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Theophilus Parsons.

Laws of business for all the states of the Union : with forms and directions for all transactions online

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had no funds, he is liable always.

Every demand of payment should be made at the proper place,
which is either the place of residence or of business of the payo'*,
and within the proper hours of business. If made at a bank aft( r
hours of business, if the officers are there, and refuse payment for
want of funds, the demand is sufficient.



THE EIGHTS AKD DUTIES OF THE HOLDER. 177

A note payable at a particular place should be demanded at that
place ; and a bill drawn payable at a particular place should bo de-
manded there, in order to charge the drawer of a bill, and tbe
indorsers of a bill or note. But in this country an action may be
maintained against the maker or acceptor without such demand ;
but the defendant may discharge himself of damages and costs be-
yond the amount of the paper, by showing that he was ready at that
place with funds. If a note is payable at any of several different
places, presentment at any one of them will be sufficient. If a bill
which is drawn payable generally, be accepted payable at a partic-
ular place, the holder may and should so far regard this as non-
acceptance, that he should protest and give notice. But if this
limited acceptance is assented to and received, it must be complied
with by the holder, and the bill must be presented for payment at
that place, or the drawer and indorsers are discharged.

If payable at a banker's, or at the house or counting-room of any
person, and such banker or person becomes the owner at maturity,
this is demand enough ; and if there are no funds deposited with
him for the payment, this is refusal enough. If any house be desig-
nated, a presentment to any person there, or at the door if the liouse
be shut up, is enough.

If this direction be not in the body of the note, but added at the
close, or elsewhere, as a memorandum, it is not part of the contract,
and should not be attended to.

If the payer has changed his residence, he should be sought for
with due diligence ; and, if he has absconded, it is better to make
the demand at his last place of residence or business.

Where a bill or note is not presented for payment, or not pre-
sented at the time, or to tlie person, or in the place, or in the way,
required by law, all parties but the acceptor or maker are dis
charged, for the reasons before stated.

5. Of Protest and IVotice. — If a bill of excliange be not accepted
when properly presented for that purpose, or if a bill or note, wbon
properly presented for payment, be not paid, the hohlcr has a furllier
duty to perform to all who are responsible for payment. In case of
non-payment of a foreign bill, there should be a regular protest by



178 NOTES OF HAND, BILLS OF EXCHANGE, ETC

a puljlic notary ; but this is not strictly necessary in the case of an
iiiland bill, or a promissory note, whether foreign or inland But in
practice, all bills if not accepted, and all bills and notes if unpaid,
are protected. By a foreign bill is meant a bill drawn in one State
or country, and payable in another. But notice of non-payment
should be given to all antecedent parties, equally, and in the same
way, in the case of both bills and notes.

The demand and protest must be made according to the laws ot
the place where the bill is payable. It should be made by a notary-
public, who should present the bill himself; but, if there be no
notary-public in that place or within reasonable reach, it may be
made by any respectable inhabitant in the presence of witnesses.

Tlie protest should be noted on the day of demand and refusal ;
and may be filled up afterwards, even so late as at the trial.

The loss of a bill is not a sufficient excuse for not protesting it.
But a subsequent promise to pay by a drawer or indorser is held to
imply, or be equal to, a previous protest and notice to him.

The notarial seal is, of itself, evidence of the dishonor of a foreign
bill, but not of an inland bill. And no collateral statement in the
certificate is evidence of the fact therein stated ; thus the state-
ment by a notary, that the drawee refused to accept or pay becauso
he had no funds of the drawer, is no evidence of the absence of
such funds.

Notice must be given even to one who has knowledge. No par-
ticular form is necessary ; it may bo in writing, or oral; all that is
absolutely essential is, tliat it should designate the note or bill with
sufficient distinctness, and state that it has been dishonored ; and
also that the party notified is looked to for payment ; but it has been
held that the notice to the party bound to pay, when given by the
immediate holder of the bill, sufficiently implies that he is looked to.
Notice of protest for non-payment is sufficient notice to indorsers of
demand and refusal. How distinctly the note or bill should be de-
^crilx'd cannot be precisely defined. It is enough if there be no such
looseness, iimbiguity, or misdescription as might mislead a man of
ordinary intelligeuce ; and if the intention was to describe the true
note, and the party notified was not actually misled, this would
alv/ays be enough. The notice need not state for whom payment is



THE EIGHTS AKD DUTIES OP THE HOLDEB. 179

demanded, nor where the note is lying ; and even a misstatement in
this respect may not be material if it do not actually mislead.

