they would not be bound to pay it again to any one who acquired it after the period when payment was due. And if it were not paid at maturity, it is then considered as dishonored; and although still transferable in like manner and form as before, yet the fact of its dishonor, which is apparent from its face, is equivalent to notice to the holder that he takes it subject to its infirmities, and can acquire no better title than his transferrer.1 The doctrine applicable to this subject has been admirably stated by Chief-Justice Shaw, who says: "Where a negotiable note is found in circulation after it is due, it carries suspicion on the face of it. The question instantly arises, why is it in circulation? why is it not paid? Here is something wrong. Therefore, although it does not give the indorsee notice of any specific matter of defence, such as set-off, payment, or frandulent acquisition, yet it puts him on inquiry; he takes only such title as the indorser himself has, and subject to any defence which might be made if the suit were brought by the indorser."" But there is this limitation to this doctrine: that if the holder acquired the paper after maturity, from one who became a bona fide holder for value and without notice before maturity, he is then protected by the strength of his transferrer's title.3

§ 783. When instruments payable on sight or on demand deemed overdue.-It is said by Professor Parsons in respect o bills on sight, and bills or notes payable on demand: “A reasonable time must elapse before mere non-payment dishonors the bill or note. What this time is, has not been

'Texas v. Hardenberg, 10 Wall., 58; Davis v. Miller, 14 Grat., I; Arents v. Commonwealth, 18 Grat., 750; Marsh v. Marshall, 53 Penn. St., 396; Kellogg v. Schnaake, 56 Mo., 137; Kittle v. De Lamater, 3 Neb., 325; Goodson v. John son, 35 Tex., 622; Henderson v. Case, 31 La. An., 215; Greenwell v. Haydon, 78 Ky. (1 Rod.), 333; Hinckley v. Union P. R.R., 129 Mass., 61. See ante, § 724.

'Fisher v. Leland, 4 Cush., 456.

'See ante, § 726, and post, §§ 786, 803, 805.

1

and can not be fixed by any definite and precise rule. One day's delay of paper on demand certainly would not dishonor it; five years certainly would. And in each case, how many days, or weeks, or months are requisite for this effect, must depend upon the test, whether so long a time has elapsed, that it must be inferred from the particular circumstances and the general conduct of business men, both of which should be considered, that the paper in question must have been intended to be paid within this period, and if not paid, must have been refused." And again the same learned author observes: "If the paper be demanded and refused within that period before the termination of which there is no presumption of dishonor, a taker after such demand, and within that period, having no notice or knowledge of the demand or refusal, can not be affected by it. For example, suppose a note on demand so circumstanced that the court would say the lapse of one month is not sufficient to dishonor it, and the lapse of two months is sufficient, and a transferee takes it on the twenty-fifth day without notice or knowledge that on the twenty-fourth day it had been demanded and refused. We should say that the law would allow him the right of presuming nondishonor during the whole of that month, and would protect his rights accordingly.'

§784. Presumption that bill or note is acquired before maturity. There is always a presumption when the payee's or an indorser's name is indorsed upon the bill or note, that it was done before its maturity; and likewise the presumption that the holder acquired the instrument before maturity, whether the legal title be transferable by indorsement, or by delivery merely. Indeed the law will presume in favor of

21 Parsons N. & B., 270; see also Bartrum v. Caddy, 9 Ad. & E., 275-8 Cripps v Davis, 12 M. & W., 159, 165.

See ante, § 728; New Orleans, etc., v. Montgomery, 95 U. S. (5 Otto), 16 (1877).

the holder, according to many authorities, that the indorsement or assignment was of even date with the instrument itself; but it can rarely be the case that any stronger or more definite presumption will be needed than that he acquired it before maturity, as he is then protected against defences available to his transferrer. We can conceive, however, of cases in which the further presumption that the transfer was of even date might be desirable to the holder

-as where it were proved that at a certain time after date of the paper he had notice of a defect which would prevent his better title, if it were not then established.

§ 784a. Strength of presumption as to date of acquisition.--But the presumption as to the time of acquiring the instrument is not a strong one. The indorsement is almost invariably without date, and without witnesses. The transfer by delivery merely, leaves no footprint upon the paper by which the time can be traced. And the presumption in favor of the holder as to the time of transfer being without any written corroborative testimony, is of the slightest nature, and open to be blown away by the slightest breath of suspicion.2

785. The presumption that the holder of a note acquired it before maturity has been held not to apply where the note is payable in so short a time as one day after date, on the ground, as stated, that the time run is so short that it is not probable that it would be put into circulation before maturity-at least, not sufficiently so as to raise a presumption in favor of the holder; that such paper is rather eviderce of a debt than a promise made with expectation of payment at the time named, and does not belong to the class of paper intended for negotiation and circulation for commercial purposes. 8 But this departure from the

1 See ante, § 728.

Gibson, J., in Snyder v. Riley, 6 Barr., 164; Hill v. Kraft, 29 Penn. St., 186 Hatch v. Calvert, 15 W. Va., 97.

