so, without any reasonable expectation that his draft will be honored, certainly cannot have the hardihood to pretend that his draft should be presented to the drawee, either for acceptance or for payment, unless he provides funds before maturity. But the indorser of the draft may stand in a different position. If he does not know the fact and is not otherwise precluded from claiming a demand, he is still entitled to a demand upon the drawee as a condition precedent to his liability. But if he knew the fact, some authority holds that he cannot pretend to any such right, but the great weight of authority, as we have seen, seems to be otherwise. The indorser of a note is not in an analogous position. Where the note is made payable at a bank or other particular place, he can require a formal demand or the depositing of the note or inquiry on the day at the bank, though no funds have been provided for the payment of the note at the place.* But if the drawer had a reasonable expectation that his draft would be paid, or if the drawee was indebted to him upon an account payable in money, but not upon an account payable in something else than money,' he is entitled to claim a demand of the drawee on the part of the holder. This rule has not been carried so far as to hold that where the drawer has promised his accommodation acceptor to furnish funds to pay the bill and does not do so, he is yet entitled to have 1 Dickens v. Beal, 10 Pet. 572; Rhett v. Poe, 2 How. 457; Kinsley v. Robinson, 21 Pick. 327, and many other cases. 2 Ramdulollday v. Darieux, 4 Wash. C. C. 61; Slack v. Longshaw, 8 Ky. Law R. 166; Mohawk Bank v. Broderick, 10 Wend. 304; Denny v. Palmer, 27 N. C. 610. 3 Farmers' Bank v. Van Meter, 4 Rand. 553. Compare Ramdulollday v. Darieux, 4 Wash. C. C. 61. 4 Allen v. Smith, 4 Har. 234; Nichols v. Goldsmith, 7 Wend. 160; Huffaker v. National Bank of Monticello, 13 Bush, 644; Maurin v. Perot, 16 La. 276; Gillett v. Averill, 5 Denio, 85. See Sherer v. Easton Bank, 33 Pa. 134. It is enough if an inquiry be made there and the fact of the non-presence of funds ascertained. Bank v. Lea, 7 Rob. (La.) 75. Nor can he require a demand if he is the party benefited. Reed v. Morrison, 2 Watts & S. 401. 5 Dickens v. Beal, 10 Pet. 572. The rule was applied in favor of an accommodation drawer of a check. Mackall v. Gozler, 2 Cranch, C. C. 240. 6 Walker v. Rogers, 40 Ill. 278. the demand made upon the acceptor. And this must be the law, for he is not authorized to anticipate that he will be successful in a dishonest attempt to appropriate the acceptor's property. Nor can the drawer require an absolute demand where the drawee upon presentation of the bill credits upon it the whole balance of the drawer's account at the date the bill or order was drawn. Or where there was an account between the drawer and drawee and the account had been settled in the drawee's favor without making any allowance for the draft, the drawer is not entitled to claim a demand.10 The reason for the rule is that the drawer could have no reasonable expectation that his draft would be paid. This reasonable expectation depends upon circumstances, such as a drawing against a consignment, even though a bill of lading failed through inadvertence to be sent or the goods were subsequently lost, or where there was a state of fluctuating accounts between drawer and drawee, or any other reasonable expectation founded on a previous honoring of drafts." This rule has not been applied by the courts to checks as well as bills drawn against a balance to the drawer's credit, so as to hold that if the drawer had funds when he drew the check any subsequent shifting of the balance will dispense with the necessity of a demand as to him and notice of non-payment. The true rule is as to checks that there is no particular time required for a demand upon a check, and the drawer is prejudiced, if the bank fails, only if he then had funds to his credit sufficient to pay the check.13 8 Harrison v. Trader, 29 Ark. 85. 9 Blankenship v. Rogers, 10 Ind. 333. 10 Stewart v. Millard, 7 Lans. 373. 11 Dickens v. Beal, 10 Pet. 572. 12 Richie v. McCoy, 13 Smedes & M. 541, as to a bill. For the contrary rule as to checks, see Fletcher v. Pierson, 69 Ind. 281; Culver v. Marks, 122 Ind. 554; Armstrong v. Brolaski, 46 Fed. R. 903; Case v. Morris, 31 Pa. 100. If he had no funds at the date of the check, the evidence that the bank would have paid is inadmissible (Culver v. Marks, supra); but if an overdraft had been arranged for under such circumstances that the bank was compelled to pay the check, he is entitled. See § 160, ante. The indorser, however, should be notified of the dishonor. 13 See § 237, ante, and next note. And if he has no credit when the drawer made up his mind to present, he is not entitled to any demand, for he has drawn out all the funds. The correct rule as to bills of exchange is that the drawer of a bill, who has himself taken his funds out of the drawee's hands prior to the date of proper presentment, cannot claim that a demand should have been made; 15 but an exception is hinted at to the effect that if the accounts were so fluctuating that it might reasonably have been presumed that the draft would have been paid, then a demand should have been made. But no demand is necessary as to the drawer if he has assigned the funds 16 or has told the holder that he has withdrawn his funds from the drawee." But if the drawer, although having no funds in the hands of the drawee when he draws, provides funds to meet the draft before the date when it should have been accepted, or, if accepted, provides them before the date of maturity of the draft, or, if the draft be not required to be accepted and not in fact accepted, provides funds prior to maturity, he is entitled to have demand of payment made; 18 he is not, however, so entitled if he fails to provide funds up to the maturity of the bill. If the maker and indorser upon a note enjoin the collection of it before maturity, it is needless to say that no demand is necessary in order to charge the indorser. But unless the indorser upon a bill or check is in some way a party to the failure to provide funds, or is 20 14 See § 237, ante. But as to the indorser the strict rule as to demand is eminently proper, for he indorses on the present status of the drawer's account. 