No copy of the protest need be sent to iudorsers ; but information
of the protest should be given.

If the letter be properly put into the post-office, any miscarriage
of the mail does not affect the party giving notice. The address
should be sufficiently specific. Only the surname, — as "Mr.
Ames," — especially if sent to a large city, would not, in general, be
enough. K a letter, however generally directed, can be shown to
have reached the right person at the right time, it is sufficient.
The postmarks are strong evidence that the letter was mailed at the
very time these marks indicate ; but this evidence may be rebutted,
that is contradicted.

A notice not only may, but should, be sent by the public post. It
may, however, be sent by a private messenger ; but is not sufficient
if it do not arrive until after the time at which it would have ar-
rived by mail. It may be sent to the town where the party resides,
or to another town, or to a more distant post-office, if it is clear that
he may thereby receive the notice earlier. And if the notice is sent
to what the sender deems, after due diligence, the nearest post-
office, this is enough. If the parties live in the same town, notice
should not be sent by mail.

The notice should be sent either to the place of business, or to the
residence, of the party notified. But if one directs a notice to be sent
to himself elsewhere than at home, it may be so sent, and bind not
only him, but prior parties, although time is lost by so sen-ding it.

The notice of non-payment should be sent within reasonable time ;
and in respect to negotiable paper, the law-merchant defines this
within very narrow limits. If the parties live in the same town,
notice must be given or sent so that the party to whom it is sent
may receive the notice in the course of the day next after that in
which the party sending has knowledge of the fact. If the parties
live in different places, the notice must be sent as soon as by the
first practicable mail of the next day, or the next mail, if there be
none on the next day.

Each party receiving notice has a day, or until the next post after
the day in which he receives it, before he is obliged to send the



180 NOTES OF HAND, BILLS OF EXCHANGE, ETC.

aolice foi'ward. Thus, if there be six indorsers, and the note is due
on the 10th of May, in New York, and is then demanded and un-
paid, the holder may send it by any mail which leaves New York
on the 11th of May, to the last indorser, wherever he lives ; and that
indorser may send it to the indorser immediately before him, by any
mail on the day after he receives it ; and so may each of the parties
receiving notice ; and all the parties to wiiom notice is sent in this
way will be held. So, too, a banker, with whom the paper is de-
posited for collection, is considered a holder, and entitled to a day
to give notice to the depositor, who then has a day for his notice
to antecedent parties. The different branches of one establishment
tave been held distinct holders for this purpose, and each to be
entitled to a day. It should be sent by the first safe opportunity.

Neither Sunday nor any legal holiday is to be computed in reckoii-
ing the time within which notice must be given.

There is no presumption of notice ; and the plaintiff must prove
that it was given, and was sufficient. Thus, proving that it was
given in " two or three days " is insufficient, if two would have been
right, but three not.

Notice should be given only by a party to the instrument, who is
liable upon it, and not by a stranger ; and it has been held that
notice could not be given by a first indorser, who, not having been
notified, was not himself liable. A notice by any party liable will
operate to the benefit of all antecedent or subsequent parties ; that
is, will hold them all to the original holder of the note, if the origi-
nal holder gave notice properly to the party nearest to him. The
notice may be given by any authorized agent of a party who could
himself give notice.

Notice must be given to every antecedent party who is to be held.
And we have seen that this may be given by a holder to the firsi
party liable, and by him to the next, &c. But the holder may
always give notice to all antecedent parties ; and it is always pru
dent, and in this country, usual, to do so. For the holder loses
all remedy against all those who are discharged by the failure of
any one receiving notice to transmit it properly. But if a holder
undertakes to notify all the antecedent parties, he must notify all as
soon as he was obliged to notify the party nearest to him j that is,



•THE RIGHTS AND DUTIES OF THE HOLDEE. 181

the day after the dishonor of the note. TVe mean by this, that every
party has a day ; so that, if there be six indorsers, if the first in-
dorser is notified on the seventh day from the dishonor, it is enough,
ij the holder took his day to notify the sixth indorser, and that in-
dorser his day to notify the fifth, and so on. But the holder has
nobody's day but his own ; and if he undertakes to notify all the
parties, he must notify them all on the first day after the non-pay-
ment.

