor and notice. 3 Where the promise is qualified or conditional, though it is not conclusive evidence of notice, it is, according to the English deci- sions, evidence from which the jury may infer notice. 3 And where it appeai-s that the paper has not been duly presented or that notice has not been duly given, and it becomes necessary for the holder 1 Taylor v. Jones, 2 Campb., 105. s Bank of U. S. v. Lyman, 20 Vermont, G6S; Bibb v. Peyton, 11 Smedes & Marshall, 275; Williams v. Matthews. 3 Cowen, 252; Keeler v. Barline, 12 Wend., 110; 9 OaL, 236; 36 N. H., 540; 20 How. U. S., 49G: 33 Penu. St., 134; ante, 4T8. ' Hicks v. The Duke of Beaufort, 4 Bing. K C, 229. A conditional promise to pay — as where the drawer said, " if the acceptor does not pay I must, but exhaust all your influence with the acceptor first," is not conclusive evidence of notice or waiver of notice ; and it was held that it was correctly left to the jury to say from the evi- dence whether the defendant had been duly notified. 1833. S. C, 5 Scott, 598; Jones v. O'Brien, supra. Dixon and another v. Elliot, 5 Carr. & P., 437. An offer on the part of an indorser to compromise by paying one-half of a bill of exchange, or securing the payment of it, is sufficient to dispense with proof of notice of dishonor ; there being no evidence on the subject of notice. Booth v. Jacobs, 3 Nev. & Man., 351. A letter from the drawer written six days after lie should have received notice, alluding in ambiguous terms to the bill, was received in evidence in this case and left to the jury to determine from it and the cir- cumstances whether or not due notice had been given. Bell v. Frankis, 4 Man. & Gr., 440. acknowledged hifl .liability, and promised to see it arranged, to settle it; it was left to the jury to find whether as a fact there had been due notice of dishonor given to ihe defendant ; and the jury were instructed that evidence of a promise to pay was ■efficient evidence of notice. And although the defendant was called as a witness, and testified that to the best of his belief ho had DO knowledge of the dishonor till a fortnight afterwards, the finding of the jury against him was held conclusive. 1854. Do Wolfe v. Murray, 2 Sand. R., 166} M'tealfle v. Richardson, 73 Bng. Com. Law R.. 1010. On the day after the bill became due, the holder's clerk called on the drawer, ami told him the bill had been presented and the acceptor could not pay it, to whirl, the drawer answered that he would see the holder about it; held sufficient to be submitted to the jury to infer the fact of due notice 1852. *«r 655 614 BILLS OF EXCHANGE AND PROMISSORY NOTES. to show that the promise to pay was made with the knowledge of the laches, the weight of authority* is that this knowledge may be inferred, as a fact, from the promise under the attending circumstances, without requiring clear and affirmative proof of knowledge. 1 Where an indorser has not been duly notified of the dishonor, a qualified or conditional promise made by him to pay the note which is not accepted by the holder, is no waiver of the want of notice." That is to say, admitted laches can only be waived by an unequivocal and direct promise to pay, made with full know- ledge of the facts and circumstances, or by conduct and language which are equivalent to a direct promise. 3 On the other hand, where it does not appear that the drawer or indorser has been discharged by the laches of *the holder, a qualified promise, taken in connection with other facts and circumstances, has been held, in several cases, presumptive evidence of demand and 1 Tibbetts v. Dowd, 23 Wend., 379, and the authorities there cited. Bank of U. S. v. Lyman, 20 Vermont R., 666. Where, after a promissory note had been duly protested for non-payment the indorser requested that it might be kept charged in a separate account, and when the account was subsequently rendered to him, made no objection to it, except to claim an additional item of credit, and said nothing as to want of notice of non-payment, it was held that this was an acknowledg- ment of liability to pay the note, and thereby an admission of notice. There was no question of presentment and dishonor. Buchanan v. Marshall, 22 id., 561. The defendant's agreement, at the time of indorsing the note, to waive notice, presupposes, that he did not intend to waive demand upon the maker ; hence it was held necessary to prove or excuse demand upon the maker. Ridgway & Budd v. Day, 13 Penn. State R., 208. The indorser wrote to the holder of a note that it would not be met, and that he would hold himself bound if the time of payment was extended for thirty days, which was done : and the court held that this was equivalent to a guaranty of payment at the end of thirty days, citing Foster v. Jurdison, 16 East, 104. Whether the conversations of the indorser amount to a waiver of notice or to an admission of notice, is a question of fact. Carmichael v. The Bank of Penn., 4 How. (Miss.), 567; Leonard v. Gary, 10 Wend., 504; 11 John. R., 180. 2 Agan v. McManus, 11 John. R., 180. The defendant in this case told the plain- tiff he would take the note in suit, and give his own payable in a year, but plaintiff demanded an indorser, which was not given. Crain v. Cohvell, 8 John. R., 384, is to the same point; the indorser promised to turn out notes, but the offer was not accepted. Sice v. Cunningham, 1 Cowen, 397, is like Agan v. McManus, supra; see also Carter v. Burley, 9 New Hamp., 558; Creamier v. Perry, 17 Pick., 332; Barka- low v. Johnson, 1 Harr., 397; Robbins v. Pinrkard, 5 S. nodes k. Marsh., 51. As to a promise to pay made by two of three executors of an indorser, see Cayuga Co. Bank v. Bennett, 5 Hill R., 236; it does not bind the estate. * Thornton v. Wynn, 12 Wheat. R., 183 ; Winn v. Levy, 2 How. (Miss.), 902. PROCEEDINGS OX NON-PAYMENT, NOTICE. 615 notice. 1 As an admission, it is evidence for the jury like any other conversation ; if the liability of the drawer or indorser be conceded by him, the concession is quite as good evidence of demand and notice as a promise to pay ; for, as we have said, the promise to pay is deemed an admission of liability — an admission that the bill or note has been presented in time, and that due notice of non-payment has been given. 2 And there is no reason why the same admission may not be made by a negotiation for time, or by any other act or language that acknowledges the obligation to pay the note or bill.' The notice may be recalled or its effect destroyed "by the holder. The indorser of a bill of exchange, on receiving notice of protest, goes to the holder of the bill to take it up and is informed that it has been paid and credited to him by the bank in which it was deposited for collection ; while in truth the acceptor was insolvent when the bill matured and it was not paid, but the drawer remained good until some time afterwards ; and in an action brought by the holder against the indorser, after the drawer became insolvent, it was held that the plaintiff could not be permitted to show that the information given by him to the indorser that the bill had been paid, was untrue — that the indorser having acted upon that infor- mation, the plaintiff was estopped from asserting a different state of facts. 4 The circumstance that the plaintiff acted in good faith, supposing that the bill had been paid, does not alter the rule ; 6 lie has placed himself in such a situation that it would be fraudulent in him to show that what he stated, and defendant acted upon to his prejudice, was not true. 1 Hicks v. Beaufort, and Dixon v. Elliott, and Booth v. Jacobs, supra; Bank of U. S. v. Lyman, 20 Vt. R., GGG; Carmichael v. The Bank of Penn., 4 How. (Miss.), 567; Jones v. O'Brien, supra. s Lundic v. Robertson, 7 East, 231 ; Croxon v. Worthen, 5 M. & "W., 5. If an insolvent enumerates a draft among his debts, inserting it in the schedule of his debts, this is evidence against him of the fact of dishonor. Hyde v. Stone, 20 How. U. S., 170. A letter from the drawer of a bill containing expressions from which an implied promise to pay it may be inferred, is evidence to show a waiver of the objection that it has not been presented. Curtis v. Martin, 20 111., 5 ."> 7 . * Gibbon v. Coggon, 2 Campb., 188, and cases cited above. A negotiation for terms, without promiso to pay, is not evidence of a waiver of notice. Moorcv. Eardeastle, 11 Md., 486. 4 Kingsley v. Vernon, 4 Sand. R., 3G1 ; sec Pickard v. Sears, 6 Ad. & EL, 4G9. * Petrio v. Feeter, 21 Wend.. 172. 616 BILLS OF EXCHANGE AND PROMISSORY NOTES. *CHAPTEK XI. PLEADING AND EVIDENCE. L Pleading. It is a general rule in pleading, that the plaintiff must state in his complaint facts sufficient to establish a cause of action, or to show that he is entitled to the judgment or relief demanded by him. 1 According to the Code, his complaint must contain a plain and concise statement of the facts constituting his cause of action without unnecessary repetition. 5 On the same principle, the answer of the defendant must contain either a general denial of the facts stated in the complaint, or a specific denial of some material alle- gation therein, or a statement of new facts showing that the plain- tiff is not entitled to maintain his action. 3 In the language of the Code, the answer must contain : " 1. A general or specific denial of each material allegation of the complaint controverted by the defendant, or of any knowledge or information thereof sufficient to form a belief. 2. A statement of any new matter constituting a defense or counter-claim, in ordinary and concise language with- out repetition." 4 #n~ 7 * The plaintiff then replies to such new matter constitut- ing a counter-claim, denying generally or specifically each allegation controverted by him in the same manner, and alleging in concise language any new matter, not inconsistent with the com- 1 Gould's Pleading, chap. 4, § 7. " The declaration, being the statement of those facts on which the plaintiff founds his right of recovery, must, of course, allege all iiat is essential to his right of action. For lie can recover only secundum allegata et probata; and can legally prove no material fact which the declaration does not allege." 'It is essential that the declaration contain a statement of all the facts necessary in point of law to sustain the action." Chitty on PL, 213, 214. 3 Code of Procedure, § 142. 1 In assumpsit, the plea of the general issue was that the defendant did not under- take and promise in manner and form as alleged in the declaration; but the defendant might also plead infancy, the statute of limitations or any other appropriate plea, showing that the plaintiff was not entitled to recover. Wheeler v. Curtiss, 11 Wend. 654; Hughes v. Wheeler, 8 Cowen, 77; Caldwell v. Cassidy, id., 271. 4 Code, § 149. Section one hundred and fifty specifies what is to be considered a counter-claim, and the mode of stating it. PLEADINGS. 617 plaint, constituting a defense to the new matter in the answer ; or he may demur to the answer containing such new matter. 1 At this point the pleadings terminate; but the allegation of new matter in the answer, not relating to a counter-claim, or of new matter in the reply, is deemed in law controverted by the adverse party as upon a direct denial or avoidance, as the case may require. 3 With this exception, the material allegations of the complaint not denied by the answer, and the material allegations of new matter in the answer constituting a counter-claim, not denied by the reply, in the manner prescribed, are for the pur- poses of the action taken as true. 3 "When the plaintiff verifies his complaint, the defendant must verify his answer ; and when the defendant verifies his answer, the plaintiff must verify his reply. 4 The effect of this provision is to abolish utterly the technicalities and fictions which were allowed under the old forms and rules of pleading. When the complaint shows on its face affirmatively that the plaintiff is not entitled to maintain the action, or fails to state facts sufficient to constitute a cause of action, the defendant may demur ; and he may demur to one or more of several causes of action stated in the complaint, and answer the residue. 5 The plaintiff may also demur to an answer containing new matter, where upon its face it does not constitute a counter-claim or defense ; and he may demur to one or more of several counter- claims, and reply as to the residue." In a word the old forms of pleading are abolished, and the * parties are required to plead respectively the facts which constitute the plaintiff's cause of action, or the defendant's ground of defense in the manner prescribed by the Code ; and the rules by which the sufficiency of the pleadings is to be determined are those established by the Code. 1 Code, § 153 as amended in 1857. And in other cases, when an answer contains new matter constituting a defenso by way of avoidance, the court may, in. its discretion on the defendant's motion, require a reply to such new matter ; and in that case the reply shall bo subject to the same rules as a reply to a counter-claim. * Idem, § 1G8. * Idem. ♦Code, §§ 150, 157. 5 ;:.-: 1 r.;. i u. * §153; 7 Barb., 80; C Uow. Pr., 255. Edw. 78 618 BILLS OF EXCHANGE AND PROMISSORY NOTES. With this brief statement, we proceed to consider as concisely as possible the rules of pleading applicable to bills of exchange, checks and promissory notes. In the first place, then, the action must be brought in the name of the lawful holder and owner of the paper, and the complaint must contain a statement of all the facts necessary to be proved on the trial, in order to entitle the plaintiff to recover thereon against the defendant. 1 An executor or administrator, a trustee of an express trust, or a person expressly authorized by statute, may sue, without joining with him the per- son for whose benefit the action is prosecuted ; * but as a general rule, every action must be prosecuted in the name of the real party in interest. 3 The phrase " a trustee of an express trust," includes a person with whom or in whose name a contract is made for the benefit of another. Mercantile agents and factors, who, according to the usage and custom of merchants, do business in their own names for other parties, are trustees in fact, and are entitled to sue on contracts made by them with third persons. 4 Hence a factor, taking a note payable to himself, on a sale of his principal's goods, is prima facie entitled to recover thereon. 6 The complaint must show title in the plaintiff. 6 If the action be brought in the name of an indorsee against the makers of a promissory note, the complaint must show by some suitable aver- „ A ment that the note has been indorsed or * transferred to the *659 plaintiff, so that he is the holder and owner of the note. T 1 Gould's PL, ch. 4, §§ 7-9. 2 Code, § 113. S §111. 4 Grinnell v. Schmidt, 2 Sand. E., 706. 6 Edwards on Bailm., 282. 6 The provision of the Code requiring every action to be brought in the namo of the real party in interest, would be a dead letter in many cases if the plaintiff could recover without first establishing his title. Parker v. Totten, 10 IIow. Pr. R., 233; 15 N. Y. Rep., 425. The transfer of a note indorsed in blank by delivery, pending a suit, has been held to pass the title, so that the action cannot be further prosecuted on it. Curtiss v. Bemis, 26 Conn., 1. But an executory agreement to purchase the judgment to be recovered on a negotiable note does not affect the suit pending. Comstock v. Savage, 27 Conn., 184. In New York, the action does not abate in consequence of a transfei of any interest therein ; the court may allow it to proceed, or may substitute the assignee or indorsee as party plaintiff. Code, § 121. 7 Lord and others v. Chcsebrough and others, 4 Sand. R., 690. Action by tht indorsees of a note made by the defendants, payable to their own order, and indorsed, by them. The complaint stated only the making and indorsing the note, gave a copy PLEADINGS. 619 The language of the Code declaring that, " in an action or defense, founded upon an instrument for the payment of money only, it shall be Sufficient for a party to give a copy of the instrument, and to state that there is due him thereon from the adverse party a specified sum, which he claims," does not apply where the plaintiff suing upon it is not named in or is not a party to the instrument j 1 nor does it apply where an action is brought against the indorser of a promissory note, who is not liable upon the in- strument alone. 8 In an action brought by the payee against the maker, it is suffi- cient to allege the making of the note, to give a copy of it, and claim the amount due thereon from the defendant to the plaintiff; for in respect to the maker the note is an instrument for the pay- ment of money only. 3 So, in an action by the payee against the acceptor of a bill of exchange, it is sufficient for the plaintiff to give a copy of the bill and of the acceptance in the complaint, and allege that the plaintiff, who is the payee of the bill, is the holder and owner of it ; that no part of it has been paid, but that the whole amount of it is justly due to the plaintiff from the defend- ant: 4 "the instrument* is unquestionably one for the pay- ment of money, and for the payment of money only. The acceptor is the party primarily liable and his contract is absolute and unconditional." 1 Code, § 162; 4 Sand. R., 692. a Alden v. Bloomiugdale impleaded with Schmidt, 1 Duer R., 601. 3 Chappell v. Bissell, 10 How. Pr. R., 274; see, also, 15 N. Y. Rep., 425. 4 Andrews v. The Astor Bank, 2 Duer R., 629. The complaint must show that tho bill has become due, and-should claim interest from a day specified, besides cost. of it. and claimed the amount due thereon. Sandford, J.: "We think, on full con- sideration of the subject, that the complaint is defective. It should show in some way the connection between the plaintiffs and the note, i. e., that it was indorsed or transferred to them, or that they are the holders or owners of the note. As it now Stands there is no such allegation. Tho indorsement as copied, if that be deemed a part of the Instrument, is in blank, and there is no averment that the noto was Settvered to the plaintiffs. The inference is rather, that tho defendants, when they tu.vle and indorsed the note, delivered it to Ihimmerlin the plaintiff 4! , -days (or weeks, or month-), dfter the Bight (or date) thereof, and then and thero delivered the samo to the said plaintiff, and the same was then and there presented to the said J. K. for acceptance, and the said J. K. then and there refused to accept the samo, of all which the defendant then and there had due notice." Chilly on Bill.-*, 552. Edw. 80 634 BILLS OF EXCHANGE AND PROMISSORY NOTES. that the plaintiff must plead specially the facts dispensing with the demand or notice. 1 And the decision is well sustained by both reason and authority ; s for there is no propriety in allowing the plaintiff to allege that a due demand has been made, or a due notice given, when he intends to prove on the trial that neither was necessary, and make that the ground of his action. But where the plaintiff intends to rely upon a subsequent promise to pay, as presumptive evidence of demand and notice, he should undoubtedly aver the facts which he expects to prove. 3 Thus, if the plaintiff, in an action against the drawer of a check, seeks to recover on the ground that the defendant drew on a bank where he had no funds, he should aver the fact, and thereby take from the drawer the right to insist upon the want of demand and notice. 4 And if he intends to recover against the drawer of a bill because he has countermanded the payment thereof, he should aver that fact, thus showing that the drawer could not be injured by the want of notice. So, where he relies upon a waiver of laches, his complaint should be framed so as to state his real cause of action. On the other hand, where he intends to show demand and notice, whether by direct or indirect evidence ; or where he expects to prove that the notice was given with reasonable diligence, though u. n » n too late in *the usual course, it is proper to make the usual averment of due presentment and notice. 6 1 Williams v. Matthews, 3 Cowen, 252 ; Kenon v. McRea, 7 Porter, 175 ; Taunton Bank v. Richardson, 5 Pick., 436. 2 Garvey v. Fowler, 4 Sand. R., 665 ; Burgh v. Legge, 5 Mees. & Wels., 418; Bylea on Bills, 337. 3 Hicks v. Duke of Beaufort, 4 Bing. N. C, 229; 5 Scott, 593 ; 7 East, 231. 4 4 Sand. R., 665. s 4 Bing. N. C, 229 ; Carter v. Flower, 16 M. & W., 749. The following cases decided in England, under the new rules of pleading, may serve to illustrate the sub- ject in hand : Iline v. Alleley, 4 Barn. & Ad., 624, decided in 1833. Action by indorsees agaiDSt the drawers of a bill of exchange, drawn upon Mr. Peter Perry, No. 6 Budge Row, Watling street, and accepted by the drawee ; and under an averment that the biuV when due, was presented and shown to Peter Perry for payment, it was held the plaintiff might prove that he went to No. 6 Budge Row, to present it, but found the house shut up and no one there. Hunt v. Massey, 5 id., 902, decided in 1834; action by the drawer against the acceptor of a bill, dated Feb. 1, 1832, payable five months after date. The defendant having proved that he was under ago when ho accepted the bill, the plaintiff intro- duced in evidence a letter in the defendant's handwriting purporting by its date to have been written after he came of age, and addressed to a third person, in these words: "I request you to pay IT. (tho plaintiff), 1012 at your earliest convenient* after the date of this letter, from money left me by my lafco grandfather, for wbic ,, PLEADINGS. 635 It results from what has been said, that in all actions upon negotiable paper, the answer must traverse some matter of fact, such as the drawing, or making, or indorsing, 1 or accepting, *or presenting, or notice of dishonor ; and that new matters in confession and avoidance must be pleaded specially. 5 Negotiable notes, bills of exchange and checks are presumed to have been made, indorsed or accepted for valid consideration ; and hence the holder suing on either of them, is not bound to allege or prove a consideration for the making, indorsement or acceptance of the instrument* But where a promissory note is not negotia- 1 In an action by the indorsee against the maker, an answer denying all the allega- tions in the complaint showing plaintiff's title to and possession of the note, though that denial be that defendants "have no knowledge or information sufficient to form a belief," &c, is a sufficient pleading; it is not frivolous. Duncan v. Lawrence, 3 Bos., 103. A like denial of the indorsement to the plaintiff is sufficient — is not frivolous. Hecker v. Mitchell, 5 Abbt., 453; Duncan v. Lawrence, 6 Abbt., 304. The fact that the buyer of chattels, on a sale fraudulently made, has commenced an action to compel the seller to surrender a note and mortgage given for the consid- eration, will not prevent the buyer, if afterwards sued on the note by the seller, from setting up the fraud and failure of title as a defense to the action. Wiltsie v. Northam, 3 Bos., 162. s Byles on Bills, 339. 1 1 Denio, 116; 9 Wend., 273 ; 13 id., 557 ; 9 John. R., 217 ; Van Santvoord's PL, 219-221. I have given my bill;" and it was proved that this letter was given to plaintiff's clerk. Htld, that the letter must bo taken to have been written at tho time of its date, and that having been written after the defendant came of age, and before the, bill became due, it would support a count on a promise to pay according to the tenor and effect of the bill. Bancks v. Camp, 9 Bing. R., 004, decided in 1833. The averment was that th(* defendant, on, a wm in dental, not in excuse, of the breach alleged in the declaration, namely, the non-payment of the bill according to the tenor and effect of tho acceptance, and therefore that tho replication was improper. 636 BILLS OF EXCHANGE AND PROMISSORY NOTES. ble, as where it is payable in specific articles and therefore not within the statute, a consideration must be alleged and proved on the trial : if it purport to have been given " for value received," it is enough to aver generally that it was so given, and these words will be prima facie evidence, on the trial, of a consideration.' And if the plaintiff aver particularly the consideration for which the note was given, he will be under the necessity of proving the averment as made. So if the plaintiff sues as the assignee of such a note, he must aver a transfer for value, and state the amount due thereon. 2 We have seen in a former chapter that, as between the original parties to negotiable paper, the consideration may be inquired into and impeached, as effectually as though the contract were not nego- tiable ; but that the want or failure of consideration is no defense to an action brought by one who has taken the same before due, in good faith, and for value. 3 It follows that the defendant who intends to attack the consideration* for which the paper was given, indorsed or accepted, in an action brought thereon by a third person, must not only allege the facts impeach- ing the consideration, but must also aver that the plaintiff took the note or bill with notice, or after the same became due, or that he did not part with value for the same. 4 But where the statute declares a note or bill void, it is a sufficient answer to allege the facts bringing it within the terms of the statute. 6 1 Jerome v. "Whitney, 7 John. R., 321 ; but it will not do to describe the note as given " for value received," unless it contains those words. Saxton v. Johnson, 10 John. R., 418. 2 Lee v. Swift, 1 Denio, 5G5 ; see, also, the Code requiring every cause of action to be brought in the name of the real party in interest. 21 Barb. R., 241. Under the old practice, a note for the payment of money not negotiable, and a note for the payment of a sum certain, in land or lumber, was permitted to be given in evidence under the money counts, on proving the maker's default. 4 Wend., 575 ; 2 John. R., 235 ; 7 Wend., 311 ; 6 Cowen, 151. * See chapter on " Consideration." 4 3 Barb., 149; 12 John. R., 343 ; 5 Wend., GOO; 24 id., 97; 11 John. R., 128; 1 Denio, 583; 20 John. R., 637; 6 Hill R., 93; 1 Sand. R., 53; 2 id., 115; 23 Wend., 311 ; 2 Hill, 301; Rochester v. Taylor, 23 Barb., 18; Crosby v. Leary, 6 Bosw., 312. The rule of pleading is correctly stated in the text; but the rule of evidence duos not precisely follow that of pleading. For the defendant is not bound in the first m- stance to show that the plaintiff took the paper with notice, or after the same had become due; instead of that he may show that it was. in respect to him, fraudulently nego- tiated or put into circulation, and tho plaintiff i3 then called upon to show that ho give value Cor the paper. Ross v. Bedell, 5 Duer, 467 ; 1 Duer, 609. • VaUctte v. Parker, 6 Wend., 615; Rockwell v. Charles, 2 Hill, 499. PLEADINGS. 637 The defendant must set forth in his answer, facts and circum- stances which amount to a good defense in law : if the action be brought by the indorsee against him as the maker of a note, given by him for the accommodation of the payee, he must state not only that it was so given, but also facts showing his right to inter- pose a defense ; as that it was made and delivered for a special purpose and transferred to the plaintiff with knowledge of the premises and in violation of the conditions upon which it was made. 1 For, where a note is made for the accommodation of the payee, without any stipulation as to the manner in which it is to be used, he is authorized to use it as he sees fit." In the case of accommodation paper, there is between the ori- ginal parties a total want of consideration. But there is another class of cases in which the consideration fails, either totally or partially ; as where a promissory note is given by the maker for the purchase money of lands conve}^ed to him by a deed with war- ranty, and the title to the premises fails ; s or where a note is given to the master, upon his promise to manumit a slave, which he utterly omits to do ; 4 or where a *note is given upon a sale 7 of personal property under a warranty of its soundness, or such false representations as will entitle the vendee to recover damages thereon against the vendor. 6 In these and like cases, the maker of the note, when the action is brought by the payee, may interpose his defense or counter-claim with the same effect as if the action were brought for the consideration of the note ; but he must plead his defense. 4 1 Beers v. Culver, 1 Hill R., 589 ; Miller v. Gambie, 4 Barb. R., 146. Seneca Co. Bank v. Eeass, 5 Denio, 329 ; S. C, 3 Comst., 442. * 11 John. R., 51; 4 Wend., 483. In Lattin v. Vail and others, it was held no defense to an action on a promissory note that it was given as part consideration of land sold by the payee under a covenant that it was free from incumbrances, and that the land ia subject to a mortgage executed by him, for a sum exceeding the amount of the note. 17 Wend., 188. 4 19 John. R., 53. 4 Payne v. Cutler, 13 Wend., 005. An answer making a general denial of indebtedness as alleged in the complaint; Fosdick v. Graff, 22 How. Pr., 158; and an answer by the- maker of the note in suit averring that the note was made under a verbal agreement, that another man, and not himself, should pay it. Shoe and Leather Bank v. Camp, 21 id., 443 ; sots up no defense. * Idem. In an action by the receiver of a bank on a note, the maker cannot set up a demand 038 BILLS OP EXCHANGE AND PROMISSORY NOTES. "When the action is brought by an indorsee or other third person not named in the note, it is presumed until the contrary is shown, that he took it in the usual course of negotiating commercial paper ; and, as a general rule, the maker cannot show any equities existing between himself and the payee, until he has first impeached the plaintiff's title by showing that he either took the note when it was overdue, that he paid no consideration for it, or that he took it with notice of the facts which are set up as a defense. 1 For this reason it is clear that the defendant must set forth in his answer a good defense against the payee, and such further facts as will enti- tle him to interpose the defense against the plaintiff in the action. 8 „„„,„ An action in the nature of trover for the conversion of 679 a bills and notes, or other choses in action, may be maintained by the owner against the party converting them, under a state of facts which will sustain the action for the conversion of other species of personal property, respect being had to the nature of the instrument* Title in the plaintiff, and a conversion by the defend- ant, must be shown. 4 But the maker of a negotiable note or the acceptor of a bill of exchange, may maintain the action against a person who, before the bill or note has any legal inception, wrong- fully obtains the possession of it and negotiates it to a bona fide holder for value, or against the party to whom it is so negotiated 1 Nelson v. Cowing, 6 Hill R., 336; ante, note 678. a The presumptions are all in favor of the holder of negotiable paper : prima fade the party in possession is a bona fide holder for value, and the owner of the paper ; and this presumption is so strong, that though the pleadings put the title in issue, it will not be overcome by proof that the plaintiff acquired the note after due. James v. Chalmers, 2 Selden, 209 ; Catlin v. Hansen, 1 Duer, Superior Ct. Rep., 309, and cases there cited. 5 Kentgen v. Parks, 2 Sand., 60 ; Down v. Hailing, 4 B. & C, 330 ; Lovell v. Martin. 4 Taunt., 799; Trentellv. Baranden, 8 Taunt, 100; Evans v. Kymer, 1 Barn. & Adol. 528; Murray v. Burling, 10 John. R., 172; Brock r. Kent, 3 Vt., 99. 4 Kentgen v. Parks, supra; so of a bond; Clowes v. Hawley, 12 John. R., 484; 2 Hill, 550. against the bank not due when the note matured or tho receiver was appointed. TJ. S. Trust Co. v. Harris, 2 Bos., 75. In an action by the indorsee of a note against the maker, the latter cannot set up as a counter-claim a demand against the payee growing out of a partnership between himself, the payee and a third person, where there has been no accounting between the partners. Cumings v. Morrifl, 3 Bos., 560 ; until an accounting is had, this debt duo to one of the firm is a debt due from tho firm, and its property is first liable for its pay- ment. Ives v. Miller, 19 Barb., 196. PLEADINGS. 639 with notice ; and where it is shown to have been transferred to a bona fide holder for value, the plaintiff need not show that he has paid the note or bill. 1 The action also lies in favor of the payee,* and in favor of the indorsee or party to whom it has been trans- ferred ;■ and in favor of the party to whom the cause of action has been assigned, after the conversion •* and against a party to whom the paper has been fraudulently indorsed with notice of the facts, notwithstanding such indorsee has a right of action thereon against his indorser.* Proof that the defendant in possession refused to surrender the instrument on demand, or wrongfully negotiated it, is evidence of a conversion. 8 *Taking a bill with notice that it has been lost or stolen, ,,„_ . i . . . 679 or with knowledge of its fraudulent diversion, or upon a usurious contract, from a party having no title, and appropriating it by negotiation, is a conversion. 7 The measure of damages in the action for a conversion, is the face of the note or bill, or the amount due thereon, there being no attempt -to show it of less value. 8 "When the bill or note has been paid, the action in the nature of trover cannot be maintained ; the suit should be for money had and received. 9 The effect of a recovery and payment of the judgment in the action in the nature of trover, is to vest the property in the defend- ant from the time of the conversion. 10 •A suit in equity may also be maintained for the cancellation and surrender of negotiable paper, in cases where courts of law 1 Decker v. Mathews, 5 Sand., 430 ; S. C, 2 Kernan, 313 ; Evans v. Kymer, 1 Barn. k Adol., 528; Murray v. Burling, 10 John., 172. 1 Goggerly v. Cuthbert, 2 N. R., 170. 3 Smith v. Maine, 25 Barb., 33. * Goold v. Goold, 36 Barb., 270. 5 Goggerly v. Cuthbert, supra; and Evans v. Kymer, supra. Tho action doe3 not lie whero the plaintiff's agent transfers negotiable paper to a party receiving it with- out notice of the agency and for value. Case v. Mechanics' Banking Association, 4 Comst, 166. ' 2 Sand., 60; 2 Comst., 293. ' Lovell v. Martin, 4 Taunt., 709; Prentiss v. Graves, 33 Barb., 621; Robb v. Mudgo, 14 Gray, 534; Kentgen v. Parks, 2 Sand., 60. * Ingalls v. Lord, 1 Cowen, 240. * Hodges v. Lathrop, 1 Sand., 40; tho action hero was by a receiver appointed after the notes were paid. Receiving tho money on tho notes merely, is not a con- version; see Jones v. Fort, 9 B. & C, 764, and also Down v. Hailing, 4 B. & C, 330. 10 Holmes v. Wilson, 10 Ad. & B., 511 ; Cooper v. Shepherd, 3 C. B., 266; see, also, Osterhout v. Roberts, 8 Cowen, 43 ; Livingston v. Bishop, 1 John., 290. 640 BILLS OF EXCHANGE AND PEOM1SSOKY NOTES. do not furnish an adequate remedy ; and its negotiation will be restrained by injunction where its* transfer to a bona fide holder for value will deprive the plaintiff of his valid and equitable defense. 1 And the party receiving accommodation paper, that has been fraudulently obtained, without paying value therefor, may be enjoined from negotiating or collecting it, and the paper may be adjudged void in his hands. 3 „ _ * Limitation of actions. An action upon a contract, obliga- 679 c • • • . tion or liability, express or implied, or for the specific reco- very of personal property, can only be commenced within the period of six years after the cause of action has accrued. 3 This statutory rule of law, limiting the time within which the action may be brought, operates upon the remedy merely, and not upon the debt : it is not a discharge of the debt, but a bar to the action.* The six years commence to run from the time the action accrues ;" and the action, as we have seen, accrues on a note or bill the day after it becomes due and payable. 6 In computing the time, no regard is had to the fractions of a day ; 7 and as the suit is to be brought within the six years after the action accrues, the rule is to exclude the first day and include the last — so that a suit com- menced on the fifth of October, on a note that became due six years previous on the fourth of October, is within the time limited by the statute.* The action is commenced as to each defendant, when the sum- mons is served on him, or on a co-defendant who is a joint contractor or otherwise united in interest with him. 8 That is to 'Smith v. Haytwell, Ambler, 66; Thompson v. Graham, 1 Paige, 384; Delafield v. State of Illinois, 2 Hill, 159; S. C, 8 Paige. 527; Morse v. Hovey, 9 id.. 197; 26 "Wend., 192; not where the note is overdue: Geer v. Kissam, 3 Edw., ch. 129. 9 Farrington v. Frankfort Bank, 24 Barb., 554; S. C, 31 Barb., 183. " Code of N. Y., §§ 74, 91. 4 Waltermire v. "Westover, 14 N. Y. Rep., 16; Carshore v. Iluyck, 6 Barb., 583; Sturges v. Crowninshield, 4 Wheat., 122. 6 Bell v. Yates, 33 Barb., 627 ; Cooper v. Dedrick, 22 Barb., 516; Davis v. Gorton, J 6 N. Y. Rep., 255. •Osborne v. Moncure, 3 Wend., 170; Hagan v. Cuyler, 8 Cowen, 203; ante, 527. ' Cornell v. Moulton, 3 Denio, 12. 8 McGraw v. Walker, 2 Hilton, 404; Code of N. Y, § 407. The suit was com- menced October 5, 1858, on a note due October 4, 1852, and was hold in time. The statute runs on a note payable on demand, from the date of the note. Wenman v. Mohawk Ins. Co., 13 "Wend., 267; from the time it is due; see Merritt v. Todd, 23 N. Y. Rep., 28; 23 How. Pr., 152; 19 N. Y. Rep., .'2; ante. 8 Code of N. Y., § 99. PLEADINGS. 641 Bay, the action against several joint debtors is, in effect, com- menced as to all by the service of the summons on part of the defendants before the statute has become a bar. 1 *An attempt to commence an action is deemed equiva- ^ a „ aA lent to its commencement, -when the summons is delivered with the intent that it shall be actually served, to the sheriff or other officers of the count)- in which the defendants, or one of them, usually or last resided, provided such attempt is followed by the first publication of the summons or the service thereof within sixty days. 3 The summons may be delivered to the sheriff in another county, by sending it to him by mail ;* but it must appear that it reached him in time. The absence or successive absences of the defendant from the state are not included in the computation of the six years ; 4 and the absence of one joint debtor suspends the running of the statute against him, even where his co-debtor remains within the state.* The intent of the statute is to subject each debtor to the reach of civil process at the suit of his creditor during a period of six years after the action accrues. 8 The time during which a person is disabled by law to bring his action, i3 not counted as a part of the six years ; but the extent of such disability, and the circumstances under which he may avail himself of it, are prescribed by the statute. 7 To take a case out of the operation of the statute, there must be an acknowledgment or promise in writing signed by the party to be charged thereby, or there must be a voluntary payment of principal or interest upon the debt. 8 Such a payment is evidence of a new promise, or evidence from which .a promise may be 1 White's Bank of Buffalo v. Ward, 35 Barb., 637 ; §§ 13G, 375, 377, 379, N. Y. Code. As to the effect of the judgment, one only being served ; see Oakley v. Aspin- wall, 4 N. Y. Rep., 517. * Code of N. Y, § 99. The delivery to the officer is not sufficiently proved by his indorsement; Wardwell v. Patrick, 1 Bosw., 40C. ' It was so held at circuit in Tufts v. Camp; seo "Wiggin v. Orser, 5 Ducr, 118. ♦Berrian v. Wright, 2G Barb., 208; Cole v. Jessup, 10 How. Pr., 515; 2 E. D. 8mith, 172. 1 Denny v. Smith k Hull, 18 N. Y. Rep., 5G7, arose under the R. S. • 18 N. Y. Rep., 570; Fannin v. Anderson, 53 Eng. Com. Law, 821; Didicr v. Davison, 2 Barb. Ch., 477, 487. Tho rule applies to one of two joint and several debtors; Bogart v. Vermilya, 1 Code Rep., N. S., 212 ; 2Comst.,523; 3 How. Pr., 316. 'Code of N. Y, §§101-107. •Code, § 110; Arnold v. Downing, 11 Barb., 554. Edw. 81 642 BILLS OF EXCHANGE AND PROMISSORY NOTES. implied ;* and its effect is not altered by the Code. But neither a payment, nor a promise by one of several joint debtors binds the others f if, however, two of them, on being called upon for pay- ment, refer the holder of a note to the principal maker, and the latter informed of such reference makes a payment thereon, it binds the two, as well as the third that makes the payment. 3 The new promise must be made to the creditor or to his agent ; and if it be a conditional promise, it must be shown that the condition has been fulfilled. 4 II. Evidence: As a general rule the pleadings show what the plaintiff must prove to maintain his action, and what the defendant must prove to establish his defense. When a single fact is put in issue, such as the making of the note, or the acceptance of the bill in suit, one party holds the affirmative and the other the negative ; and the entire evidence is directed to the proof or disproof of that fact. »^™ But when the * answer contains a general denial of the alle- gations in the complaint, the plaintiff must prove the bill or note and the facts which he has alleged, showing his right to re- cover ; and the defendant is at liberty to disprove any material averment contained in the complaint. An immaterial averment need not be proved. Thus, in an action against the drawer or indorser of a bill for non-payment, the plain- tiff need not prove an allegation that the bill was accepted, unless that be necessary to show the dishonor of the bill. 6 And where 1 Shoemaker v. Benedict, 1 Kernan, 185 ; Pickett v. King, 34 Barb., 193. 4 Ante, 117-120 ; Van Keuren v. Parmelee, 2 Comst., 527 ; Winchell v. Hicks, 18 N. Y. Rep., 558. s Winchell v. Hicks, 18 N. Y. Rep., 558; Munro v. Potter, 34 Barb., 358. 4 Wakeman v. Sherman, 5 Seld., 85 ; Bloodgood v. Bruen, 4 Seld., 362. A debt barred by statute, when tho Code took effect, can only be renewed by a written promise ; Esselstyne v. Weeks, 2 Kern., 635. The date of a written promise may bo supplied by parol evidence ; Edmunds v. Downes, 2 C. & Mees., 459. 6 Tanner v. Bean, 4 Barn. & Cres., 312. The bill in this case, which was an action by an indorsee against his indorser, must have been payable a certain time afterdate; for it was urged on the argument that the plaintiff was bound to prove the acceptance, as alleged, although the allegation was unnecessary. Abbott, C. J. : " The holder of a bill is not bound to present it for acceptance before it becomes due, and we aro of opinion that the allegation of acceptance is not in the nature of a description of the instrument. The acceptance or non-acceptance does not vary tho responsibility of tho indorser appearing on the declaration; it is at all events his duty to pay tho bill when due, if the prior parties do not. The averment of acceptance was, therefore, immaterial, and the plaintiff was not bound to prove it." EVIDENCE. 643 the action is brought against an acceptor, the plaintiff need not prove, though he has alleged, a presentment at the time and place specified in the acceptance. 1 In an action by the payee, against the maker of a negotiable note, or the acceptor of a bill of exchange, it is ordinarily enough to produce the instrument and prove the signature of the defend- ant, and the amount due thereon. If the action be against seve- ral acceptors of a bill or makers of a note, the handwriting of each must be proved ; unless the defendants are sued as partners on a note signed or on a bill accepted in the name of the firm, in which case it must be shown that the defendants were partners, and that the note or acceptance was so made or given by one of the firm." But where the action is "brought against the members of a partnership, on a note given by one of them in the name of the firm, for his individual debt, it is incumbent upon the payee and plaintiff in the suit to show that the other partners assented to the giving of the note : for the law does not presume their assent, as it does when one of them gives notes, draws bills, or makes acceptances in the usual course of business. 3 On the same principle, when the action is brought against the defendant on a note made, or on an acceptance given by an agent, it rests with the plaintiff to prove the execution of the contract, and the agent's authority to bind his principal. 4 The authority being established, it is enough to show that the signature is in the handwriting of the agent. 6 1 Freeman v. Kennell, cited by Chitty on Bills, 625. 3 PorteT v. Cummings and others, 7 Wend., 172. The note sued on in this case was signed by Adams & Thorp, and S. Cummings, and though the allegation in the com- plaint was that the defendants made their promissory note in writing, their own proper hands icing thereunto subscribed, the plaintiff was allowed to prove that Adams and Thorp were partners, and that their signature on the note was in the handwriting of Thorp. J Wardell v. Hughes, 3 Wend., 418. * Johnson v. Mason, 1 Esp. It., 90. 6 Helmsley v. Loader, 2 Campb., 450; Chitty on Bills, G27 , Bootho v. Grove, M. & M.. 182; 3 C.& P., 335. The authority of an officer of a corporation, an insuranco company, to transfer its bills and notes by indorsement, may be proved by showing that the company was in the custom and habit of transferring its paper in that manner ; and such proof is prima facie sufficient; Scott v. Johnson, 5 Bosw., 213; and the agency of a clerk, who signs a note En the name of a general agent of a manufacturing corporation, may bo shown by proof that similar notes for the same purposes had been mado in tho samo way and used by tho corporation, and that tho proceeds of tho noto wcro used by tho corporation ; Moad v. Keeler, 24 Barb., 20, ante, 87, 88. « 682 644 BILLS OF EXCHANGE AND PROMISSORY NOTES. In an action against the makers of a joint and several promis sory note, it is incumbent upon the plaintiff to prove' that it was made by the parties described in the complaint as makers of the note ; and if it appears on the trial that the note was made in the manner alleged, and that the payee afterwards, without consent of the makers signed his own name under theirs and then transferred it, the plaintiff it seems, cannot recover : the instrument proved is not the same which the defendants executed, and the alteration makes it operate differently from the original contract and is there- fore material. 1 Whether the addition of a new name under that of the maker of an individual note, without his consent, is to be considered a material alteration that will discharge the first maker, does not appear to have been decided. But it is well settled that a note beginning, "I promise to pay," and signed *by two persons is a joint and several note. 2 The several contract of the maker with the payee or subsequent holder is not altered in any respect by the act of a third person signing his name under that of the previous makers without their consent ; but the joint contract is made to operate in a different manner.* 1 Gardiner v. Walsh, 32 Eng. Law and Eq. R., 1G2 : Chappell v. Spencer, 23 Barb. R., 5S4; Bank of Limestone v. Phiney, 5 Monroe, 25. A joint indebtedness must be shown, Mott v. Petrie, 15 Wend., 317. As to what are material alterations, it has been held in this state that inserting a place of payment, 19 John. R., 391, 24 Wend., 374, or negotiable words, 3 Barb., 374, without procuring the consent of the parties to the instrument, is a material alteration that vitiates the note. Adding a new name as surety to a valid note made by one person, is not regarded as a material alteration in an action against the party so subsequently signing the note. Cobb v. Titus, 13 Barb., 45; ION. T. Rep., 198; see, also, Burton v. Baker, 31 Barb., 241. a Galway v. Mathew, 1 Campb., 403; S. C, 10 East, 2G4; March v. Ward, Peake : a Rep., 130; Clerk v. Blackstock, Holt, N. P. C, 474. A note drawn in the same form and signed by one of a- firm for the concern is the joint note of all. Doty v. Smith, 11 John. R., 543 ; see, also, Hemmenway v. Stone, 7 Mass., 58; Barnet v. Skinner, 2 Bailey, 88. 3 Bank of Limestone v. Penick, 5 Monroe, 25 (1827). Where two persons .execute a joint and several note, their names being inserted in the body of the instrument, and the same is delivered in that form as their contract, and the payee inserts in the body of the note the name of a third maker, who also adds his name under theirs, the alteration is material, and the note is void as. to them, unless they assent to the transaction. Pulliam v. Withers, 8 Dana R., 98 (1839). Where one person made his note pay- able to another, and after the same became due, a third person, a friend of the maker, without having any consultation with him, signed his own namo under that of the maker, on.an agreement indorsed on the note as follows : " This note is not to bo paid until the expiration of three years from this date, the 11th April, 1835." Very slight evidence of assent on the part of the first maker was allowed to prevent the altera- EVIDENCE. 645 *The acceptance being made after sight of the bill, admits the drawers signature ; * and the production of the bill by the payee is sufficient proof of his title to it, notwithstanding it has his indorsement thereon to another person. 2 When the action is brought by an indorsee against the acceptor of a bill, the plaintiff must prove his acceptance, and the payee's 1 Bank of Commerce v. Union Bank, 3 Comst. R., 230, and cases there cited, par- ticularly Wilkinson v. Lutwidge, 1 Strango, 648. The acceptance admits also tho ability of the drawer, and that the draft was properly drawn ; so that though drawn by an agent, it is not necessary in an action against the acceptor to show the agent's authority. Porthouse v. Parker et al., 1 Campb. N. P. C, 82. 5 1 Denio, 367 ; 13 John. R., 230 ; 1 Sand. R., 37. tion from prejudicing the payee of the note. There was in this case no interlineation ^r change made in the body of the note, a circumstance which is specially mentioned •n the opinion ; and the court did not decide whether the adding of the new name without consent of the first maker was a material alteration. In Montgomery R. R. Co. v. Hurst, 9 Ala. N. S., 513 (1846), it was held that the addition of two names as makers, as sureties under that of tho defendant to his individual note, without his knowledge or consent, does not avoid the note, unless the addition is made with a fraudulent purpose. In Smith v. Dunham, 8 Pick., 246 (1829), it was held that where the payeo of a note procured a person who was present when it was executed to attest it as a wit- ness, without having the maker's consent, tho attestation was of no effect or force, and that the alteration was not material unless made fraudulently. See Nichols v. Johnson, 10 Conn. R., 192 (1834). Ogle v. Graham, 2 Penn. R., 132 (1830). Ogle agreed to become bail of Johnson for a sum not exceeding $400. Ogle drew a note for that sum, leaving a blank for the time of payment, and executed it in presence of a witness. The note was then pnt into Johnson's hands, who inserted tho sum of $323 instead of $400 that being as much as he had need of, then executed it in presence of a witness, and in tho absence of Ogle. Held, not an alteration of the contract. In Master v. Miller, 4 Term R., 320, decided in 1791, which is the leading caso on the subject, in respect to bill and notes, it was adjudged that an alteration of tho dato of a bill of exchange, after acceptance, whereby tho payment would bo accelerated, avoids the instrument ; and that no action can be afterwards brought upon it, even by an innocent holder for value. And in Burchfield v. Moore, 3 Ellis & Bl. R., 683, decided in -1854, it was held that an unauthorized alteration of a general acceptance by the addition of a place of payment, discharges tho acceptor, even as against a bona fide holder, subsequently taking tho bill for value and without notice of tho alte- ration. Patridgo v. Colby & Nason, 19 Barb. R., 21S, decided In 1855. Colby mado his note payable to Nason or bearer, and Nason delivered the note to the plaintiff on tho purchase of a horse, in payment therefor on condition ho put his name 'to it, which ho did by signing hi3 name under that of the maker. And tho defendants being sued together on thonote, Colin- making no d< . it was held that the defendant, Nakon, bad made himself jointly liable with Colby as maker, and a judgment was rendered for the plaintiff against them both. 646 BILLS OP EXCHANGE AND PKOMISSOKY NOTES. indorsement ;' and if the indorsement be special, it must appear to have been made to the plaintiff, or he must show a subsequent indorsement to himself. But the payee's indorsement is required to be proved only as a link in the plaintiff's title ; and hence, where the drawer forges the name of the payee upon the draft and nego- tiates it in that condition, the party discounting it may establish his title as against the acceptor by proving the circumstances.' So in respect to a note or draft drawn payable to the order of a fictitious person and negotiated by the maker, the holder may recover thereon, as on a draft or note payable to bearer; 3 and , f *under the statutes of this state, the owner and holder of a note or draft payable to the order of the maker and nego- tiated without indorsement, may recover thereon, against the maker, in the same manner as if the paper had been made payable to bearer. 4 And it is not necessary in such a case, in an action against the maker, or against any party to the instrument with knowledge of the facts, to prove an indorsement by the payee ; 6 though the general rule is that a note or bill drawn payable to the order of the maker must be indorsed by him, in order to transfer the legal title. 6 By making his note payable to the order of a particular person, the maker engages to pay to the order of that person, and can only be charged with liability by proving his order upon the note, or that of his personal representative, after his death. So, where a bill or check is drawn payable to the order of a particular person or firm, the indorsement of that person or firm must be shown to entitle the holder to demand the money thereon, or to authorize the drawee to pay the same. 7 Bills and notes made payable to bearer circulate and are con sidered as money ; and as the title passes by delivery, possession 1 Canal Bank v. Bank of Albany, 1 HilL 287 ; 3 Comst., 230. 2 Coggill v. The American Exchange Bank, 1 Comst., 113. 3 Plets v. Johnson, 3 Hill R., 11 2. 4 2 R. S., 53, 3d ed. " Such notes, made payable to the order of the maker thereof, or to the order of a fictitious person, shall, if negotiated by the maker, have the same effect, and be of the same validity as against the maker and all persons having know- ledge of the facts, as if payable to bearer." 6 3 Hill R.. 112. 6 Smith v. -Lusher, 5 Cowen, CSS; Titcomb v. Thomas. 5 Greenl., 282; Peake'a Rep., 20, Ifacfcrson v. Thoytes; Bosanquct v. Anderson. G Esp. R, 43; 2 Bing. N. C, 544. 7 Morgan v. The Bank of the State of N. Y., 1 Kernan R., 504. The draweo iu such a case, is only authorized, and only bound to pay on the order of the payee. EVIDENCE. 647 is evidence of the holder's property in them. 1 And there is no legal difference between a bill or note payable to bearer and one payable to a particular person or bearer ; in either case the holder is prima facie the lawful bearer, to whom the same is payable. 8 The same presumption is raised *in favor of the holder of „ aQr a note or bill drawn payable to order, after the same has been indorsed by the payee in blank. 