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on its treasurer, payable to its own order, and indorses it in the name of the corporation, a presentment to the treasurer, and his refusal to honor the bill, is of itself notice to the corporation of both those facts. So, if the presentment in season was impossible, by reason of unavoidable accident, a subsequent presentment, when it becomes possible, will excuse the delay. But the actual insolvency of the maker of a note, at the time when it fell due, does not excuse the want of notice to the indorser ;3 even though the fact was known to the indorser, who indorsed it to give it currency. Nor does the insolvency of the acceptor excuse the want of notice to the drawer. (a)
§ 195 a. Same subject. But in the case of a banker's check, the drawer is treated as in some sort the principal debtor; and he is not discharged by any laches of the holder, in not making due presentment, or in not giving him due notice of the dishonor, unless he has suffered some injury or loss thereby; and then only
And the burden of proof is on the holder, to show, as part of his case, that no damage has accrued or can accrue to the drawer by his omission of any earlier demand or notice; or, in other words, that his situation, as regards the drawer, remains as it was at the time of the dishonor.6
§ 196. Same subject. So, as we have already seen, if the drawer
1 Commercial Bank v. St. Croix Man. Co., 10 Shepl. 280.
8 Groton v. Dalheim, 6 Greenl. 476; Jackson v. Richards, 2 Caines, 343; Crossen v. Hutchins, 9 Mass. 205; Sandford v. Dallaway, 10 Mass, 52.
4 Nicholson v. Gouthit, 2 H. Bl. 609; Buck v. Cotton, 2 Conn. 126; Gower r. Moore, 12 Shepl. 16.
6 Whitfield v. Savage, 2 B. & P. 277; May v. Coffin, 4 Mass. 341.
6 Story on Promissory Notes, S8 492, 498; 3 Kent, Comm. 104, n. (a), (5th ed.); Little v. Phenix Bank, 2 Hill (N. Y.), 425; Kemble v. Mills, 1 M. & Gr. 757.
(a) Notice of the non-acceptance and or of due and reasonable efforts to find non-payment of a bill of exchange drawn them for that purpose, in order to fix the by a partner upon his partnership need indorser and render his liability absolute. not be given to the drawer, after all Such demand will be sufficient if made at the partners have gone into insolvency. either of those places, if they were both Fuller v. Hooper, 3 Gray (Mass.), 334. left and abandoned at the same time; but If the maker of a note absconds, leaving if there be a difference in the time, it no visible attachable property, a want of should be made at that which was most a demand or inquiry for him is not there- recently occupied. In such case the by excused, so as to charge the indorser, holder is not required, as an essential prealthough the latter knew of such abscond- liminary to a claim upon the indorser, to ing. Pierce v. Cate, 12 Cush. (Mass.) resort to or inquire for the new residence 190 ; Wheeler v. Field, 6 Met. (Mass.) to which the maker has gone beyond the 290. In such case
" there must be a State into a foreign country." Grafton presentment and demand of payment at Bank v. Cox, 13 Gray, 504. his last place of business or of residence,
of a bill, after full notice of the laches of the holder, pays part of the bill, or promises to pay it, this excuses the want of evidence of due presentment, protest, and notice. The like evidence suffices in an action against the indorser of a bill or note. But it has been considered, that though the waiver by the drawer, of his right to presentment and notice, may be inferred from circumstances and by implication, yet that an indorser is not chargeable after laches by the holder, unless upon his express promise to pay.3
$ 197. Same subject. It may be proper here to add, that, where matter in excuse of the want of demand and notice is relied upon, it is usual to declare as if there had been due presentment and notice, some latitude in the mode of proof being allowed, and the evidence being regarded not strictly as matter in excuse, but as proof of a qualified presentment and demand, or of acts which, in their legal effect, and by the custom of merchants, are equivalent thereto. (a) Moreover, in all cases, where a note is given in evidence upon the money counts, any proof which establishes the plaintiff's right to recover upon the note supports the count.*
§ 198. Defences. The DEFENCE to an action on a bill of exchange or a promissory note most frequently is founded on some defect of proof on the part of the plaintiff, in making out his own title to recover; which has already been considered. Several other issues, such as Infancy, Tender, the Statute of Limitations, &c., which are common to all actions of Assumpsit, will be treated under those particular titles. It will therefore remain to consider some defences, which are peculiar to actions on bills and notes.
$ 199. Want of consideration. In regard to the consideration, it is well settled in the law-merchant, that, in negotiable securities, in the hands of innocent third persons, a valid and sufficient consideration for the drawing or acceptance is conclusively presumed.
1 Supra, § 190; Chitty & Hulme on Bills, p. 660 (9th ed.); Duryee v. Dennison, 5 Johns. 248; Miller v. Hackley, Id. 375; Crain v. Colwell, 8 Johns. 384; Myers 7. Standart, 11 Ohio St. 29.
