NOTICE OF DISHONOR 23 dressed notice is considered as sent if posted in a government mail box within the required time, no matter if it is never received. If a drawer or an indorser gives an ad You are hereby notified that a For $ 27500 Dated Payable March 3rd 1922 Signed by........ Endorsed by чи was this day protested by me for NON-PAYMENT, after demand and refusal of payment. The holders of said instrument look to you for payment, damages, interest and costs. Protested at the request of of Evanston, Illinois. Morley W. Reading The notice of protest of a note that was not paid. dress on the instrument, the notice must be sent to that address. If after diligent inquiry no address can be learned, notice of dishonor is excused. Suppose Roe makes a note payable to Gates, and Gates, Lane, Carr, and Penn are The National Goders Book bill of exchange hereto attached, at thin the close of Banking hours, presented the same during Business hours to' at his office. poques t and demanded" thereof, which was refused, for the following assigned reason: I then PROTESTED the same for non- payment and notified the drawer............and ни indorser..........thereof as follows; by a separate writen notice to each, inclosed in... envelope........... and addressed... James Leinster 2330 Blackstone At. Columbus and deposited the same in the post-office, at the same day, postage paid,.. Whereupon, I, the said Notary, upon the authority aforesaid, have PROTESTED, and do hereby solemnly Protest, as well against the drawer............of the said. bill of exchang as against all other persons whom it doth or may concern, for Exchange, Re-Exchange, and all Costs, Charges, Damages and Interests, suffered, or to be suffered for the want of'. payment the day and year above written. 2. Here write "papment" or "acceptance" as the case may be. 3. Here write "the same" or "separate," as the case may be. 4. If any notices served personally, state the fact. The above is a certificate of protest. The notice of protest is shown in the next illustration. indorsers. Brown is the holder at maturity. Brown must give notice to every one he wishes to hold liable. Suppose HOLDER IN DUE COURSE Brown notifies Penn, since he got it from Penn. 25 Penn must notify the prior indorsers if he wishes to hold them, and so on. When Penn gets notice he has the same time for starting notices to one or more of the others as Brown had. It might be a good while before Gates learns of the dishonor. 27. Protest. In the case of foreign bills of exchange (drawn by a drawer in one state or country upon a drawee in another state or country) it is necessary upon dishonor as to acceptance or payment to have a notary again make formal demand, issue a certificate of protest, and send (or give the holder to send) notices of dishonor to those to be held liable. It is the practice of banks to do this with all paper in their hands for collection, unless they are instructed not to protest it, or unless the drawer and the indorsers have waived protest. This puts the bank on the safe side and the certificate is proper proof in court that the paper was presented for payment. A negotiable instrument must be presented at the place where and on the day it is due. Of this fact the notary makes a memorandum on the instrument. The costs of protest and of each notice are added to the amount of the note or bill. The holder also is entitled to receive interest until the time of payment and in the case of protested foreign bills a sufficient allowance to pay the costs of getting equivalent funds from the payer to the holder. 28. Holder in due course. The Negotiable Instruments Law defines a holder in due course as one who has taken the instrument under the following conditions: (1) That it is complete and regular upon its face; (2) That he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact; (3) That he took it in good faith and for value; (4) That at the time it was negotiated to him he had no notice of any infirmity in the instrument, or defect in the title of the person negotiating it. was this day duly presented by me for payment which was refused; that i was therefore PROTESTED, and that the holder will look to you for payment of same, you being the drawer thereof. Yours respectfully, Bruce Stuart Notary Public Franklin County, O. Notice of protest of an unpaid draft. The certificate of protest is shown in the previous illustration. HOLDER IN DUE COURSE 27 29. The rights of a holder in due course. The "innocent purchaser" or "bona fide purchaser for value without notice" of some chattel has no title (outside the doctrine of estoppel) unless the seller has title to give. A thief cannot give title to stolen goods. The law merchant, however, treats notes and bills in a way similar to money. The finder of lost money has no title, but if he spends it for an overcoat, the law protects the clothing dealer. There is this difference, however; a negotiable instrument may not be a legal contract. Unless it is, nobody can enforce it. A contract may be absolutely void on account of defects that lie in the instrument itself. Some parties are incapable of making a note or drawing a bill; such are insane persons, extremely drunk persons, and infants. A note or bill executed as part of an unlawful transaction is absolutely void. A forged or altered instrument is also utterly void except that the original form of the altered instrument may be enforced. A note or bill is also never valid unless it is a complete instrument, provided it has not been delivered. There is another class of defects in title, but from these a holder in due course is free. They are defenses which pertain not to the instrument itself, but to the parties to the instrument. The signer of the paper or an indorser may claim that he made the transfer due to fraud or duress; he may prove that he failed to receive consideration, that he has paid it, that he has been released, or that the transfer is illegal (provided the illegality is not such as to absolutely avoid the contract). Between the parties concerned such defenses free from liability, but a holder in due course knows nothing of such defects and can exact full payment from the maker or drawer, or the indorsers. The following instances will illustrate how the law works out. It is assumed that a party is a holder in due course unless it is otherwise stated. Jones gives his note to Smith |