3 When the plaintiffs sue on a note payable to them, or specially indorsed by the payee to them, in their firm name, it must be proved that the firm consists of the plaintiffs on the record, or they cannot recover thereon. 4 Until it is shown that the plaintiffs con- stitute the firm named in the note or indorsement, they are pre- sumptively strangers to the paper, as much so, as where the plaintiff sues on a note payable to him by another name, and is held to show that he was the person intended as payee in the note ; 6 or where a bill is drawn leaving the name of the payee in blank, and the plaintiff inserts his own name, and is required to prove that he was intended as the payee." "Where the name of the payee in a promissory note is that of two persons, father and son, the presumption is that the one in 1 Goodman v. Harvey, 4 Ad. & Ellis, 870 ; "Wilborn v. Turner, 5 Pick., 526. 8 Dean v. Hall, 17 Wend., 214. Payment on a note payable to bearer, will not estop the maker from disputing the title of the party in possession receiving the payment. 28 Barb., 44, Lounsbury v. Depew. s Bayley on Bills, ch. 5, § 1. 4 McGregor v. Cleveland, 5 Wend., 475. The plaintiffs in this case sued as the payees of a note payable to McGregor, Darling & Co., and they were held to prove themselves to be the firm named in the note. In a note to the case of Ord and others v. Portal, 3 Campb., 239, it is said, "where a bill of exchange is payable, or indorsed specially, to a firm, Lord Ellexborougii has often ruled that in an action by the payees or indorsees, strict evidence must be given that the firm consists of the per- sons who sue as plaintiffs on the record." When a note is given to a firm for goods purchased, and one of the firm soon after ceases to be a partner, and the notes are afterwards renewed, it may be shown under an allegation in the complaint that the plaintiffs are the payees and lawful holders and owners of the note, that the retiring partner transferred his interest in it to the plaintiffs, and that they constituted the firm. Whitlock v. MeKiclmic, 1 Bos., 427. • Willis v. Barrett, 2 Stark. R., 27 ; Medway Cotton Manufactory v. Adams, 10 Mass. B.., 3G0. In a suit against two person sued as partners and as makers of a note, proof that one of them made the note in the firm name, and that the other acknowledged his liability on the note, is sufficient; Painter v. Austin, 37 Penn. State, 458. * Curtchley v. Mann, 1 Marsh., 29 ; 5 Taunt., 509 ; 10 Wend., 93. 648 BILLS OF EXCHANGE AND PROMISSORY NOTES. possession is the real payee. 1 But where a note purporting to have been given for value received, is made payable to one or other of two persons, the action should be brought thereon in the name of them both, and then a recovery may be had in the suit, on proof of the execution of the note. 2 In an action against an indorser of a bill or note, the plaintiff need not prove the signature of the maker, drawer or prior indor- sers ; nor can the defendant impeach the genuineness* of the bill or note, 3 for his indorsement admits the ability and signature of every antecedent party.* The general rule, which has been previously stated, is that the plaintiff need not prove in an action on negotiable paper, that the same was made, accepted or indorsed for an adequate consid- eration; the presumption being that the contract of the several parties to the instrument was entered into for value received, and that the holder acquired it in the usual course of business for value. But the rule yields and the presumption is overcome in a variety of cases. For instance, if it be shown that the bill or note in suit has been lost, or has been stolen from the owner, the plain- tiff must then show himself to be a bona fide holder for value, which he may do by showing that he took the paper fairly, in the usual course of business, and gave a valuable consideration for it. 6 So, if it be shown that the bill or note was obtained by fraud, or made under duress, or given without consideration, for a particular pur- pose and dishonestly used for another, the burden of proof is on the plaintiff, to show under what circumstances and for what value he became the holder. 6 So, if the defendant answer that the note in suit was made on an illegal consideration and that the plaintiff gave no value for it, it has been held on a general denial of the 1 Sweeting v. Fowler and another, 1 Stark. R., 106. 1 Blankenhagen v. Blundell, 2 Barn. & Aid., 417; Walrad v. Petrie, 4 Wend., 575. ' There is a warranty implied in the transfer of every negotiable instrument that it is not forged. Henich v. Whitney, 15 John. R., 240; 2 Campb., 182; 1 Salk., 127; 1 Ld. Raym., 443. In an action by an indorsee against his immediate indorser, tho latter is estopped from denying the drawing and indorsement of the bill to himself. Macgreggor v. Rhodes, 88 Eng. Com. Law, 2G6; 15 N. Y. Rep., 575. 4 Baylcy on Bills, eh. 11. 1 Miller v. Race, 1 Burr. R., 452: Grant v. Vaughan, 3 id., 152C; Peacock v. Rhodes, Dower. R., 6331 8 Duncan v. Scott, 1 Campb. N. P. C, 100; Rees v. Marquis of Headfort, 2 id., 574; Holmes v. Carsper, 5 Bin., 409 ; 4 Taunt . 1 14. EVIDENCE. 649 facts stated in the answer, that proof of the illegality is sufficient to cast on the plaintiff the burden of proving that he gave value for it. 1 Proof that the bill in question was given without consideration, as accommodation paper, raises bo presumption against the holder, and is no evidence of the want of consideration in the holder." " If the defendant says. ' I lent my name to *the drawer for the purpose of his raising money upon the bill ' the proba- bility is that money was obtaine 1 upon the bill." The party holding the affirmative on- the pleadings must begin with evidence in support of the action or defense ; but where it is shown on the defense that the note in suit was given for an illegal consideration, or fraudulently diverted from the purpose for which it was made, the plaintiff must take up the case and prove a trans- fer to himself for a good consideration. 3 1 Baily v. Bidwell, 13 M. & W., 73. ' Mills v. Barber, 1 Mees. & Wels., 425, decided in 1836. Lord Abinger, C. B. : "This was an action against the acceptor of a bill of exchange, in which the defendant had pleaded that the bill of exchange was given without any consideration, and for the accommodation of the drawer, and indorsed to the plaintiff without value ; to which the plaintiff replied, that it was indorsed to him for a valuable consideration. At the trial the plaintiff stood upon his right, contending that the possession of the bill was itself prima fade evidence of consideration ; the defendant insisted that it was cast upon the plaintiff to prove affirmatively that he did give value for the bill. Neither party choosing to act, the learned judge took it upon himself, and directed the verdict to be entered for the plaintiff." After arguing the case, the court said: "This decision of the present case requires only to lay down this rule, that where there is no fraud, nor any suspicion of fraud, but the simple fact is that the defendant received no consideration for his acceptance, the plaintiff is not called upon to prove that ho gave value for the bill. That seems to be the opinion generally prevailing among tho judges. In this case the onus probandi lay on the defendant, and he ought to have gone further." 17 Barb. R., 530; 18 id., 341; 2 Selden R., 209. 3 A few cases will show where tho burden of proof lies, more accurately than can be stated in general terms. Woodruff v. Wicker, 2 Bosw., G13. Edmunds v. Groves, 2 Mees. & Wels., 642, decided in 1837. Assumpsit by indorsee against the maker of a note. Plea, that the note was given for a gaming debt, and indorsed to the plaintiff with notice thereof, and without consideration. Replication, that the note was indorsed to the plaintiff without notice of the illegality, and for a good and sufficient consideration, on which issue was joined. Held, that on these pleadings the illegal making of the note was not so admitted as to render it necessary for the plaintiff to privo any evideuce of consideration ; lint that in order to compel him to do bo, the defendant ought to have proved the illegality by evidence. An admission of a fact on the record amounts merely to a waiver of requiring proof of that fact; but if the other party seeks to have any Inference drawn by the jury from tho fact so admitted, be must prove it like any other fact." Srown v. Phflpot, 2 Moody & Rob., 285, decided in 1840. Assumpsit. Indorsee against acceptor. On replication die injuria to a plea bv the acceptor of a bill, that it Edw. 82 650 BILLS OF EXCHANGE AND PROMISSORY NOTES. „ _ *When the defendant proves that the plaintiff acquired the bill or note after it became due, or with notice of the facts impeaching the holder's title or right to recover thereon, or was accepted for the accommodation of the drawer, and by him indorsed to A. B., without consideration, for the purpose of raising money, and by A. B. fraudulently indorsed to C. D., wi thout consideration, and by him to the plaintiff, without considera- tion, the defendant must prove the ivant of consideration from plaintiff to C. D. The defendant must support his plea by proving that the plaintiff gave no consideration for the bill. But see Mills v. Barber, supra. Jacob v. Sir W. Hungate, 1 M. & R., 445. The fact of a bill having been accepted to raise money for the acceptor, and of the payee having appropriated the money so raised to his own use, is not sufficient to call upon a subsequent indorsee to show that he gave value for the bill. Smith v. Martin, 9 Mees. & Wei.. 304, decided in 1842. To a declaration in assump- sit, by indorsee against maker of a promissory note, the defendant pleaded that the note was indorsed and delivered to the plaintiff by his indorser, in violation of good faith, and in fraud and contempt of an order for referring the claim of that indorser to arbitration, and that the plaintiff took the note with full knowledge of the premises. The plaintiff replied that he had not, when he took the note, any knowledge of the premises in the plea mentioned. Issue thereon. Held, that upon these pleadings the defendant was bound to begin at the trial, and to prove the plaintiff's knowledge of the fraud ; and that the plaintiff was not bound in the first instance to prove considera- tion given for the indorsement to him. Bailey v. Bidwell, 13 Mees. & Wels., 73, decided in 1S44. Where, in answer to an action on a bill of exchange or promissory note, the defendant pleads that it wag illegal in its inception, and that the plaintiff took it without value, to which the plain- tiff replies de injuria, the illegality being proved, the onus is cast upon the plaintiff of proving that he gave value. Aldersox, B. : "It appears to me, that though the defendant is bound to aver in his plea both the illegality and want of consideration, yet if he proves the illegality, and the plaintiff does not prove the giving of the con- sideration, the plea is maintained, because the proof of the illegality shows prima facie, that the instrument is without consideration." * * * " The illegality, which was an agreement by the payee, in consideration of the note, not to oppose the maker's petition in bankruptcy, being established in evidence, it then lies upon the plaintiff to answer the challenge, as to the value given by him, which, in this case, he has not done." Gore v. Gibson, 13 Mees. & Wels., 623, decided in 1845. To an action by indorsee against indorser of a bill of exchange, the defendant pleaded that when he indorsed the bill he was so intoxicated, and thereby so entirely deprived of sense, understand- ing and the use of his reason, as to be unable to comprehend the meaning, nature or effect of the indorsement, or to contract thereby : of which the plaintiff, at the timo of the indorsement to him, had notice. Held to be a good answer to the action, and not to amount to an argumentative traverse of the indorsement. James v. Chalmers, 2 Selden R., 209. The action was on a note made by defendant, payable to the order of Adams & Brownell ; plaintiff alleges that the payees indorsed the note to him, and that he is the lawful holder and owner of it. The answer denies on information and belief the indorsement by the payees to the plaintiff, and denies that plaintiff was the owner of the note when the action was commenced ; and then alleges that sinco the note became due, one John C. Beardsley was the owner of it, EVIDENCE. 651 that he did not part with value for the same, he is at liberty to introduce his defense to the action ; for if either of these facts be shown, the plaintiff does not stand in the attitude of a bona fide holder. 1 It is not necessary to show that the plaintiff took the paper with positive knowledge of the circumstances affecting the holder's right of recovery ; it will be sufficient to let in the defense if it be shown that he took the instrument in such a manner as to imply, or fairly charge him *with knowledge. 2 Taking a note or bill with actual knowledge of its invalidity, the indorsee stands in no better situation than the party from whom he receives it ; if it be invalid in the hands of the payee, for fraud, for failure of consideration, or for any cause that deprives him of the right to recover on it, or to negotiate it, it is equally invalid in the hands of the person to whom it is transferred with notice of the infirmity. 3 Thus, if it be shown that the plaintiff took the note in question with notice of a previous payment thereon, *the payment is a good defense so far as it goes ; 4 or if it be shown that the note was indorsed for the accommodation of a firm, and that on their becoming insolvent the indorser forbid them to negotiate it, and that the plaintiff afterwards received it with knowledge of the facts, it has been- held he cannot recover thereon. 6 Proving that the plaintiff took the note or bill after it became due, and had been dishonored, is equivalent to evidence that he 1 The plaintiff may recover as a bona fide holder, notwithstanding he took the note or hill after it was due, provided he derives his title from or through a. bona fide holder. See chapter on Consideration. Dunning v. Pratt, 4 Duer, 331. 3 Brown v. Tabor, 5 Wend., 566 ; Wiggins v. Bush, 12 John. R, 306 ; Small v. Smith, 1 Denio, 583. 3 11 John. R, 128; 5 Wend., 000; 13 id., 605 ; Brail v. Hinchman, 6 Duer, 351. 4 White v. Kibling, 11 John. R., 128. 1 Holding v. Warner, 15 John. R, 270. and was then indebted to the defendant in the sum of $220, and asks that the same be set off against the note. The reply states that plaintiff was the owner of the note at the time of the commencement of the suit, and is still, and denies that Beardsley ever was the owner of the note or Indebted to the defendant After trial the referee reported, among other things, as follows: "I did find from such proof, and all the proof in the case, that the plaint ill' presumptively paid value for such note, and that he is the owner of it." It was shown on the trial that the note was transferred to Win. M. Parka, after it became due, for $75— it having been given originally for c 17 2.06 but there was no evidence given of a transfer to the plaintiff; and the court held that the plaintiff had given sufficient prima facie evidence that lie was the owner *f tho note, by producing it. 652 BILLS OF EXCHANGE AND PROMISSORY NOTES. was notified of the equities existing between the person from whom he received the paper and the parties liable thereon to him, and lets in all legal and equitable defenses existing against it in the hands of the holder when due. 1 The non-payment of the paper at maturity is considered sufficient to put the purchaser on his guard ; and hence the law charges the purchaser of dishonored paper with all the incumbrances resting upon the security. Proof that the plaintiff did not part with value for the note or bill in suit, in like manner lets in the defense f for the law will not allow a party taking paper without consideration to enforce it, in a case where the person from whom he received it had no title to it, or right to recover the amount named in the instrument.* But the plaintiff comes into court with the presumption in his favor that he paid value for the paper, and this presumption is not overcome by showing that he received it after it became due. 4 Except in cases where the note or bill is proved to have been lost or stolen, the defendant must go further and establish his defense to the action on the merits ; 6 for he has two entirely distinct things „„ A ., to do. In the first place, he must establish his riadit to 691 " . interpose* a defense ; and in the second place, he must prove the facts on which the defense is founded. Proof that the paper has been lost by or stolen from the true owner, calls upon the plaintiff to prove his title as a bona fide holder. Proof that the paper was obtained or put in circulation fraudulently, calls for the same evidence ; while it shows a defense to the instrument on the merits, unless the plaintiff shows himself to be^a bona fide holder for value, thus shutting out the defense. 7 1 3 Cowen, 252 ; 24 Wend., 97. s Coddington v. Bay, 20 John. R., 637; 5 John. Ch. R, 54; 10 Wend., 86; 16 id., 659; Jones v. Swan, 6 id., 589; Hart v. Palmer, 12 "Wend., 523; 2 Hill R., 140; 6 Hill R., 93; 1 Sand. R., 53; 9 Wend., 170; 23 Wend., 311; 2 Hill R., 301; 21 Wend., 499;. 24 id., 115; 2 Barb. R., 559; 6 id., 445. 3 White v. The Springfield Bank, 1 Barb. R., 225. 4 James v. Chalmers, 2 Selden R., 209 ; 5 Sand. 11., 52. s Payne v. Cutler, 13 Wend., 605. u Miller v. Race, supra; Grant v. Vanghan, supra. 7 Woodhull v. Holmes, 10 John. R., 231; Skilding v. Warren, 15 John. R, 270; Brown v. Taber, 5 Wend., 566; Vallett v. Parker, 6 Wend., 615; Wendell v. Howell, 9 Wend., 170; ante, 687, 678, 420, 320; Prentiss v. Graves, 33 Barb., 621; Duncan v. Gosche, 21 How. Pr., 344. TIk- holder of a bill or note is not called upon to show how he came into posses- sion of it,- merely because it is shown to have been given without consideration, as accommodation paper. But if it bo shown that it was fraudulently put into circu- EVIDEHCE. 653 Having established his right to introduce his defense, the defen- dant may prove any defense that would have been available to him as against the person from whom the plaintiff received the paper, whether founded on fraud, want, failure or illegality of consideration. 1 And in this state the statute *allows the M „, *692 defendant to plead, and prove as a set-off or counter-claim, any demand existing against the assignor of the bill or note, when the assignment or transfer of the paper is made after the same is due. 3 1 De Mott v. Starkey, 3 Barb. Oh. R., 403 ; Reed v. Warner, 5 Paige, 650; 3 Cowen R., 252; 15 John. R., 270; Story on Bills, §187-194. It is sometimes said, and it is held in England, that a party taking a bill overdue takes it subject to the equities attaching to the particular bill; but not to equities which may exist between the parties, arising from other transactions. Burroiigh v. Moss, 10 Barn. & Ores., 558; 2 Greenleaf on Ev., § 171. "In regard to the consideration, two things are to be noted ; first, as to the parties between whom it may be impeached ; and secondly, as to the burden of proof. And here it is first to be observed, that the consideration of a bill or note, as well as of any other unsealed instrument or contract, is impeachable by the immediate or original parties ; between whom the general rule is that the want of it may always be set up by the defendant, in bar of the action. Thus, it may be in- sisted on by the drawer against the payee; by the payee against his indorsee ; and by the acceptor against the drawer. The same rule is applied to all persons standing precisely in the situation of the original parties, and identified with them, in equity; such as their agents ; purchasers of paper dishonored by being overdue ; persons who have given no value for the bill ; purchasers with notice that the instrument is void in the hands of the assignor, whether from fraud, or from want, failure or illegality of consideration. These parties are regarded as taking the bill or note, subject to all the equities attaching to the particular bill in the hands of the holder; but not to equities which may exist between the parties, arising from other transactions. But, on the other hand, no defect or infirmity of consideration, either in the creation or in the transfer of a negotiable security, can be set up against a mere stranger to the transaction, such as a bona fide holder of the bill or note, who received it for a valu- able consideration, at or before it became due, and without notice of any infirmity therein. The same rule will apply, though the present holder has such notice, if he derives his title to the bill from a prior bona fide holder for value. Every such holder of a negotiable instrument is entitled to recover upon it, notwithstanding any defect of title in the person from whom he derived it; and even though he derived it from one who acquired it by fraud, or theft or robbery." When two notes are gives under the same arrangement and for the same consider- ation, the verdict and judgment in an action upon one of the notes establishing facts that affect both notes alike, are evidence of thoso facts in a subsequent suit between the same parties on the other note. Treadwell v. Stebbins, G Bosw., 538. * 2 R. S., 450, 451. 3d ed.- Code of Procedure, § 112. lation or fraudulently negotiated, be must then show that he gavo valuo for it. Ross v. Bedell, 5 Duer, 4C7 : 1 id., (509; ante, 320, 432, C87. The test of good faith is that the party taking the paper before it became due, gave valuo for it. Seo Hall V. Fealherstone, 3 Hurl. & Nor., 284. 054: BILLS OF EXCHANGE AND PROMISSORY NOTES. But the defendant will not be allowed a set-off in such a case, where it appears that he still owes the assignor a sura equal to the amount which he offers to prove as a counter-claim. 1 Nor is he entitled to prove a set-off in any action on negotiable notes or bills of exchange, until he has first shown that the plaintiff received them with notice or after they had been dishonored. 2 Under the former practice the holder of a note, as payee or in- dorsee, was allowed to maintain an action upon it in his own name, as a trustee for the person having the real interest in it ; but it was competent for the defendant to show that the owner of the paper had forbidden him to pay it to the plaintiff, thus rendering plain- tiff's possession of the paper mala fide. 3 Under the present practice, it is very clear that where the title is put in issue, the defendant may defeat the action by showing either that the plaintiff has no title to the paper, or that he is not the real owner. 4 In actions against the drawer of bills and checks, and against the indorser of negotiable paper, it is incumbent upon the plaintiff to prove as well as allege, that the paper was duly presented for acceptance or for payment and dishonored, and that due notice * thereof was given to the defendant. These facts, as we have seen, are conditions precedent, and must be averred and proved, or dispensed with by other evidence, in order to charge either the drawer or indorser with liability. 5 "Where the action is against the drawer or indorser of inland bills, for non-acceptance, the plaintiff must prove that the draft was duly presented to the drawee for acceptance and that he re- fused to accept the same, and that the defendant was seasonably notified of the refusal. And where the action is brought against either of them for non-payment, the plaintiff must prove that the bill was presented to the drawee for payment on the day the same became payable, that payment thereof was refused, and that the defendant was duly notified of the dishonor. 6 1 Collins v. Allen, 12 Wend., 356. 5 Hendricks v. Judah, 1 John. R., 319. 3 Comstock v. Hoag, 5 Wend., 600; 10 John. R., 221; Barber v. Prentiss, 6 Mass. It., 430. 4 The legal title, as we have seen, was always necessary to bo shown by the plain- tiff; 11 Wend., 27 ; and the Code requires all actions, with the exceptions specified, to bo brought in the name of the real parties in interest. * Chittyou Bills, 652. * Greenleaf on Ev., § 175. " But in the latter caso, as in actions against the drawer or indorser of a bill, or the indorser of a note, the undertaking ol the defendant being EVIDENCE. 655 When the action against the drawer or indorser is brought upon a bill that has been accepted, payable at a particular bank or counting house, the plaintiff must prove a presentment *for payment at the place designated in the acceptance ; ' and that the presentment for payment was made on the right day and within the usual hours of business. 8 Where the bill is drawn payable a certain number of days after sight, or after demand, the plaintiff must prove a presentment to the drawee for acceptance, as a means of fixing the time of payment : 3 but this is not necessary where the bill is drawn payable so many days or months after elate. Where the action is against the indorser of a promissory note, it rests with the plaintiff to prove that he has made the demand required by law, and given to the defendant timely notice of non- payment. What is a legal demand, or timely notice, has already been sufficiently considered. In an action against the drawer or indorser of a foreign bill, it is incumbent upon the plaintiff to prove, beside the presentment and notice of dishonor, a protest for non-acceptance or non-pay- 1 Gibb v. Mather, 8 Bing, 214; IT John. R., 248; 2 Sand., 166. 1 Idem ; IT John. R., 248; As to the time when bills must be presented for pay- ment, see former chapter on that subject. "Grecnleaf on Ev., § IT 6. conditional, namely, to pay in case the party primarily liable does not, the default of such party must be proved, or the proof be dispensed with by the introduction of other evidence. The receiver of a note is understood thereby to contract with every other party, who would be entitled to bring an action on paying it, that he will pre- sent it in the proper tune to the drawee for acceptance, when acceptance is necessary, and to the acceptor for payment, when the bill has arrived at maturity and is payable ; to allow no extra time for payment, to the acceptor; and to give notice in a reasonable time, and without delay, to every such person, of a failure in the attempt to procure a proper acceptance or payment. Any default or neglect in any of these respects will discharge every such person from responsibility on account of a non-acceptance or non-payment ; and will make it operate generally, as a satisfaction of any debt, de- mand, or value for which it was given." " The neglect to give notice to the drawer of a renewed bill, not only discharges him from liability to pay that bill, but also discharges him from liability to pay tho prior bill, to satisfy which it was drawn ; and this, although it bo cxprossly agreed that the taking such second bill shall not exonerate any of tho parties to the first bill, until actual payment." Chitty on Bills, 434, citing Bridges v. Berry, 3 Taunt., 13(\ Which wai an action on a larger bill taken in payment of a smaller bill, the plaintiff paying the difference in change. Rcid v. Coats, 6 Bro. P. C, was tho case of a bill accepted by new partiwft; ami the court held that tho holder was bound to use dili. gence in presenting it for payment, and giving notice of non-payment. 656 BILLS OF EXCHANGE AND PROMISSORY NOTES. merit. 1 But the protest, when made by a notary in a foreign state, and attested under the seal of his office, proves itself, and is evi- dence of presentment and refusal. 2 And it is now settled that bills of exchange drawn in one state of the Union and payable in another, are foreign bills, within the meaning of the rule which makes the notarial protest prima facie evidence of the present- ment and dishonor of such bills. 3 But since the giving of notice of dishonor to the drawer or indorser is not the official duty of the foreign notary, his notarial certificate is not evidence of that fact, although it contains a statement showing that due notice has been given. 4 The necessity of proving the protest of a foreign bill is super- *.,~- seded, in an action against the drawer, by showing- that *he had no effects in the hands of the drawee, and no reasona- ble expectation that the bill would be honored ; or by showing that he has admitted his liability, by promising to pay the biJl when called upon for that purpose; or by showing his request that it might not be protested ; or by proving that a protest of the bill was prevented by inevitable accident, or by superior force, or by any casualty not attributable to the want of diligence in the holder or his agent. 5 As against the indorser of a foreign bill, the want of a protest is not excused, by showing the want of funds in the hands of the drawee ; with this exception, the protest may be dispensed with, in like manner as in an action against the drawer.' The averment of notice to the drawer or indorser, must be proved like any other fact. 7 This is the general rule ; to which respect must be had in the construction of the statutory enact- ments modifying the principles of the commercial law. In this state, the certificate of a notary, under his hand and seal of office, is made presumptive evidence of the protest of bills of exchange and promissory notes, and of the service of notice on the parties to 1 Chitty on Bills, 655 ; Greenleaf on Ev., § 183. 2 Halliday v. McDougall, 20 Wend., 81 ; S. C, 22 Wend., 264. 3 Buekner v. Finley, 2 Peters R., 586. 4 Bank of Rochester v. Gray, 2 Hill R , 227 ; 8 Porter R., 258. 6 Legge v. Thorpe, 12 East, 171 ; 2 Camp., 310, 188; Bylcs on Bills, 204; Greenl en Ev., § 184. 8 When the drawer adds to the bill a request or direction that the bill, in case it w dishonored, be returned without protest, retoursans protest, or, sans j'rais, he, and per- haps the indorsers, cannot insist upon the want of a protest. Chitty on Bills, 165. ' 20 Wend.; 81 ■ 2 Hill, 227. EVIDENCE. 657 the paper ; but the statute does not apply, where the defendant denies having received the notice, and supports his denial with his affidavit. 1 So that wherever the fact of notice is fairly put in issue, the parries are bound to come into court, with their witnesses, prepared to prove or disprove the allegation. If, however, the notary be dead, insane or absent, so that his present attendance or testimony cannot be procured in any mode provided by law, the original ^protest, under his signature and seal, both of them being proved, is presumptive evidence of the demand, of acceptance, or of the payment therein stated ; and a written memo- randum in his handwriting, or signed by him, at the foot of the protest, or in his register of official acts,, is, in like cases, presump- tive evidence that notice of dishonor has been sent or delivered at the time and in the manner therein stated. 2 At common law, what a man has said, when not under oath, may not in general, be given in evidence when he is dead ; because his words may have been misconstrued, or misrecollectcd, as well as because it cannot be known that he was under any strong mo- tive to declare the truth. But what a man has actually done and committed to writing, when under obligation to do the act, it being in the course of the business he has undertaken, and he being dead, there seems to be no danger in submitting to the considera- tion of a jury. 3 Accordingly, it was held competent even before the passage of the statute defining and slightly amplifying the right, to produce the protest of a deceased notary, or his register of official 1 2 R. S., 382, 383, 3d ed. " In some of the United States, the certificate of the notary, under his hand and official seal, is by statute made competent evidence, prima jade, of the matters by him transacted, in relation to the presentment and dishonor of the bill, and of notice thereof to the parties liable." 2 GreenL on Ev., § 183, and note. Ante, 4G3-4G7, and 585 note. The certificate of the notary under his hand and seal is by the statute of this state presumptive evidence of demand and notice, unless the defendant annexes to his answer an affidavit denying the receipt of notice of non-acceptance, or of non-paymenj; of the bill or note ; Young v. Catlett, C Duer, 437 j and the usual verification of an answer denying service of notice is not enough to exclude the certificate ; Arnold v. Rock Bivei B. Co., 5 Duer, 207. The notary's certificate is made by statute in many of the states prima facie proof of the service of nonce, as well as of demand and refusal to accept or to pay. Aide, 403— 407, and 585, note. a 2 R. S., 382, 3d ed. 3 Welsh v. Barrett, 15 Mass. R., 380. In this ease th<- book of a decca ed messen- ger of a bank, in which he had entered memoranda of demands and notices to tho makers and ind f notes Left at the bauk for collection, yraa admitted in evidence to prove demand on the maker, and notice to tho defendant as iudorscr of a nolo so left for collection. 658 BILLS OF EXCHANGE AND PROMISSORY NOTES. acts, as jjrima facie proof of demand and refusal, and notice to the indorser. 1 On the same principle, the memorandum of a clerk to a bank, or to a notary, made in the usual course of his employ- ment, is competent evidence after his decease to prove a demand on the maker of a note, and notice to the indorsers. 8 In like manner, a written memorandum made by the clerk of a notary at the time of the transaction, may be read in evidence as a link in the chain of testimony, to fix the time when the notice was given, though the clerk himself be called as a witness, and unable to state the time from his own recollection. 3 And when the entry in the register is abbreviated, * it is competent to prove by a person skilled in such matters what words the abbreviations stand for. 4 But the entry of a clerk in the books of a deceased notary, cannot be read in evidence, without calling the clerk as a witness ; nor can his testimony, given on a former trial, be proved, on the ground of his absence from the state.' Though the entry of the notary in his register, and the memo- randum of a clerk or cashier of a bank, made in the discharge of his duty, may be read in evidence of the facts stated after his decease, it will not avail the plaintiff if the statement itself be insufficient to prove the dishonor of the instrument, and notice to the indorser. 6 It was formerly held that evidence of the contents of a written notice could not be given without first proving the service of a notice on the opposite party to produce the written notice ; 7 but it is now settled that secondary evidence may be given of a written 1 Idem; and Halliday v. Martinet, 20 John. E., 168; 2 Wend., 369; 6 id., 284 9 Selden v. Benham, 4 Hill R., 129 ; Nichols v. Goldsmith, 7 Wend., 160. 3 Hart v. Wilson, 2 Wend., 513; Shove v. Wiley, 18 Pick., 558. The memorandum is sufficient proof of the facts stated in it, even though the witness cannot recall the transaction, if he states that the memorandum would not have been made unless the facts had occurred as stated in it. Cole v. Jessup, ION. Y. (6 Seld.), 96. 4 4 Hill R., 129. s Wilber v. Selden, 6 Cowen R., 162. "The rulo as to admitting what a witnesa swore to upon a former trial, is supposed to be this, that to render such testimony admissible, it must be between the same parties, and the point in issue the same ; and the words of the witness must be given, not what is supposed to be the substance of Ins testimony. The witness must also be dead." Decided in 1826. The witnesa must remember the testimony to which he swears. Lcightner v. Wicko, 4 Serg. & R., 203 ; but the substance may be proved, if the witness can give the substance of liia whole testimony. Wolf v. Wyette, 11 id., 149, 337; Cornell v. Green, 10 id., 1G. 6 20 John. R., 168; Farmer's Rank of Maryland v. Duval, 7 Gill & John., 78. T Shaw v. Markham, Peake's Rep., 165; Langdon v. Hulls, 5 Esp. R., 156. EVIDENCE. 659 notice of the dishonor of a bill, upon which the action is brought, without showing a previous notice to produce the writing. 1 Never- theless, it is frequently advisable to give the defendant notice to produce the written notice or letter notifying him of the dishonor ; since by so doing, the plaintiff raises a presumption in favor of the sufficiency of the contents of the notice given. 3 And where the plaintiff finds *it necessary to prove notice of the dishonor ^ aQQ of other bills than that on which the action is founded, he must always give the defendant notice to produce the letters or writing giving such notice. 3 In regard to the proof of notice, it may be well to refer to some of the cases showing the manner in which the service may be proved. Thus, in one case the notary called as a witness, stated that he presented the bill for acceptance, and protested it for non- acceptance ; that it was his usual practice, as notary, on the even- ing of the day of the protest, and in all cases of protest, to give notice in writing to the Endorsers residing at a distance, by putting such notice in the post office, directed to the party at his place of residence ; and he had no doubt notice in this case was duly given, though at that distance of time he could not recollect positively ; and that it was possible he might have given the notice to the holder to be forwarded. This evidence, say the court, was cer- tainly sufficient, in the first instance, to support the averment of due notice, and there being nothing to affect it, it will support the verdict. 4 In another case, where a party proved that he wrote a letter to the adverse party, and his clerk testified that he copied it in the letter book produced, and that it was his invariable practice to carry the original letters to the post office, as soon as he had copied them in that book, and that he very seldom handed them back; the evidence that the letter was sent, was held prima- facie sufficient, though the clerk did not recollect putting the identical letter in the post office. 6 1 Kine v. Beaumont, 3 Brod. & B., 283; Ackland v. Pcaree, 2 Carapb., G01 ; John- son v. Haight, 13 John. R., 470. A copy of the notice made at the samo timo may be regarded as a duplicate original. 5 Wheat., 104; Paton v. Lent, 4 Duer, 231. 'Roberts v. Bradshaw, 1 Stark. R., 28; Hetherington v. Kemp, 4 Camp., l o-L ■ Mood k M., 335; 6 Bing., 306; Chitty on Bills, 053. * Miller v. Hackley, 5 John. R., 37"). • Thallhimer v. Brinokerhoff, G Cowan R., 90. 660 BILLS OF EXCHANGE AND PROMISSORY NOTES. In a still earlier case, the fact to be established was notice of the dishonor of a bill ; and the plaintiff proved that he wrote a letter to the defendant containing such notice ; that the letter was put on a table, where, according to the usage of his counting house, letters for the post were always deposited ; and that a porter carried them thence to the post *office. But the porter was not called, and there was no evidence as to what had become of the letter, after it was put on the table : Lord Ellen- borough held this insufficient, saying, "Had you called the porter, and he had said that, although he had no recollection of the letter in question, he invariably carried to the post office all the letters found upon the table, this might have done." ' A witness is called to prove service of notice, and testifies that the bank, of which he was a. clerk, received a notice of dishonor, and that he then made the following memorandum on the back of it ; " delivered like notice to M., June 4, 1839. I. B. Teller ;" and states from the memorandum and the fact of receiving the notice which he recollects, he has no doubt that he delivered the no- tice, although he has no recollection of having delivered it ; his testimony is admissible evidence of the service of notice. 3 It cannot be expected that a notary or a clerk, whose constant business it is to protest notes and bills and serve notices of dis- honor, should be able to recollect each note or draft that passes through his hands, and the mailing of each notice ; such a capacity of memory belongs to few persons. And hence it is not indis- pensable that the witness should state the mailing of the notice from distinct recollection ; the fact and the time of service may be proved by circumstantial testimony. 3 It is not necessary in this place to consider, more at length, the mode of proving the dishonor of negotiable paper, and notice to the drawer and indorser : it may be easily gathered from what has been said on the subject in former chapters. The old rule was, that no party could be called as a witness on the trial who was interested in the event of the suit, where an *70f) ^J ec ^ on was ma( le to him on the ground of interest But *the rule established by the code of practice was, that no 1 Iletherington v. Kemp, 4 Campb., 193; Toosey v. Williams, 1 Maod. & Malk., 129, to the same effect. ' New Haven Co. Bank v. Mitchell, 15 Conn. R., 20C. 3 Ball v. Bank of Alabama, 8 Ala., 590; Whiteford v. Burkmyer, 1 Gill, 127 ; Brad- ley v. Davis, 2G Maine R., 45; Hatfield v. Perry, 4 Harring., 163. EVIDENCE. 661 person offered as a witness, should be excluded by reason of his interest in the event of the action ; and the qualification was, that this rule should not apply to a party to the action, nor to any per- son for whose immediate benefit it is prosecuted or defended. 1 But either party may call and examine his adversary, or the person for whose immediate benefit the action is prosecuted or defended, as a witness: and cither party may be examined on behalf of his co-plaintiff or a co-defendant as to any matter in which he is not jointly interested or liable with such co-plaintiff or co- defendant, and as to which a separate and not joint verdict or judg- ment may be rendered. 4 Bj r a recent amendment, a party to an action or proceeding may be examined as a witness in his own behalf the same as any other witness, when the opposite party is living and is the real person in interest ; provided due notice of the intention to examine him is previously given. The effect of this important change in the law of evidence is to bring the parties face to face, and let each give his own version of the facts in dispute, under oath. 3 1 Code, §§ 398, 399. The English Statute " for improving the law of evidence," known as Lord Penman's act, and passed in 1843, contains similar provisions to those embodied in our Code of Procedure. 6 and 7 Vict., c. 85 ; see also 14 and 15 Vict., c. 99, § 2 ; and more recently still, 1G and 17 Vict., c. 83. a Chapters 6 and 7 of the Code. 8 An act to amend Section Three Hundred and Ninety-nine, of the Code of Proce- dure. Passed April 13, 1857. Tlie People of the State of New York, represented in Senate and Assembly, do enact as follows : § 1. Section three hundred and ninety-nine of the Code of Procedure is hereby amended so as to read as follows: A party to an action or proceeding may be examined as a witness in his own behalf, the same as any other witness, but such examination shall not bo had, nor shall any person for whose immediate benefit the same is prosecuted, or defended, be so ex- amined, unless the adverse party, or person in interest is living, nor when the opposite party shall be tin . administratdr, executor or legal representative of a deceased person, nor unless ten days' notice of such intended examination of the party or person interested, specifying the points upon which such party or person is intended to he examined, shall be given in writing to the adverse party, except that, in special pro- ceedings of a summary nature, such reasonable notice of such intended examination shall be given, as shall be prescribed by the court or judge. And when notice of such intended exam i nation shall lie given in an action, or proceeding, in which the oppo- site party shall reside out of the jurisdiction of the court, such party ma] be examined by commission issued and executed as now provided l>\ law; and whenever a party or person in interest has been examined under the provisions of this Bection, the other party or person in interest may offer himself as a witness in his own behalf and shall be so received Wlien an assignor of a tiling in action or contract, Is examined as a Witness in behalf of any person deriving title through or from him, the adverse party vnay offer himself as a witness to the Bame matter in bis own behalf, and shall bo so receive. i, and to any matter that will discharge him from any Liability that the testi- mony of the assignor tends to render him liable for. But such assignor shall not be admitted to be examined in behalf of any person deriving title through or from him, 662 BILLS OF EXCHANGE AND PROMISSORY NOTES. #7 .. *The making, indorsing and accepting of notes, checks and drafts is generally shown by proving the signature of the maker, indorser, or acceptor, which may be done as in other cases where it becomes necessary to prove the signature of a party to a contract. If there be a subscribing witness, the rule is that he must be called on the trial to prove the signature of the party, or his absence must be accounted for : l he must be called unless he be dead, insane or disqualified to testify, or beyond the jurisdic- tion of the court. 2 If there be several subscribing witnesses, it is enough to call one of them ; but if there be doubt as to proof of signature it is advisable to call them all.' The absence of the subscribing witness having been accounted ^ 7 „ *for, it is in general sufficient to prove his handwriting; 4 and where the attesting witness has only made his mark to the instrument, it has been held enough to prove the handwriting of the party executing it. 5 It has been asserted that proof of the handwriting of the subscribing witness is not of itself sufficient proof of the execution of the contract — that there should be at least some evidence given to establish the identity of the party executing it, or to connect the defendant with the transaction ; 1 January v. Goodman, 1 Dall., 208; Stone v. Metcalf, 1 Stark., 53. 5 Richards v. Franklin, 9 Car. & Payne, 221 ; Crank v. Frith, 2 Mood. & Rob., 262. 3 Stra., 1245 ; Burr., 2224; 17 and 18 Vict., ch. 25, § 26, provides that it shall not be necessary to prove by the attesting witness any instrument to the validity of which attestation is not requisite; and that such instrument maybe proved by admission or otherwise, as if there had been no attesting witness thereto. 4 Chitty on Bills, 633. Subscribing witness is one who was present when the instrument was executed, and who at that time subscribed his name to it as a witness of the execution. Henry v. Bishop, 2 Wend., 575. If he is called in by the parties immediately afterwards, and told that it is their deed or agreement, and requested to subscribe his name as a witness, that will be enough. The execution by the parties, and the subscribing by the witness, are then considered as parts of the same trans- action. Hallenback v. Fleming, 6 Hill R,, 303. 6 Watts v. Kilburn, 7 Geo. R., 356, decided in 1849 ; contra, Kinney v. Flynn, 2 R. I., 319, decided in 1852. against an assignee, or an executor, or administrator, unless the other party to such contract or thing in action, whom the defendant or plaintiff represents, is living, and his testimony can be procured for such examination, nor unless at least ten days' notice of such intended examination of the assignor, specifying the points upon which he is intended to be examined, shall be given in writing to the adverse party. § 2. This act shall take effect immediately. In an action on a noto for borrowed money, the defense being usury, the lender called as a witness need not answer where his testimony will criminate himself. Fel- lows v. Wilson, 31 Barb., 102. EVIDENCE. 663 Buch as that the defendant was present when the note or contract was executed. 1 The presumption is, that what the subscribing witness has attested did take place ; and hence, as laid down by high authority, proof of his handwriting will ordinarily make out the execution suffi- ciently to allow the instrument to be read in evidence. 2 But it is conceded there are cases where it may be rendered incumbent on the party proving the instrument to give some evidence to estab- lish the identity of the party executing it ; and it is clear that his handwriting is the most satisfactory evidence that can be given on that point, while it is agreed that much slighter evidence will be sufficient. 8 *The evidence of the subscribing witness is not conclu- Bive upon the parties ; if he does not recollect his signature, other witnesses may be called to prove it genuine. 4 And where the instrument is not under seal and does not require a subscribing witness, such as a promissory note, the confession of the party that he gave the note, is as high proof as that derived from a subscribing witness, and will dispense with the necessity of calling him.* But it must be shown clearly that the confession of the maker had reference to the note in question.' And it has been held that proof of the defendant's admission that he had executed a note answering the description of the note in suit, without other proof of identity, is not sufficient. 7 But such an admission is ren- 1 Nelson v. Whittall, 1 Barn. & Aid., 21, per Batley, J. s Cowen & mil's Xotes, part 2, p. 394, and the authorities there cited. 'Idem; Harrington v. Fry, Ryan & M., 90; Jackson v. Waldron, 13 Wend., 183; Clark v. Saundcrson, 3 Bin. It., 192; Robards v. Wolfe, 1 Dana R., 155; 2 Phillips' Ev., 214, 215, 6th Amor, from the 9th London ed. ; Byles on Bills. 353. The authori- ties are very fully collected in Cowen & Hill's Xotes, and accompanied with this remark: "Most of the American cases, supra, when they have either required or recommended proof beyond the handwriting of the witnesses, have done so upon tho ground that it would furnish additional assurance of execution ; and not with a view to the identity of the party. Indeed, so far as merely identifying the party was con- cerned, courts have usually assumed that identity of name was sufficient, in the first instance, as presumptive evidence of identity of person. And so are the majority of the English cases, notwithstanding the opinion of Bayi.ky, J., in Nelson v. Whittall." And tho late English decisions are to tho same effect. Byles on Bills, 353. * Quimby v. BuzzeU, 4 Shcpley, 470. » Hall v. Phelps, 2 John. R., 451. e Shaver v. Ehle, 16 John. R., 201. 7 Palmer v. Manning, 4 Denio R., 131. Tho note was not shown by tho witness testifying to the admission, and the decision was mado on the authority of Shaver v. Ehle, supra. 664 BILLS OF EXCHANGE AND PROMISSOKY NOTES. dered sufficient, when the note is spoken of as made payable to the order of a particular person, by proving the payee's indorse- ment thereon. 1 It is, of course, necessary that the witness called to prove the signature of a party to the action, should be acquainted with his handwriting. Unless he saw him subscribe the instrument or was invited by him to witness its execution, he can speak only from his knowledge of the signature or handwriting of the party. If he has seen him write or has had correspondence with him, he may be asked whether he believes the signature to be genuine ; and his answer in the affirmative will be competent testimony. 2 On the contrary, if the witness has no previous knowledge of the hand, he is not ^competent to speak on the subject, from a comparison of hands. 3 The witness is competent to testify, though he has seen the party write only once, in the ordinary course of business * but he is not competent, if it appear that he saw the party write only once previous to the trial, for the purpose of making him a witness to the signature. 6 It must appear that he has had a fair opportunity to become acquainted with the handwriting or the signature he is called to prove. 6 And if that is shown, it is sufficient, though he saw the party write only his surname or the initials to his name, writing the latter in a peculiar manner ; T and an instrument exe- cuted by mark may be proved by a person who has seen the party so execute instruments. When the witness has written letters to the party and received answers in return, apparently signed by him, the fair inference is 1 Pentz v. Winterbottom, 5 Denio, 51. 2 Hopkins v. Megquire, 35 Maine 11.. 78. 3 1 Esp. Cas., 14; Titford v. Knott, 2 John. Cas., 211. "The handwriting of the maker or indorser of a note may be proved by witnesses from their previous know- ledge of his handwriting, derived from having seen the person write, or from authen- tic papers, received in the course of business; but if the witness has no previous knowledge of the handwriting, he cannot be permitted to decide upon it in court, from a comparison of hands.'' 4 Ganells v. Alexander, 4 Esp. R., 37; Smith v. Walton, 8 Gill (Md.) R., 77; Edeleu v. Gough, id., 87, decided in 1849. 6 Stranger v. Searle, 1 Esp., 14. 6 Utica Ins. Co. v. Badger, 3 Wend., 102. 7 Lewis v. Sapio, 1 Wood. & Malk., 39; 5 John. R., 144; Jackson v. Van Dusen, was the case of a subscribing witness to a will; Merchants' Lank v. Spicer, C Wend., 443; Brown v. The Butchers' and Drovers' Bank, G Hill, 4-13, and cases there cited; Cabarga v. Seegar, 17 Penn. State It., 514, decided in 1851. b George v. Surrey, Mood. & Malk., 51G; G Hill R, 443. EVIDENCE. QQo that the answers were written and sent by the person from whom they purport to have come ;' and where the witness has seen the handwriting of the party or his signature upon instruments, such as bills or notes, purporting to bind him, and he has admitted them genuine by paying them, he is qualified to testify. 3 But he is apt so qualified from having merely seen letters purporting to have been *written bv him ; he must have seen genuine speci- ,._ 705 mens of his handwriting, and the fact that they were genuine must be proved by either positive or presumptive evi- dence. 3 The general rule here is that a witness having no previous knowledge of the handwriting cannot be allowed to compare the signature in question with one that is genuine, and give his opinion, founded solely on a comparison of the hands, or the juxtaposition of the two writings, for the purpose of ascertaining whether both w r ere written by the same individual. 1 Experts, or persons supposed to be skillful in detecting forgeries, have been allowed in some cases, without previous knowledge of the party's handwriting, to give their opinion on the question whether the paper or signature was written in a natural or imitated hand ; 6 but such opinions, if admissible in evidence at all, are not deemed of much value. Chief Justice Bkonson", commenting upon this sub- ject, says : " On the whole, I think the weight of authority is against receiving such evidence, and that it should be rejected. There are many things which affect the genuine handwriting of a party, such as his age, health, habits, state of mind, position, haste, pen- manship, and writing materials ; and the opinion or belief of a witness who judges solely from an inspection of the instrument alleged to be forged, rests on no solid foundation. It is impossible that he should know whether an instrument or signature is genuine 1 Chitty on Bills, 630. 9 Johnson v. Daverne, 19 John. R., 134.; Gordon v. Price, 10 Iredell (N". Car.), 385, decided in 1849. ' Cunningham v. Hudson River Bank, 21 Wend., 557 ; Titford v. Knott, supra. * Wilson v. Kirkland, 5 Hill R., 182; The People v. Spooner, 1 Dcnio, 3±S, and cases there cited. 1 The King v. Caton, 4 Esp. R., 117 ; Goodtitlo v. Braham, 4 Term R., 497 ; Strathcr v. Lucas, 7 Peters R., 703. Cowen & Hill's Notes, part 2, pago 478, reviewing the authorities on the suhject of a comparison of hands, by which is now meant an actual comparison of two writings, with each other, in ordor to ascertain whether both were written by the s.