Notice may be given personally to a party, or to his agent author-
ized to receive notice, or left in writing at his home or place of
business. If the party to be notified is dead, notice should be given
to his personal representatives. A notice addressed to the " legal
representative of," <fcc., and sent to the town in which the deceased
party resided at his death, has been held sufficient. But a notice
addressed to the party himself, when known to be dead, or to " the
estate of," &c., would not be of itself sufficient, but might become so
with evidence that the administrator or executor actually received
the notice.

If two or more parties are jointly liable on a bill as partners,
notice to one is enough ; but, if the indorsers are not partners,
notice sliould be given to each.

One transferring by delivery, without indorsement, a note or bill
payable to bearer, is not generally entitled to notice of non-payment,
because, generally, he is not liable to pay such paper ; but if the
circumstances of the case are such as to make him liable, then he
must have notice, but is entitled not to the exact notice of an indors-
er, but only to such reasonable notice as is due to a guarantor. If,
for instance, the paper was transferred as security, or even in pay-
ment of a pre-existing debt, this debt revives if the bill or note bo
dishonored ; and therefore there must be notice given of the dishonor.

In general, a guarantor of a bill or note, or debt, is not entitled to
such strict and exact notice as an indorser is entitled to, but only
to such notice as shall save him from actual injury ; and he cannot
make the want of notice his defence, unless he can show that the
notice was unreasonably withheld or delayed, and that he has actually
sustained injury from such delay or want of notice. If an indorser
give also a bond, or his own note, to pay the debt, he is not dis-
charged from his bond or note by want of notice.



182 NOTES OF HAND, BILLS OF EXCHANGE, ETC.

In general, all parties to negotiable paper, who are entitled to
notice, are discharged by want of notice. The law presumes them
lo be injured, and does not put them to proof.

The right to notice may be waived by any agreement to that effect
prior to the maturity of the paper. It is quite common for an in-
dorser to write, " I waive notice," or, " I waive demand," or somo
words to this effect. It should, however, be remembered, that these
rights are independent, and one does not imply the other. A waiver
of notice of non-payment does not imply a waiver of demand ; there-
fore, if an indorser writes on the note, " I waive notice," still he
will be discharged if there be not a due demand on the maker. And
it has been held that a waiver of protest is a waiver of demand, but
not of notice. So if a drawer countermands his order, the bill
should still be presented, but notice of dishonor need not be given
to tlie drawer. Or, if a drawer has no funds, and notliing equivalent
to funds, in the drawee's hands, and would have no remedy against
the drawee or any one else, as the drawer cannot be prejudiced by
want of notice, it is not necessary to give him notice. But the
hidorser must still be notified ; and a drawer for the accommodation
of the acceptor is entitled to notice, because he might have a claim
upon the acceptor.

Actual ignorance of a party's residence justifies the delay neces-
sary to find it out, and no more ; and after it is discovered, the
notifier has the usual time.

Death, or severe illness, of the notifier or his agent, is an excuse
for delay ; but the death, bankruptcy, or insolvency of the drawee
of a bill is no excuse.

As the right to notice may be waived before maturity, so the want
of notice may be cured afterwards by an express promise to pay ;
and an acknowledgment of liability, or a payment in part, is evi-
dence, but not conclusive evidence, of notice ; the jury may draw
this conclusion from part payment, but are not hound to, even if the
evidence be not rebutted. If the promise be conditional, and the
condition be not complied with, the promise has been held to be still
evidence of protest. Nor is it sufficient to avoid such promise, that
it was made in ignorance of the law j but it is void if made in
ignorance of XhQfact of non-notice.



THE RIGHTS AXD DUTIES OF THE INDORSER. 1S3

SECTION VI.
THE BIGHTS AND DUTOiS OF THE IKDORSER.