'Beall v. Leverett, 32 Ga., 104, Lyon, J.

general principle, which relieves the holder from nothing but the burden of proof, is not sanctioned by the law merchant; and although the time is brief, the execution of a negotiable instrument payable at so brief a period is in itself evidence of a need of money for the period named. And we know of no reason why a party may not use negotiable instruments for a short loan as well as a long one.

§ 786. Rule as to accommodation paper, acquired overdue. While it is the general rule that if the paper be overdue at the time of the transfer that circumstance of itself is notice, and he can acquire no better title than his indorser; yet, the fact that the paper was executed for accommodation without consideration, and that the indorsee knew it, is no defence even when the paper was overdue at the time of the indorsement, it being considered that parties to accommodation paper hold themselves out to the public by their signatures to be bound to every person who shall take the same for value, to the same extent as if paid to him personally. If the holder received the paper after maturity from an indorser who took it bona fide before maturity, there is no question as to his right to recover; but if he takes it after maturity from the party for whose accommodation it was made, indorsed or accepted, there is conflict of decision on the subject; but the doctrine of the text is sustained by the highest authority.*

1

'This doctrine seems just, and is sustained by numerous authorities, though not without conflict. Favoring it, see Story on Notes, § 194; Story on Bills (Bennett's ed.); §§ 188, 191; 2 Rob. Prac. (new ed.), 253; Byles on Bills (Sharswood's ed.), 285; Dunn v. Weston, 71 Me., 270; First National Bank v. Grant, 71 Me., 374; Harrington v. Dorr, 3 Rob., 283; Davis v. Miller, 14 Grat., 6; Sturtevant v. Ford, 4 M. & G., 101; 4 Scott, 608; Charles v. Marsden; I Taunt., 224; Lazarus v. Cowie, 3 Q. B., 459 (43 E. C. L. R.); Caruthers v. West, 11 Ad. & El., 144. In Redfield & Bigelow's Leading Cases, 216, 217, it is said: "To hold otherwise would be to encourage fraud, and to relieve the party from the very responsibility which he expected to meet, and which, udon every principle of justice and fair dealing, he should be compelled to abide by." See ante, §§ 726, 782.

"Howell v. Crane, 12 La. Ann., 126; Riegel v. Cunningham, 9 Phila. (Penn.). 177; Story on Bills, § 188. See ante, §§ 726-782; post, §§ 803-805. 'Chester v. Dorr, 41 N. Y., 279; Coghlin v. May, 17 Cal., 506.

*See ante, § 726, and notes.

8787. Rule when instalment of principal or interest is overdue. If the note be payable by instalments it is dishonored when the first instalment becomes overdue and unpaid, and he who takes it afterward takes it subject to all equities between the original parties.1 Whether or not the same rule applies when there is an instalment of interest overdue and unpaid is a controverted matter. The weight of authority is to the effect that the bona fide purchaser for value of negotiable paper is within the protection of the law merchant although interest is overdue and unpaid at the time of the purchase, interest being a mere incident of the debt, and the holder losing no right as against the parties, whether makers or indorsers, by failure to demand it. This seems to be the correct rule, though the contrary view is not without some weighty considerations to support it. Where more than one note is executed upon the same consideration, they are not all to be regarded as dishonored when one is overdue and unpaid.*

§ 787a. Transfer on last day of grace.-A purchaser of a negotiable instrument, before the close of business hours, on the last day of grace, and before its dishonor, has been held, and, as we think, correctly, to be fully protected as having received it while current;5 but a contrary view has been taken in Massachusetts. The effect of a purchase pending suit is hereafter considered."

'Vinton v. King, 4 Allen, 562; Field v. Tibbetts, 57 Me., 359; Hart v. Stickney, 41 Wis., 630.

2 Kelley v. Whitney, 45 Wis., 110 (1878), overruling Hart v. Stickney, 41 Wis., 630 (1877), and re-affirming Boss v. Hewitt, 15 Wis., 260 (1862); National Bank v. Kirby, 108 Mass., 497. See post, § 1506, and cases cited, 30 Am. Rep., 702, 703; Bigelow on Bills and Notes (2d ed.), 445. of am & Eng. Cy & Newell v. Gregg, 51 Barbour, 263.

'Crosby v. Grant, 36 N. H., 273.

'Boss v. Hewitt, 15 Wis., 260.

Pine v. Smith, 11 Gray, 38. It did not appear in this case whether or not the transfer was during business hours, nor did the court seem to attach any importance to the inquiry.

'See § 1199, vol. 2.

VOL. I.-47