-'jjic person. A species of testimony which, [fallowed, might branch out into a controversy on collateral writing. Edw. 74 666 BILLS OF EXCHANGE AND PROMISSORY NOTES. or only an imitation, when he has never seen the original. At least, he can only give us a conjectural opinion, which is much too loose and unsatisfactory to lay the foundation for a judicial decision." ' *In some of the states such testimony is received and submitted to the discretion of the jury, to give it such weight as it may deserve. 2 In itself considered, there is no reason why the signature in dispute should not be compared with signatures in evidence or admitted to -be genuine ; for that is precisely what a witness ac- quainted with the party's handwriting does intuitively, comparing the writing presented with the exemplar in his mind. The objec- tion to the testimony does not therefore apply where the compari- son is made with the genuine writing already in evidence, by a witness qualified to speak on the subject by his previous know- ledge. 3 Nor does there appear to be any good reason why an expert, having no previous knowledge of the handwriting, may not be allowed to compare genuine signatures in evidence with the signature in controversy, and give his opinion in regard to its genu- ineness. 4 A person may be rendered competent to prove the handwriting of a party without ever having seen him write ; it is enough if he has once seen the signature admitted by him to be his, or has had correspondence with him. 6 Now an expert, who is shown the genu- ine handwriting, has at least an equal opportunity with such a witness to detect a forgery of that hand ; and all the authorities agree that a witness who is acquainted with the handwriting of the 1 1 Denio, 346; Gurney v. Langland, 5 Barn. & Aid., 330. 2 Moody v. Rowell, 17 Pick., 490 ; Lyon v. Lyman, 9 Conn. R., 55 ; Stone v. Hub- bard, 7 Cush., 595, decided in 1851. In this case two witnesses, cashiers of banks, were allowed to testify in relation to the date of a note, whether a certain mark should be read 2 or 4, though they had no knowledge of the handwriting. In Doe v. Luekermore, 5 Adol. & Ellis, 703, Lord De.wmax said, "I do not indeed understand how such evidence could bo rejected, if a witness should swear that his habits gave him the requisite skill ; but I do not think that either court or jury would believe him, or place the least reliance on his opinions. Practically therefore, this chapter may be considered as expunged from the book of evidence." ' Greenleaf on Ev., § 57G; Doe v. Luekermore, supra, per Patterson, J. ; Solita v. Garrow, 1 Moo. & Rob., 133; 5 C. & P., 126; Commonwealth v. Webster, 5 Cush., 295, decided in 1850. A Hicks v. Person, 19 Ohio R., 426, decided in 1850. * Gordon- v. Price, supra ; and Smith v. Walton, supra ; and Cabarga v. Sccger, tupra. • EVIDENCE. 667 party may not only *compare it with the genuine signature # before him, but may also compare it with his recollection of the party's handwriting, describing the resemblance or want of resemblance between them. 1 A recent English statute declares that, comparison of a disputed writing with any writing proved to the satisfaction of the judge to be genuine, shall be permitted to be made by witnesses ; and such writings, and the evidence of witnesses respecting the same, may be submitted to the court and jury as evidence of the genu- ineness, or otherwise, of the writing in dispute.* The signature to a contract being proved, its contents are proved ; and the instrument is supposed to have been executed on the day of its date.' 1 Hopkins v. Megquire, 25 Maine R, 78, decided in 1852 ; Sweetzer v. Lowell, 33 id., 446. 1 17 and 18 Vict., ch. 125, § 27, enacted in August, 1854. * Glenn v. Grover et aL. R MH oi 9 668 BILLS OF EXCHANGE AND PROMISSORY NOTES. ^CHAPTER XII. DAMAGES OR SUM RECOVERABLE. Measured by the standard of natural justice, the remedy for the breach of a contract for the payment of money, ought to be such as to repair the actual damages which the injured party has sus tained. But this would involve an inquiry into the circumstances of each particular case, into the embarrassments produced by the default, and into the injuries sustained by loss of credit or loss of advantageous bargains — considerations perfectly appropriate in an ethical point of view, but not capable of being entertained by a court, acting on uniform rules of law. Hence, every nation, whether governed by the civil or common law, has established a certain common measure of reparation for the detention of money not paid according to contract, which is usually calculated at a certain and legal rate of interest. 1 Interest is, therefore, the legal compensation or damage allowed for the detention of a dcbt. a The statute prescribes the rate of interest to be allowed upon the loan or forbearance of any money, goods or things in action, and leaves the parties free to make what stipulations they please with respect to the payment of interest on the sum secured, during the currency of the credit. 3 That is to say, the law fixes the rate of interest, but does not imply an engagement to pay at that or any other rate. 4 For instance, a note or bond does not carry interest unless it be drawn payable with interest; 5 and the courts do not construe the contract * so as to vary its terms in the slightest degree." The instrument speaks for itself; and I Sedgwick on Damages, 233-236 ; Curtiss v. Inerarity, G How. U. S., 146. II Edwards on Bailm., 241 ; Van Rensselaer v. Jewett, 5 Denio, 121 ; S. C., 2 Comst. R., 135. 3 2 R. S., 56, 3d ed. ; Chitty on Bills, 610. 4 13 Wend., 640; 15 Wend., 80. 6 Williams v. Sherman, 1 Wend.. 109; Gaylord v. Van Loan, 15 id., 310. 8 Bander v. Bander, 1 Barb. R., 560. A note in these words: "For value received I promise to pay M. Bander, or bearer, tho sum of $1,000, payable in ten annual in- stallments, with use," is an agreement to pay interest on each installment as it falls due. DAMAGES OR SUM RECOVERABLE. 669 whether it draw interest annually or semi-annually upon the prin- cipal, or in any other manner, the time and mode of payment must depend upon the agreement of the parties as expressed in the contract. 1 If the promisor undertakes to pay a given sum "in ten equal annual payments, with interest," interest from date on each installment falls due with it f and if he engages to pay a given sum " two years after date, with interest," both the principal and interest will fall due at the end of the term ; and if he makes a note promising to pay a certain sum in three equal annual pay- ments, with interest to be paid annually, he is bound to pay inte- rest on the principal unpaid each year. 3 Where a party contracts to pay a given sum within a certain time, the agreement does not extend beyond the time specified for payment ; and where the engagement is to pay interest at a less rate than the law allows, the payee has a right to demand and recover lawful interest from the day of the default. 4 He has a right to demand the principal on the * day it becomes pay- #/ _ 1n able, and the law gives him, in this state, seven per cent for the loan or forbearance of money, as a compensation for the use or detention of the debt. 6 1 Fellows v. Harrington, 3 Barb. Ch. R., 652. a French v. Kennedy, 7 Barb. R., 452 ; Bander v. Bander, supra. 3 Bannister v. Roberts, 35 Maine, 75. Assumpsit on &■ note promising to pay $2,250, in three equal annual payments, with interest, to be paid annually. At the end of the first year, the installment which then became payable with interest upon it, was paid; but the interest upon the other installments was demanded and refused; and at the end of the second year the second installment with interest upon it was paid. And this action being brought for unpaid interest in the third installment, it was held that the plaintiff was entitled to recover. "When a note is made payable with interest annually, whether by installment or not, the .interest accruing before tho whole of the principal becomes payable may be collected, if a suit be commenced to recover it before the whole of the principal becomes payable. If no suit be com- menced for that purpose until after that time, interest upon the interest not paid, from the time when it should have been paid, cannot be recovered in a suit for the prin- cipal and interest due upon tho note;" citing Hastings v. Wiswell, 8 Mass., 455 ; Doo v. Warren, 7 Green].. 46; Wilcox v. Howlaud, 23 Pick., 1G7 ; Ferry v. Ferry, 2 Cush., 92, is to the same effect. 4 United States Bank v. Chapin and another, 9 Wend., 471; 19 John. R., 240. 6 Ludwick v. Iluntzinger, 5 Watts & Berg., 51. A question arose on the trinl of ausc as to the rate of interest which the plaintiffs wero entitled to recover from the time tho bond became payable. It was dated tho first of July, 1830, conditioned for the payment of $1,143.75, on the fust of April, 1832, with threo per cent interest from the date thereof, and the court advised the jury to allow interest at tho rato agreed on in tho contract until it became due, and after that at tho rate of six per cent or legal interest. And the advice was held correct. " Whenever one man binds 670 BILLS OF EXCHANGE AND PROMISSORY NOTES. There may be an implied agreement between the parties to abide by the terms of the contract after default made. Thus, " where a mortgagee has contracted to receive a particular rate of interest, less than the legal rate, during the time of credit agreed upon by the parties, if he suffers the mortgagor to remain in possession after the mortgage money becomes due and payable, it may per- haps be reasonable to presume that the understanding of the parties is that the interest shall continue at the same rate until the creditor thinks proper to demand payment. But there can be no such presumption where, as m this case, the mortgagee attempts to foreclose, and takes possession of the mortgaged premises under the ^supposition that he has actually acquired the equity of redemption as a substitute for his debt." ' A demand of payment would have the same effect as the com- mencement of a suit ; for the bringing of an action operates upon the rights of the parties as a demand. If a banker, having a large sum of money, belonging to a customer, on deposit, on an under- standing that five per cent shall be paid for the use it, denies the fact on the death of the customer, and conceals the evidence of the indebtedness, his conduct abrogates the agreement and sub- 1 Bell v. The Mayor of New York, 10 Paige, 49, 69, per Chancellor "Walworth. In Miller v. Boroughs, 4 John. Ch. R., 436. on a bond carrying six per cent, Chan- cellor Kext ordered interest to be computed at that rate until the contract was merged in the decree. himself to pay a specific sum of money to another by a certain day, and he fails to do so, he becomes liable by the law of the state (Pennsylvania) to pay interest thereon at the rate of six per cent per annum, afterwards, as long as he shall improperly withhold payment thereof, unless perhaps, it should be expressly agreed otherwise by the parties. But the agreement of the parties here, in respect to the interest, extended no further than to the period fixed for the payment of the debt or principal ; after that it was left to the mere operation of law, which allows six per cent." Washington v. The Planters' Bank, 1 How. (Miss.), 230. The interest is an incident which follows, of course, after the debt becomes due. Jones v. Mallory and another, 22 Conn. R., 386, decided in 1853. "Interest by our law is allowed, on the ground of some contract, expressed or implied, to pay it, or as damages for the breach of some contract, or the violation of some duty." Scllech v. French, 1 Conn. R., 33. Wliitworth et ux. v. Hart et al., 22 Ala. N S., 343, decided in 1853. "Interest is but a just compensation for withholding the principal sum; and whentho principal bum is ascertained to be due at a particular period, and remains unpaid without a sufficient excuse for its non-payment, the interest follows as an incident." Godwin v McGehee, 19 Ala., 468. DAMAGES OR SUM RECOVERABLE. 671 jects him to the legal rate of interest from the day of demand and denial. 1 The decisions on the subject are not entirely uniform. But it is clear that the payee of a note, or bond for the payment of money, is entitled to call for the amount due on the day the same becomes payable, and that the law awards legal interest on the sum due from the time the same ought to have been paid, by way of damages. And it must follow that the payee in a contract drawing less than legal interest, has a right to recover on the instrument an amount equal to lawful interest from the appointed day of payment. On the other hand, it is not so clear that the payee of a note, bearing a rate of interest higher than that estab- lished by law, cannot recover according to the terms of the con- tract until it is merged in a judgment. The payer, in this case, is at liberty and is bound to discharge the debt on the day it becomes due ; and if the law permits him to detain the money at a less rate of interest than that which he had stipulated to pay, it enables him to derive an advantage from his own default. 2 *The rule has been laid down in this state in these terms : Whenever a debtor is in default for not paying money, delivering property, or rendering services in pursuance of his con- tract, justice requires that he should indemnify the creditor for the wrong which has been done him ; and a just indemnity, though it may sometimes be more, can never be less than the specified amount of money, or the value of the property or ser- vices at the time they should have been paid or rendered, with 1 Trustees of the Leake & "Watts Orphan House v. Lawrence, 11 Paige Ch. R., 80; S. C, 2 Demo, 577. 1 Hopkins v. Crittenden, 10 Texas R, 189. This suit was brought upon a pro- missory note, dated Jan, 15, 1819. payable on the 25th day of December following, "with ten per cent interest from date," and the Supreme Court of Texas allowed ten per cent, after the note became duo, as well as before, the legal rate being eight per cent, and the parties having a right to agree for any rate not exceeding twelve per cent. Buckhart v. SappJngton, 1 Greene (Iowa) It., C6. The legal rate of interest in Iowa is six per cent, but the parties may contract for twelve or anything less. And, on a note drawing ten per cent, it was held in this case erroneous to make tho judg- ment draw the same rate: "it should draw only six per centum as regulated by statute." It seems to have been taken for granted that the payee was entitled to ten per cent, up to the time of the entry of judgment. Tho decision was made in 1817. The previous statute of that Stat'' allowed the parties to contract for interest as high as twenty per cent — a fact which shows how much the valuo of money is enhanced by the rapid growth and development of a new State. See Wilkerson v. Daniels, 1 Ore -i ) It.. 179. 672 BILLS OF EXCHANGE AND PROMISSORY NOTES. interest from the time of the default until the obligation is dis- charged. And if the creditor is obliged to resort to the courts for redress, he ought in all such cases, to recover interest, in addition to the debt, by way of damages. 1 A note or bond specifying no time of payment is due immedi- ately, and bears interest from date. 2 And a note payable on demand draws interest from the time when default is made in payment ; but a note payable on demand with lawful interest, bears interest from date. 3 Here, as in other cases, the terms of the contract determine whether or not '"interest is to be paid : 713 • and it has been held competent for the parties to stipulate for interest from date, by way of penalty or damages for the fail- ure to pay at the maturity of the note. 4 So, also, the parties are 1 Van Rensselaer v. Jewett, 5 Denio, 135; 2 Comst., 135. The action was on a covenant for the payment of rent, and it was held that the interest was recoverable as matter of law, from the time the rent fell due, although it was payable in wheat and services, the value of which was unliquidated by the contract. 2 Francis v. Castleman, 4 Bibb R., 282 ; Purdy v. Philips, 1 Kernan R., 406 ; Wen- man v. The Mohawk Ins. Co., 13 Wend., 267 ; Rens. Glass Fac. v. Reid, 5 Cow. R., 587. 3 Hopper v. Richmond, 1 Stark., 507. Per Senator Spexcer, 5 Cowen R., 611 ; Stowits v. Bank of Troy, 21 Wend., 186. 4 Cannon v. Beggs, 1 McCord, 370. An instrument in these words: "Due Thomas Newman, Esq., on demand, three hundred and ten dollars. 1st November, 1810;" draws interest, as held in this case, only from the time of demand. Francis v. Castleman. 4 Bibb R., 282. A note in these words: "I acknowledge myself justly indebted to Lewis Castleman the sum of seventy pounds, for value re- ceived of hira this 11th day of October, 1805," bears interest from date; for this case is unlike that of a note payable on demand. Patrick v. Clay, id., 246. On a note payable on demand, interest does not run until demand made; but a suit is a demand. Bartlett v. Marshall, 2 id., 469. Satterwhite v. M'Kie. Harper, 397. The defendant made a note of hand, payable at twelve months, and unless paid at the day, to bear interest from the date : held, that defendant having failed to pay at the day, was bound for the interest. Daggett v. Pratt, 15 Mass. R., 177. Action on four promissory notes, three of them payable with interest at three per cent if paid at maturity, if not, six per cent interest to be paid ; the fourth without interest " until the note is out, if not paid, then lawful interest until paid." The notes not having been paid when they became due, judg- ment was rendered upon them all, with lawful interest at six per cent from date t-.U judgment. Horner v. Hunt. 1 Blackf., 213. A note was payable two years afterdate, and was to bear interest from date if not paid within two weeks after a legal demand ; and it was held that the interest from date thus stipulated for, was recoverable in case of the maker's default. Gully v. Remy, id., 69. Schmidt v. Limehouse, 2 Bailey (South Car.) R.. 276; held, that a due bill payable on demand, draws interest from demand made, and not before. Bradford v. Cooper, 1 Louis. Ann. It., 325. When the holder of a note omits to pre- sent it for payment at maturity, and there is no stipulation in it for tin* payment of inte- rest, he can recover interest only from the time when the debtor was put in default DAMAGES OR SUM RECOVERABLE. 673 at liberty to stipulate for the payment of interest before the prin- cipal falls due. 1 There being no stipulation on the subject, the party advancing money for another is entitled to interest at the rate established at the place where the advance is made.' For the contract to refund, implied by law, is to pay with interest, according to the rate es- tablished where the transaction takes place, and a written engage- ment to pay a sum certain, with *interest, is to be construed to mean such interest as the law allows in the state where the contract is made, without any respect to the place where the formal act of signing the instrument is performed.' For instance, a note signed and indorsed in Detroit, for the accommodation of the maker, and by him sent to his agent in New York, and there delivered in payment of a debt due from the maker, is legally made in the State of New York, and the contract of the indorser is to be governed by the laws of this state. 4 The instrument takes effect according to the law of the place where it is delivered and accepted as evidence of an existing debt. 6 When a note is made payable at large, with interest, the rule is that the payee or holder is entitled to recover interest upon it at the rate established in the state where it is made ; 6 but the rule does -not apply where it is expressly made payable in another state, for in this case the parties are supposed to have had reference to the law of the place where the payment was to be made. 7 So that a note payable with interest, and specifying no place of pay- ment, carries interest according to the law of the state or country where it is made ; while a note drawn payable with interest in a particular state, bears the rate of interest established by law at the place of payment. 9 1 Catlin v. Lyman, 1G Vt. R., 44; Bannister v. Roberts, 35 Maine, 75 ; 7 Barb. R., 560. 1 Wintbrop v. Carleton, 12 Mass. R., 4. 7 Davis v. Coleman, 7 Iredell (North Car.) R., 424. The note in this case was mado formally in North Carolina, and delivered for a loan of money in Georgia; and the plaintiff was allowed to recover Georgia interest, the contract being considered as made where the note was delivered as evidence of a subsisting debt. * Cook v. Litchfield, 5 Sand. R., 330. & Hyde v. Goodnow, 3 Comst. R., 2C6. • Sweet v. Dodge, 4 Smedes & Marsh. (Miss.) Rep., GG7. 1 Scofield v. Day, 20 John. R., 102. 8 Smith v. Smith, 2 John. R., 235; Hosford v. Nichols, I Paige Ch. R., 220; see Archer v. Duim, 2 Watts & Scrg., 327. Edw. 85 The law proceeds upon the principle that the parties *' 674 BILLS OF EXCHANGE AND PEOMISSOBY NOTES '715 knowing the rate of interest at the place of performance, stipulate for its payment, as effectually as if the note had been made expressly payable with interest, according to the law of the Interest. The laws regulating the rate of interest to be allowed for the loan or forbearance of money, are very different in the different states ; and it is deemed advisable to state here briefly the rate allowed, and the consequences that are visited upon usurious contracts in each state. New York. The rate of interest is sev m per cent ; usurious contracts and securities are void; the excess over legal interest may be recovered back; and the taking of usurious interest is declared a misdemeanor, punishable by fine or imprisonment. 2 E. S., 56-58, 3d ed. Vermont. Six per cent is the established rate of interest, and the party paying more may recover back the excess above legal interest. The statute does not apply to letting of cattle, maritime contracts, bottomry, &c. Compiled Statutes of 1850,p. 442. New Hampshire. Six per cent is the legal rate of interest ; and nothing is per- mitted beyond that, under penalty of a forfeiture of three times the amount so received. Compiled Statutes of 1853, p. 490. Massachusetts. The rate of interest is six per cent ; but usury does not avoid the contract, though it subjects the party to a forfeiture of three times the interest and costs. R. S., 307. Connecticut. Interest allowed at the rate of six per cent. And as the law now stands, the party stipulating for more cannot recover any interest at all, but may recover his principal. Compilation of 1854, p. 867. Rhode Island. Rate allowed is six per cent, nnd interest is recoverable on usurious contracts at the lawful rate. R. S. of 1857, p. 277. Maine. Legal interest is six per cent; more than that cannot be recovered, though stipulated for ; and if paid, the excess may be recovered back. And the innocent indorsee of negotiable paper may recover thereon, though usurious in its inception. R. S., 217. The plaintiff defeated on an issue of usury pays costs and recovers legal interest. The statute does not apply to letting of cattle or to maritime contracts. R. S. of 1857, p. 322, 323. New Jersey. No person can take above the rate of six per cent, contracts for more are void, and the principal is forfeited, one moiety to the state and the other to the prosecutor. The debtor must pay the principal sum lent or forborne ; and the bor- rower may file a bill against the lender and compel him to accept his principal with- out interest, at any time before the action for the forfeiture is brought ; and in that case the creditor is freed from the penalty. Earner's Digest, 372, published in 1855. Delaware. The legal rate of interest is six per cent ; for taking more, the lender or owner of the money shall forfeit a sum equal to the money lent, to any person suing for the same, one-half to his use and the other to the use of the state. Revised Statutes of 1852, p. 183. Pennsylvania. No person can take more than six per cent ; if ho does, he forfeits tho money or things lent, one-half to the government, and the other half to the prose- cutor. But the contract is valid. Laws of Penu., Duulop's ed., 76 ; 12 Serg. & R., 46; 4 Wheat, 225. Ohio. Thfe rate of interest is fixed at six per cent ; but private individuals (not banks), may contract for ten per cent, and recover at that rate till judgment is entered. Curwin's Laws of Ohio, 141, 921. Tho act allowing parties to contract for ten per DAMAGES OR SUM RECOVERABLE. 675 place of payment On this ground, notes made in New York, and given for the purchase of a farm situated in Vermont, where the payee resided, were held to bear interest at the rate of six per cent, that being the rate of interest in the latter state ; the pre- cent was passed in 1S50; usurious contracts are void only for the excess above six per cent. The act of 1850 was repealed in 1859 ; R. S. of 18G0, p. 744. Michigan. Seven per cent is the established rate ; but the parties may agreo for any rate, not exceeding ten per cent. The security by which usurious interest is reserved or stipulated for, is not void ; but may be made the foundation of an action for the principal and legal interest. The bona fide holder of negotiable paper is entitled to recover the face of the same, though usurious in its inception. R. S., 160. See Com- piled Law of 1857, p. 425. Wisconsin. Any rate of interest agreed upon by the parties in writing, not exceed- ing twelve per cent, is valid ; and when there is no agreement on the sujeot, seven per cent is the legal rate. Revised Statutes of 1858, p. 410. Usurious contracts are not void; but no interest is recoverable on them. R. S. of 1858, p. 410. The law of tlio Territory of Minnesota fixed the rate at seven per cent, and allowed parties to stipu- late for any amount. Statutes of 1851, p. 155. Iowa. Six per cent is the established rate, but tho parties may contract for any rate not exceeding ten per cent. The party taking usury forfeits ten per cent on the sum loaned or forborne, to the county school fund, and may recover his principal without interest or costs. Session Laws of 1852, '53, Greene R., 66. Missouri. "Where no rate of interest is agreed upon, six per cent is allowed as legal interest; and the parties may agree in writing for ten per cent. But there is no forfeiture for taking or stipulating for illegal interest. R. S. of 1845, pp. 614, 615. Arkansas. Interest is allowed by law at six per cent; parties may agree for ten or less; and usurious contracts are void, except bills of exchange and negotiable notes in the hands of bona fide holders. English's Digest of 1848, pp. 614, 615. Maryland. No higher rate of interest than six per cent to be taken for the loan or forbearance of moneys, wares or merchandise ; and no higher rate than eight per cent for the loan of any tobacco or other commodities. Usurious contracts are void; and persons stipulating for more, forfeit treble the money or goods so lent or forborne ; one-half of the fine to the government, the other half to the prosecutor. 1 Dorsey's Laws of Md., 6. Such was the former law. The rate now established is six per cent in all cases. See new Constitution. Virginia. Legal interest is six per cent; and usurious contracts are void. Persons taking usury forfeit double the money or property loaned or forborne, one-half to tho informer; and the borrower may file a bill in equity, and compel the lender to discover on oath, the terms of the loan ; and if usurious, the lender recovers his principal without interest. Code of 1849, pp. 575, 577. North Carolina. No more than six per cent to be taken for interest. Persons taking more forfeit double the money lent or forborne, one-half to the state and the other half to the prosecutor ; and all usurious contracts are void. Revised Code of 1 854, p. 597. South Carolina. The rate of interest is seven percent; contracts for more are void, and the person stipulating for usurious interest forfeits treble the money or property loaned or forborno, one-half to tho state and tho other half to the informer. 4 Statutes of So. Car., 363, &c. Georgia Lawful interest is seven per cent. Contracts for more than that are void and of no effect, "except so far as to authorize tho recovery of tho principal due thereon, and no more." Cobb's New Digest, Laws of Georgia, 393, 394. 676 BILLS OF EXCHANGE AND PROMISSORY NOTES. sumption, arising from the circumstances, being that the parties contemplated payment in Vermont. 1 But *the residence of the payee in another state or country is not of itself sufficient to bring the contract under the law of his domicile.* 1 Austin v. Imus, 23 Vermont R., 286. In Stewart v. Ellice, 2 Paige Ch. R., 604. ho debtor resided in England. The Chancellor: "On general principles, in the absence of any agreement on the subject, the money is payable where the creditor resides, and the interest is to be computed at the rate allowed by the law of the country where the contract was made, or is to be performed." 9 Chapman v. Robertson, 6 Paige R, 627. Florida. Interest is not allowed above eight per cent. If taken or agreed for at a higher rate, the interest is forfeited. Thompson's Digest, 234, 235. Illinois. Money may be loaned at the rate agreed upon, not exceeding ten per cent ; on other debts and contracts the legal rate stands at eight per cent ; and the party stipulating for usurious interest forfeits all interest. R. S. of 1845, p. 294, and Session Laws of 1849, p. 98, and Session Laws of 1857. Indiana. Six per cent is the legal rate, and taking or agreeing for more is unlawful. But contracts for more are not void ; the plaintiff may recover the principal sum due, and the defendant may recover costs. 1 R. S. of 1852, pp. 343, 344. Kentucky. Six per cent is legal interest. Contracts for more than that are void for the excess, but the creditor may recover principal and lawful interest thereon. R. S. 419. If he refuses that before suit, he pays costs. 2 R. S. of 1860, p. 63. Tennessee. Six per cent is the legal rate. Contracts for more are not void, and the party stipulating for it may recover lawful interest and principal. Statutes of Tennes- see, by Caruthers & Nicholson, 406; Code of 1858, p. 398. Alabama. The rate of interest is eight per cent. Code, § 1519. But contracts for iiiore than that are void only as to the interest ; the principal may be recovered. Code of Alabama, § 1923. Kansas. Six per cent interest is allowed where no rate is agreed upon ; and parties may agree upon any rate in writing or to compound it once a year. Statutes of 1855, p. 433. Mississippi. Interest is allowed in this state at the rate of eight per cent ; in cases of usury, the party stipulating for it recovers only his principal and lawful interest. Parties may agree in writing for ten per cent or under. Hutchinson's Mississippi Code, 641 ; Session Laws of 1854, p. 110 Louisiana. Conventional interest allowed as high as eight per cent; the party stipulating for more recovers no interest at all. When paid, the excess may be reco- vered back within a year. Where there is no stipulation, five per cent is the legal interest. Revised Statutes of 1856, p. 80. Texas. The legal rate of interest is eight per cent; but parties may agree for any rate not exceeding twelve: Contracts for more than that are void so far that the creditor cannot recover any interest. Hartley's Digest of the Laws of Texas, 496, 497 ; Oldham & White's Digest, 242, 243. California. Where there is no express contract for interest, interest is allowed at the rate of ten per cent: but the parties may agreo for any rate of interest, or that it be compounded and made a part of the principal at stated periods. Compiled Laws of California, 109. Oregon. Interest is allowed at ten per cent. Statutes of 1855, p. 531. DAMAGES OR SUM RECOVERABLE. 677 The doctrine on the subject is laid down by Chancellor Kent in these words : " The law of the place where the contract is made, is to determine the rate of interest, where the contract specifi- cally gives interest ; and this will be the case, though the loan be secured by a mortgage on lands in another state, unless there be circumstances to show, that the parties had in view the laws of the latter place in respect to interest. * When that is the case the rate of interest of the place of payment is to govern." ' It has been held that a promissory note made in Louisiana, bear- ing an interest of ten per cent, allowed by the laws of that state, and payable in New York, where the rate of legal interest is only seven per cent, is not usurious ; the parties having a right to stip- ulate for interest according to the law of either state. 2 And though the authority of that ruling has *been seriously questioned, 3 and the general principle, in relation to contracts made in one place to be executed in another, requires that the contract be valid at the place where it is made, the weight of authority per- mits the parties to stipulate for the payment of interest according to the law of the place of the contract, or according to the law of the place of performance, as they may see fit, without incurring the penalties of usury.* * When the maker of a note expressly promises to pay interest on the sum payable, the interest is as much a part 1 2 Kent's Com., Lect. 39, page 460, 3d ed. ; Story on Conflict of Laws, § 305, adopts the rule as here laid down, and criticises the decision of Chapman v. Robertson, supra. a DePeau v. Humphreys, 20 Martin R,, 1 ; 2 Met., 381 ; 6 Paige, 627. * Story on Conflict, &c, §§ 298, 305. 4 Andrews v. Pond, 13 Peters R., 65 ; Jacks v. Nichols, 3 Sand. Ch. R., 313 ; S. C, 6 Barb. R., 38; S. C, 1 Scldcu R., 178. Messrs. Jacks, makers of watches and jewelry in New York, in May, 18-10, applied to Nichols, who was a resident of Savan- nah, Georgia, for a loan of money; they said to him : " We propose to pay to Mr. D. B. Nichols for the use of the money he may loan us, as follows ; interest 7 per cent per annum, 5 per cent of the exchange from Savannah, and 2 1-2 per cent on all sales of watch movements made by us." Tho money being advanced, notes and securities were given for the amount in New York, and were renewed at tho end of the year; in June, 1842, the defendant, who was then staying at Bridgeport, in tho State of Connecticut was applied to for a further renewal, which was finally granted, and new securities delivered and received in the State of Connecticut. On a bill hied by the M -rs. Jacks, the notes were declared void by tho assistant Vice-Ohanoellor of the first circuit ; the decree was afterwards reversed by tho Supreme Court, on the ground that the BeoUritiee executed in Connecticut wen' valid by the laws of that State; but on appeal to the Court of Appeals, where the cause was finally passed upon in July, 1851, tho decree of tho Vice-Chancellor was affirmed, on the ground that the last renewal was in substance and in effect a New York transaction, as appeared from all the circumstances of the case. 678 BILLS OF EXCHANGE AND PROMISSORY NOTES. of the debt as the principal itself. 1 And if at the date of a note the rate of interest stands fixed at five per cent, but is changed to six before it becomes due, it has been held that the note carries interest at the rate established when it was made. 1 Where interest is not recoverable on a contract by virtue of any xpress stipulation contained in the instrument, but is allowed by way of damages for delay in making payment, the law of the place of performance silently furnishes the rule of compensation.' Ordinarily, the rate of interest established at the place of payment indicates most accurately the measure of damages arising from the default. 4 Thus, a note given in * Guadaloupe, payable in sugar at a valuation, and a note given in Canton, payable 1 Fake v. Eddy, 15 Wend., 76. 2 Lee v. Davis, 1 A. K. Marshall, 397. 3 Story on Conflict of Laws, § 296. 4 Healy v. Gorman, 3 Green (N. J.) R., 328. This was an action on a promissory note made in New York, payable in New Jersey, without interest. " The contract did not carry interest upon the face of it, but upon default of payment at the day and place, the law of this state, New Jersey, tacitly annexes an obligation thenceforth to pay interest until the debt is liquidated. But the obligation to pay interest was no part of the contract ; for if the contract had been performed, no interest could have been demanded. It did not contemplate a failure in the performance, and therefore made no provisions in anticipation of such an event ; but left the law to take its course in case of a breach of the contract." Buzzell v. Snell, 5 Foster (N. H.), 474. It is usual and proper to instruct the jury to allow interest, though none is stipulated for in the contract, from the time of default. Livermore v. Rand, 6 id., 85. Interest should be allowed in such cases by way of damages for the detention. Abbott v. Wilmot, 22 Vermont R., 437. Where there is no express contract for the payment of interest, it is only recoverable as damages for the detention of the money from the time it ought to have been paid. Pecks et al. v. Mayo et al., 14 Vt. R., 33. Where a promissory note is made in Canada., and indorsed in Vermont, in both of which places the rate of interest is six per cent, and payable in the Stato of New York, where the rate of interest is seven per cent, the makers and indorsers are held liable to pay at the rate of seven per cent damages for delay in making pay- ment after the same should have been paid. Contra, Gibbs v. Fremont, 20 Eng. Law and Eq. R., 555. This was an action by the indorsees of several bills of exchange drawn by the defendant in Upper California on the Hon. James Buchanan, Secretary of the United States, Washington. The bills were made payable to the order -of F. Iluttman. and discounted by him at the place where they were drawn, and dishonored in Washington, the place on which they were drawn ; and the question was whether the plaintiff was entitled to recover against the defendant six per cent, the rate of interest in Washington, or twenty-five per cent, the rate of interest jn California, and the Court of Exchequer in England gave the plaintiff the rate of interest in California, thero being nothing said in the bills on the subject. Decision in 1853. DAMAGES OR SUM RECOVERABLE. 679 eighteen months after date, neither of them containing any stipu- lation in regard to interest, are to be governed, and are to bear interest or not, according to the law of the country where they are made ; while a note drawn in New York, payable in New Jersey, or drawn in Kentucky, payable in Louisiana, is to be governed by the law of the place of performance. 1 But where the action on the note *is brought in another iurisdiction, it is incum- „__ bent upon the plaintiff to prove, as he would any other fact, the law of the state where the instrument was made, or was to be performed : failing to do this, damages are to be allowed only according to the law of the former, or place where the action is brought 3 The rule here is based on the familiar principle that 1 Comtors v. Carpenter, 1 Wash. C. C. R., 376. The note in this case was given iu Guadaloupe, payable in sugar at a valuation ; and it was proved that by the law of that place no interest is payable upon such notes till judgment, and none was allowed here. Cowqua v. Landerburn, id., 521. This action was brought on a promissory note, given in Canton, payable eighteen months after date, without stipulating anything about interest. And on proof that one per cent a month was customary interest at Canton, it was allowed at that rate. Jaffrey v. Dennis, 2 Wash. C. C. R., 253. On a contract made in Georgia, the plaintiff is entitled to recover in any other state the interest allowed by law in Geor- gia ; but the law of that state must be proved, otherwise it will be given according to the lex fori. Bushly v. Camac, 4 id., 296. The defendant was indebted to the plaintiff in a cer- tain sum of British sterling, and gave his bond for the amount in sterling generally, payable in Ireland ; and it was held that the bond drew Irish interest, and was paya- ble in British sterling. Winthrop v. Carleton, 12 Mass. R., 4. A party advancing money for another is enti- tled to interest at the rate established at the place where the advance is made. Gordon v. Phelps, 7 J. J. Marshall, 619. On a note executed and payable in New Orleans, with eight per cent interest after maturity, plaintiff may recover at that rato without showing what is the rate of interest in New Orleans; but it cannot carry that rate of interest after judgment. a Wood and others v. Corl, 4 Met, 203. The note in suit was made at Buffalo, payable in Cleveland, Ohio; and an action being brought upon it in Massachusetts, the court directed the jury, in the absence of any proof as to the rate of interest in Ohio, to compute it at six per cent per annum, by way of damages for non-payment of the note; that being the legal rate of interest in the State of Massachusetts. Jaf- frey v. Dennis, supra. Sweet v. Dodge, 4 Smedes t, delivering the opinion in Scott v. Bevan, says: "Speaking for myself personally, I must say that I still hesitate as to the propriety of this conclusion." Mr. J. Stoey thinks it difficult to reconcile the decision with tho doctrine of some other cases. Story on Conflict of Laws, §§ 308, 283, 284. 2 Chitty on Bills, G8-L ^Re-exchange is the expenso incurred by tho bill being dishonored in a foreigu country in which it is payable, and returned to tho country in which it is mado or indorsed, and there taken up. The amount of it depends on the course of the exchange between tho countries through which tho bill has been negotiated. It is not necessary for the plaintiff to show that he lias paid the rc-exchange ; 688 BILLS OF EXCHANGE AND PROMISSOEY NOTES. drawn at Mobile in Alabama, on a merchant at Glasgow in Scot- land, is returned dishonored for non-payment, the holder is entitled to recover thereon in an action against the drawer, or against one who indorsed the bill at Mobile, the statutory damages allowed by that state ; and in the absence of proof of any statute on the subject, the holder recovers simply re-exchange, with interest and necessary ^expenses. 1 If the bill has been negotiated through another country, the re-exchange must be allowed between the countries through which it was negotiated. Simeon in London, draws a bill of exchange on Boyd & Co., in Paris, which after hav- ing been negotiated through Amsterdam, is presented to the drawees, who refuse to pay it on account of a recent law of France prohibiting such payment : the drawer here is liable for the whole amount of the re-exchange between Paris and Amsterdam, and between Amsterdam and London ; the bill having been taken up by the indorser in Amsterdam, and transmitted from thence to the place where it was drawn. 2 " The nature of the transaction which gives rise to the question of exchange and re-exchange is this : A merchant in London draws on his debtor in Lisbon a bill in favor of another for so much in the currency of Portugal, for which he receives its corresponding - Cowperthwaite v. Sheffield, 1 Sand. K,, 416. a Millish v. Simeon, 2 H. Black. R., 318. it suffices if he be liable to pay it ; but if the jury find that there was not at the time any course of re-exchange between the two foreign places, then no re-exchange ia recoverable. It appears not to be decided whether any exchange or re-exchange can be allowed between this and an enemy's country. It is said that the relative abundance or scarcity of money in different countries, is what forms the exchange between those countries. In the drawing of bills on a foreign country, the value of money in that country is the first thing to be inquired into; thus for instance, supposing 71.000 livres turnois are worth 603J 19s. lOd. English money sterling, and that an English merchant has sold goods of the value of G03Z 19s. lOd. to a Frenchman, who wishes to pay for the same by a bill of exchange payable in France, the bill must of course bo drawn for 71,000 livres turnois; if at the time the bill is due the exchange is in favor of France, and consequently the value of 71,000 litres turnois exceeds that of G03Z 19s. lOd English money, and the bill be returned to this country, and the drawer or an in- dorser be called on to take it up, he may, as in the case of Hellish v. Simeon, be obliged to pay 3001 4s. 5dmore than the amount of the bill, which sum forms what ia called the re-exchange, and is the difference between the draft and re-draft." When a bill drawn and indorsed in England and payable abroad, is dishonored by the acceptor's non-payment, the holder is entitled as against the drawer to the amount of the re-exchange, that is, the value at the rate of exchange on the day of the dis- honor, of the sum expressed on the face of the bill in the currency of the place where it is payable, with interest and expenses. Luze v. Pompe, 98 Eng. Com. Law, 537. RE-EXCHANGE. 689 value at the time in English currency ; and that corresponding value fluctuates from time to time, according to the greater or lesser demand there may be in the London market for bills on Lisbon and the facility of obtaining them ; the difference of that value constitutes the rate of exchange on Lisbon. The like circumstan- ces and considerations take place at Lisbon, and constitute in like manner the rate of exchange on London. "When the holder, there- fore of a bill drawn on Lisbon is refused payment of it in Lisbon, the actual loss which he sustains is not the identical sum which he gave for the bill in London, but the amount of its contents if paid at Lisbon, where it was due, and the sum which it will cost him to replace that amount upon the spot by a bill upon London, which he is entitled to draw upon the persons there who are liable to him upon the former bill. That cost, whatever it may be, constitutes his actual loss and the charge for re-exchange." ' immediately on the dishonor of the bill the holder has „„„„ a right under the law merchant to redraw from the place where the bill was payable, on the drawer or indorser, as the case may require, for the amount due on the protested paper, including expenses and re-exchange ; and if the holder redraw upon his immediate indorser, for an amount sufficient to cover re-exchange between the place of dishonor and the place of indorsement, the indorser may thereupon redraw upon his indorser for an amount sufficient to cover what he has been obliged to pay, together with re-exchange ; and so on till the bill comes home to the drawer, burdened with these successive and sometimes greatly aggravated J De Tastet v. Baring, 11 East, 265. The bill in this case was drawn in London on Lisbon, payable twelve months after date : and when it was presented for payment, • Lisbon being occupied by the enemy, it was refused and returned protested for non- payment; but the plaintiff failed to recover re-exchange, because it did not appear that there was a course of re-exchange between Lisbon and London at the time of tho dishonor, or that tho plaintiff had paid or was liable to pay tho same. Pollard v. Sir Robert Henies, 3 Bos. & Pull., 335. A. deposited a sum of money at the banking house of B. in Paris, for which B. gave him his note "payable in Paris, or at the choice of the bearer at the Union Bank in Dover, or at my usual residenco in London, according to the course of exchange upon Paris." After this note was given the direct course of exchange between London and Paris ceased altogether, having been previous to its total cessation extremely low ; tho noto was at a subsequent period presented for acceptance and payment at tho residence of B. in London, at which time there was a circuitous courso of exchango upon Paris by way of Ham- burgh. Held, that A. was entitled to recover upon tho noto according to such circui- tous course of exchango upon Paris at tho timo when tho noto was presented 2 Campb., C5. Emv. 87 690 BILLS OF EXCHANGE AND PROMISSORY NOTES. damages. 1 But as it is a well settled rule that the contract of each of the parties, drawer and indorser, is to be governed by the law of the place where it is made, the damages cannot exceed the rate allowed by that law ; and the custom of this country is to limit the amount of damages recoverable on protested bills to a certain per cent. The custom in this respect began at a very early day, and has resulted in the enactment of statutes in nearly all the states, pre- *»oo scribing the measure of damages to be awarded on *the return of dishonored bills. 2 "We say on the return of dis- honored bills, for the acceptor is not liable at common law for re-exchange ; his engagement being to pay according to the laws of the country where the acceptance is made. 3 If sued by the holder of the bill, the recovery is ordinarily had at the place where the bill was payable, so that there can be no occasion for adding the re-exchange. But the reason of the rule does not apply, cer- tainly not in its full force, where the bill has been returned pro- tested and the damages paid thereon by the drawer, who brings an action upon the bill in his own name against the acceptor ; in this case, the drawer having funds in the hands of the acceptor, has suffered an actual damage in consequence of the acceptor's default Nevertheless, it is clear that the latter is not liable, under the law merchant, on his contract of acceptance, for anything more than the face of the bill with interest ; 4 though he may, doubtless, ren- der himself liable for the damages by a special engagement 6 As against the drawer or indorser, the doctrine of re-exchange is founded upon equitable principles. A bill is drawn in this country, payable at Paris, in France. The payee gives a premium for it under the expectation of receiving the amount at the time and place where the bill is made payable. It is protested for non- payment. Now the payee and holder is entitled to the amount of the bill in Paris. The same sum paid in this country, including 1 2 Hen. Black. R., 378. In Mellish v. Simeon, a bill drawn in London on Paris for C00Z, and negotiated through Amsterdam, came back to the drawer charged with 3001. damages, making the sum payable thereon over 900Z; Bank of the United States v. The U. States, 2 How. U. S. R., Til ; ante, 730. 2 Hendricks v. Franklin, 4 John. R., 119. Twenty per cent was the rate of damages formerly allowed in this state, to be added to the rato of exchange. Grares v. Dash, 12 John. R., 17; G Mass. R., 161.; 9 id., 7. * Napier v. Schneider, 12 East, 420; Hardwicke v. Farmers' Bank, 8 Porter, 539. * King v. Phillips, Peters C. C, 350 ; Armstrong v. Brown, 1 Wash. C. C, 43, 321 6 Greene v. Goddard,' 9 Mete., 212 : Randolph v. Parish, 9 Porter, 76. DAMAGES. 691 costs of protest and other charges, is not an indemnity. The holder can only be remunerated by paying to him at Paris, on the day of payment, the principal with costs and charges ; or by paying to him, in this country, those sums, together with the difference in value between the whole sum at Paris, and the same sum in *this country. And this difference in value is ascertained #lyQ . by the premium on a bill drawn in Paris and payable in this country, which should sell at Paris for the sum claimed. 1 Having engaged as drawer or indorser of the bill, that it should be paid when due, at Paris, he is bound to indemnify the holder for the loss sustained by him in consequence of its non-payment When there is an established rate of exchange between the place where a bill is drawn or negotiated, and the place where it is pay- able, it is not difficult to ascertain and determine the damages that are justly recoverable on the bill against the drawer and indorser. But when a bill is drawn in one state or territory on another, between which there is but little direct intercourse and no regular exchange, it becomes important, as a matter of convenience, to prescribe the damages to be allowed by statute ; which has been already done in all the states, with two or three exceptions. In New York, the rate of damages to be allowed and paid upon the usual protest for non-payment of bills of exchange, drawn or negotiated within this state, is as follows : 1. If such bill shall have been drawn upon any person or per- sons at any place in either of the eastern or New England states, in New Jersey, Pennsylvania, Ohio, Delaware, Maryland or Vir- ginia, or in the District of Columbia, three dollars upon the hundred, upon the principal sum specified in such bill. 2. If such bill shall have been drawn upon any person or per- sons at any place in either of the States of North Carolina, South Carolina, Georgia, Kentucky, or Tennessee, five dollars upon the hundred, upon the principal sum specified in such bill. 3. If such bill be drawn upon any person or persons at any place in any other state or territory of the United States, or at any other place on or adjacent to this continent and north of the equator, or in any British or other foreign possessions *in the West In- to- dies, or elsewhere in the Western Atlantic ocean, ten dollars upon the hundred, upon the principal sum specified in such bill. 1 Bank of TJ. S. v. The United States, 2 How. U. S., 711, per Mr. Justice McLean. 692 BILLS OF EXCHANGE AND PROMISSORY NOTES. 4. If such bill shall have been drawn upon any person or per- sons in any port or place in Europe, ten dollars upon the hundred, upon the principal sum specified in such bill. These damages are in lieu of interest, charges of protest, and all other charges incurred previous to and at the time of giving notice of non-payment ; but the holder of such bill shall be entitled to demand and recover lawful interest upon the aggregate amount of the principal sum specified in such bill, and of the damages thereon, from the time at which notice of protest for non-payment shall have been given, and payment of such principal sum shall have been demanded. "When the contents of the bill are expressed in the money of account of the United States, the amount due thereon, and of the damages allowed, are to be ascertained and determined, without any reference to the rate of exchange existing between this state and the place on which such bill shall have been drawn, at the time of demand of payment, or of notice of non-payment. On the other hand, where the contents of the bill are expressed in the money of account or currency of any foreign country, the amount due, exclusive of the damages payable thereon, is to be ascertained and determined by the rate of exchange, or the value of such foreign currency, at the time of the demand of payment. The same rate of damages is allowed on the protest for non- acceptance, in lieu of interest, charges of protest, and ail other charges incurred previous to and at the time of giving notice of non-acceptance; but the holder is entitled to recover interest upon the aggregate amount of the principal sum specified in the bill and of the damages thereon, from the time at which notice of protest for non-acceptance was given. These damages, allowed by statute, can be recovered only by the holder of the bill, who shall have purchased the same, or some interest therein, for a valuable con- sideration. 1 1 3 Revised Statutes, 54, 55, 3d ed. Hargous v. Lahens, 3 Sand. R., 213. This action was brought by the holders of a bill drawn in New York on Havre, in France, against the drawers in New York. The bill being dishonored and returned, the plaintiff's remitted to their correspondent at Havre to cover the same ; and afterwards returned the protested bill to Paris, and there received a part of the amount of the bill. And the Superior Court say : " The allowance of damages rests upon the theory, that the holder of the bill, by reason of its non-payment, is put to the expense of remitting the same amount to replace that expressed in the bill, in the country where it was payable. The rate of exchange measures the damages, in the absenco of a statutory or customary regulation. This DAMAGES. 