Only a note or bill payable to a payee or order is, strictly speak-
ing, subject to indorsement. Those who write their names on the
back of any note or bill are indorsers in one sense, and are some-
times called so ; but are not meant in the law-merchant by the word
" indorsers."

The payee of a negotiable bill or note — whether he be also maker
or not — may indorse it, and afterwards any person, or any number
of persons, may indorse it. The maker promises to pay to the payee
or his order ; and the indorsement is an order on the maker to- pay
the indorsee, and the maker's promise is then to pay the note to
him. But if the original promise was to the payee or order, this
" or order," which is the negotiable element, passes over to the in-
dorsee, though not written in the indorsement, and the indorsee may
indorse, and so may his indorsee, indefinitely.

Each indorser, by his indorsement, docs two things : first, ho
orders the antecedent parties to pay to his indorsee ; and next, ho
'engages with his indorsee, that, if they do not pay, he Y>^ill.

If the words " to order," or " to bearer," are omitted accidental-
ly, and by mistake, they may be afterwards inserted without injury
to the bill or note ; and whether a bill or note is negotiable or not,
is .a question of law.

Ey the law-merchant, bills and notes which are payable to order
can be effectually and fully transferred only by indorsement. This
indorsement may be in blanJc, or in full. The writing of the name
of a payee, — either the original payee or an indorsee, — with nothing
more, is an indorsement in blank ; and a blank indorsement makes
the bill or note transferable by delivery, in like manner as if it had
been originally payable to bearer. After a note has been indorsed
by a payee, any person may write his name on the note under that of
the payee, and be held as indorser, — because any subsequent holder
may write over the name of the first indorser a direction to pay the
note to the next signer, and this makes the next signer an indorsee,
and so gives him a right to indorse ; and he or any holder may



184 NOTES OF HAND, BILLS OF EXCHANGE, ETC.

write over his name an order to pay the holder, or anybody else.
If the indorsement consist not only of the name, but of an order
above the name to pay the note to some specified person, then it is
an indorsement in full, and the note can be paid to no one else
unless that person indorses it ; nor can the property in it be fully
transferred, except by his indorsement ; and his indorsee may again
indorse it in blank or in full. If the indorsement is. Pay to A B
only, or in equivalent words, A B is indorsee, but cannot indorse it
over.

Any holder for value of a bill or note indorsed in blank, whether
he be the first indorsee or one to whom it has come through many
hands, may write over any name indorsed an order to pay the con-
tents to himself; and tliis makes it a special indorsement, or an in-
dorsement in full. This is often done for security ; that is, to guard
against the loss of the • note by accident or theft. For the rule of
law is, that negotiable paper transferable by delivery (whether pay-
able to bearer or indorsed in blank) is, like money, the property of
whoever receives it in good faith. The same rule has been extended
in England to exchequer bills ; to public bonds payable to bearer ;
and to East India bonds ; and we think it would extend here to our
railroad and other corporation bonds, and, perhaps, to all such in-
struments as are payable to bearer, whether sealed or not, and what-
ever they may be called. If one has such an instrument, and it is
stolen, and the thief passes it for consideration to a bond fide holder,
this holder acquires a legal right to it, because the property and
possession go together. But if the bill or note be specially indorsed,
no person can acquire any property in it, except by the indorsement
of the special indorsee.

It may be well to remark liere, that the finder of negotiable
paper, as of all other property, ought to make reasonable endeavors
to discover the owner, and is entitled to use the thing found as his
own only when he has made such endeavors unsuccessfully. If he
conceals the fact of finding, and appropriates the thing to his own
use, he is liable to the charge of larceny or theft.

The written transfer of negotiable paper is called an indorsement,
because it is almost always written on the back of the note ; but it
has its full legal efiect if written on the face.



THE BIGHTS AKD DUTIES OF THE ENDOESEE. 185

Joint payees of a bill or note, who are not partners, must all join
in an indorsement.

An indorser may always prevent his own responsibility by writing
" without recourse," or other equivalent words, over his indorse-
ment ; and any bargain between the indorser and indorsee, written
or oral, that the indorser shall not be sued, is available by him
against that indorsee ; but he cannot make this defence against sub-
sequent indorsees who had no notice of the bargain before they took
the note.