15 See note 12, supra, and the cases cited in the next two notes, and Dallfus v. Frosch, 1 Denio, 367; Hopkirk v. Page, Fed. Cas. 6697 (notification that drafts would not be accepted); countermanding order, see Child v. Moore, 6 N. H. 33; stopping check, Jacks v. Darrin, 3 E. D. Smith, 557; Purchase v. Mattison, 6 Duer, 587; counter manding draft, Neederer v. Barber, Fed. Cas. 10,079; Manning v. Maroney, 87 Ala. 563. 16 Syracuse Co. v. Collins, 57 N. Y. 641. Notice should, however, be given to the indorser. 17 Sutcliffe v. McDowell, 2 Nott & McC. 251. Notice should be given to the indorser. 18 This is admitted to be the rule by all the authorities. See cases cited in this section passim. 19 Kinsley v. Robinson, 21 Pick. 327; Foard v. Womack, 2 Ala. 368. 20 Williams v. Bartlett, 4 Lea, 620. the real party benefited by the bill or check, he is entitled to claim a demand. $265. Change of residence. If the maker of a note or the drawee or acceptor of a bill changes his residence after the note is made or the bill is drawn or accepted, what must be done by the holder depends upon the place to which he has removed. If the removal is to a place within the same state, we have already considered the question of what is due diligence in the holder by way of inquiry for the new residence and a demand there,' as to paper not made payable at a particular place; upon paper so payable, the change of residence, whether in the state or out of it, is perfectly immaterial. The demand is still to be made at the place designated in accordance with the rules heretofore given. If that particular place of business has been removed, no demand is necessary, or at any rate is necessary only under peculiar circumstances. But as to a note not made so payable, a removal out of the state by the maker dispenses with the necessity of a demand upon the maker. The holder is not compelled to follow the maker out of the state; but if the absence is temporary, service of demand is necessary at his residence or place of business, or due diligence should be shown in an attempt to find the residence or place of business. The same will be the rule as to one of the joint makers of a note. But the maker may have left an agent 1 See § 259, ante. 3 2 Shaw v. Reed, 12 Pick. 132; Farwell v. St. Paul Trust Co., 45 Minn. 495. 7 McClelland v. Bishop, 42 Ohio St. 113. See Smith v. Little, 10 N. H. 526, a case of non-residence at the time of making of the note 3 Smith v. Poillon, 87 N. Y. 590; and not of removal from state. and see § 258, ante. 4 See § 258, ante. 5 See § 259, ante, note 21. 6 Taylor v. Snyder, 3 Denio, 145; McClelland v. Bishop, 42 Ohio St. 113. If a sailor is on the sea demand upon him is excused. Moore v. Coffield, 12 N. C. 247. See also McKee v. Boswell, 33 Mo. 567. The decision is wrong, for the rule differs where, at the time the note was made, the maker lived out of the state. In the latter case demand upon him is necessary. Spies v. Gilmore, 1 N. Y. 321; Bradley v. Patton, 51 Ala. 108. Contra, Ricketts v. Pendleton, 14 Md. 320; and see note 9, infra. in the state, and inquiry should be made for one at least at the place of former residence. But if the maker was a nonresident at the time the note was made, the fact that it is dated in the state does not excuse a demand upon the maker.9 The maker, upon his removal, may leave a deposit in the state to pay the note, but he should so inform the holder; for if the holder has no knowledge of the fact, a demand will not be necessary,10 presupposing, however, due inquiry for an agent on the part of the holder. If the acceptor of a bill changes his residence, the same rule ought to govern a demand upon him as upon the maker of a promissory note." And as to the drawee of a bill, it is conceived that the same rules ought to be applied to his change of residence.12 § 266. Absconding of maker or drawee.- Where the maker of the note absconds before the maturity of the note,' or where the drawee of a bill absconds, or where the acceptor absconds, no demand is necessary upon him unless the paper is payable at a particular place. The word "absconding" means that the person so conceals his whereabouts that he cannot be found. If he has actually absconded, inquiry for him would seem to be supererogatory; yet one case wrongly holds that inquiry should be made even though the indorser knew the fact that he had absconded. 8 Williams v. Bank of United States, 2 Pet. 96, as to service of notice. 9 Taylor v. Snyder, 3 Denio, 145; Spies v. Gilmore, 1 N. Y. 321; Bradley v. Patton, 51 Ala. 108. Contra, Ricketts v. Pendleton, 14 Md. 320. 10 Walton v. Henderson, Smith, 168. Cord, 503; Ratcliff v. Planters' 2 Madderson v. Heath Mfg. Co., 35 Ill. App. 588. 3 The same rule as to the maker of a note. 4 See the cases in note 1. This rule as to absconding has no appli 11 See the preceding notes to this cation to paper payable at a par section. ticular place. Shaw v. Reed, 12 12 See the preceding notes to this Pick. 132; Farwell v. St. Paul Trust section. Co., 45 Minn. 495. Taylor v. Snyder, 3 Denio, 145; Duncan v. McCullough, 4 S. & R. 480; Gillespie v. Hannehan, 4 Mc 5 Pierce v. Cate, 12 Cush. 190. Contra, Lehman v. Jones, 1 Watts & S. 126. |