693 * Maine. Damages on protest of bills of exchange of a hundred dollars or more, payable by the acceptor, drawer, or indorser of one in this state, are, if payable at a place seventy-five miles distant, one per cent ; if payable in the State of New York, or in any state northerly of it, and not in this state, three per cent ; if payable in any Atlantic state or territory southerly of New York and northerly of Florida, six per cent ; and in any other state or territory, nine per cent. 1 These damages are not allowed against the indorser on a promissory note payable in another state. 3 Massachusetts. On bills drawn or indorsed in the state and pay- able without the limits of the United States, the party 737 "liable pays, on due notice and demand, at the current rate of exchange, and damages at the rate of five per cent upon the con- tents, with interest thereon from the date of the protest : but on bills payable in Africa, beyond the Cape of Good Hope, or any place in Asia or the islands thereof, the party liable pays the same at par value, together with twenty per cent thereon, in full of all damages, interest and charges. On bills drawn or indorsed in the state, and payable in any part of New England or in New York, the party liable pays two per cent with interest, costs, and charges ; and on such bills payable in New Jersey, Pennsylvania, Delaware, and Maryland, three per cent ; on such bills payable in Virginia and the District of Columbia, North Carolina, South 1 R. S. of 1857, p. 519 ; Fisko v. Foster, 10 Mete, 597. In this case the bill wa3 drawn at Bangor, in the State of Maine, upon the defendant, a citizen of Massachu- setts, in favor of the plaintiff, a citizen of Maine, and was accepted by the defendant ; and the court held that the plaintiff was not entitled to recover the damages given by the Revised Statutes of Maine, in an action brought in Massachusetts. Such statutes have force only within the state enacting them. * Loud v. Merrill, 47 Maine, 351. Tho action was by the indorsee against th» indorser of a note payable at the Suffolk Bank in Boston. allowance is made without any inquiry as to the fact of a remittance to cover tho amount of the protested bill. The liability to pay tho damages becomes perfect, on the return of the protested bill. A subsequent part payment by the acceptor, can have no greater influence in reducing or extinguishing that liability, than a similar partial payment by the drawer or any other party. It is as fixed and determinate an obligation as the debt represented by the sum expressed in the bill itself." Laing v. Barclay, 3 Stark. R„ 38; and the Bangor Bank v. Hook, 5 Greenl. R., 174, com- mented upon. 694 BILLS OF EXCHANGE AND PROMISSORY NOTES. Carolina, or Georgia, four per cent ; and on bills payable else- where in the United States, five per cent. 1 On bills and orders for the payment of money within the state at a distance of seventy-five miles from the place where they are drawn or indorsed, the holder is allowed to recover one per cent damages. Connecticut. Whenever any bill of exchange, drawn or nego- tiated within this state, upon any person in any other state, terri- tory or district of the United States, shall be returned unpaid, and shall have been duly protested for non-payment, in the manner usual in cases of foreign bills of exchange, the person to whom the same is payable shall be entitled to recover from the drawer, *738 ° r ttie indorsers of sucn *kiU the damages hereinafter speci- fied, over and above the principal sum for which such bill shall have been drawn, together with lawful interest on the aggre- gate amount of such principal sum and damages, from the time at which notice of such protest shall have been given, and the pay- ment of the said principal sum and damages shall have been demanded ; that is to say, if such bill shall have been drawn upon any person in the city of New York, two per cent upon the prin- cipal sum ; if upon any person in New England or the State of New York, New Jersey, Pennsylvania, Delaware, Maryland, Vir- ginia, or the District of Columbia, three per cent; if upon anv person in North or South Carolina, Georgia or Ohio, five per cent*; if upon any person in any other state or territory of the United States, eight per cent; and such damages shall be instead of interest and all other charges up to the time of giving notice of dis- honor. 8 ' R. S. of Mass.. of 1836, pp. 302, 303: Laws of 1S37, p. 272. Bowen and others v. Stoddard, 10 Mote, 375. The acceptor of a bill is not liable to the payee or indorsee for damages ; " it is no part of his contract to pay them ; and the bill, when satisfied by him, is paid at the place where it was made payable, and the party does not require, nor is he in such a case entitled to the damages given by statute in lieu of re-exchange. The holder, on protest for non-payment, is at liberty to pursue his remedy against the acoeptor, drawer and indorsers: but if lie follows the acceptor to judgment, he cannot charge him '.villi damages." As between the drawer and acceptor, the damages may, it seems, be recovered where the latter was bound to accept and pay, and the drawer has been subjected to damages by his neglect; but even here the acceptor is not liable for tin- damages on his contract of acceptance. Biggs v. Lindsay, 7 Cranch, 500. ' Statutes of Conn., compilation of 1854, p. COG. DAMAGES. 695 Rhode Island. Bills drawn or indorsed in this state on any place or country out of the United States, subject the drawer or indorser to damages for non-acceptance or non-payment to the amount of ten per cent, and charges of protest, with six per cent interest from protest. Bills drawn within the state, called inland bills, for the payment of money out of the state, subject the drawer or indorser to live per cent damages, charges of protest, and six per cent inte- rest from date of protest 1 Pennsylvania. The holder of bills of exchange drawn or in- dorsed in this state and returned unpaid with a legal protest, may receive and recover from the drawer or indorser the damages here- after specified over and above the amount of the bill and charges of protest, with interest thereon from the time of protest and notice ; that is to say, if such bill shall have been drawn upon any person or persons, or body corporate, of or in any of the United States or the territories thereof, excepting Upper and Lower California, New Mexico and Oregon, five per cent upon such principal sum ; and if upon Upper or Lower California, New Mexico or Oregon, ten per cent upon such principal sum ; and if upon China, #7Q0 India, or other parts of Asia, Africa or islands in the Pacific Ocean, twenty per cent upon such principal sum ; and if upon Mexico, the Spanish Main, West Indies or other Atlantic islands, east coast of South America, Great Britain or other places in Europe, ten per cent upon such principal sum ; and if upon places on the west coast of South America, fifteen per cent upon such principal sum ; and if upon any other part of the world, ten per cent upon such principal sum. 3 Delaware. The damages on bills of exchange drawn on any person beyond seas, and returned unpaid, with legal protest, shall, as to the drawer, indorser and all concerned, bo at the rate of twenty per centum on the contents of such bills, in addition thereto. 3 Maryland. An early statute gives to the holder of any bill of exchange, drawn in the state on any person in a foreign country, regularly protested, a right to receive and recover so much current money as will purchase a good bill of exchange of the same time 1 Public Laws of Rhode Island, Revised in 1844, p. 287 ; Tl. S. of 1S57. pp. 277, 278. s Laws of Pennsylvania, Dunlop's Compilation, 376, The act of 1821 is replaced by that of 1850. The act of 1819, allows bills to be drawn payable in particular funds, with the current rate of exchange in Philadelphia or any othor place in tho state, and leaves tho parties to specify, as they might do at common law the rato of damages to bo recovered on the bill. Id., 1150, 1157. 1 Laws of Delaware, Revised Code of 1852, p. 183. 696 BILLS OF EXCHANGE AND PKOMISSORY NOTES. of payment, and upon the same place, at the current exchange of such bills, and also fifteen per cent damages upon the principal sum mentioned in the bill, and costs of protest, with legal interest upon the value of the principal till paid : and provides that if any indorser of such bill shall pay to the holder or person entitled to *740 tlie Same ' -^ yalue of ^ e principal, and the damages and * interest as aforesaid, such indorser is to have a right to receive and recover the sum paid, with legal interest upon the same from the drawer or any other person liable to him upon the bill. 1 On a bill drawn in the state upon any other state or terri- tory of the United States, the holder may recover so much current money as will produce a good bill at the current rate of exchange, and also eight per cent as damages upon the value of the principal, with costs of protest and legal interest from the time of the protest Virginia. When a bill of exchange drawn or indorsed within this state is protested for non-payment, there must be paid by the party liable for the principal of such bill, in addition to what else he is liable for, damages upon the principal at the rate of three per centum, if the bill be payable out of Virginia and within the United States, and at the rate of ten per centum if the bill be payable without the United States. 8 North Carolina. The damages on protested bills drawn or in- dorsed in this state are as follows : Where the bill is drawn or indorsed in the state upon any person or corporation in any other of the states, or the territories thereof, three per cent on the princi- pal sum; where such bill is drawn or indorsed upon any person or corporation in any other place in North America (excepting the northwest coast of America), or in any of the West India or Bahama islands, ten per cent upon the principal sum ; where such bill shall be drawn or indorsed upon any person or corporation in the island of Madeira, the Canaries, the Azores, the Cape de Yerd islands, or in any other state or place in Europe or South America," fifteen per cent on the principal sum ; and where such bill shall be drawn or indorsed on any person or corporation in any other part of the world, twenty per cent on the principal sum. 3 South Carolina. In this state an early statute enacts, that upon all bills of exchange that shall be drawn upon persons resident 1 Statute of 1181, cited and construed in Bank of the United States v. The United States, decided in 1844, 2 Peters' Rep., 711; Md. Code, Public Laws, 64. 7 Virginia Code of 1849, p. 582. ' Revised Code of North Carolina, chap. 13, pp. Ill, 112. DAMAGES. 697 within the United States, and out of the state, and shall be returned protested, the damages of such protested bills shall be ten per cent on the sum drawn for; and on all bills in like manner drawn upon persons resident in any other part of North America, or within any of the West India ^islands, and protested, the damages „ shall be twelve and a half per cent; and on all bills drawn on persons resident in any other part of the world, being protested, the damages shall be fifteen per cent on the sum mentioned in said bills respectively, and all charges incidental thereto, with lawful interest, until the same be paid. 1 Georgia. Whenever any bill of exchange, drawn or negotiated within this state upon any person of or in any state, territory, or district of the United States, is returned unpaid, duly protested in the manner usual in cases of foreign bills of exchange, the person or persons to whom the same is or may be payable, is entitled to recover and receive of and from the drawer or indorser five per cent damages over and above the principal sum for which the bill is drawn, together with lawful interest on the aggregate amount from the time of giving notice of protest and making demand of payment. 2 The holder of bills of exchange drawn on any place bej^ond the limits of the United States, recovers the principal, with postage, protests, other necessary expenses and interest on the amount of these sums from the date of the protest until presenting the same for payment to the drawer or indorser in Georgia ; and also the premium on said aggregate amount for a new bill on Georgia, in case it be necessary to pay a premium, and if not, (return bills being at a discount,) the discount to be deducted ; and the holder to recover damages on the amount for which the bill was drawn at the rate of ten per cent, with Georgia interest. 3 Florida. Damages are allowed on foreign protested bills of ex- change, at the rate of five per cent. 4 Alabama. The damages on inland bills of exchange, protested for non-payment, are ten per cent; and on foreign bills of ex- change, protested for non-payment, fifteen per cent, on the sum 'Act of 178G. 'Act of 1823. The rule is the same without any reference to the residence of the drawer or acceptor. Act of 1839. * T. R. R. Cobb's New Digest, Laws of ficorgia, 521, 522. * Thompson's Digest, Laws of Florida, 310, published in 1817. Edw. 88 698 BILLS OF EXCHANGE AND PROMISSORY NOTES. drawn for. But such damages are in the place of all ^charges, except costs of protest incurred previous to, and at the time of, giving notice of non-payment ; and the holder may recover legal interest upon the aggregate of principal and damages from the time of demand, and costs of protest When the bill is drawn for money of the United States, the amount is to be ascertained without reference to the rate of ex- change ; but when drawn for money or currency of any foreign country, the amount is to be ascertained and determined by the rate of exchange, at the time of the demand of payment. The same damages are allowed on the dishonor of bills by non- acceptance, with interest on the principal from the time when it ought to have been paid, and interest on the damages from the dishonor. 1 Mississippi All bills of exchange drawn upon any person or body politic or corporate resident within the United States and out of this state, and protested for non-acceptance, shall draw damages at five per centum on the sum drawn for, and interest on the prin- cipal ; and the damages on bills drawn by any person payable out of the United States, which shall be protested for non-acceptance or non-payment, shall be ten per centum on the amount drawn for, the principal to draw interest also, and in all cases the holder shall be entitled to all costs and charges. 8 Louisiana. The rate of damages to be allowed and paid upon the usual protest for non-acceptance or non-payment of bills of exchange, drawn or negotiated within this state shall be as follows : On all bills drawn on and payable in foreign countries, ten dollars upon the hundred upon the principal sum specified in such bills ; on all bills drawn on and payable in any other state in the United States, five dollars upon the hundred upon the principal sum spe- cified in the bill. These damages are in lieu of interest, charges of protest and all other charges incurred previous to, and at the time of giving notice of, non-acceptance or non-payment; but the holder is entitled to recover lawful interest on the aggregate of the ^principal sum and damages from the time of giving such notice and making demand of payment. "When the con- tents of the bill are expressed in the money of account of the United States, the amount of the principal and damages arc to bo 1 Codo of Alabama, §§ 1537-1541. * Hutchinson's Mississippi Code, C39; Codo of 1857, p. 356. DAMAGES. G99 ascertained and determined without any reference to the rate of exchange at the time of the notice and demand ; if expressed in the money or currency of any foreign country, then the principal, as well as the damages payable thereon, must be ascertained and determined by the rate of exchange ; but when* the value of the foreign currency is fixed by the laws of the United States, the value thus fixed must prevail. 1 Texas. The statutes of this state allow damages on bills of exchange drawn by merchants upon their agents or factors living beyond the state to the amount of ten per cent on the sum speci- fied in the draft with interest and costs of suit thereon. 2 Ohio. No damages are allowed by statute on bills of exchange drawn or negotiated in this state. 3 Indiana. Damages payable on protest for non-payment or non- acceptance of a bill of exchange, drawn or negotiated within this state, shall be, if drawn upon any person, at any place out of this state, but within the United States, five per cent, but if upon any person at any place without the United *States, ten per cent on the principal of such bill. * * Beyond such dama- ges, no interest or charges accruing prior to protest shall be allowed ; but interest from the date of the protest may be recovered. As to any bill payable within the United States, the rate of exchange is not taken into account. . And no damages beyond cost of protest are chargeable against drawer or indorser, if, upon notice of protest, and demand of the principal sum, the same is 1 Revised Statutes of Louisiana, 43, 44, published in 1856. a Oldham & "White's Digest pp. 52, 53. I found nothing in Hartley's Digest of the Laws of Texas on the subject of damages on bills of exchange ; nothing under the proper head in his index. ' Swan & Critchfield's R. S. of Ohio of I860, p. 863. The former statutes of this state declared that when any bill of exchange shall be drawn for the payment of any sum of money, and such bill shall be legally protested for. non-acceptance or non-pay- ment, the drawer or drawers, indorser or indorsers, shall be subject to the payment of twelve per centum damages thereon, if drawn on any person or persons, or body corporate without the jurisdiction of the United States; and six per centum damages thereon, if drawn on any person or persons, or body corporate, within the jurisdiction of the United States, and without the jurisdiction of this state; and the said bills shall in all cases bear an interest of six per centum) from the date of the protest, until the money, therein drawn for, shall be fully satisfied and paid. But no damages were recoverable thereon in case of an agreement or under- standing between the drawer or indorser and the payee or indorsee permitting the bill to be paid at any other place than that on which it was drawn. Swan's 11. S., Derby's ed. of 1854, page 57 G. 700 BILLS OF EXCHANGE AND PROMISSORY NOTES. paid ; nor can trie holder recover damages unless he has given value therefor. 1 Illinois. On the return of bills drawn expressly for value re- ceived, on foreign countries, protested for non-payment or non- acceptance, the drawer or indorser must, on notice, pay the bill, with legal interest from the time when it should have been paid, and ten per cent damages, with the costs and charges of protest. On the return of bills drawn on any of the states or territories, given "for value received," the holder recovers the amount of the bill, five per cent damages, with costs and charges of protest. 4 Michigan. The holder of bills drawn or indorsed in this state, pa}-able out of the United States, is entitled to the contents of the bill, on due notice and demand, the current rate of exchange at the time of demand, and damage at the rate of five per cent, with interest on the principal from the date of protest : on bills payable in Wisconsin, Illinois, Indiana, Pennsylvania, Ohio or New York, three per cent on the principal ; on bills payable in Missouri, Ken- tucky, Maine, New Hampshire, Vermont, Massachusetts, Ehode Island, Connecticut, New Jersey, Delaware, Maryland, Virginia, or the District of Columbia, five per cent ; and on bills payable elsewhere within the state, ten percent. 3 „ > ( „ * Wisconsin. Whenever any bill of exchange, drawn or ■*74o . ... indorsed within this state, and payable without the limits of the United States, is duly protested for non-acceptance or non- payment, the party liable for the contents of the bill, must, on due notice and demand thereof, pay the same at the current rate of exchange at the time of the demand, and damages at the rate of five per cent upon the contents thereof, together with interest on the said contents, to be computed from the date of the protest ; and said amount of contents, damages and interest, are in full of all damages, charges and expenses. On dishonored bills drawn on adjoining states, the holder reco- 1 1 Revised Statutes of Indiana, 3T9, published in 1852. See State Bank v. Rodgers, 3 Ind., 53 ; May v. State Bank, 9 id., 233 ; "Wood v. Farm, and Mech. Bank, 7 T. B. Mon., 281. 9 Revised Statutes of Illinois, 1845, p. 384. The act speaks of "foreign bills,"' evi- dently meaning bills drawn on foreign countries, and not bills drawn on other states. The State Bank v. Bowers, 8 Blackf., 72. Silas Bowers drew the bill in question at his residence in Indiana, payable in New Orleans, where the same was addressed to himself by name ; and tho bill being protested for non-payment, the drawer was held liable for five per cent damages. 3 Revised Statutes of 1846, p. 156. These damages are in full of charges and expenses. Compiled Laws of 1857, p. 408. DAMAGES. 701 vers five per cent damages, interest, costs and charges of protest On bills drawn on other states, the holder recovers interest, ten per cent damages, costs and charges of protest 1 Iowa. The rate of damages to be allowed and paid upon the non-acceptance or non-payment of bills of exchange drawn or indorsed in this state, w T here damages are recoverable, is as fol- lows: If drawn upon a person at a place out of the United States, or in California or the territory of Oregon, Utah or New Mexico, ten per cent upon the principal with interest thereon from the time of the protest ; if drawn upon a person at any place in the State of Iowa, Missouri, Illinois, Wisconsin or Minnesota, three per cent with interest ; if drawn upon a person at any place in the State of Arkansas, Louisiana, Mississippi, Tennessee, Kentucky Indiana, Ohio, Virginia, District of Columbia, Pennsylvania, Mary- land, New Jersey, New York, Massachusetts, Ehode Island or Connecticut, five per cent with interest ; if drawn upon a person in any other state in the United States, eight per cent, with interest* Missouri. On bills drawn (expressly for value received) or nego- tiated in this state, and protested for non-acceptance and non-pay- ment, damages are allowed to the holder for value as follows : if drawn on a person within the state, four per cent on the principal ; if drawn on any person without the state, but within the United States or the territories thereof, ten per cent on the principal ; and if drawn on *any place without the United States, twenty per cent on the principal. And the acceptor is made liable for damages on dishonored bills, accepted within the state, at the rate of four per cent on the principal ; and on bills accepted out of the state, but within the United States, at the rate of ten per cent ; and in other cases at the rate of twenty per cent. These damages are in lieu of interest, charges and expenses prior to notice ; after that the holder recovers interest on the principal and damages.' Kentucky. Where any bill of exchange, drawn on a person out of the United States, is protested for non-payment or non-accep- tance, it bears ten per cent per year interest from the day of the protest, for not longer than eighteen months, unless payment be sooner demanded from the parly to be charged ; such interest to 1 Revised Statutes of 18-19, p. 263, § 8, and Revised Statutes of 1858, p. 409. * Code of Iowa, 1 ."< l . * Revised Statutes of Missouri, of 1845, pp. 173, 171. If paid within 20 days after demand and notiee, no damages are allowed. 702 BILLS OF EXCHANGE AND PROMISSORY NOTES. be recovered up to the time of judgment, and the judgment to bear legal interest thereafter. Damages on all other bills are disallowed. 1 Tennessee. On bills of exchange drawn within this state upon per- sons in any other state or territory, the holder is entitled to recover in an action against the drawer or indorser damages over and above interest and charges, as follows : if such bill shall have been drawn on a person in any of the United States, or the territories thereof, three per cent upon the principal ; if upon a person in any other state or place in North America bordering on the Gulf of Mexico, or in any of the West India islands, fifteen per cent upon the principal; if upon a person in any other part of the world, twenty per cent upon the principal. But these damages are in lieu of interest and all other charges, except the charge of protest, up to the time when notice and demand of payment were given and made. 3 Arkansas. Every bill of exchange expressed to be for value received, drawn or negotiated in this state, payable after date to * 747 order or bearer, is, when returned protested * for non-pay- ment or non-acceptance, subject to damages as follows : 1st. If drawn on any person at any place in the state, at the rate of two per centum on the principal. 2d. If drawn on any person and payable in any of the States of Alabama, Louisiania, Mississippi, Tennessee, Kentucky, Ohio, Indiana, Illinois and Missouri, or any point on the Ohio river, at the rate of four per centum on the principal. 3d. If drawn on any person and payable at any place within the limits of the United States, not hereinbefore expressed, at the rate of five per centum on the principal. 4th. If drawn on any person and payable at any port or place beyond the limits of the United States, at the rate of ten per centum on the principal. The acceptor of bills drawn on persons within the state is required to pay as follows : 1. If drawn within the state, two per cent damages on the principal. 2. If drawn at any place out of the state, but within the United States, damages at the rate of six per cent on the principal. 3. If drawn by any person beyond the limits of the United States, damages at the rate of ten per cent on the principal. 1 Revised Statutes of Kentucky, 195, adopted and published in 1852; 1 R. S., ed of 1SG0, p. 272. J Statutes of Tennessee, by Caruthers & Nicholson, published in 1836. The acl Mted is an old statute. DAMAGES. 703 In addition to the damages above mentioned, the holder recovers, in all cases, costs of protest, and interest at the rate of ten per cent on the principal, from the date of the protest ; and has a right of action against the acceptor as well as the indorser, as above given. 1 California. The rate of damages allowed upon the usual protest for non-payment of bills of exchange, drawn or negotiated within this state, is as follows : 1st. If such bill shall have been drawn upon any person or persons in any of the United States, east of the Rocky Mountains, fifteen dollars upon the hundred upon the principal sum specified in such bill. 2d. If such bill shall have been drawn upon any person or persons in any port or place in Europe or in any foreign country, twenty dollars upon the hundred upon the princi- pal sum specified in such bill. * Such damages shall be in lieu of interest, charges of „„.„ . . *748 protest, and all other charges incurred previous to, and at the time of, giving notice of non-payment ; but the holder of such bill shall be entitled to demand and recover lawful interest upon the aggregate amount of the principal sum specified in such bill, and of the damages thereon, from the time at which notice of pro- test for non-payment shall have been given, and payment of such principal sum shall have been demanded. When drawn for an amount expressed in the currency of the Uni- ted States, the sum due and damages thereon are to be determined without any reference to the rate of exchange ; but when drawn for an amount expressed in the money or currency of a foreign country, the amount due with damages thereon is to be ascertained by the rate of exchange at the time of the demand of payment. The same damages arc allowed on a protest for non-acceptance, to be in lieu of interest, charges of protest and all other charges previous to the giving of notice of non-acceptance ; but after that the holder may recover interest on the aggregate of the principal sum and damages." Oregon. In this state, damages arc allowed on bills drawn or indorsed here and payable beyond the limits of the United States at the rate of ten per cent in addition to the current rate of exchange, together with interest from the date of the protest for 1 English Digest of Laws of Arkansas, 21C, 211, published in 1818; and Gould's Digest of L858, pp. 209, 210. 2 Compiled Laws of California of 1853, p. 148; Wood's Digest, 18C8, p. 72. 704 BILLS OP EXCHANGE AND PROMISSORY NOTES. non-acceptance or non-payment. On bills drawn on other states or territories of the Union, the holder recovers five per cent dama- ges with interest, costs and charges of protest. 1 Minnesota. On bills drawn or indorsed within the state, and payable without the limits of the United States, the party liable pays at the current rate of exchange at the time of demand, and damages at the rate of ten per cent upon the contents, with inte- rest on the contents from the date of protest : *on bills drawn upon persons in any other state or territory of the United States, for the payment of money, the drawer and indorser are liable to pay the contents, with legal interest, and five per cent damages, with costs and charges of protest. 2 Kansas. Bills must be accepted in writing, and the provisions on the subject are like those of New York. Damages are allowed on bills of exchange drawn in form for value received in favor of the holder for value, when drawn or negotiated within the terri- tory and protested for non-acceptance or non-payment against the drawer and indorser duly notified, 1st, if the bill be drawn on any person within the territory at the rate of four per cent on the prin- cipal ; 2d, if drawn on any person at any place out of the territory but within the United States or its territories at the rate of ten per cent on the principal ; 3d, if drawn on auy person at any port or place beyond the United States and its territories at the rate of twenty per cent on the principal. The acceptor who refuses pay- ment is liable for the same damages in like cases. These damages are in lieu of interest, charges and expenses prior to notice ; but after that, the holder is to have legal interest on the principal and damages. No damages are allowed if the bill be paid within twenty days after demand or notice. When the bill is payable in the currency of a foreign country, the amount is to be ascertained by the rate of exchange ; not so, when payable in money of the United States. 3 Under the law merchant the holder of a dishonored foreign bill is entitled to recover against the drawer or indorser, the principal named in it, together with interest from the time when it ought to have been paid, and the necessary charges of protest, postage, a ad 1 Statutes of Oregon, 531, published in 1855. The statute of Oregon, in respect to otes and bills, resembles those of New York. It was passed in 135-1. 3 Statutes of Minnesota, 154, 1855 ; ed. of 1859, p. 375. 'Statutes of 1855, pp. 140-142. DAMAGES. 705 the current rate of exchange at the place where the bill was paya- ble, on the place where it was drawn or indorsed ; and he is entitled also to the broker's commission, and all other necessary expenses on a new bill, in case he redraws, to reimburse himself. 1 Under the statutes of the several states, the holder in some cases recovers the damages and expenses allowed by the law merchant, with a certain per cent added, so as to make a very ample compen- sation for the delay of payment : in other cases the holder recovers very nearly the same amount of damages given by the common law. Considering that the damages are not allowed as a penalty, but as a reasonable and fair compensation for the expense of remit- ting funds to the place of payment, the commercial rule is by far the most equitable : 2 at the same time it is very evident that a fixed rule is the most convenient in practice, since it generally dis- penses with the necessity of proving the rate of exchange. The want of a uniform rule of damages through the several states, and the inconveniences arising from such diverse legislation on the subject, have been frequently urged upon the attention of Congress, in order to procure the passage of a *law pre- #7Kft scribing the damages recoverable on bills, drawn in one state upon another, or upon foreign countries; and it has been confidently maintained that the National Legislature, being clothed with the power " to regulate commerce with foreign nations, and 1 Kent's Com., 151, 7th ed. ; Code of Commerce, art. 181. In some places the new bill must be stamped and a duty paid therefor ; and the bill must be purchased, which is generally done by a broker for a commission. 2 Bangor Bank v. Hook, 5 Greenl., 174. The acceptor having paid a part of the bill, the damages ate diminished pro rata; see Hargous v. Lahcns, 3 Sand. R., 213, decided on the same principle, but holding that a part payment made by the acceptor after the holder has remitted funds to meet the bill at the place of payment, does not diminish the damages pro rata. Nevada. Damages are allowed upon the usual protest for non-payment of bills of ex change drawn or negotiated in the territory, as follows: 1. If the bill be drawn upon any person in any of the United States east of the Rocky Mountains, $1 5 upon the $100, upon the principal thereof. 2. If the bill be drawn upon any person in any port or place in Europe or in any foreign country, $20 upon the $100, upon the principal thereof. Such damages to be in iieu of interest, charges of protest, and all other charges pre- vious to the giving of notice of non-payment ; but after that tin' holdor recovers lawful interest upon tbe aggregate amount of the principal named in the hill and the damages. Laws of 18C1, p. 5. When payable in money of the [Jnited States, no reference to be had to the rate of exchange. But when payable in the currency of a foreign country, the amount due is to be ascertained by the rate of exchange, with the damages added. The same damages are allowed on protest for non-acceptance, recoverable by the holder for value ; pp. 5, C. EDW. 89 706 BILLS OF EXCHANGE AND PROMISSORY NOTES. among the several states," is fully authorized to enact laws regu- lating and governing bills of exchange, which are but the instru- ments of commerce. 1 1 See report of Mr. Yerplanek to the House of Representatives, on the subject of foreign bills, made March 22, 1826; 3 Kent's Com., 159, 7th ed. As it may serve for reference and elucidation, it is thought advisable to insert in the following pages a translation of that part of the French Code of Commerce relating to bills of exchange and promissory notes. It is perhaps the most successful effort that has yet been made in the work of codifying laws, which, like the great body of the common law, lie scattered through many books, and require great diligence and labor to bring them together in the form of a symmetrical treatise. The translation is not new, but it has been carefully compared with the original and found to be a faithful rendering of the text. STAMP ACTS. 707 751 ^CHAPTER XIII. STAMP ACTS. The recent act of Congress, as amended, imposes certain stamp duties upon every contract ; upon every inland bill of exchange, draft or order for the payment of any sum of money exceeding twenty dollars, otherwise than at sight or on demand ; upon any bank check, draft or order for the payment of any sum of money exceeding twenty dollars, drawn upon any bank, person, company or corporation, at sight or on demand ; upon every promissory note ; and upon every memorandum check, receipt or other written or printed evidence of an amount of money to be paid on demand or at a time designated ; upon certificates of deposit in bank ; and upon every foreign bill of exchange or letter of credit drawn in but payable out of the United States, or drawn in any foreign country and payable in this. 1 The statute evidently in- cludes among inland bills those which are drawn in one state upon another, anywhere within the Union ; and indicates very clearly those which it regards as foreign bills. 2 As a means of securing the payment of the duties imposed, the statute declares that every person who shall make, sign or issue •any such instrument not duly stamped, or shall cause any such instrument not duly stamped to be made, signed or issued, shall incur a penalty of fifty dollars ; and that such instrument shall be deemed invalid and of no effect. 3 The instrument is to be duly stamped when it is made, signed or issued ; * and it is duly stamped when written upon paper •The marginal paging is continued, for the sake of convenient reference. 1 See § 101, requiring tho acceptor to .stamp such bills the same as inland bills, &c 1 See § 9-1 of the act of July l, 13G2, and Schedule H, therein referred to, as amended by § C of the act of March 3d, ISO.'i, as printed on the following pages. 'See § 95 of the act of July 1, 1862; and § 21 of ch. 163, approved July 11, 18G2; and § 5 of the act of December 25. 1 863 ; and § 17 of tho act of March 3, 18G3. *Soo§ 99 of tho act of July 1, 18G2. 708 BILLS OF EXCHANGE AND PROMISSORY NOTES. stamped so as to denote the duty imposed, or when it has im- pressed upon it an adhesive stamp denoting the duty imposed upon the instrument. Under the act of July 1, 1862, the amount of the stamp duty was not fixed with reference to the time the instrument had to run before it became payable ; and no stamp was required upon any of the instruments mentioned, when given or drawn for the sum of twenty dollars or less. 1 The amendatory act, just passed, provides that every memorandum, check, receipt, or other written or printed evidence of an amount of money to be paid on demand or at a time designated, shall be stamped the same as a promissory note ;' i and that any inland bill, draft or order for the payment of any sum of money exceeding twenty dollars, otherwise than at sight or on demand, and every promissory note shall (in lieu of the duties prescribed in schedule B) have a stamp or stamps affixed thereon, denoting a duty, upon every sum of two hundred dollars, or any fractional part thereof, if payable on demand or at any time, not exceeding thirty-three days, including the grace, from the date or sight, of one cent (01). 7-9 ^ payable at any time not less than thirty -three days as aforesaid, and not exceeding sixty-three days, including the grace, from date or sight, of two cents (02). If payable at any time not less than sixty-three days, as afore- said, and not exceeding ninety-three days, including the grace, from date or sight, of three cents (03). If payable at any time not less than ninety-three days, as afore- said, and not exceeding four months from elate or sight and grace, of four cents (01). If payable at any time not less than four months as aforesaid, and not exceeding six months from date or sight or grace, of six cents (06). If payable at any time exceeding six months from date or sight and grace, of ten cents (10). It is reasonably plain that this provision, though made in words not very fitly chosen, prescribes the rate at which the instruments mentioned must be stamped. u Any (that is, every) inland bill, 1 See Schedule B of that act. ' See § 6 of the act of March 3, 1863. The punctuation of this seutonce is the Bamo as In the official publication of the statute; but the suggestion of an able jurist, that a memorandum-check was evidently intended, instead of memorandums and checks, has almost the force of a judicial interpretation. STAMP ACTS. 709 draft or order for the payment of any sum of money exceeding twenty dollars, otherwise than at sight or on demand, and every promissory note shall have a stamp or stamps affixed thereon, denot- ing a duty of, so much, upon every sura of two hundred dollars or any fractional part thereof:" these terms must include bills, drafts and notes drawn for any sum exceeding two hundred dollars; and if so, they fix the rate at which all such paper must be stamped. The same form of words used in the same section with reference to any mortgage or personal bond for the payment, or to secure the payment of any definite or certain sum of money, evidently prescribes the rate at which such instruments shall be stamped, in lieu of previous duties. 1 753 Bank checks and drafts at sight or on demand. Many questions must arise under the amendatory act of March, 1863, to which no certain answer can be given until it is received in the form of a judicial interpretation of the language used. Does the amendment include and operate upon bank checks, drafts or orders for the payment of any sum of money exceeding twenty dollars, drawn upon any bank, company, person or corpo- ration at sight or on demand ? The terms of the amendment, liberally construed, are perhaps broad enough to include each of these instruments ; but the occasion of the amendment in this par- ticular renders it quite probable that that was not the intention of the framersof it, and it is apparent that it does not in terms include a sight draft. In this state, it is true that a draft drawn payable at sight is due and payable on presentation, that is, on demand; 3 it is therefore here "written or printed evidence of an amount of money to be paid on demand." Under the law merchant, which prevails in all the states where it is not modified by statute, a draft drawn payable at sight is entitled to the usual days of grace, and is not therefore payable on demand. 3 Is it payable "at a time designated?" Clearlv not at a time designated on the face of the instrument; for the holder is not bound to present it at once, and it is the presentation that fixes the time when it is payable. 1 The words referred to are as follows : "Any mortgage or personal bond for the payment of money, or as security for the payment of any definite or certain sum of money, in lieu of the duties imposed or prescribed in Schedule B, following the oue hundred and tenth section, shall have a stamp or stamps affl reon denoting a duty pponsyerj Bum of two hundred dollars, or any fractional part thereof, of ten cents (10)." * Sec statute, ante, p. 623. ' Sec the law as stated, ante, 523. 710 BILLS OF EXCHANGE AXD PROMISSORY NOTES. No part of the original act or of the schedule annexed is repealed, except in so far as the same is repugnant to the provisions of the amendatory act; 1 and in the schedule, "bank checks," drawn upon a bank, company, person or corporation, for over twenty dollars on demand, are charged with a certain duty ; while in the amendment the general term check is accompanied by words that may be held to qualify its meaning. If used in the amendment in its ordinary sense, 2 meaning the usual business check paya- ble to order or to bearer on demand, it must be stamped as a promis- sory note ; but if the sense of the word as used in that place be held controlled by those which precede and follow it, so as to make it mean a memorandum -check for a continuing demand, this con- struction, which is that of the business community, would hold that the amendatory act does not include the ordinary bank check payable on demand. There is, in the customary transactions of „ M . business, a substantial reason for this distinction. The bank 754 • check delivered in liquidation, in payment of a debt due, or for the purpose of drawing money thereon presently from the bank or banker, is not intended nor used as a continuing security; and no profit accrues to either party from the use of it ; it is simply a thing of convenience. But when it is delivered, as on a call loan, and designed as a memorandum of a debt to be paid at some future time, at the option of one or either' party, it becomes in purpose and effect an instrument closely analogous to an inland bill or promissory note, and ought to be stamped under that denomination. On the same ground, a check that is post dated or expressly made payable at a future day, or at a certain time after sight or after demand, must be stamped as a promissory note ; for it is, in that case, strictly a bill of exchange. 3 Certificate of deposit In the schedule appended to the original act, a certificate of the deposit of money in a bank or trust com- pany, or with a banker or person acting as such, is charged with a specific duty; and it is considered among men engaged in the business as unaffected by the amendment. In this state the instru- ment is declared in substance and effect a promissory note ; 4 but as banks and bankers are not here allowed to issue the certificate 1 See § 37 of the amendatory act of March 3, 18C3. a See as to checks proper, ante, 58, 396-398. 3 Ante, 58, 512. * Ante, 348. STAilP ACTS. 711 on time, or payable otherwise than on demand, there does not seem to be any reason for supposing that Congress intended indi- rectly to make any alteration in the duty placed upon it. But it must be admitted that the language of the amendment is compre- hensive enough to include it ; and it is also true that the language used may have a legitimate operation and effect without including the certificate of deposit. A letter of credit, drawn in, but payable out of, the United States, is not mentioned in the act of amendment, and must, therefore, be stamped as required in the schedule, to the same extent as a foreign bill of exchange. Inland letters of credit, not being charged with a specific duty, should undoubtedly be stamped simply as con- tracts. Omission of the stamp, and its effect. Issued without being properly stamped, checks, drafts or orders for the payment of money, bills of exchange and promissory notes, are to be deemed invalid and of no effect. What is the meaning of this provision ? The act was passed on the first of July, eighteen hundred and sixty-two ; and an amendment to the act was made two weeks after declaring, " that no instrument, document or paper made, signed or issued prior to the first day of January, 1863, without being duly stamped, or having thereon an adhesive stamp to denote the duty imposed thereon, shall for that cause be deemed invalid and of no effect : provided, however, that no such instrument, document or paper shall be admitted or used as evidence in any court until the same shall have been duly stamped, nor until the holder thereof shall have proved to the satisfaction of the court that he has paid to the collector or deputy collector of the district within which such court may be held the sum of five dollars, for the use of the United States." This amendment was repealed and replaced by another on the 25th of December, 1862, in substantially the same terms, extending the time within which unstamped or improperly stamped instruments should not be deemed invalid to the first of March, 1863, and authorizing the party desiring to use the unstamped paper in evidence, to stamp the same in presence of the court. 1 By a like amendment the time is now extended to 1 See also like amendment in the act of March 3, 1803, § 16. 712 BILLS OF EXCHANGE AND PROMISSORY NOTES. the first of June next, so that no paper or instrument made or issued prior to that day will be invalid under the law. 1 It is evident from these amendments that Congress intended, by declaring such unstamped instruments invalid and of no effect, that they should not be held available as the ground of an action, nor received in evidence in support of an action for the original consideration. But without drawing any inference from the form and substance of the amendments, the terms of the statute are sufficiently explicit ; the unstamped instrument, issued after the act -goes into full operation, is invalid and of no effect. Receiving it in evidence, though not as the ground of an action, would be giving to it some effect ; and that cannot be done. Effect of omitting the stamp illustrated by English decisions. The English statutes, imposing like duties, declare, in so many words, „„ , that unstamped or improperly stamped bills, notes or drafts, shall not be pleaded or given in evidence in any court, or admit- ted to be good, useful or available in law or in equity; and prohibit the commissioners from stamping any bill or note after it is made. 2 And under the decisions, an unstamped bill or note is not receivable in evidence for any purpose in furtherance of its original design ; it is not available as an admission. 3 Indorsing it over in payment of a debt, or for goods sold, does not suspend the action on that debt, nor charge the party receiving it with the use of diligence in presenting it, or in giving notice of its non- payment. 4 And it has been held that the giving of an unstamped promissory note cannot be shown to take the case out of the statute of limitations; 6 nor as establishing or furnishing a link in a chain of evidence. 8 It may, of course, be looked at by the court to determine its character ; and it may be used by a witness to refresh his memory. 7 It has also been received and shown to the jury 1 The penalty for issuing the unstamped paper is incurred, though the instrument is valid. s 31 Geo. ILT, c. 25, § 19, still in force; Fields v. Woods, 7 Ad. & E., lit. ' Wilson v. Vysar, 4 Taunt., 288; Jardine v. Payne, 1 B. & Ad., 663. 4 Wilson v. Vysar, 4 Taunt., 288; Cundy v. Marriott, 1 B. & Ad., 696; Plimley v. Westley, 2 Bing. N. Cas., 249. 6 Jones v. Rider, 4 M. & W., 32. 8 Jardine v. Payne, 1 Barn. & Adol., 663 ; overruling Sutton v. Toorner, 7 B. 4 416, and Bishop v. Chambre, 1 Dawson & Lloyd, 83. 7 Mangham v. Hubbard, 8 B. & C, 14. STAMP ACTS. 713 for a collateral purpose ; as, to show in an action for the amount (money loaned), by the handwriting, that the transaction occurred while the maker was in a state of intoxication ; l and an improperly stamped bill has been held admissible in evidence, to show an agreement usurious and illegal ; a and the same rule applies upon indictments for forgery.' The intent of the statute, and the theory of the decisions under it, is that the unstamped or improperly stamped bill or note shall not be rendered available or useful to the party taking it. The party making or issuing the paper without a stamp incurs a pen- alty; and the party taking it acquires no advantage from the instrument. Receiving it on a debt, it is of no effect; and he may therefore maintain his action for the recovery of that debt, just the same as if the bill or note had not been given. 4 • The taking of part payment on an agreement to give time for the balance, with a note improperly stamped by mistake for that balance, suspends the action until the time arrives at which the note would have matured ; 6 not on account of taking the note, but by virtue of the agreement to give time. In a case like this, especially where a prior valid agreement is surren- dered on the execution of a new and invalid contract, the court may look at the unstamped paper to ascertain whether the first was in fact rescinded; 9 but in an action on a first bill, an un- stamped bill, taken in renewal at the instance and through the influence of the acceptor of both bills,' cannot be submitted to the jury as an item of evidence to show that the first was canceled on the reception of the unstamped bill, with the assent of the drawer. 7 The party making an express agreement to give a valid note, and delivering one on an improper stamp, may be compelled by a court of equity to fulfill his contract by delivering a valid note — one properly stamped.' 1 Gregory v. Frazer, 3 Campb., 454. ' Cappock v. Bower, 4 M. & "W., 3G1. * Rex v. Hawkeswood, 1 Leach, 257. 4 Wilson v. Vysar, 4 Taunt., 288; Ruff v. Webb, 1 Esp. Rep., 129. * Swears v. Weils, 1 Esp. Rep., 317. * Reed v. Deere, 7 B. k C, 2G1. ' Bweeting v. liaise, 9 B. & C, 365; 4 M. & Ry., 287, S. C. ' Ajlett v. Bennett, 1 Anst., 45. Euw. 00 714 BILLS OF EXCHANGE AND PROMISSORY NOTES. Under a special provision of the English statute, a bank or banker paying a bill, draft or order insufficiently stamped, is not allowed therefor in account. 1 But a creditor holding two bills, one properly stamped and the other not, receiving money from his debtor generally on account, may apply the payment on the unstamped bill ; a and a payment into court in an action on an unstamped bill or note, is a waiver of the objection. 3 An alteration in a properly stamped bill by way of correcting a mistake, does not vitiate it ; as, where the words or order were inserted in compliance with the original intention of the parties,* or where the date was corrected • by inserting the true date,' or where the bona fide holder of a bill payable to blank or order inserts his own name as payee. 8 And an alteration made in a bill or note before it has any legal inception, with the consent of the parties affected thereby, does not avoid the instrument ; as, where the drawer sent his draft payable to his own order to the drawee for acceptance, and it was altered so as to extend the time of pay- ment at the request of the drawee when he accepted it, 7 or where a draft was drawn, indorsed and accepted for accommodation, and the date was altered by the consent of the parties before the bill came into the hands of a holder for value. 8 Given for value by the drawer to the payee, or by the latter to his indorsee, an alteration of the draft vitiates it, before as well as after its acceptance.' It deserves to be noticed that the English acts imposing stamp duties, are far more specific than the recent acts of Congress ; so that many of their decisions are wholly inapplicable under our statute. 1 55 Geo. Ill, c. 184, s. 13. There is no such provision in the act of Congress. a Biggs v. Dwight, Man. & R, 308. ' Israel v. Benjamin, 3 Camp., 40. * Kershaw v. Cole, 3 Esp., 246; 10 East, 437; Jacobs v. Hart, 2 Stark., 45; 6 M. k Sel., 142 ; Byron v. Thompson, 11 Ad. & Ell., 31. * Brutt v. Picard, R. & K, 37. * Attwood v. Griffin, R. & M., 425; 2 C. & R, 368. 1 Kennerly v. Nash, 1 Stark., 452. ■ Downes v. Richardson, 5 B. & Aid., 674; S. C, 1 D. & R., 332; Tar'.don >. Shin- gler, 7 Q B. Rep., 812. 8 Walton v. Hastings, 4 Camp., 223; S. C, 1 Stark., 215. STAMP ACTS. 715 Notes, orders and drafts payable in property, 011 a condition, or out of a fxind. Care must be used in determining what instruments must be stamped as drafts, orders, bills of exchange and promissory notes ; and what must be stamped simply as contracts. And where there is any doubt in respect to a given paper whether it should be merely stamped as a contract or as one of the other instruments named, the prudent course is to use the highest stamp required in either case. For, under the amendment of December last, it is not necessary that the paper should have the particular kind or descrip- tion of stamp designated for and denoting the duty charged upon that specific instrument, provided a legal stamp or stamps denoting a duty of equal amount be affixed thereon. 1 This is a very con venient and just modification of the law as originally passed." Under the terms of the statute as amended and made specific in the schedule annexed, it is presumed that drafts and orders paya ble in goods or property are to be stamped as special contracts ; ' for it is only when these instruments are given for a definite sum of money that they are to be stamped as orders or drafts. And since a draft or order payable in goods or property is, when delivered by the debtor on a demand due to his creditor, an agreement or contract of some kind, it must be stamped under that denomination. 