Every indorsement and acceptance admits conclusively the genu-
ineness of the signature of every party who has put his name upon
the bill previously in fact, and who is also previous in order. By
this is meant, that if an indorser — say a third indorser — is sued,
he cannot defend himself by saying that the names of the maker
and first and second indorsers, or eitlier of them, were forged, be-
cause by iikdorsing it himself he gives his indorsee a right to believe
that the previous signatures were genuine. And an acceptor can-
not say that his drawer's name is forged ; but he may say that an
endorsement which was on the bill when he accepted it was forged,
bacause an indorsement of a bill comes properly and in order of law
after acceptance.

If a holder strike out an indorsement by mistake, he may restore
it ; U on purpose, the indorser is permanently discharged.

A holder may bring his action against any prior indorser, either by
making title through all the subsequent indorsements, or by filling
any blank indorsement specially to himself, and suing accordingly ;
but then he invalidates all the indorsements which arc subsequent
to tl^at which he has made special to himself.

One may make a note or bill payable to his own order, and in-
dorse it in blank ; and this is now very common in our commercial
cities, because the holder of such a bill or note can transfer it by
delivery, and it needs not his indorsement to make it negotiable
further. A note to the maker's own order, if not indorsed by him,
is, strictly speaking, of no force against him. But there is some dis-
. position in the courts to say that a holder of such note may sue tbe
maker as if the note were to bearer.

A transfer by delivery, without indorsement, of a bill or note pay-



186 NOTES OF HAND, BILLS OF EXCHANGE, ETC.

able to bearer, or indorsed in blank, does not generally make the
transferrer responsible to the transferree for the payment of the in-
strument. Nor has the transferree a right to fall back, in case of
non-payment, upon the transferrer for the original consideration of
the transfer, if the bill were transferred in good faith, in exchange
for money or goods ; for such transfer would be held to be a sale of
the bill or note, and the purchaser takes it with all risk.

An indorsement may be made on the paper before the bill or note
is drawn; and such indorsement, says Lord Mansfield, "is a letter
of credit for an indefinite sum, and it will not lie in the indorser's
mouth to say that the indorsements were not regular." The same
rule applies to an acceptance on blank paper. So an indorsement
may be made after or before acceptance, though strictly proper only
after.

A bill or note once paid at or after maturity, ceases to be negotia-
ble, in reference to all who had been discharged by tlic payment.
If issued again, it is like a new note without their names. If a bill
or note is paid before it is due, it is valid in the hands of a subse-
quent bond fide indorsee, and must be paid to him.

A portion of a negotiable bill or note cannot be transferred, so as
to give the transferree a right of action for that portion in his own
name. But if the bill or note be partly paid, it may be indorsed
over for tlie balance.

After the death of a holder of a bill or note, his executor or ad-
ministrator may transfer it by his indorsement. The husband who
acquires a right to a bill or a note which was given to the wife either
before or after marriage, may indorse it.

If the rule that the same party cannot be plaintiff and defendant,
prevents the action, as where A, B, & Co. hold the note of A, C, &
Co , bo that if a suit were brought A would be one of the plaintiffs
and one of the defendants also, which cannot be. A, B, & Co. may
Indorse the note to D, who may then sue A, C, & Co.



THE RIGHTS A^'D DUTIES OF THE ACCEPTOR. 187

SECTION vn.

THE RIGHTS A>'I> DUTZES OF THE ACCEPTOR.

AccEPTAXCE applies to bills, and not to notes. It is an engage-
ment of the person on whom the bill is drawn to pay it according to
its tenor. The usual way of entering into this agreement, or of ac-
cepting, is by the drawee's writing his name across the face of the
bill, and writing over it the word " accepted." But any other word
of equivalent meaning maybe used, and it may be written elsewhere,
and it need not be signed, or the drawee's name alone on the bill
may be enough. A written promise to accept a future bill, if it
distinctly define and describe that very bill, has been held in this
country as the equivalent of an acceptance, if the bill was taken on
the credit of such promise.

A banker is liable to his depositor without acceptance of his



Online LibraryTheophilus ParsonsLaws of business for all the states of the Union : with forms and directions for all transactions → online text (page 20 of 70)