2 Ibid.; Taylor v. Jones, 2 Campb. 105. See also Trimble v. Thorn, 16 Johns. 152; Jones v. Savage, 6 Wend. 658; Leonard v. Gray, 10 Wend. 504.
3 Borradaile v. Lowe, 4 Taunt. 93. And see Wilkinson v. Jadis, 1 M. & Rob. 41; 2 B. & Ad. 188; Lord v. Chadbourne, 8 Greenl. 198; Fuller v. McDonald, Id. 213.
- North Bank v. Abbott, 13 Pick. 465, 469, 470; Hill v. Heap, 1 D. & R. 57. And see Cory v. Scott, 3 B. & Ald. 619, 625, per Holroyd, J., acc. But Bailey, J., was inclined to think, that the excuse for want of notice should be specially alleged. Id. p. 624. See also, in accordance with the text, Norton v. Lewis, 2 Conn. 478; Williams 0. Matthews, 3 Cowen, 252.
(a) Armstrong v. Chadwick, 127 Mass. 156.
But as between the original parties, and those identified in equity with them, this presumption is not conclusive but disputable, and the consideration is open to inquiry. Wherever, therefore, the plaintiff, being an indorsee, is shown to stand in the place of the original promisee or party, as, by receiving the security after it was dishonored, or the like, the defendant, as we have already scen, may set up the defence of illegality or insufficiency in the consideration; in which case he must be prepared with evidence to prove the circumstances under which the bill or note was drawn, and that it was transferred after its dishonor.2 Thus, in an action against the acceptor of a bill, given for the price of a horse, warranted sound, it appearing that the holder of the bill and the original payee were identical in interest, the breach of the warranty, with an offer to return the horse, were held to constitute a good defence. If the consideration has only partially failed, and the deficiency is susceptible of definite computation, this may be shown in defence pro tanto. But if the precise amount to be deducted is unliquidated, this cannot be shown in reduction of damages, but the defendant must resort to his cross-action.* (a) Mere inade
· Supra, § 171. At what time a note, payable on demand, is to be considered by the purchaser as a dishonored security, merely from its age, is not perfectly clear, and perhaps the case does not admit of determination by any fixed period, but must be left to be determined upon its own circumstances. In Barough v. White, 4 B. & C. 325, the time of the trausfer of the note does not appear; but it was payable with in. terest, which Bailey, J., mentioned as indicating the understanding of the parties, that it would remain for some time unpaid. See also Sanford ". Mickles, Johns. 221; Losee v. Dunkin, 7 Johns. 70; Thurston v. McKown, 6 Mass. 76. In the last case the note had been running seven days from the date, and was held not dishonored. But the lapse of eight months, and upwards, has been held sufficient evidence of dishonor. Ayer v. Hutchins, 4 Mass. 370. See also Freeman v. Haskins, 2 Caines, 368; Sylvester v. Crapo, 15 Pick. 92; Sice v. Cunningham, 1 Cowen, 397, 408-410. In this case the lapse of five months was held to discharge the indorser. See 3 Kent, Comm. pp. 91, 92; Niver v. Best, 4 Law Rep. N. s. 183. By a statute of Massachusetts respecting notes payable on demand, a demand made at the end of sixty days from the date, without grace or at any earlier period, is to be deemed made in reasonable time; but after sixty days it is deemed overdue. Gen. Sts. c. 53, § 8. In Merritt v. Todd, 23 N. Y. 28, it is held that a promissory note, payable on demand, with interest, is a continuing security; an indorser remains liable until an actual demand; and the holder is not chargeable with neglect for omitting to make such demand within any particular time. The question is here fully discussed by Comstock, C. J. See also Lockwood v. Crawford, 18 Conn. 361.
Chitty & Hulme on Bills, pp. 648, 662 (9th ed.); Webster v. Lee, 5 Mass. 334; Ranger v. Carey, 1 Met. 369; Wilbour v. Turner, 5 Pick. 526. Thus he may show that the note or bill was void, by the statute of the State, being made and delivered on Sunday. Lovejoy v. Whipple, 3 Washb. 379. And see Story on Contracts, $8 616620 (2d ed.).
8 Lewis v. Cosgrave, 2 Taunt. 2. 4 See supra, tit. Assumpsit; Chitty & Hulme on Bills, pp. 76–79, 662 (9th ed.).
(a) Where a promissory note is given siderations, each going to a distinct porupon two distinct and independent con- tion of the note, and one is a considera.
quacy of consideration cannot be shown simply to reduce the damages, though it may be proved as evidence of fraud, in order to defeat the entire action.1
$ 200. Other equities. How far other equities between the original parties may be set up in defence, against an indorsee affected with actual or constructive notice, is a question on which the decisions are not perfectly uniform. It has already been intimated, that, in the law-merchant, the equities thus permitted to be set up are those only that attach to the particular bill, and not those arising from other transactions. But in the courts of several of the United States, the defendant has been permitted, in many cases, to claim any set-off, which he might have claimed against the original party, though founded on other transactions. In all cases, where the plaintiff is identified with the original contracting party, the declarations of the latter, made while the interest was in him, are admissible in evidence for the defendant.* (a) But,
i Solomon v. Turner, 1 Stark. 51. 2 Supra, § 171; Burrough v. Moss, 10 B. & C. 558; Story on Bills, $ 187, and n. (3); Story on Promissory Notes, $ 178. Though the note is made payable to the maker's own order, he will be entitled to the same defence against an indorsee who received it when overdue, as if it were made payable to and indorsed by a third person. Potter v. Tyler, 2 Met. 58.