4 Where the draft is not delivered on a debt or upon an executory contract, there being between the drawer and the payee no existing demand or obligation in fact, it is no contract — it is a mere request from the drawer to the drawee to sell and charge the goods — and it need not be stamped. Whether a draft or order for the payment of a certain sum of money, out of a special fund, or upon an uncertain event, is to be stamped as a draft or as a contract, must remain for judicial inter- pretation/ The most that can be said unofficially on the point is, that it may be held liable to the stamp duty as a draft without doing any violence to the terms of the statute. A note for a definite sum, say one hundred or one thousand dollars, given in terms for value received and payable in goods 1 Tlio amendment does not apply to any stamp appropriated to denote a duty charged on proprietary articles. a It is in effect a repeal of §§ 9G and 97 of the original act. ■ Payable in property, they are not bills or drafts. Ante, 134.-138, 1G9, 210. ♦8eeara. P. San- ger, pp. 432, 475-484. STAMP ACTS. 719 merits, matters and things mentioned and described in the schedule (marked B) hereunto annexed, or for or in respect of the vellum, parchment or paper, upon which such instruments, matters or things, or any of them, shall be written or printed, by any person or persons, or party who shall make, sign, or issue the same, or for whose use or benefit the same shall be made, signed or issued, the several duties or sums of money set down in figures against the same respectively, or otherwise specified or set forth in the said schedule. Sec. 95. And be it further enacted, 1 That if any person or per- sons shall make, sign or issue, or cause to be made, signed or issued, any instrument, document or paper of any kind or descrip- tion whatever, without the same being duly stamped for denoting the duty hereby imposed thereon, or without having thereupon an adhesive stamp to denote said duty, such person or persons shall incur a penalty of fifty dollars ; and such instrument, document or paper, as aforesaid, shall be deemed invalid and of no effect. Sec. 96. And be it further enacted, That no stamp appropriated to denote the duty charged on any particular instrument, and bearing the name of such instrument on the face thereof, shall be used for denoting any other duty of the same amount, or if so used the same shall be of no avail. 2 Sec. 97. And be it further enacted, That no vellum, parch- w fi q ment or paper, bearing a stamp appropriated by name to any particular instrument shall be used for any other purpose, or if so used, the same shall be of no avail. Sec. 98. And be it further enacted, That if any person shall forge or counterfeit, or cause or procure to be forged or counterfeited, any stamp or die, which shall have been provided, made or used in pursuance of this act, or shall forge, counterfeit or resemble, or cause or procure to be forged, counterfeited or resembled, the impression, or any part of the impression of any such stamp or die, as aforesaid, upon any vellum, parchment or paper, or shall stamp or mark, or cause or procure to be stamped or marked, any vellum, parchment or paper, with any such forged or counterfeited stamp or die, or part of any stamp or die, as aforesaid, with intent to defraud the United States of any of the duties hereby imposed, or any part thereof, or if any person shall utter or sell, or expose to sale, any vellum, parchment or paper, article or thing, having thereupon the impression of any such counterfeited stamp or die, or any part of any stamp or die, or any such forged, counterfeited. or resembled impression, or part of impression, as aforesaid, know- ing the same respectively to be forged, counterfeited or resembled ; or if any person shall knowingly use any stamp or die which shall have been so provided, made or used, as aforesaid, with intent to 1 See § 5 of the act of December 25, 1802, post. See § 3 of tho act of December 25, 18C2, modifying sections 90 and 97. 720 BILLS OF EXCHANGE AND PEOMISSOEY NOTES. defraud the United States ; or if any person shall fraudulently cut, tear or get off, or cause or procure to be cut, torn or got off, the impression of any stamp or die which shall have been provided, made or used in pursuance of this act, from any vellum, parchment or paper, or any instrument or writing charged or chargeable with any of the duties hereby imposed, then, and in every such case, every person so offending, and every person knowingly and wilfully aiding, abbetting or assisting in committing any such offence as aforesaid, shall be deemed guilty of felony, and shall, on conviction thereof, forfeit the said counterfeit stamps and articles upon which they are placed, and be punished by fine not exceeding one thousand dollars, and by imprisonment and confinement to hard labor not exceeding five years. Sec. 99. And be it further enacted, That, in any and all cases where an adhesive stamp shall be used for denoting any duty imposed by this act, except as hereinafter provided, the person using or affixing the same shall write thereupon the initials of his name, and the date upon which the same shall be attached or used, so that the same may not again be used. And if any person shall fraudulently make use of an adhesive stamp to denote any duty imposed by this act without' so effectually cancelling and obliterating such stamp, except as before mentioned, he, she or they, shall forfeit the sum of fifty dollars. (The remaining part of this section applies to articles mentioned in Schedule C.) „ . Sec. 100. And be it further enacted, That if any person or persons shall make, sign or issue, or cause to be made, signed or issued, or shall accept or pay, or cause to be accepted or paid, with design to evade the payment of any stamp duty, any bill of exchange, draft or order, or promissory note for the pay- ment Of money, liable to any of the duties imposed by this act, without the same being duly stamped, or having thereupon an adhesive stamp for denoting the duty hereby charged thereon, he, she or they shall for every such bill, draft, order or note forfeit the sum of two hundred dollars. Sec. 101. And be it further enacted, That the acceptor or accep- tors of any bill of exchange or order for the payment of any sum of money, drawn or purporting to be drawn in any foreign country but payable in the United States, shall, before paying or accepting the same, place thereupon a stamp indicating the duty upon the same as the law requires for inland bills of exchange or promis- sory notes ; and no bill of exchange shall be paid or negotiated without such stamp ; and if any person shall pay or negotiate, or offer in payment, or receive or take in payment any such draft or order, the person or persons so offending shall forfeit the sum of one hundred dollars/ Sec. 102. And be it further enacted, That * * * * the commissioner of Internal Eevenue may from time to time make regulations for the allowance of such of the stamps issued under STAMP DUTIES. 721 the pro ?isions of this act as may have been spoiled or rendered useless or unfit for the purpose intended, or for which the owner may have no use, or which through mistake may have been impro- perly or unnecessarily used, or where the rates or duties represen- ted thereby have been paid in error or remitted; and such allowance shall be made either by giving other stamps in lieu of the stamps so allowed for, or by repaying the amount or value, after deducting therefrom, in case of repayment, the sum of five per centum to the owner thereof Sec. 103. And be it further enacted, That it shall be lawful for any person to present to the Commissioner of Internal Kevenue any instrument, and require his opinion whether or not the same is chargeable with any duty ; and if the said commissioner shall be of opinion that such instrument is not chargeable with any stamp duty, it shall be lawful for him, and he is hereby required to impress thereon a particular stamp, to be provided for that purpose, with such word or words or device thereon as he shall judge pro- per, which shall signify and denote that such instrument is not chargeable with an^v stamp duty ; and every such instrument upon which the said stamp shall be impressed, shall be deemed to be not so chargeable, and shall be received in evidence in all courts of law or equity, notwithstanding any objections made to *r.~ the same, as being chargeable with stamp duty, and not stamped to denote the same. SCHEDULE B. 1 STAMP DUTIES. DUTT. Agreement or contract, other than those specified in this schedule ; any appraisement of value or damage, or for any other purpose ; for every sheet or piece of paper upon which cither of the same shall be written, five cents, 5 Bank check, draft, or order for the payment of any sum of money exceeding twenty dollars drawn upon any bank, trust company, or any person or persons, companies or cor- porations, at sight or on demand, two cents, 2 Bill of exchange (inland), draft, or order for the payment of any sum of money exceeding twenty and not exceeding one hundred dollars, otherwise than at sight or on demand, or any promissory note, except bank notes issued for circu- lation, for a sum exceeding twenty and not exceeding one hundred dollars, five cents, 5 Exceeding one hundred dollars and not exceeding two hundred dollars, ten cents, 10 Exceeding two hundred dollars and not exceeding three hundred and fifty dollars, fifteen cents, . . , 15 1 Tho whole Schedule is printed for convenient reference. Edw. 91 722 BILLS OF EXCHANGE AND PROMISSORY NOTES. Exceeding three hundred and fifty dollars and not ex- bT;TT - ceeding five hundred dollars, twenty cents, 20 Exceeding five hundred dollars and not exceeding seven hundred and fifty dollars, thirty cents, 30 Exceeding seven hundred and fifty dollars and not ex- ceeding one thousand dollars, forty cents, 40 Exceeding one thousand dollars and not exceeding fifteen hundred dollars, sixty cents, 60 Exceeding fifteen hundred dollars and not exceeding twenty -five hundred dollars, one dollar, $1 00 Exceeding twenty-five hundred dollars and not exceeding five thousand dollars, one dollar and fifty cents, 1 50 And for every twenty-five hundred dollars or part of twenty-five hundred dollars in excess of five thousand dol- lars, one dollar, 1 00 Bills of exchange (foreign) or letter of credit drawn in, but payable out of, the United States, if drawn singly, or otherwise than in a set of three or more, according to the custom of merchants and bankers, shall pay the same rates of duty as inland bills of exchange or promissory notes. If drawn in sets of three or more : for every bill of each set where the sum made payable shall not exceed one hundred *nn and fifty dollars, or the equivalent thereof in any foreign currency in which such bills may be ex- pressed, according to the standard of value fixed by the United States, three cents, 3 Above one hundred and fifty dollars and not above two hundred and fifty dollars, five cents, 5 Above two hundred and fifty dollars and not above five hnndred dollars, ten cents, 10 Above five hundred dollars and not above a thousand dollars, fifteen cents, 15 Above one thousand dollars and not above one thousand five hundred dollars, twenty cents, 20 Above one thousand five hundred dollars and not above two thousand two hundred and fifty dollars, thirty cents, . . 30 Above two thousand two hundred and fifty dollars and not above three thousand five hundred dollars, fifty cents,. 50 Above three thousand five hundred dollars and not above five thousand dollars, seventy cents, 70 Above five thousand dollars and not above seven thou- sand five hundred dollars, one dollar, 1 00 And for every two thousand five hundred dollars or part thereof in excess of seven thousand five hundred dollars, thirty cents, 30 Bill of lading or receipt (other than charter party) for any goods/ merchandise, or effects, to be exported from a port or or place in the U. S. to any foreign port or place, ten cents, 10 STAMP DUTIES. 723 Express — For every receipt or stamp issued, or issued by DUTT « any express company, or carrier, or person whose occupation it is to act as such, for all boxes, bales, packages, articles, or bundles, for the transportation of which such company, car- rier, or person, shall receive a compensation of not over twenty-five cents, one cent, 1 "When such compensation exceeds the sum of twenty- five cents, and not over one dollar, two cents, 2 "When one or more packages are sent to the same address at the same time, the compensation therefor exceeds one dollar, five cents, 5 Bond — For indemnifying any person who shall have be- come bound or engaged as surety for the payment of any sum of money, or for the due execution or performance of the duties of any office, and to account for money received by virtue thereof, fifty cents, 50 Bond of any description other than such as may „„* be required in legal proceedings, and such as are not otherwise charged in this schedule, twenty-five cents, 25 Certificate of stock in any incorporated company, twenty- five cents, 25 Certificate of profits, or any certificate or memorandum showing an interest in the property or accumulations of any incorporated company, if for a sum not less than ten dol- lars and not exceeding fifty dollars, ten cents, 10 For a sum exceeding fifty dollars, twenty-five cents, .... 25 Certificate — Any certificate of damage, or otherwise, and all other certificates or documents issued by any port war- den, marine surveyor, or other person acting as such, twenty- five cents, 25 Certificate of deposit of any sum of money in any bank or trust company, or with any banker or person acting as such — If for a sum not exceeding one hundred dollars, two cents, 2 For a sum exceeding one hundred dollars, five cents, ... 5 Certificate of any other description than those specified, ten cents, 10 Charter Party — Contract or agreement for the charter of any ship or vessel, or steamer, or any letter, memorandum, or other writing between the captain, master or owner, or person acting as agent of any ship or vessel, or steamer, and any other person or persons for or relating to the charter of such ship or vessel, or steamer, if the registered tonnage of such ship or vessel, or steamer, does not exceed three hundred tons, three dollars, 3 00 Exceeding three hundred tons, and not exceeding six hundred tons, five dollars, 5 00 Exceeding nix hundred tons, ten dollars, 10 00 724 BILLS OF EXCHANGE AND PROMISSORY NOTES. Contract — Broker's note, or memorandum of sale of any DDTT « goods or merchandise, stocks, bonds, exchange, notes of hand, real estate, or property of any kind or description issued by brokers or persons acting as such, ten cents, .... 10 Conveyance — Deed, instrument, or writing, whereby any lands, tenements, or other realty sold shall be granted, assigned, transferred, or otherwise conveyed to, or vested in, the purchaser or purchasers, or any other person or persons by his, her, or their direction, when the consideration or value exceeds one hundred dollars, and does not exceed five hundred dollars, fifty cents, 50 When the consideration exceeds five hundred dollars, and does not exceed one thousand dollars, one dollar, $1 00 Exceeding one thousand dollars and not exceeding two thousand five hundred dollars, two dollars. 2 00 Exceeding two thousand five [thousand] dollars and not exceeding five thousand dollars five dollars, 5 00 Exceeding five thousand dollars and not exceeding ten thousand dollars, ten dollars, 10 00 Exceeding ten thousand dollars and not exceeding twenty thousand dollars, twenty dollars, 20 00 And for every additional ten thousand dollars or frac- tional part thereof, in excess of twenty thousand dollars, twenty dollars, 20 00 ,jno Despatch, Telegraphic — Any despatch or mes- sage, the charge for which, for the first ten words, does not exceed twenty cents, one cent, 1 When the charge for the first ten words exceeds twenty cents, three cents, 8 Entry of any goods, wares, or merchandise at any custom- house, either for consumption or warehousing, not exceed- ing one hundred dollars in value, twenty-five cents, 25 Exceeding one hundred dollars and not exceeding five hundred dollars in value, fifty cents, 50 Exceeding five hundred dollars in value, one dollar, ... 1 00 Entry for the withdrawal of any goods or merchandise from bonded warehouse, fifty cents, 50 Insurance, (Life,) — Policy of insurance, or other instru- ment, by whatever name the same shall be called, whereby any insurance shall be made upon any life or lives, when the amount insured shall not exceed one thousand dollars, twenty-five cents, 25 Exceeding one thousand and not exceeding five thousand dollars, fifty cents, 50 Exceeding live thousand dollars, one dollar, 1 00 Insurance, (Marine and Inland,) — Each policy of insu- rance or 'other instrument, by whatever name the same shall be called, by which insurance shall be made or renewed, STAMf DUTIES. 725 upon property of any description, whether against perils by DTITT - the sea or by fire, or other peril of any kind, made by any insurance company, or its agents, or by any other company or person, twenty-five cents, 25 Lease, agreement, memorandum, or contract for the hire, use or rent of any land, tenement, or portion thereof — If for a period of time not exceeding three years, fifty cents, 50 If for a period exceeding three years, one dollar, $1 00 Manifest for custom house entry or clearance of the cargo of any ship, vessel, or steamer for a foreign port — If the registered tonnage of such ship, vessel, or steamer does not exceed three hundred tons, one dollar , 1 00 Exceeding three hundred tons, and not exceeding six hundred tons, three dollars, 3 00 Exceeding six hundred tons, five dollars, 5 00 Mortgage of lands, estate, or property, real or personal, heritable or movable whatsoever, where the same shall be made as a security for the payment of any definite and cer- tain sum of money lent at the time or previously due and owing or forborne to be paid, being payable : also any con- veyance of any lands, estate, or property whatsoever, in trust to be sold or otherwise converted into money, which shall be intended only as security, and shall be redeemable before the sale or other disposal thereof, either by express stipulation or otherwise ; or any personal bond given 7fi q as security for the payment of any definite or cer- tain sum of money exceeding one hundred dollars, and not exceeding five hundred dollars, fifty cents, 50 Exceeding five hundred dollars, and not exceeding one thousand dollars, one dollar, 1 00 Exceeding one thousand dollars, and not exceeding two thousand five hundred dollars, two dollars, 2 00 Exceeding two thousand five hundred dollars, and not exceeding five thousand dollars, five dollars, 5 00 Exceeding five thousand dollars, and not exceeding ten thousand dollars, ten dollars, 10 00 Exceeding ten thousand dollars, and not exceeding twen- ty thousand dollars, fifteen dollars, 15 00 And for every additional ten thousand dollars, or frac- tional part thereof, in excess of twenty thousand dollars, ten dollars, 10 00 Passage ticket, by any vessel from a port in the United States to a foreign port, if less than thirty dollars, fifty cents, 50 Exceeding thirty dollars, one dollar, 1 00 Power of attornev for the sale or transfer of any stock, bonds or scrip, or for the collection of any dividends or interests thereon, twenty-live cents, 25 726 BILLS OF EXCHANGE AND PROMISSORY NOTES. Power of attorney or proxy for voting at any election for DTrrr officers of any incorporated company or society, except re- ligious, charitable, or literary societies, or public cemeteries, ten cents, 1G Power of attorney to receive or collect rent, twenty-five cents, 25 Power of attorney to sell and convey real estate, or to rent or lease the same, or to perform any and all other acts not hereinbefore specified, one dollar, $1 00 Probate of will, or letters of administration : Where the estate and effects for or in respect of which such probate or letters of administration applied for shall be sworn or de- clared not to exceed the value of two thousand five hun- dred dollars, fifty cents, . . . . 50 To exceed two thousand five hundred dollars, and not exceeding five thousand dollars, one dollar, 1 00 To exceed five thousand dollars and not exceeding twen- ty thousand dollars, two dollars, 2 00 To exceed twenty thousand dollars and not exceeding fifty thousand dollars, five dollars, 5 00 To exceed fifty thousand dollars and not exceeding one hundred thousand dollars, ten dollars, 10 00 Exceeding one hundred thousand dollars and not exceed- ing one hundred and fifty thousand dollars, twenty dol- lars, 20 00 And for every additional fifty thousand dollars or frac- tional part thereof, ten dollars, 10 00 7~q Protest. — Upon the protest of every note, bill of exchange, acceptance, check or draft, or any ma- rine protest, whether protested by a notary public or by any other officer who may be authorized by the law of any State or States to make such protest, twenty-five cents, 25 Warehouse Eeceipt for any goods, merchandise, or pro- perty of any kind held on storage in any public or private warehouse or yard, twenty-five cents, 25 Legal Documents : Writ or other original process by which any suit is commenced in any court of record, either law or equity, fifty cents, 50 Provided, That no writ, summons, or oilier process issued by a justice of the peace, or issued in any criminal or other suits com- menced by the United States or any state, shall be subject to the payment of stamp duties: and provided further, that the stamp duties imposed by the foregoing Schedule 15, on manifests, bills of lading, and passage tickets, shall not apply to steamboats or other vessels plying between ports of the United States and ports in British North America. / ST^MP DUTIES. 727 The following sections are from the act of December 25, 1862, being An act to amend an act entitled an act to provide internal revenue to support the Government and to pay interest on the public debt, approved July first, eighteen hundred and sixty-two. Sec. 3. And be it further enacted, That no instrument, document, writing or paper of any description, required by law to be stamped, shall be deemed or held invalid and of no effect, for the want of the particular kind or description of stamp designated for and denoting the duty charged on any such instrument, document, writing or paper, provided a legal stamp, or stamps, denoting a duty of equal amount, shall have been duly affixed and used thereon : Provided, That the provisions of this section shall not apply to any stamp appropriated to denote the duty charged on proprietary articles. Sec. 4. And be it further enacted, That all official instruments, documents, and papers issued or used by the officers of the United States Government shall be, and hereby are, exempted from duty. SEC. 5. And be it further enacted, That the ninety -fifth section of an act entitled " An act to provide internal revenue to support the Government and to pay interest on the public debt," approved July first, eighteen hundred and sixty-two, be so amended that no instrument, document, or paper made, signed or issued prior to the first day of March, Anno Domini, eighteen hundred and sixty-three, without being duly stamped or having thereon an adhesive stamp to denote the duty imposed thereon, shall, for that cause, be deemed invalid and of no effect : Provided, That no instrument, document, writing, or paper, required by law to be stamped, signed or issued, without being duly stamped prior to the day aforesaid, or any copy thereof, shall be admitted or used as evidence in any court until a legal stamp or stamps, denoting the amount of duty charged thereon, shall have been affixed »«-. thereto, or used thereon, and the initials of the person using or affixing the same, together with the date when the same is so used or affixed, shall have been placed thereon by such per- son. And the person desiring to use any such instrument, document, writing or paper, as evidence, or his agent or attorney, is authorized, in the presence of the court, to stamp the same as hereinbefore provided. And section twenty-four of an act entitled " An act increasing, temporarily, the duties on imports, and for other pur- poses," approved July fourteen, Anno Domini, eighteen hundred and sixty- two, is hereby repealed. Approved December 25, 1862. The sections that follow are from the act of Congress approved March 3d, 1863, entitled An act to amend an act entitled ' An act to provide internal revenue to support the government and pay interest 728 BILLS OP EXCHANGE AND PROMISSORY NOTES. on the public debt" approved Jidy first, eighteen hundred and sixty- two, and for other purposes : Sec. 6. And be it further enacted, That section one hundred and ten be and hereby is amended as follows : " Any memorandum, check, receipt, or other written or printed evidence of an amount of money to be paid on demand, or at a time designated, shall be considered as a piomissory note within the meaning of that section, and shall be stamped accordingly ; and that Schedule B, following said section, be and is hereby amended so that any inland bill of exchange, draft, or order for the payment of any sum of money exceeding twenty dollars, otherwise than at sight or on demand, and any promissory note shall (in lieu of the duties prescribed in Schedule B), have a stamp or stamps affixed thereon denoting a duty, upon every sum of two hundred dollars or any fractional part thereof, if payable on demand or at any time not exceeding thirty-three days including the grace from the date or sight, of one cent (01). If payable at any time not less than thirty-three days as afore- said, and not exceeding sixty-three days, including the grace, from date or sight, of two cents (02). If payable at any time not less than sixty-three days, as afore- said, and not exceeding ninety-three days, including the grace, from date or sight, of three cents (03). If payable at any time not less than ninety-three days, as afore- said, and not exceeding four months from date or sight and grace, of four cents (04). Y72 If payable at any time not less than four months, aa aforesaid, and not exceeding six months from date or sight or grace, of six cents (06). If payable at any time exceeding six months from date or sight and grace, of ten cents (10). And that Schedule B, following section one hundred and ten, be and is hereby further amended, so that the stamp duty on cer- tificates of any other description than those specified in said sche- dule, in lieu of ten cents as therein prescribed, shall be five cents (05). On 'passage tickets by any vessel from a port of the United States to a foreign port, costing thirty dollars or less, fifty cents (50). On any power of attorney for the sale or transfer of any scrip or certificate of profits or memorandum, showing an interest in the profits or accumulations of any corporation or association, if for a sum not exceeding fifty dollars, ten cents (10). On any policy of insurance or other instrument, by whatever name the same shall be called, by which insurance shall be made or renewed upon property of any description, whether against perils by sea or by fire, or other peril of any kind, made by any insurance company or its agents, or by any other company or per* / STAMP DUTIES. 729 Bon in which the premium or assessment ^ hall not exceed ten dollars, ten cents (10). On any bill of sale by which any ship or vessel, or any part thereof, shall be conveyed to or vested in any other person or per- sons when the consideration shall not exceed five hundred dollars, there shall be affixed a stamp or stamps denoting a duty of twenty- five cents (25). If the consideration exceeds five hundred and does not exceed one thousand dollars, the duty shall be fifty cents (50). If the consideration exceeds one thousand dollars, for each and every additional amount of one thousand dollars, or any fractional part thereof, in excess of one thousand dollars, the duty in addi- tion shall be fifty cents (50). On each and every assignment or transfer of a mortgage, lease, or policy of insurance, a stamp duty shall be paid equal to that imposed on the original instrument. Any power of attorney, conveyance, or document of any kind made, or purporting to be made, in any foreign country, to be used in the United States, shall pay the same duty as is required by law on similar instruments or documents when made or issued in the United States; and the party to whom the same is issued or by whom it is to be used, shall, before using the same, affix thereon the stamp or stamps indicating the duty required. Any mortgage or personal bond for the payment of money, or as security for the payment of any definite or certain sum of money, in lieu of the duties imposed as prescribed in Schedule B, following the one hundred and tenth section, shall have a stamp or stamps affixed thereon, denoting a duty upon every sum of two hundred dollars, or any fractional part thereof, of ten cents (10). No conveyance, deed, mortgage, or writing, whereby any lands, tenements, realty, or other propeily shall be sold, granted, assigned, or otherwise conveyed, or shall be made as security for the „„„ payment of any sum of money, shall be required to pay a stamp duty of more than the sum of one thousand dollars, any- thing to the contrary notwithstanding. No stamp duty shall be required on powers of attorney or any other paper relating to applications for bounties, arrearages of pay or pensions, or to the receipt thereof from time to time ; or indem- nity awarded for depredations and injuries by certain bands of Sioux Indians ; nor on any warrant of attorney accompanying a bond or note, when such bond or note shall have affixed thereto the stamp or stamps denoting the duty required ; and whenever any bond or note shall be secured by a mortgage, but. one stamp duty shall be required to be placed on such papers: Provided. That the stamp duty placed thereon is the highest rate required fir said instruments, or either of them; nor on certificates of the measurement or weight of animals, wood, coal, or other articles; nor on deposit notes to mutual insurance companies for insurance Edw. 02 730 BILLS OF EXCHANGE AND PROMISSORY NOTES. upon which policies subject to stamp duties have been or are t| be issued ; nor on any certificate of the record of a deed or othei instrument in writing, or of the acknowledgment or proof thereof by attesting witnesses. The duty or stamps required for transportation by express com- panies and others is hereby repealed, and such transportation shall be exempt from stamp duty. That the stamp duty on a contract or agreement for the chartei of any ship, or vessel, or steamer, as now provided for in Schedule B, or any letter, memorandum, or other writing between the cap- tain, master, or owner, or person acting as agent of any ship, or vessel, or steamer, and any other person or persons for or relating to the charter of such ship, or vessel, or steamer, if the registered tonnage of such ship, or vessel, or steamer does not exceed one hundred and fifty tons, shall be one dollar ($1). Exceeding one hundred and fifty tons and not exceeding three hundred tons, three dollars ($3). Exceeding three hundred tons and not exceeding six hundred tons, five dollars ($5). Exceeding six hundred tons, ten dollars ($10). Sec. 7. And be it further enacted, That the Commissioner of In- ternal Revenue be and he is hereby authorized to prescribe such method for the cancellation of stamps as a substitute for or in addition to the method now prescribed by law as he may deem expedient and effectual. And he is further authorized in hia 774 discretion to make the application of such method impera- tive upon the manufacturers of proprietary articles, and upon stamps of a nominal value exceeding twenty-five cents each. Sec. 16. And beit further enacted, That in any collection district ■where, in the judgment of the Commissioner of Internal Revenue, the facilities for the procurement and distribution of stamped vel- lum, parchment or paper, and adhesive stamps, are or shall be insufficient, the Commissioner, as aforesaid, is authorized to fur- nish, supply, and deliver to the collector of any such district a suitable quantity or amount of stamped vellum, parchment, or paper, and adhesive stamps, without prepayment therefor, and shall allow the highest rate of commissions to the collector allowed by law to any other parties purchasing the same, and may, in ad- vance, require of any such collector a bond, with sufficient sure- ties, to an amount equal to the value of any stamped vellum, parchment, or paper, and adhesive stamps which may be placed, in his hands and remain unaccounted for, conditioned for the faithful return, whenever so required, of all quantities or amounts undisposed of, and for the payment, monthly, of all quantities or amounts, sold or not, remaining on hand. And it shall be the duty of such collector to supply his deputies with, or sell to other parties within his district who may make applications therefor, stamped vellum, parchment, or paper, and adhesive stamps, upon COMMERCIAL CODE OF FRANCE. 731 the same terms allowed by law, or under the regulations of the Commissioner of Internal Eevenue, who is hereby authorized to make such other regulations, not inconsistent herewith, for the security of the United States and the better accommodation of the public in relation to the matters hereinbefore mentioned, as he may judge necessary and expedient: Provided, That no instru- ment, document, or paper made, signed, or issued prior to the first day of June, Anno Domini, eighteen hundred and sixty-three, with- out being duly stamped, or having thereon an adhesive stamp to denote the duty imposed thereon, shall, for that cause, be deemed invalid and of no effect : A nd provided, That no instrument, docu- ment, writing, or paper, required by law to be stamped, signed, or is- sued, without being duly stamped prior to the day aforesaid, or any copy thereof, shall be admitted or used as evidence in any court until a legal stamp, or stamps, denoting the amount of duty charged thereon, shall have been affixed thereto or used thereon, and the initials of the persons using or affixing the same, together with the date when the same is so used or affixed, shall have been placed thereon by such person. And the person desiring to use any such instrument, document, writing or paper, as evidence, or his agent or attorney is authorized, in the presence of the court, to stamp the same as heretofore provided by law. Sec. 37. And be it further enacted, That this act, except where otherwise indicated, shall take effect from and after its passage, and all acts and parts of acts repugnant to the provisions „~~ of this act be and the same are hereby repealed : Pro- vided, That the existing laws shall extend to and be in force, as modified, for the collection of the duties imposed by this act, for the prosecution and punishment of all offences, and for the reco- very, collection, distribution, and remission of all fines, penalties, and forfeitures, as fully and effectually as if every regulation, penalty, forfeiture, provision, clause, matter, and thing to tha effect, in the existing .laws contained, had been inserted in, and reenacted by this act. 732 BILLS OF EXCHANGE AND PROMISSORY NOTES. BOOK I. TITLE VIII. OF THE COMMERCIAL CODE OF FRANCE. — OF BILLS OF EXCHANGE, PROMISSORY NOTES, AND LIMITATION OF ACTIONS. SECTION I. OF BILLS OF EXCHANGE. Sec. 1. Of the Form of Bills of Exchange. Art. 110. The bill of exchange is drawn from one place on another place ; It is dated ; It specifies ; The sum to be paid ; The name of the person who is to pay the same ; The time when, and the place where, the payment is to be made; The value furnished, whether in money, in merchandise, in account, or in any other manner; It is drawn to the order of a third person, or to the order of the drawer himself; If drawn in sets of 1, 2, 3, 4, &c, it is so expressed. „„n Art. 111. A bill of exchange may be drawn upon one person, and payable at the domicile of a third. It may be drawn by the order and for the account of a third person. Art. 112. All bills of exchange, containing a fictitious name, quality, domi- cile, place where drawn, or where payable, are held to be only simple promises. Art. 113. The signature of a married or single woman, not a sole trader, to a bill of exchange, is equivalent, with respect to her, only to a simple promise. Art. 114. Bills of exchange signed by minors, not merchants, are void in respect to them, saving the rights of the respective parties, conformably to article 1312 of the Code Napoleon. 1 Sec. 2. Of Provision for Payment. Art. 115. Provisions ought to be made by the drawer, or by the person for whose account the bill of exchange is drawn ; but the drawer does not on that account cease to be personally liable. Art. 11G. There has been provision, if, when the bill of exchange becomes due, the person on whom it is drawn is indebted to the drawer, or to the person 1 The article referred to provides that when minors, interdicted persons, or married women, are admitted in these qualities to plead in bar to their engagements, the reimbursement of any money which may have been paid to their use, during their minority, interdiction or marriage, cannot be obtained, unless it bo proved that the sums paid have been beneficial to them. COMMERCIAL CODE OF FRANCE. 733 mi whose account it is drawn, in a sura at least equal to the amount of tha bill of exchange. Art. 117. The acceptance supposes or assumes provision; It is proof of it in regard to the indorsers; ' Whether the bill be accepted or not, the drawer solely is bound to prove, in case of denial, that those on whom the bill was drawn, had provision at tha maturity of the bill ; otherwise he is held responsible, although the protest may have been made after the fixed time. Sec. 3. Of the Acceptance. Art. 118. The drawer and indorsers of a bill of exchange, are joint and several sureties for the acceptance and payment of the bill at maturity. Art. 119. The refusal of acceptance is verified by an act which is called pro- test for non-acceptance. Art. 120. On the notification of protest for non-acceptance, the indorsers and the drawer are respectively bound to give security for the payment of the bill when due, or for reimbursement with expenses of protest and re-exchange. The security, whether for the drawer or indorser, is a joint obligation only with the person for whom the security is given. Art. 121. He who accepts a bill of exchange, contracts an obligation to pay the amount of it. The acceptor is not released from his acceptance, even though the „„„ drawer should have failed without his knowledge before the acceptance. Art. 122. The acceptance of a bill of exchange must be signed. It is expressed by the word accepted. It is dated, if the bill be at one or more days or months after sight And, in the latter case, the want of a date to the acceptance, renders the bill payable at the terra expressed in it, counting from its date. Art. 123. The acceptance of a bill of exchange, payable in another. place than that of the residence of the acceptor, must indicate the domicile where th after sight, one or more usances ) At one or more days ) one or more months [■ after date, one or more usances ) On a day fixed or determined. At or during a fair. Art. 130. A bill of exchange drawn at sight is payable on its presentment Art. 131. The maturity of a bill of exchange, At one or more days ) one or more months j- after sight, one or more usances ) Is determined by the date of the acceptance, or by that of the protest for non-acceptance. Art. 132. The usance is thirty days, which run from the day after the date of the bill. The months are according to the regulation of the Gregorian calendar. Art. 133. A bill of exchange payable at a fair, is at maturity on the evening preceding the day fixed for the closure of the fair, or the day of the fair, if it continue only one day. fj-Q Art. 134. If a bill of exchange fall due on a legal holiday, it is payable the preceding evening. Art. 135. All days of grace, of favor, of usage, or local custom, for the pay- ment of bills of exchange are abolished. Sec. 6. Of the Indorsement. Art. 136. The property in a bill of exchange is transferred by means of endorsement. Art. 137. The indorsement is dated. It expresses the value received. It mentions the name of the person to whose order it is payable. Art. 138. If the indorsement be not conformable to the regulations of the preceding article, it does not affect the transfer of the bill; it operates only as a simple power of attorney. Art. 139. It is forbidden to antedate the indorsements, under the penalty attached to forgery. • Sec. 7. Of Liability. Art. 140. All those who have signed, accepted, or indorsed, a bill of ex change, are jointly and severally bound as sureties to the holder. Sec. 8. Of the Guaranty. Art. 141. The payment of a bill of exchange, independently of the accep- tance and the indorsement, may be secured by a written guaranty. Art. 142. This guaranty is given by a third person, on the bill itself, or in a separate instrument of writing. The person thus becoming guarantee, is jointly and severally bound with tho drawers and indorsers, saving any different stipulations between the parties. COMMERCIAL CODE OF FEAXCE. 735 Sec. 9. Of the Payment. Art. 143. A bill of exchange must be paid in the kind of money mentioned in it Art. 144. He who pays a bill of exchange before it is due is responsible foi the validity of the payment. Art. 145. He who pays a bill of exchange when it is due, and without opposition, or notice of objection, is presumed to be validly discharged. Art. 146. The holder of a bill of exchange cannot be compelled to receive payment for the same before its maturity. Art. 147. The payment of a bill of exchange made on, the presentment of a second, third, fourth, &c, of the set, is valid, when the second, third, fourth, &c, expresses that the payment of one renders the others void. Art. 14S. He who pays a bill of exchange on the presentment of a second, third, fourth, &c., of a set, without retiring that on which his acceptance is written, is not discharged in regard to third persons holding that accepted bilL Art. 149. Objection to the payment of a bill is not admitted, except in case the bill be lost, or the holder has failed. Art. 150. In case of the loss of a bill of exchange not accepted, he to whom it belongs may prosecute for the payment on a second, third, fourth, &c. Art. 151. If the bill of exchange lost be accepted, the payment of it can- not be required on a second, third, fourth, &c, except by the order of the judge, and on giving security. Art. 152. If he who has lost a bill of exchange, whether accepted or not, cannot present a second, third, fourth, &c, of the set, he may demand the pay- ment of the bill lost, and obtain it, by order of a judge, on proving his property therein by his books, and giving security. Art. 153. In case of refusal of payment, on a demand made, in ,_,_q virtue of the two preceding articles, the owner of a bill of exchange lost, preserves all his rights by a regular protest. This protest must be made the next day after the bill lost became due. It must be notified to the drawer and indorsers, in the forms and within the time hereafter prescribed for the notice of protest. Art. 154. The owner of a bill of exchange, lost or mislaid, must, in order to procure a second, apply to his immediate indorser, who is bound to lend his name and assistance in an application to his own indorser, and so on, ascending from indorser to indorser, up. to the drawer of the bill. The owner of the bill lost or mislaid must bear the expense. Art. 155. The engagement of the surety mentioned in articles 151 and 152 is extinguished after the lapse of three years, if during that time there has been neither demand nor judicial prosecution. Art. 156. The payments made on account, as part of the amount of a bill of exchange, operate in discharge of the drawer and indorsers. The holder is bound to have the bill protested for the balance. Art. 157. The judges cannot grant any delay for the payment of a bill of exchange. Sec. 10. Of Payment scpra Protest, or by Intervention. Art. 158. A bill of exchange protested may be paid by any intervening per- Bon, for the honor of the drawer, or one of the indorsers. 736 BILLS OF EXCHANGE AND PKOMISSORY NOTES. The intervention and the payment must be stated in the certificate of protest, or at the bottom of it. Art. -159. He who pays a bill of exchange supra protest, is substituted in the rights of the holder, and bound to observe the same formalities. If the payment supra protest, be made for the account of the drawer, all the indorsers are discharged. If it be made for an indorser, all the subsequent in- dorsers are discharged. If there be a concurrence of several persons, in the payment of a bill of ex- change supra protest, he who effects the most towards the discharge is preferred. If he on whom a bill was originally drawn, and against whom protest for non-acceptance has been made, presents himself to pay it, he shall be preferred to all others. Sec. 11. Of the Eights axd Duties op the Holder. Art. 160. The holder of a bill of exchange drawn from the Continent and the European Islands, and payable in the European possessions of France, whether at sight, or at one or more days, months, or usances, after sight, must demand payment, or acceptance, within six months from its date, under the penalty of losing his remedy against the indorsers, and even against the drawer, if the latter has made provision for the payment of the bill in the hands of the drawee. A delay of eight months is allowed for the presentment of a bill drawn from the parts of the Levant, and northern coasts of Africa, on the European posses- sions of France, and reciprocally, from the Continent and European Islands, on the French establishments in the Levant, and northern coasts of Africa. A year is allowed for the presentment of bills drawn on the western coasts of Africa as far as, and including the Cape of Good Hope. „ Q A A year is also allowed for the presentment of bills of exchange drawn from the American continent and West India islands, on the European possessions of France, and reciprocally, from the European continent and islands, on the French possessions or establishments on the Western coasts of Africa, on the American continent and West India islands. Two years are allowed for the presentment of bills of exchange from the East India continent and islands, on the European possessions of France, and reciprocally from the European continent and islands, on the French possessions or establishments on the East Indian continent and islands. The delays above mentioned, of eight months, one year, and two years, are allowed to be doubled in time of maritime war. Art. 1G1. The holder of a bill of exchange must demand payment on the day of its becoming due. Art. 102. The refusal of payment must be verified, the next day after it became due, by a certificate, which is called a protest for non-payment. If this day be a legal holiday, the protest is made on the following day. Art. 163. The holder is not excused from making the protest for non-pay- ment, neither by the protest for non-acceptance, nor by the death or failure of the person on whom the bill is drawn. In case, of failure of the acceptor, before the bill becomes due, the holder may cause it to be protested, and have recourse to the other parties on the bill. COMMERCIAL CODE OF FRANCE. 737 Art. 164. The holder of a bill of exchange protested for non-payment, may pursue his remedy against the sureties, Either individually against the drawer and each of the indorsers, Or jointly against the indorsers and drawer. The same right exists for each of the indorsers in regard to the drawer, and all the preceding indorsers. Art. 165. If the holder would pursue his remedy individually against his immediate indorser, or the drawer, in case the bill came directly from him, he must give him notice of the protest, and in default of reimbursement, com- mences his suit against him within fifteen days from the date of the protest, if the said indorser or drawer reside within the distance of five myriameters (10 leagues, equal tc about 25 miles). This period of delay, with respect to the indorser or drawer, domiciled at a greater distance than five myriameters from the place where the bill of ex- change was payable, shall be increased one day for every two and a half myria- meters exceeding the five before mentioned. Art. 166. In case of the protest of bills of exchange drawn in France, and payable out of the continental territory of France in Europe, the remedy against the drawers and indorsers residing in France, must be pursued within the fol- lowing periods, to wit : Two months for bills payable in Corsica, in the island of Elba, or Capraja, in England, and in the countries bordering on France. Four months for those payable in the other states of Europe. Six months for those payable in the ports of the Levant and on _ the northern coast of Africa. A year for those payable on the western coasts of Africa, as far as, and in- cluding the Cape of Good Hope, and in the West Indies. Two years for those payable in the East Indies. These periods of delay are allowed in the same proportions, for pursuing the remedy against the drawers and indorsers residing in the French possessions situated out of Europe. The above mentioned delays, of six months, a year, and two years, are allowed to be doubled in time of maritime war. Art. 167. If the holder pursue his remedy against the indorsers and drawer jointly, he is allowed, with respect to each of them, the period of delay deter- mined by the preceding articles. Each of the indorsers has the right of pursuing the same remedy, either in- dividually or jointly, within the same period of delay. In respect to them, the time allowed begins to run from the day after the Bervice of judicial citation. Art. 168. After the expiration of the above mentioned periods of delay, For the presentment of a bill of exchange at sight, or at one or more days, or months, or usances, after sight, For the protest of non-payment, For the action against the sureties, The holder of a bill of exchange is barred of all lights against the- indorsers. Art. 169. The indorsers are equally barred from all remedy against prior Edw. 93 738 BILLS OF EXCHANGE AND PKOiHSSORT NOTES. indorsers, after the expiration of the above periods of delay, each as it respects himself. Art. 170. The same exception to the right of action of the hclder and the indorsers is allowed with respect to the drawer himself, if the latter prove that provision was made for the payment of the bill at its maturity. The holder in this case preserves his right of action only against the person on whom the bill was drawn. Art. 171. The effect of the exception or bar to the right of action pro- nounced in the three preceding articles, ceases in favor of the holder against the drawer, or against any of the indorsers who, after the expiration of the periods of delay fixed for the protest, the notice of protest, or the commence- ment of the suit, has received in account, as set-off, or otherwise, the funds destined for the payment of the bill of exchange. Art. 172. Independently of the formalities prescribed for pursuing the remedy against the sureties, the holder of a bill of exchange protested for non- payment, may, by obtaining the permission of the judge, attach conservatively the personal property of the drawer, acceptors and indorsers. Sec. 12. Of Protests. Art. 173. The protest for non-acceptance, or non-payment, is made by two notaries, or by one notary and two witnesses, or by a bailiff and two wit- nesses. The protest must be made, At the domicile of the person on whom the bill was drawn, or at his last known place of residence ; At the domicile of the person mentioned in the bill of exchange, who is to pay it in case of need ; At the domicile of the acceptor supra protest. The whole is a single instrument of writing. ^ RC) In case of false indication of domicile, the protest is preceded by a "' certificate of perquisition or inquiry. Art. 174. The protest contains, The literal copy of the bill of exchange, the acceptance, indorsements, and directions therein mentioned ; The demand of payment of the bill of exchange. It declares the presence or absence of the person who ought to pay it. The motives of refusing payment, and the inability or refusal to sign. Art. 175. No act on the part of the holder of the bill can supply the place of the protest, except in the cases provided for by article 150, and following, concerning the loss of a bill of exchange. Art. 17G. The notaries and bailiffs are bound, under the penalty of loss of office, and of costs and damages to the parties, to take an exact copy of the protests, and to transcribe them at length, day by day, and in the order of the dates, in a particular register, marked and certified, and kept in the forms pre- ecribed for books of record. Sec. 13. Of Re-exchange. Art. 177. Re-exchange results from the act of redrawing. Art. 178. Redrawing is when the holder of a bill protested draws another COMMERCIAL CODE OF FKAXCE. 739 bill on the drawer, or one or more of the indorsers, of the former bill, to reimburse himself for the principal of the bill protested, his expenses, and the new ex- change which he pays. Art. 179. Re-exchange is regulated, with respect to the drawer, by the current rate of exchange at the place where the bill was payable, on the place whence it was drawn. It is regulated with respect to the indorsers, by the rate of exchange at the place where the bill has been remitted or negotiated by them, on the placo where the reimbursement is to be effected. Art. 180. The bill redrawn is accompanied by the return account. Art. 181. The return account contains, The amount of the bill protested ; The expenses of protest, and other lawful charges, such as banker's commis- sion, brokerage, stamp duties, and postage of letters. It mentions the name of the person on whom the bill for reimbursement is drawn, and the rate of exchange at which it is negotiated. It is certified by an exchange agent. In places where there are no exchange agents, it is certified by two merchants. It is accompanied with the bill of exchange protested, the protest, or a certi- fied copy of it. In case the bill for reimbursement be drawn on one of the indorsers, it is accompanied besides with a certificate attesting the course of exchange at the place where the bill protested was payable, on the place whence it was drawn. Art. 182. There can be made only one return account on the ^„ same bill of exchange. This return account is reimbursed from indorser to indorser, and finally by the drawer. Art. 183. The re-exchanges cannot be accumulated. Each indorser, as well as the drawer, is charged with only one. Art. 184. Interest on the principal of the bill of exchange protested for non- payment, is due from the date of the protest. Art. 185. Interest on the expenses of protest, re-exchange, and other law- ful charges, is due only from the day of judicial demand. Art. 186. No re-exchange is due, if the return account be not accompanied with the certificates of an exchange agent, or of merchants, as prescribed in article 181. SECTION II. OF PROMISSORY NOTES. Art. 187. All the provisions relative to bills of exchange, and concerning, The maturity of the bill, The indorsement, The joint and several responsibility, The guaranty, The payment, The payment supra protest, The protest, The duties and rights of the holder, The re-exchange, or expenses, Are applicable to promissory notes without prejudice to the regulations rcla- 740 BILLS OF EXCHANGE AND PKOMISSORY NOTES. tive to the cases provided for by articles 636, 637 and 638 of title 2, book IV. Art. 188. Promissory notes are dated. They mention, The sum to be paid, The name of the person to whose order they are made, The time of paj^ment, The value received, -whether in money, in merchandise, on account or in any other manner. SECTION III. OF LIMITATIONS OF ACTIONS. Art. 189. All actions relative to bills of exchange and promissory notes, signed by merchants, traders or bankers, or for commercial transactions, are „ limited to five years, counting from the day of the protest, or from that of the last judicial proceeding, if there has been no judgment, or if the debt has not been acknowledged by a separate instrument in writing. Nevertheless, persons presumed to be debtors shall be bound, if required, to declare under oath, that they are no longer indebted ; and their widows, heira or assigns, that they verily believe that nothing remains due. INDEX. THE REFERENCES ARE TO THE MARGINAL PAGES. A. ABSCONDING, by maker of a note, demand, 159, 160. by the drawee of a bill, 380, 381. presentment where maker or acceptor lias absconded, 484-486. diligence to find address of party, sufficient, when, 648, 649. ABSENCE, of maker of note from the state. 