its settlement. If the maker fails to pay, the note is dishonored. If the drawee of a bill refuses to accept it, or as acceptor neglects to pay it, the bill is dishonored. In such cases the drawer, or the maker, is liable; but few people would advance money on paper, if those from whom they purchased it, were not also liable. Just what the indorser promises to do will next be considered. It must be kept in mind that secondary liability is like a hothouse plant neglect will kill it. 24. What the indorser agrees to do. Whoever negotiates a check, bill or note, no matter whether he indorses it or how he indorses it, is under certain obligations to the next and succeeding owners. He declares that the signature is genuine, that he has a good title to it, and that the parties to the contract have the contractual capacity, in fact that the entire instrument is genuine and so far as he knows, valid; but if the seller did not indorse, the warranty extends only to his immediate purchaser. Whoever makes an unqualified indorsement absolutely guarantees the validity of the instrument and obliges himself to pay it, provided the holder at maturity performs certain conditions. The holder of a note must present it to the maker on the exact date for payment; if it is not paid, the indorser must be given notice at once (see 25-26). The holder of a bill must duly present it for acceptance; if it is not accepted the indorser must be notified at once, and if need be, the bill must be protested (see 27). The holder of a sight bill, or an accepted bill, must duly present it for payment and give the indorser immediate notice of non-payment, a formal protest being made if required. Unless an indorser waives the above requirements, orally, in writing (see 22), or in his indorsement, they are necessary to hold him liable. If the conditions are carried out every indorser, unless he indorsed without recourse, PRESENTMENT 19 is liable for payment, if the maker or acceptor fails to pay. Any indorser the holder selects must pay. That one in turn can collect from any previous indorser, but not from a succeeding one. Roe's note has passed through the hands of Gates, Bell, Carr, and Penn, and bears their indorsements. Lane is the holder at maturity. Lane fails to present it for payment. Gates, Bell, Carr, and Penn, are released from liability. Suppose that on due presentation Roe does not pay and only Penn and Carr are notified. Gates and Bell are thereby released. If on due presentation and after dishonor, all are notified, Lane can proceed against any one he chooses. He collects from Bell, and Bell can collect from Gates, but not from Penn or Carr. If it is proven that four successive indorsers are joint indorsers each intending to be equally liable, the indorser who is required to pay is at liberty to recover pro rata from each of the other indorsers regardless of the order of their signatures. 25. Presentment. Both a note and a bill of exchange must be presented for payment. In the case of a bill reading "after sight," no date of payment is fixed until the day of the sight has been fixed, nor has the drawee obligated himself to pay the bill. It is, therefore, necessary to present such a time bill for acceptance. The duty of presentation lies on the holder or his duly authorized agent. Presentation must be made on a business day at a reasonable time, if at a place of business during its regular hours, to the maker, or the drawee or the acceptor. If two or more persons are the makers or the drawees, it is necessary to know whether they executed the instrument as partners, or jointly. Presentation to any one of several partners is sufficient, but no dishonor is complete until after presentation to each of those parties who are to be held primarily liable. It is necessary to make presentment at the proper place. The negotiable instruments law provides that presentment for payment is made at the proper place: 1. Where a place of payment is specified in the instrument and it is there presented. 2. Where no place of payment is specified but the address of the person to make the payment is given in the instrument and it is there presented. 3. Where no place of payment is specified and no address is given, and the instrument is presented at the usual place of business or residence of the person to make payment. 4. In any other cases if presented to the person to make payment wherever he can be found, or if presented at his last known place of business or residence. "If no place of payment is specified, but the paper is dated at a particular place, the presumption is that the maker resides and contemplates payment there. But if the holder knows or might have ascertained by reasonable diligence that the maker resides elsewhere, this presumption is destroyed." 2 Due diligence to find the party must be used; not until then does the law excuse presentment. Death also excuses presentment for acceptance. Failure to present a bill for acceptance within a reasonable time releases the drawer and all indorsers. The bill must be accepted as drawn. If the drawee wishes to change the time of payment, the amount of the bill, or add some condition to the bill, it is equivalent to refusing to accept it, unless the holder of the instrument agrees to the change or changes. Furthermore, the holder in consenting releases the drawer and indorsers from liability unless he gets their several consents, or unless after due notice of the change in the bill no unwillingness is expressed. 2 Irving National Bank, Bankers' Forms and Negotiable Instruments Law, p. 93. A PROTESTED NOTE 21 77 renty-five and no Dollars Crust Company Franster erate of seven per cent per annum. Rochard Meyers A promissory note that has been protested for non-payment. It also shows the can- The acceptor, however, may state the place he wishes to pay the bill as "payable at the Traders' Exchange Bank." Demand for payment must be made on the maker or acceptor, or in case of death upon the personal representative. Demand for payment must be made on the date the instrument is due, unless some legally recognized excuse renders this impossible. In counting the due date only one of the first and last days of duration is counted. One month after date, April 1, is May 1. Thirty days after date, May 1, is May 31. If days of grace are allowed, the due dates would be May 4 and June 3, respectively. A note or bill due on a holiday is due on the next succeeding business day. At a time of calamity in order to postpone the maturity of negotiable paper governments often declare a series of holidays. If a bank has been stated as the place of payment and payment is not secured at the first presentation on the due date, the paper may again be presented just before the bank closes. Presentment is considered made if the specified bank has the paper in its hands for collection on the due date. Notes as well as acceptances usually specify the place of payment. The creditor prefers this to be the debtor's own bank, since then he is more likely to protect his credit. 26. Notice of dishonor. If a bill duly presented has not been accepted or paid, or if a note duly presented has not been paid, the holder or his agent must at once give notice to the indorsers (and to the drawer if it is a bill). This notice may be oral or written, and may be mailed, or sent so as to be received as early as if sent by mail. If the sender and the receiver of the notice live in the same place, it must be given or properly mailed so as to be received on the day following the dishonor. If the parties are in different places, the notice must start equally as early, or by the first mail. A properly written and ad 3 It is due on the preceding business day in some states. |