159. 160, 485. or from his residence, 159, 160. in a case of guaranty, 236, 237. ACCEPTANCE, when qualified, effect of, 142-145, 383, 428, 429. contract of, 405. duty of drawee to accept, not a legal duty, 405, 406. of checks by certifying them, 40 G. when a written promise is an, 407, 408. by parol, when may be, 409. by a written promise, 409. statutes of New York on the subject, 409, 410. design and requirements of, 410—115. authority to draw by letter, an acceptance when, 413, 414. collateral acceptances, 407-413, 414, 415. an agreement to accept, 414, 41 5. what drafts deemed accepted, 416. destruction of bill by drawee, or refusal to return, 268, 417, 418. general acceptance, 418. what it admits, 433. holder may if ho chooses take a qualified acceptance, 419. effect of conditional acceptances, 419-421. acceptance how construed, 421, 422. of bills drawn against consignments of goods, 422-424. not to bo varied by parol, 424, 425. when may be so varied, 426. to pay at another place, effect of, 426, 427. rule of pleading, where bills and notes aro payable at a particular place, 427, 428. taking qualified acceptance, effect of on indorscr and drawer, 428-430. acceptor primarily liable, like maker of a note, 4:i0— 432. how discharged, 561. must pay the party having the title, 132*484. 742 INDEX ACCEPTANCE— Continued. acceptance completed by delivery, 434. canceling by mistake, 434. how waived, and how released, 435-437. alteration of and its effect, 438. terms of, cannot be varied by parol, 313. conditional delivery, may be, note, 313, S14. consideration may be inquired into, when, 311, 314. for accommodation, liability of acceptor, 315, 316. may be used as a security for advances, note, 224. to pay at a particular place, presentment, 399. • the acceptor cannot inquire into consideration between the drawer and payee, &c, note, 430. for accommodation, presumed to be general, 320. cannot be used after acceptor's death, note, 323. as a gift, not valid as between whom, 324-326. made under duress, fraud, &c, 325, 32G. given on an executory contract, note, 329. given on a condition or promise not fulfilled, 335. given on illegal contracts, when void, 336-338, 339, 340. contracts growing out of wagers, 341, 367-370. in restraint of trade or marriage, 342-344. given on a conspiracy against trade, 344. to prevent competition at auction sales, 344. secretly giving a preference on composition with creditors, 345, 346. by banking associations on time, illegal, 347, 348. usuriously given, void, 349, 350. or in renewal of usurious securities, 351, 352, 354. when acceptor represents the bill to be business paper, 353, 354. given on stock -jobbing contracts, 370. given on prohibited contracts, valid in whose favor, 370, 371. remedy when given for accommodation, 373-377. not necessary to bind the drawee, in what cases, 379, 380. may make bill payable at a bank in same city, note, 384. but not in another city, 383. discharged under insolvent or bankrupt laws, when, 385, 386. a simple acceptance is an engagement to pay as directed by bill, 405. the acceptor stands in relation to payee as does the maker of a note, 405. is not answerable on the bill till he accepts, 405. ought to accept, in what cases, 405, 406. in the case of a check, drawn by a customer on bank with funds, 406. the draft or check is not an assignment of the fund, text and note, 406. money deposited in bank, vests in the bank, note, 406. of, or certifying a customer's check, its effect, 406. a savings bank not bound to pay unless its rules are complied with, note, 406. the act of an officer certifying his own check, note, 407. an unconditional promise in writing to accept, effect of, 407, 403. becomes a virtual acceptance, when, 407, 408. a promise to pay a bill under law merchant, 408, 409. of a 'foreign bill may be by parol under commercial law, 408, 409. of inland bill in England, 408. / IXDEX. 743 ACCEPTAXCE— Continued. of a bill not yet drawn, not by parol, when, 409. regulated by statute in this and in other states, 409, 410. See Promissory Notes, statutes in respect to. cannot be verbal, must be in writing, 411. mode of making in writing, 411. by letter of credit, when, 411, 412, 413, 414. not by a conditional promise, note, 412. action on breach of promise to accept, 413. difference between rule here and in England, 413, 414. quere, whether the doctrine be applicable to drafts after sight, 414. must be consideration of promise to accept, 415. an offer to accept or pay, not acceded to, 415, 41 G. the drawing of a draft on oneself is an acceptance, 416. 80 where one partner draws on his firm, 416. or where one officer draws on another of same corporation, 416, 417. such draft may be treated as a note, note, 417. refusal to return bill treated as an acceptance, 417, 418. not the same thing as, 417, 418. deemed general, unless specially limited, 418, 419. made on a condition, becomes absolute, when, 419. holder not bound to take conditional acceptance, 419. cases illustrating effect of conditional acceptances, 419-421. on a conditional understanding, with security, note, 419. when the draft is payable in goods, or out of a fund, 420, 421. pleadings in suit on, and on like notes, 420. 421. construed like other writings, 421, 422. where bills are drawn on consignments, 422, 423. with bill of lading attached, 422-424. surrender on payment, of a pledge of spurious stock, note, 423. right of borrower, where a larger note pledged for payment of a smaller is paid, note, 423, 424. rights of parties giving or taking collaterals, text and note, 424, 425. cannot be varied by parol evidence, 424, 425. when verbal and valid, it may, 426. acceptance of bill left blank as to amount, text and nolo, 425, 426. acceptance payable at another place, 426, 427. at a bank in same place, note, 426. allegations in suit against acceptor, or maker of note, 427. against indorser, 428. holder must not take qualified acceptance, 428-130. incurs what risk by doing so, 428—130. by one of a firm in its name after dissolution, note, 430. binds the firm under what circumstances, note, 430. the acceptor not being a party to it, cannot iuterposo a breach of agreement between drawer and payee, note, 430. admits what relation between acceptor and drawer, 430, 431. for accommodation, the acceptor is surety for whom, 431. not a surety as to third persons, 431. rights of bona fide holder of paper, 4:; I . 744 INDEX. ACCEPTANCE— ConiirmeA. of party taking with notice, 431, 432. acceptor must not pay party in possession without title, 432. effect of forgery of payee's name on bill, 432, 433. or of a fictitious name as payee. 433. admits drawer's signature, not payee's indorsement, 433. the acceptor estopped from denying his admission, when, 433. may be recalled, or erased, till what time, 434. erasures made by mistake, 434. payment by acceptor by mistake, 434, 435. the holder may discharge acceptor, verbally in what way, 435, 436. in general, the discharge must be on a consideration, 435, 436, 437. modes and manner of discharge, 43G, 437. of an executory contract, 437. release of all indebtedness, all debts, or existing demands, 437. cannot be made by parol, when, 437. by surrender, or by destruction, when, note, 437. torn in two pieces, picked up and negotiated afterwards, note, 437, 438 discounting a bill before its acceptance, note, 436. a material alteration cancels the bill, when, 438. when drawn with carelessness, note, 438. parties liable for original amount, note, 438. ACCEPTANCE SUPRA PROTEST, for honor, 438-444. nature of the contract, 43S. for the honor of an indorser, 438, 439. for the honor of the drawer, 439. what party paying for honor must show, 439. action against acceptor for honor, 439, 440. acceptance for the honor of all the parties, 440, 441. duty of acceptor to notify, 441. demand must be made on the drawee, 441, 442. holder not obliged to take, 443. his duty if he does take, 443. ACCIDENT, unavoidable, excuses demand, when, 484, 486. must be such as to prevent demand, 492, 493. ACCOMMODATION BILLS AND NOTES. want of consideration in, between what parties, 315-324. maker of accommodation notes, 315, 316. acceptor of accommodation bills, 315, 316-320. indorser of, 316-320. remedy and relation of parties to, 373-377. acceptor, when liable in case of diversion, 431, 432. delivered on usurious contracts, 352. bona fide purchaser of, 370. accommodated drawer or indorser not entitled to notice, 453, 454, 638. payment by acceptor of, its effect, 532, 533. defense, how alleged and proved, 678, 679, 688. have no legal inception till negotiated for value, 323, 352-354. liability of parties to, when made for a special purpose, 316-323. ' when made for a general accommodation, 316, 319, ::i:;. parties incur usual liabilities, 431, 432. I2TDEX. 745 • ACCOMMODATION" BILLS AND NOTES— Continued. parties to, liable to bona fide holder for value, 316. who is a bona fide holder, 316-320, 431, 432. must take the paper before due and in good faith, 371, 432. what is giving value for, 319-324. why protected, reason of rule, 372, between themselves, rights of parties to, 373-377. not liable on, if negotiated usuriously, 323, 352-354. nor if negotiated with notice, after the death of party making, 323. are liable on, if they represent the paper to be business paper, note, 350. 353, 324, 325. surety drawer of accommodation bill, his liability, 375, 376, 534, 535. payment by parties to, effect of, 532-535. effect of payment by party accommodated on the negotiability of the paper, 564, 565. the holder for a precedent debt, may recover on, when, 316-323, 678. See Consideration, want of. acceptor, drawer and indorsers, effect of payment by, 532-534, 535. their remedies against party accommodated, 373-377. when not on the paper itself, 374, 532, 533. ground of the action, 374, 532, 533. payment of the paper, gives the right of action, 374, 375. action not delayed by holding collaterals, 375. ■ in general acceptor discharged only by release or payment, 564. ACCORD and satisfaction, what is not, 579. what is an, and when executory, 5S0, ACCOUNT, directions in relation to, in bill, 172. ACKNOWLEDGMENT of liability, an admission of notice, when, 653-655. must be unequivocal, 654, 655. ACTION ON A BILL OR NOTE, by owner, 251. by trustee, when, 252, 669. by whom, 293, 564-668. on accommodation paper by parties to, 315-324. party accommodated has no action on, 315-324. nor in general has the party accommodating, 373-376. by payee, 659, 665. against acceptor, 672, 673. against drawer or indorser, 674-676. by an indorsee, 678. See Trover, Equity, Bona fide holder, Pleadings. ADDRESS, in a bill of exchange, 173,174,381. of letters enclosing notice, how made, 608, 610. in case of need, 175. presentment according to, 380, 381, 479-482, 496-496- ADMINISTRATORS AND EXECUTORS, as parties to notes or bills, 18-801. indorsement by, 247. Seo Executors and Administrators. ADMISSIONS OF LIABILITY by drawer or indorser, 654, 655. ADVERTISEMENT, of lost note or bill, 308-310. of dissolution of partnership, 113-117. ADVICE, words of, 172. Edw. 04 - 746. INDEX. AGENT, no one is presumed to act as, 80. should sign as agent, 81-83. rule as to negotiable paper, 82-84. general agent, 87, 88. must follow his authority, 84-87. his appointment, 85-87. agency supposed to continue, 89. liable if he does not bind his principal, 90. who may act as such, 95, 96-103. revocation of authority, 113-115. partners bind each other as, 96-103. when acting apparently for the firm, 99, 100. but not when known to be acting personally, 101. scope of the business, 102. signing a note as, without naming or binding a principal, binds himself, 80-83. indorsing as agent for a corporation, 81, 82. as treasurer, or as cashier, 81, 82. it is enough, if agent disclose his principal, 82, 83, 84. and binds the principal, 80, 90. bound personally, if he do not, 90, 91. though agent contract in his own name, principal may interpose, note, 81. adding agent to signature, with authority, effect of, note, 83. mode of signing as agent, note, 83, 84. must follow special authority, 84. the acts of a general agent, though he act fraudulently, bind his principal, 85-87. powers of attorney, construction of, 86, 87 general words in, 86, 87. private instructions to agent, 87. agency shown by act3, &c, 87-89. adopted by principal, 88. how far banks are agents for their customers, 88. in the case of a note payable at bank, note, 88. cashier's authority as agent, note, 88, 249. principal, when and how far bound by the act of one who appears as his agent, 88, 89. public agents, rule as to, 90. effect of agent's adding initials of his name, when he acts without power, 90, 91. acting as, without authority, he is liable in some form, 91, 92. agency created by blank paper, 92-95. how appointed by a corporation, 96. • having an adverse interest, cannot bind his principal, note, 407. AGENCY, created by restrictive indorsement, 253. AGREEMENT, waiving protest, 633-635. to retire a bill, how construed, 534. ALABAMA, statutes of, relating to notes and bills, note, 275. damages allowed on bills under, 741. rate of interest in the state, note, 716. effect of usurious contract, note, 716. ALIEN, contracts with in time of war void, 338. INDEX. 747 ALIEN ENEMY, contracts with, void, 72-74. exceptions to the rule, 74. ALLONGE, what is, 267. ALTERATION of a bill or note avoids it, 95. immaterial when, 94, 95, 500, 502. material when, 500-502, 145, 146, 682. of an acceptance or note, effect of, 438. when note carelessly drawn, note to, 438. by adding new name to joint note, 681, 682. ALTERNATIVE, a promise to pay or do some other act, 138, 139, is not a negotiable note, 138. AMBIGUITY, in the form of instrument, effect of, 174. ANALOGY between note and bill, 390, 391. ANSWER, allegations in, 678. See Pleading. APPROPRIATION OF PAYMENTS, 554-565. in the case of accommodation bills, 564-567. ARKANSAS, statutes of, relating to notes and bills, note, 277. damages allowed on bills, 746. interest allowed in, note, 715. usury laws of the state, note, 715. ASSIGNEE of negotiable paper, his rights, 286, 287. does not possess rights of bona fide purchaser, 286. ASSIGNMENT, of choses in action, 55, 56. of bills and negotiable notes, 245. AT SIGHT, drafts drawn at, or after, must be presented, 386-388. analogy between drafts, and notes on demand, 390, 391. See Bills and Notes. laches in presenting, 389-395. See Sight Drafte. ATTESTING WITNESS, must be called, 175, 176. proving instrument by, 701-703. ATTORNEY in possession of note may demand payment, 628, 629. and give notice of dishonor, 629. ATTORNEY, POWER OF, how construed, 84-87. AU BESOIN, meaning and effect of, 175. AUTHORITY, of an agent, how construed, 84-88. parties contracting with agent, must examine his power, 85-87. of a partner, revoked by dissolution, 111-113. of a general and special agent, 84-89. special, how construed, 84-86. by a general power of attorney, construction of, 86, 87. when implied, or proved by circumstances, 87-89. to draw, or promise to accept, 407—116. an unconditional promise, an acceptance when, 407-409. a parol promise is not, 409. under our statutes, 410. by letter authorizing draft, 411, 412. to draw at ninety days, means after sight, 412, 238. promise to accept, valid when as a contract, 613, 415. becomes virtually an acceptance, when, 413, 414. 748 ho)ex. B. BANKS, how created, T5-71. restraining acts, effect of, "76, 77. cannot issue notes on time, 75-77. prohibited by a public statute, 347. who bound to take notice of, 347, 348. actual knowledge, 348. illegal contracts of, void, 349. cannot indorse for accommodation, 349. may transfer, 349. bound as an indorser, when, 349, 249. cannot interpose defense of usury, 349. authority of cashier, note, 88. to indorse, not implied, note, 88. effect of making a deposit iu bank, note, 88. right to pay customer's note, when, 88. may set off demand held by, against amount on deposit, when, 88. ratifying act of agent, note, 88. right to a lien on stock held by their debtor, note, 260. BANKS AND BANKING ASSOCIATIONS, as parties, 75-77. no power to issue time notes or bills, 347-349. BANK CHECKS, are drafts or bills of exchange, 57. always payable on demand, 58, 59. accepted, when and how, 406. should be presented, when, 396-398. See Checks. BANK NOTES, are promissory notes, 59, 60. in what sense money, 59. are treated the same as any other notes, 481. severed for transmission by mail, 482. BANKRUPTCY of maker or drawee, no excuse for not presenting for payment 486-488. BARON AND FEME, see married woman, 68-72. BEARER, who ia bearer in law, 130-132. BEGINNING, right of, at the trial, 687. BILL-BROKER, sale of bills by, and liability on sale, 291. the sale warrants existence and legality of bill, 289. BILL OF LADING, nature of, note, 61. in a sense negotiable, note, 61. BILLS AND NOTES, payable on demand, 156-160, 390-392. to charge indorser, demand must be made, when, 156, 390. must be made within a reasonable time, 156, 390. when two months and a half is unreasonable delay, 390. a note payable on demand with interest, not dishonored while interest ia paid, 156, 390. when interest accrues on, 713. what delay is unreasonable, 390-392. what circumstances will excuse delay, 392. sickness of holder, stato of war, 392. diligence in making demand, how decided, 391. INDEX. 749 BILLS AND NOTES— Continued. diligence treated as a question of fact in England, 391. and as one of law here, 391. statute rule in Massachusetts, sixty days, 266. See Presentment for Acceptance and Presentment for Payment. bills payable after date, need not be presented, 444. if presented and dishonored, duty of holder, 444, 445. See Promissory Notes and Bills. BILLS OF EXCHANGE, definition of, 41. use and origin of, 42-46. use of, in transmitting money and property, 42. circulation of, as compared with bank notes, 43. theory and legitimate use of, 43-45. in business, presumption as to, 43, 44. abuse of the bill, 44, 45. use in effecting exchanges, 45. are foreign and inland, 47 when foreign, 47-50. the states, how far foreign to each other, 47-50. how far sovereign, 47-49. general government, its constitution, 48. foreign bills must be protested, 50, 581-583, 461. are usually drawn in parts, 161-164. inland bills came into use, wheu, 50, 51. essential qualities and parts of, 124-176. fictitious parties to, 125-130. how made, 133, 134 must be payable in money, 134-138. must be for payment of money only, 138, 139. how framed when drawn in several parts, 161, 162. action on the part dishonored, 162, 163. transferable under custom of merchants, 245. bills void for usury, 349-367. See Promissory Notes and Bills. BLANK ACCEPTANCES, bind acceptor, 411. BLANK BILLS, may be filled up, 94, 95. BLANK INDORSEMENT. what is, and use of, 267-276. misuse of, not forgery, 94. BLANK PAPER, delivery of, creates an agency, 92. blank as to date, may bo filled up, 92, 151. blank indorsement, gives what authority, 92, 93. valid in hands of bona fide holder, though fraudulently issued, 93. blank signatures intrusted with clerk to be overwritten, 93. when valid, though used fraudulently, 93, 94. blank sets of exchange, used, note, 93, 162. misuse of blank paper, a forgery when, 94. principal bound notwithstanding, 94. holder's right to fill the blank, 94. how to be filled, 94, 95, 168. by inserting amount stated in margin, 152. 750 - INDEX. BLANK TAPER— Continued. discrepancy between margin and body, 152, 153. blank must be filled up, 153, 168. implied authority to fill up, 168. extent of authority, 168, 95. may insert name of payee, when, 95. must be inserted, and why, 132. BONA FIDE HOLDER, rights of, 56, 57. who is a holder in good faith, 316-320, 432, 259, 56, 57. a purchaser of negotiable bonds is, when, 60, 61. circumstances showing want of, 317-320. must show good faith, when, 318, 319. what disproves good faith, 688-691. and what is evidence of good faith, 309, 310. the usual test is that he gave value, 320, 687, 432. the indorsee has the rights of, when he takes from a bona fide holder, 312, 573 receiving with notice, is not good faith, 105, 319, 371, 372. chargeable with notice, when, 347, 348, 105, 371, 372, 688-691. is not bona fideholder, taking paper overdue, 371, 688, 56, 259-261. is not, taking the paper on a usurious loan, 372. presumption as to accommodation paper, 320. as to partnership paper, 99-105. receiving it with notice, 105. good faith is not presumed, in respect to a check drawn and also certified by the president of a bank, note, 407. Boxa Fide Holder, for value. what is giving value, 319-324, 350. parting with property or securities is, 321, 322. receiving it as collateral, is not, 321. discharging prior debt is, 321, 322, 350. exchange of notes, 322. taking paper on a present sale, 322, 323. receiving bills and notes for collection, to be credited in account, note, 322. receiving paper to secure a usurious loan, is not, 372. of accommodation paper, diverted, rights of, 316-323. must show that he is a bona fide holder for value, when, 318, 371-373. what facts let in a defense, 688-691, 259-261. rights of, to notes or bills rendered void by statute, 337. when chargeable with knowledge of their illegality, 347. or want of authority to bind principal, note, 407, 80-95. and when not, 347, 348. cannot recover on usurious paper, 349-351. but may recover against the parties who transfer it as, or ropresent it to be business paper, 350. on a purchase for an undervalue, 353. BONDS, when negotiable, 60, 61. of railroads, cities and villages, 60, 61. rights of purchaser of, in good faith, 60. liability of indorser of, 60. of corporations, 60, 61. ra not negotiable under statute, 20S-210. INDEX. 751 BONDS— Continued. of private persons transferable in certain states by indorsement, see note, 266-234. not sealed are valid as notes, 209. See Promissory Notes, Statutes in respect to. BRANCH BANKS, indorsement from one to another, 622, 623. BROKER, sale of bills by, incidents of, 2S9, 291. BURDEN of proof, 686-691. in respect to partnership paper, 100-104, 105. c. CALENDAR MONTH, time computed by, 512, 513. CALIFORNIA, statutes of, relating to bills and notes, 283. damages allowed on bills, 747. interest and usury laws of the state, note, 716. CANCELING indorsements, 275-27 7. acceptances by mistake, 434. by agreement and release, 435-437. CAPACITY of parties to a bill or note, 62-72. to transfer, 245-250. asserted by transfer, '289-291. CERTIFICATE, of a notary, is evidence of protest, 50, 463, 464, 467. the foreign bill must be protested, 50. the notary's certificate under seal proves its protest, 50, 463, 464. effect of the certificate under our statute, 463, 406, 585, 695. applicable to inland bills and notes and notaries of .the state, 463-467. must specify mode of service of notice, residence, &c, 464. does not prove dishonor of a note protested in another state, 465. must be drawn, in what manner, 466, 467. minute made by the notary on note or in his book, 466. when made by clerk of bank or of notary, 406. in what cases the certificate is not evidence, 467, 585, 695, when evidence on ground of notary's absence, death, &c, 467. received as evidence under statutes, in other states, note, 407, 5S5. the certificate is evidence of service of notice in most of the states, note, 585. See Non- Acceptance, and Notice of Dishonor. CERTIFICATE OF DEPOSIT, is a promissory note, 348. cannot be issued by a bank payable on time, 348. character of, 348. is in substance a promissory note, 348. negotiable with like effect, note, 348. CERTIFICATE OF STOCK, nature of instrument, 61. a muniment of title, 61. has no negotiable quality, 61. CHATTELS, warranty of title to, 188. CHECKS, what are, 396, 57, 58. to be presented, when, 396-398. acceptance of by banks, 400. checks proper are payable on demand, 58. no days of grace on, 58, 512. 752 INDEX. CHECKS— Continued. effect of post-dating a check, note, 151. payable at a future day, they become bills, 58. N. Y. Statute with reference to, note, 58. rule of the commercial law, 58. diligence in presenting, rule of, 58, 59. drawer's undertaking, 58, 59. are bills of exchange, 396. when foreign bills, 396. drawer of, when discharged, 396, 397. by delay in presenting, when, 396-398. presentment when made to charge indorser, text and note, 398. the day after date or receipt of, when, 398. sufficient if deposited in bank the day after, note, 398. and presented by the bank the day after that, note, 398 what delay excused, when negotiated, note, 398. in the case of a draft on demand, not negotiated, note, 398. rights of holder, when certified, 406. when drawn and certified by same man, note, 407. when not certified, note, 406. for money on Savings bank, rules of, to be respected, note, 406, 407. CHOSES IN ACTION, not transferable at common law, 54, 55. rule gradually modified, 55. at length changed, 55, 56. consideration of assignment must appear, 56. implied in transfer of negotiable paper, 56. the words " value received" are usual but not necessary, 56. a note is a chose in action, 72. CHRISTMAS DAY, not counted as a day of business, 529-532. CLERK, not authorized to sign notes, 88. may in certain cases, 88, 89. COLLATERAL contracts and memorandums, 145-148. COLLATERAL SECURITY, delivering notes and bills as, for usurious debt, 354. on prior debt, 445. general owner may give notice of dishonor, 628. demand must be made before sale, when, 482. the pledgee has no right to sell collateral paper, note, 482, except by special agreement, note, 482. COLLECTING AGENT, duty and liability of, 460, 402-404, 475, 476. COMMERCIAL CODE of France, 775-784. COMPARISON OP HANDWRITING, when permitted, 705-707. COMPOSITION WITH CREDITORS, notes giving a preference, 345, 346. when void, 345. COMPOUNDING with maker or acceptor, effect of, 575. CONDITION, annexed to acceptance, 419-421, 424. if verbal, cannot be proved, 424, 425. CONNECTICUT, statutes of, relating to notes and bills, 266, 267. damages allowed in, on bills, 737. rate of interest, laws of usury, note, 715. CONSIDERATION, of bills and notes implied, 56, 78, 315. in the inception of the paper, 186-189. INDEX. 753 CONSIDER ATIOX— Continued. pleaded and proved, when, 209-217. chapter on consideration, 311-377. may be inquired into, between what parties, 56, 57, 311, 312. presumptions iu favor of negotiable paper, 311, 312, 313. may be inquired into between original parties, 311, 312. need not be alleged or proved in first instance, 311. may be inquired into if plaintiff sues in behalf of one of the original or imme- diate parties, 311. or if plaintiff took the note after dishonor, 311. he is not presumed to have taken it after its dishonor, 311, 312. in action by payee on a check, may show it given, delivered conditionally, 311. may bo inquired into, if plaintiff knew it to be void when he took the paper, 312. void for fraud, failure, want or illegality of consideration, 312, 314. he takes in such cases with notice, 312. not so, if he takes from a bona fide holder, 312. what the law presumes iu favor of negotiable paper, 312. these presumptions yield to evidence, when, 312, 313. notes and bills cannot in general be varied or contradicted by parol 313-315. to show mistake in time of payment, 313, 148. may if the pleadings permit, note, 313. nor to show that the maker was not to pay his note, 313. or that it was not to be paid in a certain event, 313. or at a different place, 313. or that it was to be renewed, 313. or to vary terms of acceptance, 313. or to show that it was not to bo paid, while the interest was paid, 313. may show the delivery conditional, note, 313, 314. not given for value, note, 313. or the purpose, in conflict with tho terms, note, 313. or fraud, or failure, or illegality in consideration, 314, 312. cannot show that a sum was to be deducted as a set off, 313, 314. distinction between a conditional delivery, and a delivery or an agreement that the note shall become void, 314. note given for an interest in an estate, 314. on settlement of an account, 314. under a collateral understanding, 314. why and to what exteut the verbal agreement is excluded, 315. special consideration expressed, not to be varied, 315, 148. Want of Consideration, 315-327. accommodation paper, 315-324. in notes executed as a gift, 324, 325. in notes &c, given for a thing of no value, 326, 327. a consideration of tho essence of a contract, 3 1 ">. bills and notes no exception to tho rule, 315. # accommodation maker not liable to payee, 315. nor accommodation acceptor to drawer, 315, 316. paper so given or accepted is a mere loan of credit, 316 rule when given for a particular purpose, 31G. rule when for a general purpose, 31G. and the paper is taken with notice, 316. EDW. 95 754 INDEX. CONSIDERATION, Want of— Continued. accommodation indorser, his liability, 316, 31?. indorsement for special purpose, diversion from, 316, 317. taking with notice, 317. circumstances equivalent to notice, 317, 318. the question is one of good faith in party taking, 318. a diversion being shown, holder must show how he took it, 318. taking with notice, he is bound by the agreement, 319. presumption as to note due, in hands of maker, note, 318. a note made for a special purpose, should be returned, when, 319. void, if not returned, in whose hands, 319. rule, where it has affected the purpose designed, 319, 320. in substance, though not in form, 319, 320. what is parting with value for, note, 319, 321. presumed given for general accommodation, 320. general, may be used in any manner, 320. whether given by maker, drawer, indorser or acceptor, 320. holder must show good faith, and value given, when, 320. good faith, how shown, 320. proof of taking the paper mala fide, or with notice, 320. diverted, holder must show he took it in due course, 320, 321. and gave value for it, 321. after it is due, it is taken subject to equities, 321, note, 321. what is giving value, instance showing, 321, 322. when it must be, and how it may be shown, note, 321, 322. taking it in payment, is when and when not, 321, 322. taking it as collateral is not, 321. taking it on account is not, note, 322. rule in Massachusetts, note, 321, by exchange of notes, 322. for money in part, 322. for notes as security on a sale, 322, 323. on a loan of money, note, 322. in extinguishment of original demand, note, 322. a note for accommodation of payee has its inception, when, 323. cannot be negotiated after maker's death, note, 323. till negotiated, the accommodation party is not bound, note, 323. until then, it is a naked power, and death revokes it, note, 323. right of party taking accommodation paper to recover on, 323. notice when important, 323. taking it for less than its face, amount recoverable, 323, 324. amount recoverable on business papor, 324. on paper represented to be business paper, note, 324, 325. Gift, negotiable paper made as, 324. not valid between the parties, 324. it is only a promise to make the gift, 324, 325. which is valid only from delivery, 324, 325. the note of another may be transferred as a gift, 325. indorsed over as, the indorser is not liable, 325. the donee may recover on it against other parties, 325, cases illustrating the rule of law on s abject, notes, 325, 326. INDEX. 755 CONSIDERATION. Waxt of— Continued. Duress, may bo shown as a defense, when, 325, 326. intoxication, fraud, and false pretences, when, 325, 326. delivery without authority, when, 325, 326. note given for a chattel of no value, is void, 326. not so, if the chattel be of some value, 326. given for goods on a fraudulent sale, the goods should be ret lrned, 326. or should be tendered back, 326. the indorser cannot set up warranty, when, note, 326. fraud in the contract vitiates it, 326. but the defrauded party must disaffirm it, how, 326. when vendor rescinds, it is enough if he returns note on trial, note, 326. need not return a thing utterly valuless, 326. notes given as collateral to a usurious debt, must be demanded before suit, 327. n note for value received by another, made by administrator, is not valid, 327. so of a note given merely as a receipt, 327. *"" or in renewal of one without consideration, 327. or to a widow for a debt due her husband's representatives, 327. or to the mother of a child for an injury to it, 327. or on a merely moral or honorary obligation, 327. is valid, if given for a debt barred by statute, 327. party taking a valid note on a usurious loan, cannot recover, note, 327. nor on a mortgage so taken, note, 327. the usurious debt is not a consideration for note, 327. cases showing what are valid considerations, note, 327. Failure of Consideration, 328-336. entire failure of, instances, 328-333, 335. partial failure, 333-335. may be shown in reduction of damages, 333-335. an entire failure of consideration defeats a note or bill, 328. as where given for land, and the title fails, 328. where the deed is accompanied with a warranty, when, 328. effect of a partial failure of title, 328. under different kinds of warranty, 328. when an eviction must be shown, 328. when the maker is left to his remedy on his warranty, 328. recent cases illustrating the rule, note, 328. when given on an executory contract for land, 328, 329. when given for purchase money of goods, of no value, 329. if beneficial to purchaser, or a loss to seller, 329. when sold for another thing, but on a fair sale, 329, 330. an old case of the kind cited, 329, 330. notes and bills given on an executory contract, note, 329. must between the parties abide tho agreement, note, 329. not so in the hands of an indorsee, when, note, 329. given on a new contract, founded on one abandoned, note, 329, 330. caveat emptor, application of tho rulo, 330-832. rule of the civil law, 330. salo of a thing thai had ceased to exist, 330. or to which the title has failed, 330, 331. 756 INDEX. CONSIDERATION, Failure of— Continued. no defense that the article was of no value to purchaser, 331. or of merely speculative value, case of the mulberry trees, 331. of a lottery ticket, 331. of painted clay sold for indigo, 331. a recent similar case, 331, 332. •when no action can be sustained on notes given on sales, 332, 333. partial failure of consideration, how interposed, 333. in recoupment or mitigation of damages, 333. based on a counter cause of action, 333, 334. on a breach of warranty, when, 333, 334. when allowed and how established, 333-335. where a chattel hired, is taken back before end of term, note, 333. English rule allowing recoupment or reduction, 334, 335. recoupment is not grounded on rescission of contract, 335. when a bill or note is given on a condition or promise, 335. which is not fulfilled, 335. as when given for a release, not executed, 335. or for the manumission of a slave, not made, 335. or for a patent machine, the patent being void, 335. or by mistake for more than due, 335. inadequacy, no defense of itself, 335. but a total failure is a good defense, 335. and a partial is good pro tanto, 335. Illegality op Consideration, 336-377. general principle, 336. when illegality may be shown, 337. contracts with public enemy, 338. immoral contracts, 339, 340. merely illegal, 340. wagers, contracts of, 341. in restraint of marriage and trade, 342-344. conspiracy against commerce, &c, 344?*. to prevent competition at an auction or sheriff's sale, 344. giving preference in composition with creditors, 345. inducements to permit a discharge of debtors, 346. notes and bills given and taken illegally, 347-349. the restraining act, 347-349. notes and bills illegal because usurious, 349-367. notes and bills illegal by statute, 367-370. of accommodation paper, 373-377. contracts in violation of law, void, 336. bills and notes to secure performance of, also void, 336. defenso to, not allowed as favor to either party 336. the law does not help either party, 336. contract illegal in part, wholly illegal, 336. not as a general rule, a defense against a bona fide holder for value, 337. an exception, where the statute declares the security void, 337. such as notes or bills given usuriously, or for money lost by gaming, 337 but the indorser of such notes is liable, when, 337, 338. bo is the party that transfers them without indorsement, note, 337. IXDEX. 757 CONSIDERATION, Illegality of— Continued. contracts with the enemy in time of war, void, 338. except when made by prisoners for ransom, 338. for necessaries and the like, 338. 80 are bills remitted to the enemy, 338. on existing contracts, war only suspends the remedy, 338, 339, contracts in furtherance of immorality void, 339. such as letting rooms for purposes of prostitution, 339. or giving notes or bonds to continue illicit intercourse, 339. the security is valid if given to injured party, when, 339. in case of bastardy, note, 67. an executory parol contract, when supported, 339. contracts for sale of libelous or obscene works, 339. for illegal sale of liquors, text and note, 339. for illegal electioneering, 339. for sale of goods to be smuggled, 339. to induce a trespass, 339, 340. for sale of lottery tickets, 340. to drop criminal prosecution, 340. to compound a felony or misdemeanor, 340. by an alderman with a city contractor, 340. a note given for liquors sold in Massachusetts, note, 339. a note given for services of a negro as a slave, the negro being a free- man, 340. the defense of illegality must be affirmatively established, 340. a note, though illegal, is valid in hands of bona fide holder, when, 340, 341. note given on a subscription for stock, note, 341. wagers, common law rule in regard to, 341. void under, when contrary to public policy or good morals, 341. on result of a prize fight, or on question of war or peace, 341. or on the result of an election, or of a trial, 341. or on the sex of a third person, a curious case, note, 341. or on a third person's solvency, 341. restraint of trade or marriage, contracts in, void, 342-344. a conditional note not to marry another .or pay, etc., note, 342. contract hi general restraint of trade, not allowed, 342, 343. allowed in partial restraint, when, 342, 343. as where one sells out a trade or business, 343, 344. or a secret of manufacture, 344. a conspiracy against trade and commerce, not allowed, 344. bills and notes given on such contracts are void, 344. to prevent competition at auction sale, 344. or not to bid against each other, 345. for a contract, note, 345. but an agreement to buy together at a certain price is valid, note, 345. composition v:ith creditors, notes or bills given secretly for larger amount, 34 are fraudulent and void, 345. void even as between immediate parties, 345. 80 is a noto given to a creditor, if he sign insolvent's petition for dis- charge, 346. 758 INDEX. CONSIDERATION, Illegality of— Continued. or to induce a withdrawal of his opposition, 346. bo is a third person's note given for like purpose, 346. under bankrupt law, 346. notes given on a purchase made to defraud creditors, void, 346. so held, on what ground, 346. corporations and public officers, illegal contracts of void, 347. as to pay a sheriff an extra fee, 347. or to take a check on subscription for stock, 347. the law requiring it to be paid in money, 347. restraining act, prohibiting the issue of bills and notes by banks on time, 347. bills and notes by banks payable so long after date, are void, 347. the act is a public statute, 347. and the indorsee here is chargeable with notice, 347. not so, the indorsee of another state, 347, 348. a note given in another state for small bills to be circulated here, note, 347. a certificate of deposit payable six months after date, is in substance a note, 348. payable on demand, valid in whose hands, note, 348. banking corporations have general power to contract, 348. limitation of this right, 348, 349. no power to engage in purchase and sale of stock, 349. may take them as security, 349. not at liberty to indorse for accommodation, 349. may negotiate and sell by indorsement, 349. note given for money paid in redeeming illegal notes, valid, note, 349. Usurious Contracts, void here, 349-367. terms of our statute, 349. declare securities taken on, void, 349. make no exception in favor of negotiable notes and bills, 349. the law is less stringent in most of the states, note, 715, 716. does not apply here to a contract of sale of lands, note, 349. corporations cannot interpose defense of usury, note, 349. but the indorsers of their notes may, note, 349. the usurious bill or note is vitiated, tainted, 349, 350. the payee of it indorsing it over, makes a new contract, 350. so also the party negotiating it without indorsement, note, 350. innocent accommodation parties, not bound, note, 350. the party representing it as business paper is estopped, note, 350. other parties not affected by, note, 350. representations by agent negotiating, note, 350. provisions of R. S., now superseded, 350. in favor of lonafide holder, 350. taking a note under, in payment, effect of, 350. the title of purchaser in good faith under foreclosure of usurious mortgage, 35I» bona fide holder of usurious note may take a valid security therefor, 351, 352. if the debtor pay usurious debt, he cannot recover it back, 351. nor can he avoid a conveyance in payment of it, 351. may recover back excess of interest, 351. I>TDEX. . 759 CONSIDERATION", Illegality of— Continued. but the usurious debt cannot be enforced, 351. nor can any renewals thereof or securities therefor, 351, 352. paper valid in its inception, may be sold for any price, 352. not so, if negotiated usuriously in the first instance, 352. as where accommodation paper is first negotiated usuriously, 352. rights of the indorsee against the party negotiating it as business paper, 352, 353. the party so representing it, is estopped thereby, text and note, 353. estoppel where the maker of a note says he has no defense, note, 353. amount of recovery against one who indorses over a note for less than its face, 353, 354. in the case of a sale with warranty, 353, 354. transfer of valid notes as collateral to usurious debt, 354, 327. conveys no title, but does not destroy the notes, 354. receiving them back, the owner may sue on as before, 354. exacting a usurious premium on renewal, effect of, 354. security given for two loans, one being usurious, is void, 354, 355. antecedent debts, when not extinguished, 354. the taker cannot repudiate usurious security, in first instance, 355. may do so, when the party giving it sets it up, note, 355. a subsequent agreement for usurious interest is void, 355. though given oh forbearance, extending time, 355. creditor may resort to original security, though surrendered, when, note, 355. the statute declares void bins and notes, &c, when taken in a certain way, 355, 356. what is the construction of the statute, 355, 356. notes securing by mistake more than seven per cent, not void, 356. by mistake in calculation or in writing the note, 356. there must be an intent, a corrupt agreement to take, 356. the taking of a bonus by an agent making the loan does not avoid the note, note, 356. money may be recalled from agent, before delivery, when, note, 356. giving and receiving more than seven per cent intentionally, usurious, 3f " though the error be really one of law, when, 356, 357. usage and custom cannot be shown to evade the law, 357. three hundred and sixty days cannot be counted as a year, 357. by statute thirty days may be counted the twelfth part of, 357. rule for computing interest in this state, note, 357. Compound Interest, stipulation for, not usurious, when, 357, 358. agreement or notes taken for, after due, 357. the interest is as much due when payable, as the principal, 357. ordinarily a note draws only simple interest, 357. compound, sometimes allowed as damages, 357, 358. interest upon interest to accrue, is not recoverable, 358. why it is not, ground of tho rule, 358. compound interest paid by mistake, recoverable back, note, 358. interest recoverable upon rent duo in specific articles, 358. in advance, taking interest on a loan, not usurious, 358, 359. effect of taking interest In that manner, for long term, 358, 359. usurious to take interest in advance for a term of years, 359. 760 INDEX. CONSIDERATION, Illegality of— Continued. taking interest in advance allowed on short loans, 359, 360. by banks and by individuals, 359, 360. interest may be taken on the days of grace, 360. usury, the defense of must be strictly proved, 360. not presumed on notes with interest, antedated, 360. nor inferred, where the lender retains a part of the amount loaned with borrower's consent, note, 360. not usurious to discount note, and charge premium on drafts therefor payable in New York, 360. nor to charge rate of exchange between place of payment and payee'a residence, 360. nor to give certificates of deposit payable in fifteen days, when, 360, 361. nor to give depreciated notes, when, 301. usurious if there be an agreement for them, when, 361. or to take stock for more than its value, 361. not material from whom usurious proposition comes, 361, 362. as to take proceeds of discount in certificates of deposit payable at a future day with less than legal interest, 361. taking such certificates after discount voluntarily, 362. agreeing for drafts on New York worth more than par, 362. or charging on such drafts for collection, 362. and discounting on an agreement for the circulation of bills, 362. on agreement for insurance, 362. commissions allowed on acceptances by commission merchant, 362. allowed factor for accepting and paying, 363. no evasive device allowed, 363, 357, 365. a loan of goods or chattels, not within the statute, 363. reason of the rule, its application, 363, 364. in loans of stock, cattle, grain and flocks, 363, 364. value uncertain on return, note, 363, 364. credit, being of value may be sold, 365. a bond and mortgage with guaranty of amount due, 365. so may an indorsement or guaranty of a note, 365. commission on exchange of notes, note, 365. these are sales of credit, in substance, 365. not tolerated as a disguise of usury, 365, 366. nor is a sale or loan of property or credit, 365, 366. a note made In another state bearing eight per cent, not presumed usurious, 366. not presumed usurious because rate of exchange in favor of place of payment, 366. not usurious in discounting drafts on New York to deduct interest and difference of exchange on drafts on the samo place, reason of rule, 366, 367. exchange not certain to continue the same, 366, 367. legally money is of same value all over the state, note, 367. terms, on opening default to let in defense of usury, note, 306. the answer must state usurious contract specifically, note, 366. wagering contracts, declared void by statute, 367. | and all securities in furtherance of, are void, 367. INDEX. 7(51 CONSIDERATION, Illegality of— Continued. bills and notes for a gaming debt, or in execution of contract, void, 367, 36S. they stand on the footing of usurious paper, 368. the party indorsing them over may be liable, 368. they are void as between the parties, 368, 369. a note to pay when M. "V. E. is elected President, 368. like notes on result of election, 369. the statute renders such securities void, 369. those given for money won at play, 369. bills and notes for money lent to game with, are also void, 369. the loan is void, 369. money lent to bet on a race, not recoverable, 369. oontract not affirmed in any manner, 369, 370. made in another state and valid there, affirmed here, 370. bills, notes, checks, &c, issued in violation of stamp act are invalid and of no effect, 750-762. stock-jobbing contracts, former statute, 370. rulings under, 370. notes and bills, in execution of, when void, 370. such contracts, are now valid by statute, note, 370. prohibited contracts, notes and bills in execution of, 370. when valid and when not, 370. general rule of commercial law in respect to, 370. valid when, in the hands of bona fide holder, 370, 371. cases illustrating the rule, 370, 371. who is a bona fide holder, &c. ? 371. must take the paper before it becomes due, 371. after it is due, he takes it dishonored, 371. on the credit of his indorser, 371. must take it also in good faith, 371. and without notice of any defect or defense, 371. what is not such notice, 371, 372. memorandums on the note, 372. taking it mala fide or with notice, he is not, 372. when the paper itself is notice, 372. means of knowledge not the samo thing, note, 372. the usual test of good faith is giving value, note, 372. want of care is not bad faith, note, 372. must have given value for the paper, 372, 373. reason of this rule stated, 373. crediting in account is not giving value, when, note, 373. as to what is giving value, see Bona fide Holder for value. relation and remedy of parties to accommodation paper, 373-377. relation of acceptor to drawer, 37.'!. on the bill, after payment, 374. the acceptor has no action on tho bill itself, 374. but may recover for tho money paid, when, 374. 80 mny the maker of a note, when, 374. and the drawer or indorser, 374, burden of evidence, on whom rests, note, 374. Edw. 90 762 INDEX. CONSIDERATION— Continued. payment in any manner, gives an action to the accommodation party 374,. 375. may be made, at what time, 375. and his action accrues from what time, 375. not delayed by holding collaterals, 375. the accommodated party bound to indemnify, &c, 375, 376. a surety-drawer held as principal, 375, 376. whether signing as surety or not, 376. the accommodation party becomes such with a view to his remedy over 376, 377. and holds himself out as a party, 377. his defense not favored, when, 377. premium and subscription notes, given to mutual insurance companies, note 377. a premium note, what is, note, 377. an assessment a condition of liability, when, note, 377. given as part of the capital, when, 377. how shown whether so given, 377. may be negotiated, when and how, note, 377. rights and liabilities of parties to, note, 377. mode of negotiating, and rights of party taking, note, 377. CONSIGNMENTS, drafts drawn on, 422-424. drafts with bill of lading attached, 421-424. CONSTRUCTION of bills and notes, 176-186. must be by the law of the place, 177, 178. remedy by law of the forum, 179, 180. when contract to be performed in another state, 180-184. of acceptances, 421, 422. CONTINGENCY, cannot be supplied by parol evidence, 313-315. CONTRACT, what is, 62. requisites of, 62. illegal, cannot be enforced, 336. when illegal, 336-377. notes and bills founded on, rule as to, 337, 370. declared void by statute, see Usury, Wagering Contracts, Consideration. CONTRACTING CAPACITY, what constitutes, 62-72, 75-78. non-sane persons have not, 63. infants have, 64-68 CONTRADICTION of written contract, 313-315. of acceptances by parol, 424, 425. CONTRIBUTION, between sureties and joint makers, 572, 573. COPARTNERSHIP, see Partnership, 96-99. COPY note may be used in making demand, when, 506-508. CORPORATIONS, creation and rights of, 75. incidental powers of, 75. right to make and negotiate bills and notes, 75-78, 347-349. cannot make or issue time notes or bills, 75-77, 347-349. transfer of an illegal note made by, effect of, 347, 348. to a person out of the state, 348. implied rowers of, 75, 76. INDEX. 763 CORPORATIONS— Continued. frith authority to advance upon goods, may accept bills, 75. notes and acceptances of, presumed to have been rightfully given, 76, 77. valid in the hands of a bona fide holder, though illegally issued, 77. not so, if illegal on their face, 77, 76. restraining acts, effect of, 76, 77. prohibiting banks from issuing notes payable on time, 75-77. recent decisions, note on page 76. act restraining banks from issuing time notes or bills, is a public statute, 347 citizens and residents presumed to know the law, 347. non-residents, not, 347, 348. knowledge, effect of, 348. illegal contracts of, void, 349. cannot make accommodation indorsement, 349. but may transfer by, 349. where the bank is bound by, 349. cannot interpose defense of usury, note, 349. indorser of its notes may, 349. bound by indorsement of its officers, when, 249. COUNTERFEIT and valueless bank notes, payment of, 205-207. COUNTERMAND of payment, effect of, 546. COVERTURE, see Married Woman. CREDIT, giving in account, effect of, 5G0-563. CREDITOR, taking notes or bills in payment, 192-207. operates as payment, when, 560-562. CROSS BILLS, are consideration for each other, 322. CURRENCY, judgments must be entered in our, 137, 138. CUSTOM OF MERCHANTS, foundation of commercial law, 46. indorsement of bills, 245. CUSTOMER, notice to, on dissolution of firm, 114-116. who are customers, 116, 117. D. DAMAGES, or sum recoverable, 708-749. interest usual measure of damages, 708. interest secured by contract, when, 708-710-719. recoverable as damages, when, 711-722. interest by contract below legal rate, after due, 711-713. on notes, &c, payable on demand, 712, 713. on money due, 713, 714. on notes and debts made in one state payable in another, 714-718. rates of interest in the different states. 715, 716. interest as damages on notes and debts payable in another state, 719-722, damages on notes payable in specific articles, 723-725. sum recoverable on a note payable in another currency, 725, 726. on debts and notes payable in another country, 725-728. rate of exchange on, not allowed, 726-729. on bills of exchange, under law merchant, 730-734. under the statutes of the seveni] states, 734-749. a general rule desirable, 749, 750. 76i INDEX. DAMAGES— Continued. on a note for so much money payable in salt at shillings per barrel, 723. it is a contract to pay so much money, not for the purchase of so many barrels of salt, 723, 724. rule of damages on, in other states, 723, 724. under a covenant to pay a certain rent in grain, 724. on notes payable in goods, chattels, &c, 723,* 724. on a note payable in notes, note, 724. on a note payable in depreciated bank bills, 724, 725. in neat cattle, wool, cotton, &c, text and note, 725. on a note for £100 payable in London, 725, 726. entitled to value in Federal money, with English interest from defa\ilt in payment, 725, 726. what is the value of £100 in Federal money, text and note, 726. it is accurately determined by weight and fineness, note, 726. par of exchange, what is meant by, note, 726. what is the actual par, note, 726. in a recovery here on a debt due abroad, 725-727. plaintiff not entitled to recover at rate of exchange, 727. exception in favor of a bill payable in foreign currency, 735. argument in favor of recovery at rate of exchange, 725, 726-728, 729. in favor of rule as held here, 727, 729. rule as held in Englaud, and its application, 728, 729. in action on a foreign judgment, 728, 729. the value of foreign money should be proved, note, 726. recoverable as re-exchange or bills of exchange, 730. re-exchange allowed under law merchant, 730-732, 733. against the drawer, 730-734. also against the indorser, 732-734. ground on which re-exchange is allowed, 730, 731. right of the holder to redraw upon the drawer or indorser, 732. for what amount, 732. when the redrawing is from party to party, 732. the acceptor is not under the law merchant responsible for re-exchange, 732, 733. may be to drawer under special contract, 733. right to re-exchange as against drawer and indorser is founded in equity, 733, 734. where there is not an established rate of exchange, 734. / damages allowed by statute in this country, in lieu of re-exchange, 734. on bills drawn or negotiated in New York, 734, 735. on bills for an amount expressed in a foreign currency, the sum duo is deter- mined by the rate of exchange, 735. on bills drawn or indorsed in Maine and Massachusetts, 736, 737. in Maine the acceptor is liable for the damages, 736. in Massachusetts, he is not so liable, 736, 737. on bills drawn or negotiated in Connecticut and Rhode Island, 737, 738. only the drawer and indorsers of, are liable for the damages, 737, 738. on bills drawn or indorsed in Pennsylvania and Delawaro, 738, 739. what parties are liable to the damages, 738, 739. on bills drawn or indorsed in Maryland, Virginia, North and South Carolina, 739, 740. INDEX. 765 DAMAGES— Continued. parties liable therefor, 739, 740. on bills drawn or indorsed in Georgia, Florida and Alabama, 741, 742. in Georgia filed with reference to redrawing, 741. in Alabama, the amount clue on bills payable in foreign currency is ascer- tained by rate of exchange, 742. on bills drawn or negotiated in Mississippi and Louisiana and Texas, 742, 743. reduced by recent statute in Mississippi, 742. in Louisiana the amount due on bills payable in a foreign currency ascertained by rate of exchange, 743. when allowed in Texas, 743. on bills drawn or negotiated in Ohio, no damages allowed by statute, 743. this is by recent statute, 743. on bills drawn or negotiated in Indiana, Illinois and Michigan, 743, 744. in Indiana, only holder for value entitled to damages, 744. on bills drawn or negotiated in "Wisconsin, Iowa and Missouri, 745, 746. in Missouri, damages allowed only on certain bills to holder for value, 745, 746. and the acceptor is liable for, 746. on bills drawn or negotiated in Kentucky and Tennessee, 746. in Kentucky only on certain foreign bills, 746. on bills drawn or negotiated in Arkansas and California, 746-748. in Arkansas, the acceptor is liable, 747. in California, the amount due on bills payable in a foreign currency is ascer- tained by rate of exchange, 748. on bills drawn or negotiated in Oregon, Minnesota, Kansas and Nevada, 748, 749. amount recoverable under the law merchant, 749. inequality of damages in different states, 749. See Interest and Sum Payable. DATE, of bills and notes, 150-152, 187. not essential, 150. importance of, when used, 151, 187. essential under law of France, 775. DATS OF GRACE, number allowed, 517-525. form part of time bills and notes have to run, 525. expire at what time, 526-528. Sundays and holidays, 529-532. origin of, in custom and actual indulgence, 517. not allowed in France, 517. number allowed in different countries, note, 518, 519. are to be added, in computing the time when a bill or note mat-ares, 518-525 interest may be computed upon them, as a part of the time, 518. three days grace allowed hero and in Great Britain, 518. allowed or not, according to law of place of payment, 518, 522. effect of a local custom, in respect to, 519-522. allowed on a post note, 522. a mistake in respect to, liability for, 521, 522. allowed on notes, bills and drafts payable at sight, 523 not under the statute of this state, 523. notes not negotiable, not entitled to grace, 524, 525. 766 index. DATS OF aRACE— Continued. commercial paper remains negotiable during the days of grace, 525. action on, accrues, not till they have expired, 525, 526, 521. after dishonor on the third day, in some states, 525. time of demand, on the third or last day, 525-529. on an individual, 526, 52S. on a bank, 521-529. when the last day of grace falls on a Sunday or holiday, 459, 529-532. whether the maker's religion is to be considered in making demand, 529, 530. what are considered holidays, 459, 531, 532. DEATH, of maker or acceptor, effect of, 486-488. of drawer or' indorser, 454, 630, 631. effect of death of accommodation iudorser before the paper has been nego- tiated, note, 323. mode of giving notice after indorsees death, 631, 632. DEBT, action of, formerly brought, when, 665, 666. recovery under money counts, 665. DELAWARE, statutes of, relating to bills and notes, 268. damages allowed on bills, 739. rate of interest and law of usury, note, 115, DELAY, in presenting for acceptance, when excused, 391-399. in giving the usual notice, when excused, 649. diligence equivalent to notice, 648. DELEGATION of authority by notary, 586. DELIVERY, necessary part of the contract, 186-192. contract made at place of, 181. will be inferred, 188. implies a guaranty of title, when, 188-192. See Promissory Notes and Bills, and Acceptance. DEMAND, notes and drafts payable on, 156. when must be made, 390-392, 156-160. exceptions to the ride, 158, 160. See Bills and Notes. DEMAND OP PAYMENT, see Presentment for Payment, 419-532. DEPOSIT, certificate of, is a promissory note, 348. DESTRUCTION, see Loss of Bills and Notes. DILIGENCE in presenting bill for acceptance, 386-399. in presenting note for payment, 390, 483-486. *> a question of law, when, 391. equivalent to notice, when, 648. in presenting bills at sight, after sight or demand, 386-388. in presenting foreign bids, 388, 389, 390-395. when negotiated from place to place, 389, 398. when purchased for speculation and not negotiated, 392-395, the interest of both parties to be considered, 395. in presenting inland bills, after sight, 389. when negotiated, text and note, 389, 390. . in presenting notes on demand, 390. to shut out defense thereon, 390. to charge indorser thereon, 390. what delays excused in presenting, 392. INDEX. 767 DILIGENCE— Continued. and what delays in giving notice, 458, 459, 647-650. from war, pestilence, sickness, death, &c, 458, 459. in presenting checks, 396-398. to charge the drawer, 396, 397. to charge the indorser, text and note, 398. when the check was deposited in bank, note, 398. if the check be negotiated, note, 398. in the case of a demand draft, not negotiated, note, 398. should be sent forward in due course of business, 398, 399. in giving notice to drawer, excused, when, 449-453. not so as to the indorser, 452-454. where the drawer, indorser, or drawee dies, 454, 455. where the drawer or indorser absconds, &c, 456. in serving notice by mail, 456, 457. avails in place of notice, when and to whom, 457. agent or notary's diligence not sufficient, when, note, 457. in serving notice at a place named by indorsement, note, 457, 458. in sending off notice by mail, 459. where the service is made from party to party, 474-476. in making inquiry as to residence of parties not known, 457, 647-649. See Presentment for Acceptance^ Presentment for Payment, Non-acceptance, Notice of Dishonor. DIRECTION, to apply to a particular account, 143, 144. in case of need, 175. DIRECTOR, of a bank not a general agent, 116. DISCHARGE, of maker or acceptor, releases drawer and indorser, 294. by giving principal time, 567-569. of prior parties, 569. discharges sureties, 572. discharging one of several joint debtors, 573-575. of indorser or drawer, or surety, how made, 291, 566. by payment or release of prior party, 291. or by giving prior party time, 291, 293. rule the same as to accommodation indorser, 293. of surety by valid agreement giving principal time, . 355. as by taking a bond and mortgage payablo at a future day, 355. or a note or a bill, 197, 567. of principal debtor, effect of, 565. by dealings with prior party, when, 566-575. mere delay does not discharge drawer or indorser, 566. nor do certain agreements, 56G, 570. discharge by taking new security, 197, 567. if it extend timo of payment, 567, 197. even for a single day, 572. real principal, though in form drawer or indorser, not discharged by giving time, &c, 575. of surety maker by omitting to prosecute principal, 244. joint and several makers or acceptors, not discharged ^by giving time to one, 572. a surety maker, when not, 572, 573. 768 INDEX. DISCHARGE— Continued. when discharged by release of one, 573, 574. or by not prosecuting the principal maker, 244. the drawer, indorser or surety is not released by taking a new security as col- lateral to debt, 291, 566. but is discharged when the time is extended by taking bills or notes payable a* a future day, 567, 197, 355. of principal contract, discharges surety, 218. on account of the nature of surety's engagement, 218. DISCOUNTING paper at usurious rates, 352-354. what are such, 360-362. DISHONOR, and see Presentment for Acceptance, for Payment, Notice of Dishonor. DISSOLUTION, of partnership, 111, 113. right of partner to dissolve, 111, 112. notice of, when necessary, 113-117. how made, its incidents, 112-123. a revocation of each partner's right to bind the firm, 111, 113-123. See Partners. DIVERSION must be shown, to let in defense, when, 678. of accommodation paper, 316-324, 431. plea of by an accommodation indorser, 579, 580. accommodation makers or indorsers never liable to party accommodated, 315; 316. when liable, in case of diversion, 316. on paper made or indorsed for general accommodation, 316-320, 323. presumption as to accommodation paper, 320. it has inception, when negotiated, 323, 352-354. what is diversion of accommodation paper, 316, 317-320. what is good faith in taking such paper, 317, 318, 319. the usual test of good faith is giving value, 320,687. what is giving value for it, 321. parting with property or securities is, 321, 322. discharging a debt is also, 321, 322. exchange of notes, 322. taking the paper as security for goods sold, 322, 323. of partnership paper from the business of the firm, 99-105. its paper presumed to have been regularly given, 99-104. can be no diversion of paper made for general accommodation, 3 L6-320, 431 DONATION, see Gift, 324, 325. -DORMANT PARTNER bound by acts of the firm, 107, 109. see Special Partner, 107, 109. DRAWEE, effect of his absconding or absence, 381. destruction or refusal to return bill by, effect of, 268, 417, 418. duty of drawee to accept, 405. his acceptance, 405-438. See Acceptance. duty to accept draft with bill of lading attached, 422-424. DRAWER, signing draft as surety, 375, 376. contract of drawer, 378-386. signing as agent, when bound personally, 378. the implied contract, 378, 379. im>Ex. 769 DRAWER— Continued. & draft for the whole of a given fund, effect of, 379, 3S0. Stipulation as to residence of drawee, 380, 381. that drawee is capable of binding himself, &c, 381, 382. that he will accept, absolutely, 382-384. governed by the lex loci, 38-1. discharged by laches, when, 384, 385. contract, how discharged and by what law, 385, 386. ■ contracts for notice of dishonor, 378, 379, 288. that is, his undertaking is conditioned upon notice, 379, 288. true theory of the bill, 379, 288. reason for requiring notice, 379, 2S8. a draft for a whole fund is not a bill, but an assignment, 379. drawing against a consignment, is not an assignment, 379. if the draft amount to an assignment, it is not a bill, 379, 380. if an assignment, need not be accepted, 379, 380. when a fund may be reached and applied on a bill, 380. what the drawer stipulates for, particulars of his contract, 380-386. by addressing his bill to a particular place, 3S0, 381. in regard to acceptance and payment, 381, 382, 383. when the bill specifies the place of payment, 382. discharged if holder- take a conditional acceptance, 383. or an acceptance to pay at a distant place, 383, 384. not by taking one to pay at a bank in same place, note, 384. the indorser is a new drawer, &c, 384. a contract implied by law, 379, 380, 384. but cannot be varied, 384. may be released by laches, 384, 385. as by failure to present drafts at sight or after sight, 384, 385. implied and discharged by law of place where drawn, 385. discharged as insolvent under state law, effect of, 385, 386. decisions in respect to such discharge, note, 386, 385. discharge under foreign bankrupt law, note, 386. rule in Massachusetts, note, 385, 386. DRAWING BILL, what it implies, 378, 379-386. drawing for the whole of a fund, an equitable assignment, 378, 379. DRUNKENNESS, incapacities a party to contract, 325. defense, how pleaded, note, 688. DUE-BILL, is a promissory note, 132. DURESS, note given under, void, 325. E. EFFECTS, want of, excuses presentment, 449-452, 490, 491. want of, in case of a check, 396-398. want of, excuses want of notice, when, 449-452, 640-646. pleading want of, 646, 647. ENTRIES, by notary, Ac, when evidence, 695-C97. EQUITY, remedy in, on lost bill or note, 295-303. notes and bills held in trust, 256, 257. suit in, for cancellation, or surrender of negotiable paper, may bo sustained in what cases, 67 D b . Edw. 97 J70 INDEX. EQUITY— Continued. the negotiation of the paper may be restrained by injunction, in what cases, 679 b . ERASURES, see Alteration. ESTOPPEL, case of, 655, 250, 353. vender of illegal paper estopped, when, 347, 348. transfer of paper, 188-191. party transferring, admits what, 289-291, 250. acceptance admits drawing, 683. the drawer estopped from denying payee's indorsement, when, 433. the acceptor, from denying drawer's, 433. from denying his acceptance, when, 433, 434, 188. parties to paper forged, estopped as between, 188-191, 289-291. an indorser is estopped from denying the drawing and prior indorsement, 685, 686. from denying representations accompanying transfer or negotiation of papen note, 324, 325, 353. as that it is business paper, note, 350. the maker of a note by saying he has no defense, note, 353. the acceptor by like reply to question, 433, 434. from setting up usurious agreement in first instance, 355. not when the party giving security first sets up usury, note, 355. entrusting blanks with an agent, nature of the act, 92-95, 425. by accepting a bill before it is drawn, 411. by certifying a check, 406. of indorser from showing maker a married woman, 71. married women not estopped, 71. EVIDENCE, of title to negotiable paper, in respect to partnership paper, 104, 105. to paper not negotiable, 216, 217. varying terms of notes and bills cannot be given, 313-315, 147, 148. when pleadings show what must bo proved, 679, 680. averments immaterial need not be proved, 680. proof in action by payee against maker or acceptor, 680. against a firm, proof of assent, when necessary, 681. on a note or bill given or accepted by an agent, 681. in action on a joint and several note, 681, 682. proving a note that has been altered, effect, 681-683. accepting admits drawing, 683. in suit by indorsee against acceptor, proof, 683-685. payee's indorsement must be proved, when, 683, 684. plaintiffs suing as partners must prove partnership, 685. misnomer of payee, effect of, 685. in an action against indorser, proof, 685. proof of consideration, when necessary, 686-692. who must begin, 687-691. proof showing right to introduce defense, 688-691. further proof on the merits, 691, 692. proving counterclaim or set-off, 692. proof against drawer or indorser, of demand and notice, 692-694. the same in respect to foreign bills, 694, 695. notice to drawer or indorser, how proved, 695-697. INDEX. 771 EVIDENCE— Contimed. by memorandum of deceased witness, 695-691. proof of contents of notice, 697. mode of proving notice, as to time, &c, 698, 699. who may be called as witness, and when, 699, 700. proving signature or handwriting, 701-707. by subscribing witness, 701-703. who qualified to prove handwriting, 703-706. comparison of hands by experts, 70-4-707. giving a note evidence of a settlement, how far, note, 579. in a case where a single fact is put in issue, 679. order of proof on trial, 680. in action against drawer, need not prove acceptance, when, 680. in action against acceptor, need not prove presentment, 680. in action against several acceptors, must prove acceptance by each, 680. when the acceptance is by a firm, 680, 681. when a firm note is made by one partner outside of its business, 681. when an agency to make, indorse or accept, must be proved and how text and note, 681. in the case of a note signed by the clerk of an agent, note, 6S1. iz. a suit against a surety-maker of a note, who signed without consent of the principal maker, note, 681, 683. does such adding of a new name alter the contract so as to avoid it, text and note, 681-683. production of bill by payee, proof of title in him though specially indorsed to • another, 683. by indorsee to vest the title in himself as plaintiff, 683. where the drawer forges the payee's indorsement, the payee having no title, 683. when the draft is payable to order of a fictitious person, 683, 684. when it is payable to the order of drawer or maker, 684. the general rule requiring payee's indorsement, 684. of the indorsement by the payee of a check, 684. of titlo to paper payable to bearer, 684. or to a particular person or bearer, 684. possession proves titlo to such paper, 084. of titlo to paper payable to order and indorsed by payee, by blank indorsement, 684, 685. possession is proof of title, 684, 685. a payment by maker on a noto does not estop him from disputing holder's titlo, note, G8 L of titlo by payee who received the note in blank as to the payee, and inserted las own name, 685. whero the payee's name is that of two persons, father and son, 685. where the note is payable to one or other of two persons, 685. against partners, proof that one of them ruado the note and that the otho acknowledged his liability on it is sufficient, note, 685, whero one of a firm, the payees of a note, goos out aud another comes in, and the noto is renewed to the latter firm, note, 685. what the indorsement of a noto admits, text and note, 685, 686. presumption in favor of consideration, 68G. 772 IXDEX. EVIDENCE— Continued. and of transfer in due course for value, 686. effect of proof that the paper was lost by or stolen from the owner, 686, 691. or that it was obtained by fraud, 686, 691. or made under duress, 686. or without consideration for a particular purpose, and diverted therefrom, 686, 687. or given for an illegal consideration, 686, 687. burden and order of proof in such cases, 686-692. decisions illustrating the rule, text and notes, 687-692. of facts to let in a defense, 688-691. that plaintiff took the note past due and dishonored, 688, 690. or with notice of impeaching facts, 688. or without giving value for it, 688, 690. with implied notice, 688, 689, 690. or with actual knowledge, 6S9. 690. the party taking dishonored paper, does so with notice, 690. plaintiff presumed to have paid value, though he took the paper past'due, 690. not so, where it is proved to have been lost or stolen, fraudulently obtained or fraudulently negotiated, 690, 691. recent decision, note, 691. giving value is the usual test of good faith, note, 691. where the plaintiff stands in the shoes of an original party, 691, 692. proof of defense against, 691, 692. verdict and judgment admissible as proof, when, note, 691. taking paper with notice of payment, 689. when a set-off cannot be proved, 692. that plaintiff's possession is mala fide, 692. that he has not title, 692. or is not the real owner, 692. of demand and notice, 692-694, 584. See Presentment for Acceptance, Kon- Acceptance, Presentment for Payment, Notice of Dishonor. demand and notice to be proved and conditions precedent, 692, 693. and presentment for acceptance, when, 693, 695, 696. and dishonor by non-acceptance, or non-payment, 693, 694. presentment at the right place, 693, 694. and at right time, 694. of protest of a foreign bill, 694. certificate of a foreign notary, not proof of notice, 694. notice need not be proved against drawer, when, 694, 695. though it must be against indorser, 695. notice may be proved here by certificate of the notary, when, 695. presentment, &c, how proved, the notary being dead or absent, 695, 696. by entry in register, by original protest signed by him, 695, 696. or his by memorandum, 696. not by his memorandum unless it shows the fact, note, 696, 697. what affidavit is sufficient to set aside the certificate of a notary of the state, note, 695. proof of notice, &c, by the memorandum of a clerk since deceased, 696. use of memorandum to fix the time of notice, 696, 698 INDEX. 773 EVIDENCE— Continued. if living, the clerk must be called, 697. abbreviations in register may be explained, 696, 697 . when the original entry or memorandum will not avail, 697 what testimony is sufficient to prove presentment and notico, 698, 699. how aided by general mode of business, entries and general recollection, 698, 699. by notary's certificate of service of notice, 585. statutes in the other states, note, 585. See Parol Evidence. a draft in the hands of the acceptor, and a check in the hands of the drawer paid, is not evidence of a debt due from drawer of the draft, 374. or from the payee of the check, note, 374. may be given between what parties, as to consideration, &c, 56, 57, 311-313. presumptions of, in favor of negotiable paper, 312, 313. consideration must be pleaded and proved, when, 209-217. Bee Parol Evidence, Bona Fide Holder, Consideration, Indorsement and Ti-ansfer, Pre- sentment, Notice, &c. EXCHANGE of notes and acceptances, 322. EXCHANGE, on notes and debts not allowed, 725-729. rate of when allowed on bills of, 730-734. rule under law merchant, 730-733. under statutes of the different states, _734-750. want of uniform rule, 749. EXECUTION, of bills and notes, &c, in pencil, by mark, &c, 91. parties may so execute or indorse notes and bills, 150, 251. delivery essential to complete, 180-192. must be alleged, 671. See Acceptance, Deliver]/. EXECUTORS AND ADMINISTRATORS, a negotiable note given by, binds them personally, 78. an acceptance without qualification, binds in same manner, 78. between the original parties, their note or acceptance is evidence of assets. 78, 79. evidence that may be overcome by proof, 78. they have no power to bind the estate they represent by an acceptance or ne- gotiable note, 78. they do not limit their liabiltty by signingas executor or as administrator, 78, 79. a note payable out of the estato is not negotiable, 78. an acceptance thus payable is a special contract, 78. tne same rules apply to trustees and guardians, 78, 79. a note not negotiable or not negotiated casts upon the administrator tho burden of showing want of funds, 79. when such a note does not throw upon him that burden, 79. several executors considered but one party, 79, 80, 248. each has the right to dispose of the goods and securities belonging to tho estato 79, 80. if ho transfer a note by indorsement without cpialification, ho bocomes person- ally liable, 80, 248. no distinction between notes payable to deceased and thoso payablo to exe- cutors, &o., 80. 774 INDEX. EXECUTORS AND ADMINISTRATORS— Continued. they are vested with the title to negotiable paper by their appointment, 247. an administrator appointed abroad, may sue here as bearer, 247. on a note payable to himself as administrator, may sue in his individual name, text and note, 247. a foreign administrator cannot interfere with suit by an administrator appointed here, 247, 248. their right to sue or to act is given by letters granted to them, 248. each may negotiate or indorse over negotiable paper, 248. no right to bind the estate by contract of indorsement, 248. what his liability, if he indorse without qualification. 248. describing himself as executor or administrator, not enough, 248. whether this rule harmonizes with other cases, 249. Where the payee or holder appoints the maker or acceptor his executor, the debt is discharged at common law, 553, 554. but he is accountable iu equity therefor to creditors, 553. the rule is the same as to debt due from oue of several executors, 654. in this state the statute rule is different, 554. rights of executors and of administrators are the same, 248. EXECUTORY AGREEMENTS, notes and bills taken on, note, 329. to apply one debt in payment of another, note, 580. EXPENSES, of giving notice of dishonor, 607. of redrawing, when allowed, 732. F. FACTOR, a trustee of express trust, 252, 658. when may transfer title, 252. PAST-DAT, see Holiday and Days oj Grace. FATHER OR SON, note to, both of same name, 125. presumption as to title, 125. FEME COVERT, see Married Woman. FELONY, misuse of blank indorsements is not, 94. FESTIVAL DAYS, see Holidays, notice need not be given on, 649, 529-532. FAILURE OF CONSIDERATION, 328-336. entire failure of, instances, 328-333, 335. partial failure, 333-335. may bo shown in reduction of damages, 333, 334. See Consideration, Failure of. FAIRS, notes and bills payable at, 142. come to maturity, when, by French law, 777. FICTITIOUS PAYEE, or other party, 125-130. FIGURES and marks used instead of party's name, 91, 150, 251. FLORIDA, statutes of, relating to bills and notes, 275. damages allowed in, on bills, 741. rate of interest in, usury law of, note, 710. FORBEARANCE, consideration for valid promise, 223. voluntary, does not discharge sureties, &c, 291-293, 294. FOREIGN BILLS, what are, 47-50, 582, 583. pre'sentmeut of, for acceptance, &c, 3S8-395. slid uld bo protested, 50, 4G1, 462, 5S1. INDEX. 775 FOREIGN BILLS— Continued. damages on, 730-734. construction, by what law, 176-186. FOREIGN JUDGMENTS, judgments in one state, not foreign in another, 48. FOREIGN LAWS, must be proved, 49. laws of sister states are foreign, 49. need not be taken notice of, 348. when to be considered as fixing rights of parties, 177-185. FOREIGN MONEY, notes and bills payable in, 137, 138, 726. allegations in suits on, 728, 729. FORGERY, of payee's name, 188-190. no title through a forged indorsement, 190. transfer of forged paper, 289-291. See Payment, to whom. FORMS AND REQUISITES of negotiable paper, 124-175. must not be payable on a contingency, 125. fictitious payee and other parties, 125-130. must be executed, 133, 134. must be payable in money, 134-138. and not for the performance of some other act, 138, 139. must be for a sum certain, 140. must not depend on an uncertain event, 141, 142. must not be payable out of particular fund, 142-145. acceptance must be absolute, 144, 145. parts, &c, must be in writing, 149, 150. dating and superscription in the margin, 152, 153. time and place of payment, 153-1G0. order to pay, 160. bills drawn in parts, 161-164. words of negotiability, 164-168. sums payable, value received, 168-172. words of advice, 172. address of bills, 173-175. FRAUD, vitiates all contracts, 325, 326. between whom may be shown, 325. rescinding for, must be done promptly, 326. . FRAUDS, see statutes of, 222-240. FUND, drafts payable out of, not negotiable, 142-145. effect of the contract, 419-422. G. GAMING CONSIDERATION, illegal, 341, 367-370. GEORGIA, statutes of, relating to notes, 273 damages allowed in, on bills, 741. rate of interest and law of usury in, note, 715. GIFT, notes made as aro void, 324, 325. notes of a third person may bo supported as, 325. See Consideration. GIVING TIME to principal, discharges drawer and indorser, 291-295. and all sureties, 355. 776 INDEX. GIVING TIME— Continued. must be by valid agreement to operate as discharge, 665-576. See Discharge. GOOD FRIDAY, see Days of Grace. GOODS SOLD, on warranty, 329-330. one thing for another, 329-332. fraudulently, 326, 329-333. GOVERNMENT AGENTS, not liable personally, 90. GRACE, see Days of, 517-532. GUARANTY, contract of, 218-244. is not negotiable, 219, 220. a new note when, 220-222. when must be in writing, 222-232. Brewster v. Silence, 225, 226. an original contract, when, 224, 225, 229-232. when implied, 230. of payment, 233, 234. of collection, 234-233. agreement to guaranty, 239, 240. notice to guarantor, 241-244, 630. an indorser when a guarantor, 273, 274. an agreement accessory to that of principal, 218. a discharge of principal discharges it, 218. definition of, under the civil law, 218. a surety maker of a note, action against, 219. the note not evidence against him of money had and received, 219. the indorsee of a guaranteed note may sue on guaranty, 219, 220. a guaranty of payment, when equivalent to a new note, 220, 221, 233, 222. containing negotiable words, 220. guarantor not liable as an indorser, 220. and not entitled to notice, 220, 221. a guaranty of payment is unconditional, 221, 222. in legal effect, the guarantor a joint maker, when, 222. statute of frauds, terms of, 222. classification of cases under the statute, 222, 223. 1. when the collateral is part of the original contract, 222, 223. 2. when a third person engages to pay prior debt, 223. 3. when the engagement to pay arises out of a new and original contract, 223, 224. illustrations of these classes, 223-225. what is a new and original contract, 224. an executory promise, acted upon, note, 224, 225. a guaranty made on sale of a note, 224, 225. question is, whether promise be independent or collateral, 224, 225. promise to pay on release of a lien, note, 225. the guaranty must express the consideration, 225, 226. whether made on prior or presently contracted debt, 226. terms of present statute, 226, 227. agreement must express consideration, 227, 228. departure from English rule, 228. principles of interpretation, 228, 229. nrDEx. 777 GUARANTY— Continued. scope and meaning of the usual guaranty, 229. a collateral engagement, 229. when it is not, 229, 230. indorsement of a note by a stranger, effect of, 229, 230. the actual contract provable by parol, note, 230. in some of the states, indorser liable as an original promisor or surety, note, 230. indorsement by a stranger of a note not negotiable, 230, 231. indorsees liability here and in other states, 229-231. guaranty on a sale of a note, 231. when the payee signs a note as maker, 231. the statute of frauds does not apply, 231, 232. to come within, the promise must be collateral, 232. discharge of original debt, effect of, 232. new contract, cases of, 232. consideration of promise, how expressed, 232, 233. for value received, is enough, 233. guaranty of a forged note, &c, after seeing it, effect of, note, 233. of a lease, presumed to have seen it, 233. guaranty on a separate paper, 233. of payment, when equivalent to a new note, 233, 234. of a note already due, effect of, 234. of collection, or that a note is good and collectible, 234. scope of such engagements, 234, 235. on an indorsed note, 235. • that a note is good, meaning of, 235. failure in diligence to collect, note, 235, 236. transfer of a guaranteed note, note, 235. special guaranty, case of, 235, 236. degree of diligence required, 235, 236. of collection, how construed, 236. where the maker of the note removes from state, 236. of a non-resident's note, 237. analogy between guarantor and indorsees contract, 237. - effort to collect, 237. a guaranty is a conditional promise, 237. conditioned on diligence to collect, 237, 238. failure to perform, discharges, 237, 238. a new promise, no waiver, 238. promise to pay on a certain event on request, 238. guaranty on a certain credit, effect of, 238. that credit must be given, 238. cannot be varied by parol, note, 238. extending time of payment by now note, note, 238. promise to accept drafts at ninety days, moaning of, 238. an authority to draw is a promise to accept, 238, 239. the drafts must be described and follow the authority, 239. a promise to accept drafts, or pay for goods to be sold, note, 239. letters of credit, when general aud when special, 239. not negotiable, 239. when an open proposition, 210. EDW. 98 778 INDEX. GUARANTY— Continued. a promise to accept drafts to be drawn, not a guaranty, note, 240. a guaranty of a draft is within the statute of frauds, 240. not negotiable, action on, 240, 241. guaranty under French law, 241. notice to guarantor, not necessary, 241. when it should be given, 241, 242. notice is not a term or condition of cj ntract, 242, 243. rules stated, 242. party guaranteed, must charge parties liable on bill or note, 242. loss from want of notice, 242, 243. surety when discharged from want of notice and neglect, 243. the terms of contract are to determine, 243. injury from want of notice, 244. when one of two makers signs a note as surety, effect of, 244. liable as a maker just the same, 244. may require the holder to proceed and collect, when, 244. effect of principal's becoming insolvent, 244. rule in other states, 244. terms of guaranty strictly construed, 244. H. HALF NOTES, or notes severed for transmission, 307-309. half note and half bill, 1 74. * HANDWRITING, how proved, 703-707. proof of instrument by attesting witness, 701-703. the subscribing witness should ordinarily be called, 701. if there be several, it is enough to call one, 701. in cases of doubt, all of them should be called, 701. in the absence of the subscribing witness, it is sufficient to prove his hand- writing, 701, 702. where the attesting witness signed by making his mark, 702. additional proof in such case, 702. who is a subscribing witness, note, 702. proof of his handwriting, prima facie sufficient, when, 701, 702. what further proof advisable, 702. where the subscribing witness docs not recollect, 703. a note though attested by a subscribing witness may be proved by the admis- sion of the maker, 703. this is also the English rule by recent statute, note, 701. proof by admission must clearly identify the note, 703. when a witness is competent to prove handwriting, 703-707. or party's signature, 703, 704. must have seen him write, 703, 704. or had correspondence with him, 703, 704. the proper question to the witness, 703. the witness is competent, if he has seen the party write but once, 70*. not if he only saw him write once, so that he could testify, 704. is also competent, though he saw the party write only his surname, 704. or only his initials in a peculiar way, 704. IKDEX. 779 HANDWRITING— Continued. or by merely making his mark, 704. competency shown by what kind of correspondence, 704, 705. knowledge from seeing signature to papers treated as genuine, 704. witness without knowledge, not allowed to speak as an expert, 705. or from a comparison of hands, 705, 706. how far a comparison is allowed, 706, 707. reasons against and in favor of permitting, 705, 706, 707. a recent statute of England permits it, 707. proof of the signature to, is proof of contents of a contract, 707 and its date is presumptive proof of the time when made, 707. See Evidence. HOLDER BONA FIDE, see Purchaser, and Bona Fide Solder, 371-373 who is such, 316-318. presumption in respect to negotiable notes and bills, 312, 313. when made for one purpose and diverted to another, 316-323. what is giving value for paper, 320-322. HOLIDAYS, what are such, see Bays of Grace, 529-532. HONOR, acceptance and payment for honor, 438-444. nature of contract, 438. rights of party accepting or paying for, 438-443. HORSE-RACING, notes given to secure bets on, 341, 367-370. HOUR of presentment, &c., 399, 526-528. HUSBAND AND "WIFE, see Married Woman. I. H) ENTITY of party executing contracts, presumptions as to, 702. of payees, proving them partners, 685. of the payee, where he is misnamed, or where there are two persons of samo name, 685. IGNORANCE of party's address excuses delay, when, 647-649. must be accompanied with diligence, 648, 649. ILLEGALITY of consideration, 336-370. of note given by corporation, note, 78. when it makes void notes and bills, 336, 337. on grounds of public policy, 338-347. by express statute, 347-349. usurious contracts, 349-365. wagering, gaming and stock jobbing contracts, 367-370. of note given for liquors illegally sold, 339, 369. See Consideration, Illegality of. ILLINOIS, statutes of, relating to bonds, bills and notes, 281. damages allowed in, on bills, 741. rate of interest and law of usury in, 710. ILLNESS, an excuse for delay in presentment, when, 352. delay in giving notice, when, 458. IMBECILITY" of mind, when a want of legal capacity, 62-64. IMMATERIAL ALLEGATIONS, need not be proved, 680. IMMATERIAL A LTE RATIONS, what are, 94, 95. what are material alterations, 145, 146, 681, 682. 780 INDEX. IMMORAL CONTRACTS, 339, 340. several kinds of, 339-347. IMPLIED AUTHORITY, to fill up blanks, 92-94, 95. blank acceptances, 411. of an agent to bind his principal, 80, 87-89. IMPLIED WARRANTY of title, 188-191, 289-291, 646. that paper is valid, 348. existence and validity of paper, 289-291. INCAPACITY, to contract, what is, 62. mere weakness or immaturity is not, 62. circumstances of fraud, when, 62, 63. the non-sane are incapable, 63. their contracts void or voidable ? 63. presumption of capacity, 64. incapacity must be pleaded, 64. inquisition, effect of, 64. from total intoxication, 64. habitual drunkenness, inquisition of, 64. from infancy, extent of disability, 64. contracts of infant voidable only, 64, 65, 66-68. cannot waive his privilege, 65. his note for necessaries, action on, 65. what proof necessary, 65. the indorsee may sue on, 65. new promise on coming of age, 66-68. action on, 66. may repudiate usurious contracts, 66. not bound by an account stated, 67. not estopped, 67. liability on note given in case of bastardy, note, 67. no other person can set up his disability, 67. his right of action, 67, 68. his acceptance, or indorsement, 67. repudiating his note, must do equity when, 68. See title Married Woman. INDEMNITY, for a lost bill, must be given, when, 295-301. INDIANA, statutes of, relating to bonds, notes and bills, 28L damages allowed on bills, 743. rate of interest and law of usury in, 716. INDORSEMENT, manner of making, 54. contract of, 245-295. by whom made, 24G-253. of bills and notes by executors, &c, 247-249. of notes in blank, creates an agency, when, 92-94, 252. under commercial law, 2G3-265. restrictive, when, 253, 277-280. by all tho payees, when, 254. by a firm, 254-256. by party holding title by assignment, 256-258. when to be made, time important, 258-261. of bills and notes that are overduo, 258. INDEX. 781 INDORSEMENT— Continued. what an indorsement implies, 289-291. indorsement " without recourse," 282-284. delivery completes transfer, 2S5, 286. of notes and drafts not negotiable, effect of, 230. indorsees undertaking, 261, 287-289. what he guarantees or admits, 289-291. what acts discharge him, 291-295. indorsement by a stranger, effect of, 650, 213, 274, 229, 230. modes of indorsement and deb very, 261-271. laws of different states in respect to, note, 264-284. right of holder to fill up blank indorsement, 271, 272. to strike out indorsements, 275-277. indorsement for part, memorandum, 279-281. essential to vest indorsee with rights of a bona fide holder, 286, 287. rn)(<*SEMENT AND TRANSFER, of bills and notes, 245. . indorsement of notes not negotiable, liability of the indorser, 230. when not entitled to notice, &c, 649, 650. till and notes, with right of action on, transferable, 245. tills of exchange at common law, 245. promissory notes by statute, 245. this transferable quality, their peculiarity, 245. the common law rule and its relaxation, 245, 246. difference between transfer of negotiable paper and other choses in action- 245, 246. the transfer of bills and notes is a contract, 246. legal capacity to do the act, 246. an infant may transfer such paper, 246. and may avoid his contract as indorser, 246. when and how he may do so, 246. on what condition, 246, 247. may ratify, and how, on coming of age, noto, 246. his disaffirmance, on what terms, 246, 247. negotiable paper payable to married woman, how transferred, 247. at common law by her husband, or in his name, 247. by the wife with his assent, 247. under the statute, in her own name, note, 247. may bind herself by note, 247. executors or administrators may transfer, 247. may recover on bills and notes iu their individual capacity, 247. when, and when not, 247, 248. each of several represents deceased, and may transfer, 248, 79, 80. executors or administrators but one person in law, 248. whether payable to them, or to deceased, 248. cannot bind the estate by indorsement, 248. when personally liable on, 248, 249, 80. by casliicr of a moneyed corporation, 249. or by agent or other officer, 249. mode of indorsement, held official act, 249. the double contract of transfer and indorsement, 249. bank not authorized to indorse for accommodation, note, 249. 782 index. INDORSEMENT AND TRANSFER— Continued. but its cashier apparently acting for, binds the bank, note, 249. his is an indorsement by the bank, note, 249. effect of adding word agent to signature, 249. payee's right to transfer by indorsement, 250. admitted by maker and acceptor, 250. the indorser affirms the competency of the maker, note, 250. only the party having the title, can transfer, 250. so plaintiff in suit must show title, 250. payment to party without, may be recovered back, 250. indorsement by party of same name as payee, 250, 251. when payable to a person by a wrong name, suit on, 251. transferable, how, note, 251. indorsement by use of initials, a mark, &c, 251. when payablo to whoever shall indorse, 251. action by real owner under present practice, 251. must show his title, right of action, 251. may show title without indorsement, note, 251. effect of a transfer without indorsement, note, 251. trustee of express trust, suit by on notes taken as, 252. transfer by him for value, 252. acts as agent, but with title, 252. proof of agency to indorse, how made, note, 252. agency, when known to indorsee, 252. limited to authority given, 252. not so, when agent entrusted with blank indorsement, 252, 253. .bound for full amount, to whom, 253. a blank indorsement is a letter of credit, 253. an indorsement creating an agency, 253. a restrictive indorsement, mode and use of, 253, 254. indorsement for account of indorser, note, 253. of bills and notes payable or indorsed to several persons not partners, 254. when payable to a firm, 254. how transferred by indorsement, 254, 255. one of the firm acts as agent for the others, 254. but one of payees, not partners, cannot, 254, 255. form of instrument, shows its character, 254. indorsement by one with others' assent, 254, 255. when apparently payable to a firm, 255. by one of a firm after dissolution, but before notice, 255. binds the firm in favor of bona fide indorsee, 255. the dissolution ends the agency, 255. power of one partner after dissolution, 255. dissolution by death, effect of, 256. transfer by survivor, 256. by whom, where a note is indorsed or payable to A. for use of B., 256. I and how, where payable to A. assignee, &c, 256. or to one person to order of another, 256. transfer by assignment in bankruptcy, 256, 257. before filing petition, and after act of bankruptcy, 256. taking in good faith and without notice, 256. rsr>Ex. 783 JNDOBSEMENT AND TRANSFER— Continued. rule that assignment relates back, 256, 257. that it does not carry paper held in trust, 257. objects of a bankrupt law, and of insolvent laws, 257. assignment under both, 256, 257. by operation or by force of law, 257. does not operate on property in a foreign state, 257, 385, 386. by insolvent, carries his entire estate, 257. receivers vested with title, when and how, 257, 258. time of transfer, how far material, 258 effect of taking negotiable paper after due, 258. taking it after due, it must be demanded again, Ac, 258. rights of indorser in that case, note, 258. the assignee acquires action against indorsers charged, 258. transfer by blank indorsement of bill not drawn, 258. effect of acceptance of bill not drawn, 258. presumption as to time of indorsement, 258. to a party after acceptance refused, without notice, effect of, 259. taking the bill with notice, 259. subsequent payment to prior holder, note, 259. indorser of an overdue bill or note, liable to what equities, 259. his liability controlled by statute of set-off, 259. terms of our statute, 259, 2G0. where maker of two notes holds demands against payee equal to one note, rule, 260. his demand a set-off against the last note transferred, 260. the English rule allows only equities on the bill or note, 260. not arising out of collateral matters, 260. not adopted here, 260, 261. right of a bank to set-off against its customer, note, 260. a note negotiable after its dishonor, 261. transferred after, it is payable within a reasonable time, 261. and on demand made, 261. set-off allowed in this case, 261. as to set-offs allowed, see Promissory Notes, statutes in respect to. Modbs of Indorsement and Transfer, governed by what law, 261-264. the indorsers liability declared by law of state where he contracts, 185, 262. the contract made at place of delivery, note, 185, 262, 263. the indorser is supposed to have respect to the law of his state, 262. and an indorsement has not the same effect in all places, 262. different liabilities under, 262. the form of bills and notes indicates the particular mode of transfer, 262, 263. payable to bearer, may bo transferred by delivery, 263. to payee's order, by indorsement and delivery, 263. the indorsement is a new contract, 263. so in the act of drawing and accepting, 263, 264. drawn in one state, indorsed in another, accepted in a third, 263, 264. remedy on these several ''ontracts, rights under, 263, 264. particular forms of indorsement, note, 203. 784 INDEX. INDORSEMENT AND TRANSFER— Continued. contract of drawer, indorser and acceptor under general law, 264. how affected by statutes, 264. indorser's contract in Maine, New Hampshire and Vermont, note, 264, 265. their statute in reference to notes, note, 264, 265. an indorsement in blank under law merchant, effect of, 265, 266. indorser's liability on, 265, 266. liable on demand and notice, 266. on a foreign bill, on protest and notice, 266. indorser's liability in Massachusetts, Connecticut and Rhode Island, note, 265, 266, 267. statutes of these states regarding notes, note, 275, 266, 267. indorsement under law merchant, how made, 266-268. meaning of the word indorsement, 267. does not control the form, 267. may be made on the face or on paper annexed, 267. writing the name simply on the back is an indorsement in blank, 267. with an order to pay A. B. it is special or full, 267, 268. advantages of these different modes, 268-270. the indorsement in full, safety of, for transmission, 268, 269. indorsement in blank, transferable by delivery, 269, 270. may be filled up and made special, 270, 271. or special words erased, 271. by holder of the bill or note, when, 271. statutes of New Tork, New Jersey, and Nevada territory, note, 267, 268. conform to commercial law, 267, 268. statutes of Delaware, Pennsylvania and Maryland, 268, 269, 270. of Virginia, North and South Carolina, Georgia, and Florida, note, 271-275. of Alabama, Louisiana, Mississippi, Texas and Arkansas, note, 275-278. of Missouri, Tennessee, Kentucky and Ohio, note, 278-281. of Michigan, Illinois, Indiana, "Wisconsin and Iowa, note, 281-282 of Kansas, Minnesota, California and Oregon, note, 282-284. effect of indorser's taking up by paying dishonored note, note, 271. holder may overwrite blank indorsement, how, 272, 273. not with a guaranty, note or waiver of notice, note, 271, 272, 273. when indorser cannot be charged as such, 273, 274. presumptively chargeable as indorser, 273, 274. indorsement by a stranger, his liability, text and note, 273, 274. may be shown by parol, note, 274. holder may erase indorsement, when, 275, 276. and show title under payee's blank indorsement, 275, 276. no re-indorsement required, 276. restrictive indorsement, constituting indorsee an agent, 277, 278. manner of making and effect of, 277, 278, 253, 254. when not restrictive, note, 253, 278. indorsement with a condition annexed, 279. transfer without indorsement, 279. not regularly of a part of note or bill, 279, 280. INDEX. 785 INDORSEMENT AND TRANSFER— Continued. action here under such a transfer, note, 279. an indorsement for part does not comply with custom, 280. is not in law an indorsement, 280, 281. a memorandum on back, effect of as notice, 281. a conditional delivery of indorsement, effect of, note, 281. without recourse, effect of, how made 282-284. transfers the title simply, 282. without incurring liability as indorser, 282, 283. may be done by any words disclaiming such liability, 283. restricted liability in some of the states, note, 283. when adding agent, treasurer, cashier, is without recourse, 283. adding backer or surety is not, 284. a resolution of directors presumed, when, note, 373, 37ST. the indorsement is presumed to be a double contract, 284. a transfer and a conditional promise to pay, 284. it is both unless a different intent is expressed, 284, 385. transfer made and completed by delivery, 285, 2S6. indorser is in effect a new drawer, 285, 287. averment of indorsement, making, &c, 285, 286. a note has its inception from and by delivery, 286, so of an acceptance or indorsement, 286, an exception, where it is to be given for goods, &c, note, 286. may be transferred without indorsement, 286. but not with the usual presumptions, 286, 287, the assignee takes it subject to prior equities, 287. the indorser a new drawer, in what sense, 287, 2S8. the undertaking of each, presumed stipulation, 287, 288. what the drawing or indorsement implies, . 287, 288, 581. drawer and indorser supposed to stipulate for notice, &c, 288, 581. admission or warranty as to prior parties, 289. that the paper is not forged, 289. that is genuine and valid, 289. that the prior parties are liable and competent, 289. liable where he indorses, as indorser, 289, 290. liable without indorsement, when, note, 290. if he knows it void, or if his title fail, 290. acceptance admits drawing, drawer's signature, 290. and indorsement admits what, 290. Belling of forged bills or insolvent notes, 291. liability of broker selling them, 291. as agent, without disclosing principal, 291. indorsees contract discharged, by payment by prior party, 291. or by release of prior party, 291. or by giving time to prior party, 291. not by taking a new note as collateral, 291. giving time has same effect in equity, after judgment, note, 291. mere indulgence to prior party, doos not discharge, 292. must be by valid contract, to discharge, 292. the indorser not treated exactly as surety, 292. holder not bound to active prosecution, 292, 293, 294. EdW. 99 786 INDEX. INDORSEMENT AND TRANSFER— Continued. and must not disable himself to sue at once, 292. accommodation indorser discharged same as others, 293, 295. though he also has right of action against his principal, 293. liability of surety maker or surety drawer, and his remedy, 293. relation and rights, as between principal and surety, 293, 294. action by surety to recover amount paid, 293, 294. holder has right of action against all the parties, 294. and must respect their rights, as to each other, 294. an accord with prior party, effect of, 294. an agreement to take security and extend time, 294. holder may remain passive and retain his rights, 294. reason why he cannot give time by contract, 294, 295. by giving time, he changes contract, 295. not by giving time on invalid agreement, 295. nor does giving the indorser time discharge prior parties, 295. the prior parties do not suffer by such agreement, 295. the rule is the same when paper is made for accommodation of indorser, 295. accommodation maker and acceptor not discharged by giving time, note, 295. Loss of Negotiable Paper, effect of, on right of action, 295. destruction by fire not a loss, note, 295. common-law rule, and reason of, 295. our statute on the subject, terms of it, 295, 296. applies to bills of exchange and negotiable notes, 295, 296. a negotiable check is a bill, within the statute, note, 296. the act applies only to negotiable paper, 296. which has been lost, 296. not to paper voluntarily destroyed, 296. or burnt up, note, 295. does not apply if paper be found and produced, 296. operates only upon the remedy, 296. does not release holder from proceedings to charge the- drawer or in« dorser, 296, 297. right of parties to protection against claim on lost instrument, ground of, 297-299. no right to demand receipt on payment of a simple debt, 297. difference between that and negotiable paper, 297, 298. negotiable paper lost after due, rule, 297. loss of paper payable to A. B. or order and not indorsed, effect of, note, 297, 302. or specially indorsed to plaintiff, note, 297, 302. or of bank bill severed for transmission, note, 297. discussion of general rule, 298, 299, 300. lost in such condition that it will pass by delivery, 299. bond must be given, note, 299. remedy on, in England, in equity, why, 299, 300. mislaid and destroyed but not lost, case of, 301. accidentally destroyed, 301. statute does not apply to drafts, checks or notes not negotiable, 302. INDEX. 787 INDORSEMENT AND TRANSFER— Continued. not presumed negotiable, 302. in action on original demand, negotiable paper given on, must be produced and surrendered, 302. proof of loss, by whom to be given, 303. proof of condition of paper when lost, 303. voluntary destruction, 303. holder's righc independent of statute to payment, on security given, 304. costs of proceedings, if refused, 304. loss of one of parts of a foreign bill, 304. drawee when to give note for amount, 304. drawee's refusal to return bill to holder, 305. demand and notice, in case of lost note, how made, 305, 306. indemnity to Ludorser, 305, 306. indorser to be charged, in usual way, 305, 306. loss of part of bank note, severed for transmission, 307. action on, 307. holder should publish notice of loss, 307. this notice should be explicit, 307, 308. notice to maker or acceptor not to pay, 308. to bank not to pay check, 308. loss of bank notes, 308. notice should have respect to condition and nature of paper, 308. purchaser of lost or stolen paper, rights of, 309. may hold if he takes it in good faith and for value, 309, 310. usual test of good faith, general rule, notes, 309, 310. INDORSEE, merely an agent, when, 253. is something more than an assignee, 286, 287. who are assignees, 256-258. right to fill up blank indorsement, 271, 272. to strike out indorsements, when, 275-277. INDORSER, his contract governed by what law, 185, 261-264. when he writes his name on blank paper to be used, 92-94. see note giving substance of statutes, 264-285. his contract conditional, 261-267, 291-295. may limit his liability, 277-284. when a maker or guarantor, 273, 274. prima facie defense by, 579, 580. See Indorsement and Indorsement and Transfer. is like and unliko a surety, 565, 566. discharged if maker or acceptor pays, 566. not by mere delay, 566, 570. not by certain agreements with prior party, 566, 570, 569. discharged, by valid agreement extending time, 667-575. by taking new securities that extend the time, 567, 197. discharged if time be given to prior party, 567, 572. reason and extent of the rule, 567-572. not discharged if ho assents to arrangement, 571. not by an invalid agreement, 670-672. is a new drawer, 411. liability of indorser of notes not negotiable, 230. 788 INDEX. INDORSER— Continued. not entitled to insist upon strict demand and notice, 649, 650 See Discharge and Indorsement and Transfer. INFANT, cannot bind himself by note or bill. 64-68. notes and acceptances by, are voidable, 65-68. so is his indorsement, 67. may repudiate his usurious contract, 66. as payee his competency admitted, 67, 68, 250. See Incapacity. INFORMAL BILL, instance of, 174. INITIALS, may be used instead of name, 91, 251. must be shown to have been used instead of full name, 91. INLAND BILLS, origin of, 50, 51, 52. need not be protested, 462, 463, 584, 585. promissory notes on the footing of, 584. not in all the states, see note, 264-283. See Promissory Notes and Bills. INSANITY, incapacitates, 63, 64. acts of insane person presumed void, when, 63, 64. INSOLVENT, discharge of, and its effect, 385, 386. INSTALLMENTS, notes payable in, interest on, 709. INTEREST, on notes and bills payable in another state, 180-184, 715 716. right to stipulate for interest in either, 180. on a mortgage made here to secure an English loan, 183, 184. rule for calculating, note, 35.7. rates of, in all the different states, note, 715, 716. interest, when recoverable by contract, 708-719. when recoverable as damages, 712, 719-722. as a penalty — due bills, 712, 713. is the legal compensation or damage for the detention of a debt, 708, 712. the statute prescribes the highest rate that may be taken, 708. but does not imply a promise to pay at that or any rate, 708. must be made payable by the contract, in terms, 708, 709. the mode and time of payment are matters of agreement, 709. illustrations of the law in this respect, 709. on a debt drawing by contract less than the rate allowed by law the creditor may demand legal interest after the debt is due, 709-712. the creditor has the right to his money when due, and lawful interest is hia legal damages, 708-711, 712. the continuance of the contract rate may bo implied, 710, 711. not where the creditor stands upon his rights, 710, 711. by instituting suit or by demand, 710, 711. or by insisting upon payment, 711. effect of unfair dealing by the debtor, 711. on a note securing more than the legal rate, what interest is recoverable from the day it is due, 711, note, 712. allowed by way of damages for detention of debt, 712, note, 719, 720, 721, recoverable <5n note or bond when no time of payment is fixed, 712. on notes payable on demand, from day of demand, 712, 713. parties allowed to stipulato for interest by way of penalty, 713. cases illustrating rule, note, 713. INDEX. 789 INTEREST— Continued. interest on a due-bill, of a certain form, note, 713. allowed on money advanced without any stipulation, 713. at the rate allowed where advances made, 713, 714. where the contract to repay is made, 713, 714. notes, &c, are made where they are delivered, 714. though signed in another state, 714. allowed on a note payable at large, at the rate of the place where delivered, 714. in general, to be recovered at the rate of the state where payable, 714. the parties are presumed to stipulate for that rate of interest, 715-717. rate of interest in New York, note, 715. in the six Eastern states, note, 715. in New Jersey, Delaware, Pennsylvania and Ohio, 715. in Michigan, "Wisconsin, Iowa, Missouri and Arkansas, 715. in Maryland, Virginia, North and South Carolina, Georgia and Florida, 715, 716. in Illinois, Indiana, Kentucky and Tennessee, 716. in Alabama, Kansas, Mississippi and Louisiana, 716. in Texas California and Oregon, 716. where a contract or note is made in one state payable in another, it may bo with interest at the-rate in either state, 717, 718. alteration in the rate by law, its effect on existing contracts, 719. when allowed as damages, to be computed by what law, 719-722. at the rate permitted at the place of payment, 719-722. no matter where the action is brought, 719-721. where the law of the place of payment must be proved, text and note, 720, 722. the laws of another state, not proved, are not noticed, 721. the place of performance governs as to the interest, 722. rule applies to checks, bills, notes, &c, 722. in an action here, the foreign interest reckoned only till the recovery, 722. after that, it bears our rate of interest, 723. INTERPRETATION, of contract by what law, 176-186. INTOXICATION, effect of, or capacity to contract, 64. complete and total, it incapacitates, 64. more or less complete, it is a material circumstance in cases of fraud, note, 64 effect of an inquisition, finding a party an habitual drunkard, 64. when intoxication may be pleaded as a defense, 325. when by an indorser, note, 688. form and substance of such a plea by an indorser in an action against him by an indorsee, note, 688. L 0. U. is not itself a promissory note, 132. but is so when it contains a promise to pay, 132. when need not be stamped, note, 132. valid as to consideration, when, note, 315. similar instruments, such as duo bills, 132. must be payable to a person by namo, or to bearer, to be good as a promissory note, 131, 132. and should contain or import a promise to pay, 131, 132. IOWA, statutes of, relating to notes, bills and bonds, 282. 790 INDEX. IOWA— Continued. damages allowed on bills, 745. rate of interest and law of usury in, note, 715. J. 0EN T T AND SEVERAL NOTES, liability of makers of, 219, 244, 293. where one of them signs as surety, 244, 293. is liable thereon as a principal maker, 244, 293. but may call upon the holder to proceed and collect of the principal maker, 244. consequences of holder's neglect to do so, 244. in several of the states the surety-maker is liable on the note just the same as the principal, 244. presentment must be made to each of the joint-makers of a note, who are not partners, 160. but a presentment to one of two married women, joint makers of a note, act- ing as partners, is sufficient, note, 160. joint indorsers, not partners, must be separately notified, 160. presentment to one of the firm makers of a note is sufficient, 160. and notice to one of the firm is notice to all, 160. form of the action against the surety-maker, 219. at common law the action on the note should be either jointly against all, or several, 293. may show. the character in which he signed against his principal, 293, 573. or against his co-surety, 293-573. extending the time on a note by a valid agreement with the principal maker, discharges the surety, 572, 573. being signed as surety, the holder must respect his rights as such, 572. must treat him as such even after judgment, note, 572. the party taking the note with knowledge that one is surety for the other, must respect his rights, text and note, 573. but the party taking it without such knowledge is not so bound, 573. and does not release by extending time, 573. so as to accommodation acceptor, when, note, 573, note, 535, 575. order of liability between sureties, 573. contribution between sureties, 573. effect of discharge of one of the joint and several makers by erasure, 573, 574. by part payment, 574. by release qualified, 574. a firm note in terms joint and several, suit on, note, 574. joint debtors must bo sued jointly, 574. remedy if not so sued, by plea in abatement, 574. effect of discharge of one by act of creditor, 574. compromise with one allowed in this state, 574. or with one of a dissolved partnership, 574, 575. the surety njaker of a joint and several note, on paying it, has a right to re cover the amount of the principal maker, 533, 634. for money paid, 533, 534. proof in an action against the makers of a joint and several note, 681. IXDEX. 791 JOINT AND SEVERAL INDORSEES— Continued. •when the note lias been altered by adding a new name to the note, effect of proof, 681. as against the party so signing, note, 681, note, 682, 683. a note beginning "I promise " and signed by two persons is joint and several, 681, 682. when a new party signs it, it operates differently as to prior makers, 682, 681. See Promissory Notes and Bills. JUDGMENT, entered in dollars and cents, "J 11, T12. bears legal interest only, 111, 712. JURY, questions of fact for, 472, 473, 611-614 questions of law for the court, 593-599, 625. K. KANSAS, statutes of, relating to bills and notes, note, 282. damages allowed on bills, 748. rate of interest and law of usury in, 716. KENTUCKY, statutes of, relating to notes and bills, 279. damages allowed on bills, 746. rate of interest and law of usury in, note, 716. KNOWLEDGE, of dishonor not sufficient, 626, 581. promise with, a waiver of laches, 650-655. that drawee has no funds, etc., 639-647. that paper will not be honored, 453. that paper is illegal or invalid, 316-324. of agent, binds principal, when, 105. when presumed and when not, 347, 348. L, LACHES, how waived, 478, 650-055. what are, in presenting for acceptance, 389-395. in presenting check, 396-398. waiver by part payment, 653. conditional promise, effect of, 652-655. proof that promise was made with knowledge, 653, 654. by distinct admission of liability, 654, 655. See Notice of Dishonor, Presentment for Acceptance, or for Payment LADING, bill of, appended to, effect of, 422-424. how far negotiable, note, 61. LARCENY, of bill or note, proof of, and its effect, 309, 310. changes burden of proof, C91. LAW-MERCHANT, what is, 46. contract of indorsement under, 265. does not prevail in all the states, note, 264-283. LETTER, direction of enclosing notice, 608, 610. LETTER OF CREDIT, not negotiable, 239. See Guaranty. two classes of, general and special, 239. LEX LOCI, where it applies, 177-180, 261-204. applies to indorser's contract, 2G1-264. 792 INDEX. LEX LOCI— Continued. to drawer's contract, 263, 264. and to that of the acceptor, 385, 386. prevails in regard to interest, 713-719. and as to damages, 716-722, 709. LIMITATIONS, statute of, runs from what time, 512. on notes payable on demand, 512. begins to run on notes payable on demand from date, note, 67 9 e , 512. not so if payable a certain time after demand, note, 512. within what time action may be brought, 67 9 C . the statute operates upon the remedy merely, 679 c . the time commences to run from the day the action accrues, 67 9 C . the action accrues the day after the paper is payable, 67 9 C . mode of counting the time, 67 9 C . action how commenced, 679^, 679 d . against several joint debtors, 679 c . by issuing process under the Code, 679d. effect of absence from the state, 679 d . time of absence not included, 679 d . nor time of disability, 679 d . an acknowledgment in writing, necessary to take case out of state, 679d. or a promise in writing to pay, 679 d . or a payment of principal or interest on the debt, 679 d . payment or promise by one joint debtor, effect of, 117, 118-120. when one of them refers the holder to the other, 679 a . the new promise must be to the creditor or to his agent, 679 d . and if conditional, must be shown that the condition was fulfilled, 679d. LIMITED PARTNER, his responsibility, &c, 107-109. LOSS OF RILLS AND NOTES, negotiable, 295-310. the holder has no action on, at law, 295-303. under the statute of this state, 295-297. English rule in relation to, 297-300. party called on to pay must be indemnified, 295-301, 305. when not so entitled, 301, 302. proof that bill or note has been destroyed, 302-304. or not indorsed when lost, 307. demand of payment of lost bill or note, 306. severing bank bills for transmission, loss of, 307, bona fide purchaser of lost or stolen bills and notes, 308-310. See Indorsement and Transfer. LOUISIANA, statutes of, relating to bills and notes, 276. damages allowed on bills, 742. rate of interest and law of usury in, note, 716. LUNATIC, cannot bind himself by contract, 63, 64. after office found, his contracts are void, 64. before that they are voidable, 64. he is like an hrfant, 63, 64. M. MAINE, law of, relating to negotiable paper, noto, 264. INDEX. 793 MAINE— Continued. damages allowed on bills in, 736. rate of interest and law of usury in, note, 715. MAKER, contract by, governed by what law, 185. MALA FIDES, effect of taking paper in bad faith, 317. with notice of diversion, 316-324, 347, 348. MARKSMAN, may sign or indorse by mark or initials, 150, 251. proof of his signature, 702. MARRIAGE, effect of, on rights of women, 68. in relation to her separate estate, 68-71. vests notes, 4c, in her husband, when, 71. MARRIED WOMAN, cannot bind herself by contract, 68-72. may if her husband is absent from the country, when, 68. and may bind her separate estate by note, &c, 68-71. notes payable to, belong to her husband, 71. may act as agent for her husband, 71, 72. charges her separate estate, when and how, 68-71. for its improvement, 68-71. for debts incurred on the faith of it, 68-71. ^ cannot charge her estate, when, 69. rights under statutes of 1848 and 1849, 70. does not bind herself personally, 70. charges her estate, when, 70. not by signing a note with her husband, 70. nor where the intention is not expressed, 70. by budding on her property, 71. not bound by covenant, 71. not estopped, 71. notes to, vest in whom, 71, 72. may indorse, when, 71. authority from husband, 71, 72. agency, how shown, 72. her act without authority, void, 72. husband's election, 72. failure to exercise, 72. an indorser cannot show the maker a married woman, 71. statutes of 1860, scope of, note, 72. wife may carry on business, 72. and give a valid note for goods, in, 72. MARYLAND, law and statutes of, relating to negotiable paper, note, 270. damages allowed on bills in, 739. rate of interest and law of usury in, note, 715. MASSACHUSETTS, law of, relating to negotiable paper, note, 265. damages allowed on bills in, 730, 737. rate of interest and law of usury in, note, .715. MEMORANDUM, on notes and drafts, effect of, 145-148, 281. on separato paper, 145-147. does not effect noto or bill, 146, 110. MERCHANTS, bills formerly drawn only between, 51, 52. MICHIGAN, statutes of, relating to bills and notes, note, 281. damages allowed on bills in, 744. Edw. 100 794 INDEX. MICHIGAN— Continued. rate of interest and law of usury in, note, 715. MINNESOTA, statutes of, relating to notes and bills, note, 283. damages allowed on bills in, 748. MISDESCRIPTION, of bill or note, effect of, 472, 473, 588-601. misstatement in notice. 591-593. MISNOMER, of the payee,' 91, 92, 251. proof in respect to, 685. MISSISSIPPI, statutes of, relating to bills and notes, note, 277. damages allowed on bills in, 742. rate of interest and law of usury in, 716. MISSOURI, statutes of, relating to notes and bills, note, 278. damages allowed on bills in, 745. rate of interest and law of usury in, 715. MISTAKE, in drawing notice, 472, 591-593. in calculating interest, 356. MODES of indorsement and transfer, 262-294. indorsement in blank and in full, 267. advantages of each, 267-276. restrictive indorsement, 277-280. qualified indorsement, 282-284. unqualified, is a double contract, 284. delivery completes contract, 285, 286. the indorser a new drawer, 287. transfer of negotiable paper without indorsement, 286, 287. MONEY HAD AND RECEIVED, &c, action for, under former practice, 665, 666. MONEY, negotiable notes and bills must be payable in, 134-138. should be surrendered only on payment in, 506, 507. foreign, converted into our currency, 137, 138, 726-729. MONTH, meaning of term, 513. where note or bill runs from one into another, long and short months, 512-515 N. NAME, mistake in writing, 91, 92, 251. proof in respect to, 685. contained in notice, 591, 592. NECESSARIES, notes given by infants for, 65, 66. NEED, direction to apply in case of, 175, 401, 402. NEGLIGENCE, in making inquiry, what is, 609-614. it is want of diligence, 607, 608, 647, 649. See Notice of Dishonor. NEGOTIABILITY, words of, 164-168. of state and railroad bonds, 60, 61. of notes in several states, note, 264-285. NEGOTIATION, see Indorsement and Transfer, Sale, and Purchaser. NEYADA, statutes of, relating to notes and bills, note, 267. damages allowed on bills, 749. NEW AND OLD STYLE, difference between, 513, 514. NE"W HAMPSHIRE, law and statute relating to notes, noto, 264. rate of interest and law of usury in, note, 715. ixdex. 795 NEW JERSEY, statutes relating to promissory notes, note, 267. rat6 of interest and law of usury in, note, 715. NEW YORK, statutes of, relating to bills and notes, note, 267. to acceptances, 409-415. damages on bills in, 734, 735. usury laws of, 349-367. rate of interest in, note, 715. NON-ACCEPANCE, proceedings on, 444-478. holder must give notice of, 444, 445. of notes and bills received conditionally, 445. failure to give notice, effect of, 446. presumptions of injury, 446, 447. exceptions to the general rule, 446-448. where there is want of funds, Ac, 449-452. no effect on the indorsees rights, 452-454, effect of death of drawee, drawer or indorser, 454, 455. bankruptcy and absence of drawee, &c, 455, 456. service of notice, how made, 456, 457-459. delay caused by sickness or accident, 458. when Sunday or a holiday intervenes, 459. duty of an agent to obtain absolute acceptance, 459, 460. protest, when necessary, and how made, 461, 462. notarial certificate, what evidence of, 463-467. inland bills and notes need not be protested, 468. notice of dishonor is necessary, 469-472. proceedings on, in special cases of bills received in payment, duty of holder on, 445. or as a conditional payment, 445. or on a precedent debt, 445. for want of notice drawer and iudorser discharged, 445, 446. exceptions to the rule, presumptions, 446-448. burden of proof rests on whom, 447. want of notice, of no avail against a bona fide holder, when, 447, 448. available if transfer made after due, 448. proceedings under what law, 448. notice need not be given to the drawer if he has no funds, &c, 449. he is not injured, and has no right to draw, 449, 450. where he has a right to draw without funds, 450, 451. the drawer of a check, who stops its payment, note, 450. in the case of a running account, 451. where drawer has no dealings with drawee, &c, 450, 452. where the drawing is fraudulent, 450-453. or the drawer withdraws his fund, 450. or forbids acceptance, 450. draws with no expectation that his bill will be honored, 451, 452. notice must bo given to indorser, though not to drawer, when, 452, 453. even if drawer have no funds, 452, 45.'!. otherwise in cases of fraud, w. 102 810 INDEX. PLEADING- Continued. under the old forms of pleading it was enough if plaintiff made out a forma* title, 660-662. under the present system it must appear that plaintiff is the real party, 660, 662. rule in England, 662. pleading indorsement by corporation, note, 662. averments, showing title in plaintiff under Code, 662-665. showing transfer by indorsement, &c., 663-665, 674. recent decisions illustrating rule, notes, 664, 665. showing transfer of paper not negotiable, text and note, 664. action against principal and surety-maker of a note, note, 665. against parties to paper on original consideration, 665, 666. transfer without indorsement, &c, 664, 665. must allege presentment and notice, when, 667. theory and incidents of a negotiable note, 667, 668. recovery on, against maker or indorser, 668. present rules of pleading, 668-670. complaint in a special capacity, 669, 670. as receiver of a bank, 669, 670. as a personal representative of deceased, 670. recent cases on the point, note, 670. answer showing mistake in, note, 670. must allege or imply delivery, &c, 670, 671. suit prematurely commenced, effect, 672. need not allege demand, &c, against acceptor or maker, 672, 673. action on note payable to bearer, 673. averments in suit against drawer or indorser, 674-677. of demand, protest, notice, Ac, text and note, 674, 675. dispensing with either, 675, 676. answer denying material allegations, sufficient, note, 676. what denials not frivolous, note, 676. in suits on negotiable paper, no consideration need be averred, unless, Ac., 677. rule in suits on paper not negotiable, 677. rule of evidence not the same as rule of pleading to let in a defense, text and note, 678. pleading in the case of a diversion of accommodation paper, 6T8. want and failure of consideration, 678, 679. mode of showing a right to interpose a defense, 679. answers and counter-claims held insufficient, note, 679. actions of trover, when and how maintained, 679a. allegations and proof in the action, 679a. measure of damages in, 679b. effect of a recovery in, 679b. when and for what purposes a suit in equity may be brought, 679b. PLEDGING OR SALE of notes and bills of factor, 252, 658. POSSESSION, evidence of title to negotiable paper, when, 494, 495, 537-540, 684. not evidence of title to notes and drafts not negotiable, 216, 217. evidence of title to negotiable paper acquired after maturity 690. of indorsed check, evidence of payment, 553. POST-DATING, does not affect bill or note, 151. INDEX. 811 POST-DATING— Continued. or ante-dating, 151. the French law as to indorsements is different, 175, 718. post-dating a check, note, 151. POST OFFICE, service of notice through, 602-607. in relation to foreign bills, 608. directing notice, 608, 609. POUND STERLING, value of, 726. where no proof of value is given, 726. its real par value here, note, 726. POWER OF ATTORNEY, how construed, 85-89. PREMIUM AND SUBSCRIPTION NOTES, 377. liability on a premium note, 377. when given as part of capital, 377. in the hands of a bona fide holder, 377. on subscription notes, 377. PRESENTMENT FOR ACCEPTANCE, 386-405. the holder has an interest in an early presentment, 386-388. of bills payable after sight or demand, 386, 387. of bills payable after date or on a day certain, 387. after sight bills to be presented with diligence, 387-395. effect of a general custom, 392-394. of checks and inland bills, 396-398. hours and place of, 399. to whom and by whom, 400-402. duty of a collecting agent, 402-405. of bills at sight, after sight or after demand, must be made within reasonable time to charge indorser, 386, 387. what is reasonable time, a question of law, 391. payable after date, or on a day certain, need not be presented till when, 387. what diligence required in presenting, when payable after sight, 387, 388. in presenting foreign bills, 388, 389, 390-395. when negotiated from place to place, 389, 398. when not negotiated, but purchased on speculation, 392-395. the interest of both parties considered on question of diligence, 395. what diligence in presenting inland bills, after sight, 389. when negotiated, text and note, 389, 390. what delay reasonable and what unreasonable, 389, 390 analogy with notes payable on demand, 390. demand notes, when to be presented, 390. to shut out a defense thereon, 390. to charge an indorser thereon, 390. a promissory note, its resemblance to a bill, 390, 391. the time for presenting a bill, a matter of custom, 391, 392. what delays in, will bo excused, 392. and what delays will not bo excused, 392. object in purchasing a bill, when considered, 392-395. checks are bills of exchange, 396. wheo foreign bills, '■'■'■"'>■ drawer of when discharged, :;no, :;97. by delay in presenting, 396-398. 812 INDEX. PRESENTMENT FOR ACCEPTANCE— Continued. should be presented when, to charge indorser, text and note, 398. as early as the day after date, or receipt of, 398. but sufficient if deposited in bank the day after, note, 398. though the bank always presents the day after, 398. what delay excused, if check be negotiated, note, 398. or on a demand draft not negotiated, note, 398. whether foreign or inland draft, holder must not lock it up, 398. must forward it in due course of business, 398, 399. should be made at what time of the day, 399. when on a bank, 399, 499. when addressed to a particular place, 399, 381. in case the drawee has absconded or never lived there, 399, 484, 490 when not addressed to a particular place, 399. in case the drawee has removed, 399. to another state or country, 399, 400. manner of presenting, should be personal, when, 400. should be made by the holder, 400. or by his agent, 400. party in possession may present, 400. presentment, when drawn on two persons, not partners, 400, 401. when drawn on partners, 401. in case one of them be dead, 401. when drawn on an individual since deceased, 401. in case drawee be insolvent, or has absconded, 401, 402. when application should be made to other parties, 402. collecting agent, duty of, in presenting, 402-405. of bills payable after date, need not be made, 444. PRESENTMENT FOR PAYMENT, 479. When necessary, 479-494. not, as against maker or acceptor, 479-482. effect of making bills and notes payable at a given place, 479-481. severed bank bills, demand when necessary, 482. exception in the case of a pledge, 482. to charge drawer or indorser, 483, 484. diligence, when sufficient, 483-486. in case of death or insolvency of maker or acceptor, 486-489. absence, or absconding of maker or acceptor, 484-4S9. as to drawer, want of funds excuses, 491. accident preventing, 492, 493. an express condition precedent, 493. proof of demand of note falling due in another state, note, 465. bank notes or bills treated the same as other notes or bills, 481, 482. readiness to pay at place named, a matter of defense, 481, 482. transferred overdue, must be again demanded, 484. payment of a note must be demanded as against the maker, when it ia se- cured by collaterals, 482. the holder has no right to sell negotiable paper received as collateral, note 482. where a demand cannot be made, diligence is sufficient, 484—486. proper allegations in respect to, 484. INDEX. 813 PRESENTMENT FOR PAYMENT, When necessary— Continued. what is diligence in special cases, 484-486, 4S 8-490. in following up inquiries for the maker, note, 484. m case of removal from the state, TDEX. 821 PROMISSORY NOTES AND BILLS— Continued. useful in construing instrument, 172. meaning of "and charge as per advice," 172, 173. without further advice, 173. or as already advised, 173. such words do not operate as a condition, 173. the address of a bill should be to the drawee by name, 173. how usually written, 173. is sufficient, when it indicates proper person, 173. being addressed to No. of house, 173, 174. a stranger cannot accept, unless for honor, 173, 174. number of parties to bill, 174. where a party, draws on himself, 174. the draft is in effect a note, 174. ambiguous instruments, a draft or note, 174, 175. a draft by one on another officer of same corporation, 174. may be treated as a note, 174. "in case of need apply," &c, use and meaning of, 175. a direction to return without protest, 175. subscribing witness, should be called, 175. his testimony when not conclusive, 175. admission sufficient without calling, 175, 176. but the note must be clearly identified, 176. a note payable in property, is not negotiable, 176, 210. but is negotiable if payable in money or property at payee's option, note, 176. payable in specific articles, not a note within statute, 210. but is a common and valid contract, 210. when given for value received, 210, 211. pleadings in action on, and proof, 210, 211. indorsement and transfer of, 213-215, 210. acceptance of drafts payable in property, effect of, 211, 212. conditional, becomes absolute when, 212, 213. complaint upon, allegations in, 212, 213. orders for goods, evidence of what, in hands of drawee, 213. note payable in land, recovery of money on, when, 214. construction of contract, place of payment, 214-216. when note made by merchant, manufacturer" or farmer, 214, 215. od demand, at what place, 215. where the maker, a merchant, removes his store, note, 215. when payable in ponderous articles, 216. possession of such notes or drafts, not evidence of titlo, 216, 217. See title, Notes and Drafts not negotiable, joint and several makers of a note, how lial >le, 219, 293, 666. when surety maker not to be treated as surety, 535, 573, 574. when to be treated as a surety, 573, 574. liability of parties to joint and several notes, 244. effect of adding swrety to signature of maker, 244, 573. notice from surety to thi to proceed and collect, 244. effect of failure to comply, 244 CONSTRUCTION OP BlLLfl AN'I) XolKS, IlY WHAT LAW, 176-186. construed so as to carry out the intention of the parties, 176. 822 index. PROMISSORY NOTES AND BILLS, Construction op, by what law— Continued. all parts of instrument to be considered, 177. if its meaning be doubtful, how to be sought for, 177. in situation of parties, in course of trade, usage, 177. or by proof of meaning of technical terms, 177. by what law, by law of place where the contract is made, 177. except when it is to be performed in another state, 177. presumptions in respect to, 177, 178. laws restricted to states adopting them, of no force beyond, 178. allowed by courtesy to accompany contract, 178. when not allowed, 178. insolvent laws, discharge under, note, 178, 385, 386. the remedy is given by the law of the forum, 179. and regulates the transfer, statute of limitations, &c, 179. procedure, evidence, right of arrest, &c, 179, 180. when contract made in one state to be performed in another, 180-184. may stipulate for rate of interest in latter, 180. or in the former, 181. if void under law of both states, which law determines the fate of the instru- ment, 180, 181, 182. a note with interest simply, draws the rate of, at place of payment, 181, 183. general principle stated, 181, 182. the place of delivery is the place where a contract is made, 181, 182. delivery by letter, 182, 185. mortgage on laud here to resident of England, 183. may bear what interest, 183, 184. rule' in Louisiana and in England, 183, 184. protest of a foreign bill necessary, 184. how made and how authenticated, 184. engagement of the drawer, by what law defined, 184, 185. of the indorser, by what law, 185, 186. with respect to protest and notice, 185, 186. wnen his indorsement for accommodation is delivered in another state, notes 185, 186. a guaranty sued on in another state, 186. Delivery, a note has no legal inception until delivered, 186. becomes a contract only on delivery, 186-188. after that, valid in origin, it may be sold for any price, 187. though void for usury, the indorser of, is liable on, 187. it is made where it is delivered, 187, note, 185. delivery after date, may be shown, 187. payable according to terms from date, just the same, 1S7. delivery inferred from possession, when, 1 88. inference as to time of transfer, 188. that it was for value, in due course, 188. presumption, how overcome, 188. implied guaranty, on a transfer of title, 188, 191. that the paper is valid and genuine, 188. cases of usury and forgery, 188, 189. fictitious payee, 189. INDEX. 823 PROMISSORY NOTES AND BILLS, Delivert— Continued. when forged indorsement is fatal to the title, and when not, 190, 189. acceptance admits drawer's signature, 190. but not the indorsees, 190. payment by acceptor through mistake, effect of, 190. his want of diligence, 190, 191. the indorser warrants paper not forged, 191. scope of his engagement, 191. Payment by Note or Bill, 192-207. giving note or bill on a debt, not regarded as payment, 192. unless the agreement is express to that effect, 192. so as to the note of one of several joint debtors, 192, or partners, 193. giving the note of a third person in payment of a prior debt, 193. not a payment, unless received as such by agreement, 193. presumption, when a third person's note is given on a present sale, 195» 196, 203. how rebutted, text and note, 196. whether the note of one of two partners discharges their debt, when received as payment, 194. the note of one with part payment does, 194. and part payment with the note of a third person in full payment of a larger debt, does, 194. though not paid according to agreement, but received, 194. further security a sufficient consideration, 194, 195. effect of indorsing or guaranteeing the note or bill given in payment, text and note, 196. giving a negotiable note or bill is payment sub modo, 196. must be surrendered in an action on original debt, 196. not so, as to drafts and notes not negotiable, 197. taking a bill or noto payable at a future day, suspends the right of action on the debt, when, 197. duty of party taking a bill to present it, &c., 197, 198, 199. presumed a payment, 198, 200. part performance of an agreement, giving note or bill, 199. effect of paying note or bill given on a debt, 200. renewal note, whether a payment of prior note, 200. or collateral, 200. effect of failure in diligence to collect bill, 200, 201, 204. not material whether note or bill be given on prior or present debt, 201. it must be received in payment by agreement, 201. not presumed a full payment, 201. rule in Massachusetts and some other states, 201, 202. as to negotiable paper, 201, 202. general rule, and presumption in respect to, 202, 203. such paper to be surrender"), v. h< n, 203, 204. presumption when taken on a present sale, 203, 204. when taken on prior debt, 203, 204. refusal to guaranty or indorse, 203, 204. principle of law, payment in property tbe same, 204. the original debt revives, when, meaning of ter;n, 201, 205. agreement to receive note on an executory sale, to be performod, when, 205. 824 INDEX. PROMISSORY NOTES AND BILLS, Payment by Note or Bill— Continued. not if maker fail before delivery of goods or note, 205. the goods being delivered, the note must be received, 205. delivering counterfeit notes on a debt is no payment, 205, 207. neither is the delivery of the notes of a broken bank, 206, 207. neither party knowing of its failure at the time, 206. rule different in some states, 206. paying over forged notes a nullity, but must be returned promptly, 207. so as to the notes of a broken bank, 207. notes under seal not negotiable, 208-210. in some of the states they are, 209. remedy on, 209, 210. See Promissory Notes, statutes in respect to. ■Notes and Drafts not negotiable, Consideration, Indorsement and Transfer, Pre' sentment for Acceptance, Acceptance, Presentment for Payment, Payment, Notice of Dishonor, &c. PROOF OP CONSIDERATION, in general not necessary, 56, 78, 315. pleaded and proved, when, 209-217. presumptions in favor of, 312. 313. accommodation paper, 315-324. relation of parties to, 373-377. proof against maker or acceptor, 681, 682. where defense is allowed, 691, 692. PROPERTY NOTES AND DRAFTS, 210-217. damages on, 723-725. PROTEST, when it must be made, 50, 184. for non-acceptance, how made, 461. of notes and iuland bills, 462, 463. certificate of, when evidence, 463-467. protest for non-payment, when necessary, 581-583. according to what law, 585, 586. part of the custom, mode of, 581. by notary, when and when not, 5S1, 582. of notes and inland bills, 584, 585. must be shown, when, 694. See Notary, Certificate. PUBLIC POLICY, contracts contrary to, 338-347. PURCHASER, of negotiable paper overdue, 56-57, 259-261. of negotiable bonds, 60, 61. of note with memorandum on the back, 281. with notice implied, 317. with notice of diversion of accommodation paper, 316-324. of notes and bills rendered void by statute, 337. of same made in another state, 348. when chargeable with notico of illegality, when not, 347, 348. in good faith, 371. and for value, 372, 373, 425. purchaser of partnership paper, 100-103. of such paper signed by firm as surety, 103, 104. See Bona Fide Holder. INDEX. 825 Q. QUALIFIED ACCEPTANCE, effect of, 142-145, 419-424. releases drawer and indorser, when, 428-430. R. RAILROAD BONDS, when negotiable, 60. rights of purchaser in good faith, 60. liability of indorser of, 60. RATIFICATION of the act of an agent, 87. no ratification where there is no assumed authority, 109. RECEIPT should be taken, when, 575-580. should be indorsed on note, when, 575-578. party paying entitled to note or bill, as voucher, 576. right to a receipt, general doctrine, 576, 577. custom of banks, presumption in respect to, 577. may be contradicted, not when a contract, 578-580. no right to, in what cases, 578. no right to demand surrender of paper, when, 578, 579. receipts in full, not entitled to, 579. usage to give receipts, 579. payment sub modo, when pleaded as defense, 579, 580. accord and satisfaction, what is, 580. RE-EXCHANGE, not allowed on debts and notes, 725-729. what is, on bills of exchange, see Damages, Interest, 730-734. RE-ISSUING notes and bills, 261, 258, 259, 564. RELEASE of drawer and indorser, 291-295. by giving time to maker or acceptor, 565-573. must be by valid contract, 565-568. by giving time to prior indorser, 569. what does not work as a release, 570, 571. must be a consideration for, 571, 572. of surety makers of notes, &c, 572, 573. of a joint maker, effect of, 573, 574. parties accommodated, not released, 575. by surrender or by receipt of paper paid, 575-579. on receipt of part payment, 580. See Discharge. REMOVAL, by maker or acceptor, 159, 160. from residence in the state, 159, 160. of principal debtor in case of guaranty, 23G, 237. RENEWAL of notes and bills, effect of, 351, 352. by a partner, when, 118-120. REQUEST TO PAY, equivalent to an order, 160. REQUISITES of drafts and negotiable notes, 124-175. essential qualities of, 124. must-be payable to some person, 125-132. exception, in case of a fictitious payee, 125-128. or other party, our statute, 129, 130. payable to bearer, &c., 130-132. duo bills, Ac, are good promissory notcB, seo Promisory Notes and Bilk, 132. Edw. 104 826 INDEX. RESTRAINING LAW, effect and operation of, 15-19, 347-349. RESTRICTIVE INDORSEMENT, see Indorsement, and Indorsement and Trantfw. RETOUR SANS PROTET, direction, effect of, 115. RHODE ISLAND, statutes relating to notes and bills, note, 267. damages allowed on bills, 738. rate of interest and law of usury in, note, 715. s. SALE of negotiable paper, what it implies, 289-291. to a person in another state, effect of, 348. sale of, at an under value, 352-355. sale of, at an under value by indorsement, 353. not usurious here, 353. of valueless articles, void, 329-333. of worthless and illegal paper, 348. SATISFACTION, accord and, what is, 579, 580. compounding with maker or acceptor, 575. SEALED NOTES, in general not negotiable, 208-210. see Statute Laws of the different States, 264-284. SETTLEMENT, proof of, 579. giving of a note prima facie proof of, 579. is payment sub modo, 579, 580. SECURITY, collateral, effect of taking, 627, 628, 354. for a debt evidenced by a draft, 380. SECRET PARTNER, when bound by acts of firm, 109. SETS OF BILLS, form but one, 161-164. SET-OFF, when allowed, 259-261. partial failure, when allowed, 333-335. SIGHT DRAFTS, when presented, 155, 386-388. grace allowed on, 523. under our recent statute, note, 523. foreign, when presented, 388-395. laches in presenting, 389-395. in presenting a bank check, 396-398, 481. at what hour and place, 399. where there are several drawees, 400, 401. in case of drawee's death, 401, 402. duty of collecting agent, 475, 476, 402-404. SIGNATURE, how proved, 703-707. by attesting witness, when, 701-703. SILENT OR SECRET partners, when liable, 107-109. SOUTH CAROLINA, statute relating to bills and notes, 272, 273. damages, allowed on bills, 740. rato of interest and law of usury in, note, 715. SPECIE, see Money. SPECIAL PARTNER, when bound by acts of the firm, 107-109. SPIRITUOUS LIQUORS, notes for, illegally sold, 339, 558, 559. STERLING, meaning of, 725, 726. how converted into our money, 726-729. STAMPS, certain stamp duties are levied upon instruments, documents, &c., by act of Congress, 751. INDEX. 827 BTAJfPS— Continued. including what negotiable paper, 151, 152. consequence of not stamping such instruments, 151, 155-. at what time the instrument must be stamped, 151. and in what manner, 160. construction of the statute, 153, 154. the amendment to the statute, 151, 152. inference from terms of amendment, 155. required on inland bills, 150-152. on drafts and orders for over $20 in money, 150-152. on checks proper, and sight drafts, 150-154. on memorandum checks, receipts, &c., 151, 153. on any paper, evidence of money to be paid, 151. on promissory notes, 151, 152. on contracts, 150, 158-160. on certificates of deposit, 150, 154. on foreign bills of exchange, 151. on foreign letters of credit, 150, 154. terms of the English stamp acts, 155, 156. decisions under them, 156-158. unstamped bills, notes, &c, not receivable in evidence, 155, 156. in furtherance of the object for which they were made, 156. not even to take a case out of the statute of limitations, 156. may be looked at by the court, 156. may bo received in evidence for what purpose, 156. intent of the statute, and theory of decisions under it, 156. receiving unstamped bills, &c, on prior debt, 156. effect of so doing, 156. when may and when may not be proved, 156, 151. agreement to give note, enforced in equity, 151. a payment may be applied on unstamped bill, when, 151. alteration of bills, &c, when they require a new stamp in consequence, 151. and when they do not, 151. the English acts more specific than ours, 158. many of their decisions inapplicable here, 158. caro to be taken under our statute, 158. drafts or orders payable in goods, 158, 159. when contracts and when not, 158, 159. drafts or orders payablo out of a fund, 159. or on an uncertain event, 159. a bank check, when it becomes a bill, 159. a note payable in goods — a promissory note? 159. the stamp to bo canceled, by whom, 160. and in what manner, 160. the statute being public, all men must take notice of it, 160. when an instrument may bo presented to the Commissioner to be stamped aa not requiring a stamp, 1G0. the effect of such stamp, 160. provisions of the stamp acts, with schedule annexed, 162-111. BTATUTE OF FltAUDS, 222-234. tendency of decisions under, 222-226. 828 INDEX. STATUTE OF FRAUDS— Continued. in the different states, 223-230. English rule, 227. original undertaking, 229-232. See Guaranty, and Surety. STATUTES of different states, note, 264-284. dissimilar in many respects, 266-284. in relation to rates of interest and usury, note, 715, 116. See Promissory Notes, statutes in respect to, Indorsement and Transfer, Consideration, Acceptance, Notice of Dishonor, Limitations, Usury, Interest, Stamps. STATES are foreign to each other, 47-49, 582. and their laws are also, 177-185, 348. STATING PROCEEDINGS, by agreement, effect of, 565-570. STOCK- JOBBING CONTRACTS, 370. when statute does not annul notes, &c, founded on, 370. other illegal contracts, 367-371. STRIKING OUT INDORSEMENTS, 271, 275-277. STYLE, old and new, difference between, 513, 514. SUBSCRIBING WITNESS, 175, 176. proving instrument by, 701-703. must be called or his absence accounted for, 701. proof of his signature, sufficient when, 702, 703. SUM PAYABLE and recoverable, 168, 708-749. interest the usual measure of damages, 708. interest secured by contract, when, 708-719. recoverable as damages, when, 711-722. on debts and notes payable in another state or country, 714, 718-722. on notes payable in specific articles, 723-725. on note payable in another currency, 725, 726. exchange not allowed on debts and notes, payable in another country, 725-729 on bills of exchange under law merchant, 730-734. under statutes of several states, 734-749. rate of interest in several states, note, 715-716. damages on bills fixed by statute in this country, 734-749. want of uniform rule, 749, 750. law of France in this respect, 782, 783. See Damages, and Interest. SUNDAY, see Days of Grace, notes dated on, valid, note, 152. SUPRA PROTEST, see Acceptance for Honor. SUPERSCRIPTION, use of, 152, 153. SUPERVISORS, drafts by, not negotiable, 80. SURETY, when discharged, 355, 572-574. indorser and drawer, when, 291-295. must be by valid agreement, 565-575. remedy of, for payment of his principal's debt, 293, 572. the contract of, is accessory to that of principal, 218. and is dissolved by that which discharges the principal, 218. is not negotiable, but is transferable, 219, 220. See Guaranty. liability of and form of suit against a surety-maker of a note, 219. the surety-maker on the note liable as a principal, 244, 293 rsr>Ex. 82$ SURETY— Continued. but not to same extent in all respects, 244. may call upon holder to proceed and collect of principal, 244. not so in all the states, 244. his engagement is construed strictly, 244. the surety-maker is liable jointly or severally, when the contract is so drawn, 293. mode of presentment to joint makers, 160. the indorser, though a surety, is not treated as such in all respects, 292, 293. is held as an indorser, 293. a surety-drawer is liable simply as a drawer, 293. as against his principal, or against his co-surety, he may show in what charac- ter he signed, 293, 573. signing as surety, must be treated as such, 572. even after judgment, note, 572. the party taking the paper with knowledge of his suretyship, must respect hifl rights as such, text and note, 573. not so, the party taking it without such knowledge, 573. not released by extending time of payment, 573. whether an accommodation acceptor is released by extending time, note, 535, note, 573, 575. the surety-maker of a note is, it seems, so discharged, 572-575. order of liability between sureties, 573. contribution between sureties, 573. effect of discharge of one of the joint and several makers, by erasure, 573, 574. by part payment, 574. by qualified release, 574. right of a surety-maker of a note, on paying it, to recover of his principal the money paid, 533, 534. liability in action, his name being added subsequently to the note as a surety, note, 683, 681. See Discliarge. a bank cannot indorse as surety or for accommodation, note, 249, 349. but may render itself liable as an indorser, 249. engagement as, by indorsing notes not negotiable, 230. not entitled to notice as indorser, 649, 650". in the case of an indorsement by a stranger, may bo charged by parol in favor of whom, 229, 230, 273, 274. liable in this state in form as an indorser, 230, 273, 274. contract of surety in form, that of a principal in fact, when, 220-222. his engagement, as affected by the Statute of Frauds, 222. contracts that are within, and aro not within the statute, classified, 222, 223. 1. An instance of the first class, not within, 223. 2. An instance of tho second class, within, 223. 3. An instance of third class, a now and original contract, 224. when tho undertaking is new and original, and when merely collateral, 224, 225. late illustrative decisions, note, 224. an acceptance is not within tho statute, 224, 225. 830 INDEX. SURETY— Continued. nor is an indorsement, 224, 225. nor is a note, though used as a guaranty, 224, 225. a promise to pay for materials furnished to a builder is -within the statute, note, 224. so is a promise to pay for work done for him, 224. not so, when contractor abandons the contract and the owner steps in, &c, 224, 225. case of an original agreement, in form of a guaranty, 224, 225, 233. an engagement that a draft to be drawn shall be accepted, note, 225. or that goods to be sold shall be paid for, note, 225. when written on a contract for stock, a consideration must be expressed, note, 225. when made to a party having a special hen for repairs, on the strength of which he releases a boat, note, 225. the consideration must be expressed, 225, 22G. the terms of the statute modified, effect of modification, 226, 227. the terms contract and agreement imply a consideration, 227. which must be in -writing, 227, 228. departures from the English doctrine, 228. construction, principle of, 228. the usual guaranty is within the statute, 229. when it is not, 229-233. is liable on his indorsement of a note not negotiable, 230, 650. being a surety in fact to the payee of a negotiable note, the real contract may be shown by parol, note, 230. rule in this and in other states, text and note, 230, 273, 374. must be charged as an indorser, when, 231. where the holder signs as a maker, and delivers the note, 231. or -warrants a note, on making a sale of it, 231. liability of surety by contract under seal, 231, 232. where the original debt is merged in the new contract, 232. or the new is based upon the receipt of funds, &c, 232. or only incidentally operates as payment of the prior debt, 232. when the consideration maybe inferred, 232, 233. for value received, a sufficient expression of it, 233. the rule is the same where the engagement is written upon a separate paper, 233. the surety guaranteeing the payment of a note, after having seen it, must pay though it be a forgery as to the maker and first indorser, note, 233. like liability of a surety on a lease, note, 233. SURETY-DRAWER, liable as principal drawer, 293, 532. to the acceptor for accommodation, 534, 535. contract of surety for above surety, note, 535. SURETY-INDORSEE, liable the same as principal on papor, 293. SURETY-MAKER, discharged as a surety by giving time, 572. form of action against, 219. complaint special against, 293. Bhould state simply the facts, note, 665. effect of payment by, 532-534. of a note, liable on it as a principal, 241 293. ETDEX. 831 SURETY-MAKER— Continued. may call upon holder to proceed and collect, 244 liable according to the form of the contract, 293. must be treated as a surety, when, 572-575. what dealings with principal discharges, of note or drawer of biU, 533, 534: See Jndorser, Discharge, and Surety. SURRENDER, notes given for debt sued on, must be returned, 196-199, 302. a good answer to action when not, 578, 579. in a suit on original demand, negotiable paper given for, must be surrendered and canceled, 196. it is payment prima facie, 196. rule as to paper not negotiable, 197, 578. SUSPENSION of right to sue, 355. T. TENDER, plea in nature of, 480-482, 672. TENNESSEE, statutes of, relating to bills and notes, note, 278. damages allowed on bills, 746. rate of interest and law of usury in, note, 716. TEXAS, statutes of, relating to bills and notes, note, 277. damages allowed on bills in, 743. rate of interest and law of usury in, note, 716. TIME, computation of, 155, 512, 515. business time, what is, 459. counted from date, 514, 515. allowed as days of grace, usances, &c, 515-529. as festivals and holidays, see Presentment for Payment, 529-532. See also, Notice of Dishonor. TIME OP PAYMENT, see Presentment for Payment, 512-532. # must be made when bill or note is due, 512. how ascertained, computation of time, &c, 515-522. TIME OP SERVING NOTICE of dishonor, 614-625. See Notice of Dishonor. TITLE, warranted on a transfer, 188, 289-291, 235-238. cannot be deduced through a forgery, 190, 191, 250. TRANSFER, includes a guaranty of title, 188-191. and indorsement, 245-295. by infants and husband, 246, 247. by executors and administrators, 247, 248. by trustee, 256. by agent, 249-252. by the payee and owner, 250-253. by restrictive indorsement, 253. by all the payees, when, 254. by a firm, 254-256. by party holding title by assignment, 250-258. asserts the existence of the paper, 258. transfer and indorsement not the samo thing, 249. by restrictive and qualified indorsement, 277-284. 832 INDEX. TR ANSFER— Continued. by assignment of negotiable paper, 664, 665, 286, 287. completed by delivery, 285, 286. of bills and notes, 245. manner of making, by indorsement, 54. by indorsement, a new contract, 246. by an infant, 246, 67. ratification of, 246, 64-67. of paper payable to a married woman, 247. by executors or administrators, 247, 248. wben payable to them, 247. or to deceased, 247, 248. by cashier, agent, or treasurer of corporation, 249. by Indorsement, what it implies, 250. must be by party having the title, 250. not by party of same name, 250. when payable to a party by a wrong name, 251. indorsement by making a mark, initials, &c, 251. by assignment, without writing, 251. rights of assignee under, 251. by a trustee or factor, 252. to a purchaser for value, 252. by a party acting as agent, 249, 252. filling up paper indorsed in blank, 252, 253. by a restricted indorsement, 253. right of indorsee under, 253. by several persons, not partners, 254. by partners, 254. use of a firm name as payee, 254, 255. by partners, after dissolution, 255, 256. of bill or note payable to A. for use of B., 256. or to one as assignee or trustee of another, 256. by assignment as bankrupt or insolvent, 256, 257. statutory assignment, effect of, 257. to receivers, 257, 258. time, and effect of, on rights of indorsee, 258. transfer before due, presumed, 258. presumption, may be rebutted, 258. after acceptance refused, without notice of dishonor, 259. after dishonor and with notice, 259. after dishonor, subject to what equities, 259-261. to what set-off, 259. English rule, 259. American rule, 259, 260. where two notes are transferred successively, 260. after dishonor, a renewal in what sense, 261. no set-off at common law, 261. See Indorsement and Transfer. TROVER, action in the nature of. may be maintained when and by whom, 679« may bo brought by owner for conversion of bills and notes, 67 9a. ground of action, title and conversion, 67 9 a i» INBBI. 838 TROVER— Continued. may be sustained by maker or acceptor, 679*. proof and allegations to support the suit, 679». may be sustained by the payee, when, 679*. and by the indorsee, when, 6? 9». and against whom, 679». evidence of conversion by defendant, 679*, 67 9 b . and what amounts to a conversion, 679", 679 b . damages in the action, 679 b . when the action must be for money had, &c., 67 9 b . effect of a recovery in, on title, 679 b . TRUSTEE of an express trust, right to sue, 252, 658. U. USANCE, what is, 516, 517. USURY, on notes made in one, payable in another state, 180-186, 366. on notes and bills, 349-367. statutes in reference to, 349-351, 355. scope of, 351. construction of, 355-367. carried forward into renewal securities, 351. when notes and bills may be sold at an under value, 352-354. inception of accommodation paper, 352-354. sale of notes and bills for an under value by indorsement, not usurious here, 353» depositing notes as collateral security for a usurious debt, effect of, 354. usurious renewals, effect of, on previous security, 354. who may set usurious agreement, note, 355. usury, what is corrupt agreement for, 356. taking more than law allows by mistake, 356. by mistake of law, usurious, 356, 357. taking compound interest, not usurious, 357, 358. taking interest in advance, when usurious and when not, 358, 359. ' for the days of grace, not usurious, 360. defense of usury must be strictly proved, 360. taking funds below par on a discount, 360-362. agreement to keep bills in circulation, 362. agreement for an insurance on a discount, 3C2. commissions on acceptances, &o, 362, 363. interest and forbearance, meaning of, 363. no usury on loan of goods and chattels, 363, 364. exceptions to rule, 365. sales of credit, not within statute, 365. pleading usury under Code, 366. taking rate of exchange, effect of, 360, 366, 367. laws of different states, in regard to, and rates of interest, 715, 716. See Consideration. V. VALUR RECEIVED, formerly necessary, 56. in general not necessary, 1C9-172. not necessary in negotiable paper, 109, 170. Edw. 105 834 INDEX. VALUE RECEIVED— Continued. use of, in notes not negotiable, 111, 421. in notes and drafts payable in specific articles, 210-216. VARIANCE of description in notice, when not material, see Notice of Dishonor, 589, 590. VARYING ACCEPTANCE, see Qualified Acceptance, and Acceptance. VENDING FORGED PAPER, effect of, 191, 348. party vending, responsible, 289-291. 7ERMONT, statute and law of, relating to notes and bills, note, 264, 265. rate of interest and law of usury in. note, 115. VIRGINIA, statutes of, relating to bills and notes, note, 211. damages allowed on bills, 740. rate of interest and law of usury in, 715. w. "WAGERING CONTRACTS, illegal when, 367-370. securities founded on, void, 367, 368, 369. certain wagers void at common law, 341, 368, 369. money lent to game with, 369. analogous cases, 339. stock-jobbing contracts, 370. general rule in relation to illegal contracts, 370. WAIVER of laches, by subsequent promise, 650-655. by payment, 653. conditional promise is not, 652-655. evidence of promise with knowledge, 653, 654. admission of liability, 654, 655. of demand and notice, 633, 636. after laches, 478, 650-655. See Notice of Dishonor, Presintment, &o. WANT OF CONSIDERATION, 315-327. in accommodation paper, 315-324. in notes and bills made or accepted as a gift, 324, 325. where the thing sold was of no value, 326, 327. See Consideration. "WANT OF EFFECTS or funds, effect of, 640-646. excuses presentment for payment, when, 490, 491. and presentment for acceptance, 449-452. no excuse as to indorser, 452-454. WARRANTY of title, 188-191. that paper is genuine, 191. that a note is good or collectible, 235-238. implied by indorsement or transfer, 289-291. of collection, 234-238. of payment, 221, 233, 234, 240. See Guaranty. WIFE, See Married Woman. WISCONSIN, statutes of, relating to notes and bills, note, 282. damages allowed on bills, 745. rate of interest and law of usury in, note, 715 WITNESSES, parties may be, 699, 700. subscribing, 701-703. f University of California Library Los Angeles This book is DUE on the last date stamped below. 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