8 Sargent v. Southgate, 5 Pick. 312; Ayer v. Hutchins, 4 Mass. 370; Holland 7. Makepeace, 8 Mass. 418; Shirley v. Todd, 9 Greenl. 83. See also the cases cited in Bayley on Bills, pp. 544-548, Phillips & Sewall's notes (2d Am. ed.); Tucker v. Smith, 4 Greenl. 415; Sylvester v. Crapo, 15 Pick. 92. By a statute of Massachusetts, the maker of a note payable on demand is admitted to any defence against the indorsee, which would be open to him in a suit brought by the payee. Stat. 1839, c. 121.
* Ante, vol. i. $ 190 ; Beauchamp v. Parry, 1 B. & Ad. 89 ; Welstead v. Levy, 1 M. & Rob. 138 ; Chitty & Hulme on Bills, pp. 664, 665 (9th ed.); Shirley v. Todd, 9 Greenl. 83; Hatch v. Dennis, 1 Fairf. 244; Pocock v. Billings, 2 Bing. 269; Hacket t. Martin, 8 Greenl. 77.
tion which the iaw deems valid and suffi- transferred long after it was overdue, the cient to support a contract, and the other declarations of a former holder, made not, there the contract will be apportioned while he held the note, but after it was as between the original parties or those due, are admissible in evidence to show that have the same relative rights, and payment to such former holder, or any the holder will recover to the extent of right of set-off which the maker had the valid consideration and no further; against him. Such declarations, made by and when the parts of the note are not such holder before he took the note, are respectively liquidated and definite, a jury inadmissible; and such declarations by will settle, on the evidence before them, such holder, made after assigning the what amount is founded on one considera- note to one from whom the plaintiff since tion and what on the other. Parish v. took it, are not competent testimony, unStone, 14 Pick. (Mass.) 198. See also Chic. less such assignment was conditioned to opee Bank v. Chapin, 8 Met. (Mass.) 40; be void upon the payment to the assignor Stoddard v. Kimball, 6 Cush. (Mass.) 469; of a less sum than the amount due on the Bond v. Fitzpatrick, 4 Gray (Mass.), 89; note, in which case such declarations are Lothrop v. Snell, 11 Cush. (Mass.) 453. competent evidence for the defendant to
() In a suit against the maker of a defeat the recovery against bim of any inpromissory note by one to whom it was terest remaining in the assignors, after
where the plaintiff does not stand on the title of the prior party, but on that acquired by the bona fide taking of the bill, it is otherwise. 1
$ 201. Discharge of acceptance. The acceptor of a bill may also show as a defence, that his acceptance has been discharged by the holder; as, if the holder informs him that he has settled the bill with the drawer, and that he needs give himself no further trouble ; or, where the holder, knowing him to be an accommodation acceptor, and having goods of the drawer, from the proceeds of which he expects payment, informs him that he shall look to the drawer alone, and shall not come upon the acceptor; or, if he should falsely state to the acceptor, that the bill was paid, or otherwise discharged, whereby the acceptor should be induced to give up any collateral security; or, if he should expressly agree to consider the acceptance at an end, and make no demand on the acceptor for several years. And whatever discharges the acceptor will discharge the indorser; as, indeed, whatever act of the holder discharges the principal debtor will also discharge all others contingently liable, upon his default;3 and, more generally speaking, the release of any party, whether drawer or indorser, will discharge from payment of the bill every other party to whom the party released would have been liable, if such party released should have paid the bill.4
§ 202. Where parties are collaterally liable. If the defendant is not the principal and absolute debtor, but is a party collaterally and contingently liable, upon the principal debtor's default, as is the drawer or indorser, he may set up in defence any valid agreement between the holder of the security and the principal debtor, founded upon an adequate consideration, and made without his own concurrence, whereby a new and further time of payment is given to the principal debtor; and this, though the liability of the drawer or indorser had previously become fixed and absolute, by due presentment, protest, and notice. But mere neglect to sue
Smith v. De Wruitz, Ry. & M. 212 ; Shaw v. Broom, 4 Dowl. & Ry. 730. 2 Story on Bills, $$ 252, 265–268, 430-433. 3 Story on Bills, $$ 269, 270, 437. 4 Story on Bills, § 270 ; Sargent v. Appleton, 6 Mass. 85.
6 Story on Bills, $$ 425-427 ; Chitty & Hulme on Bills, pp. 408-415 (9th ed.); Philpot v. Bryant, 4 Bing. 717, 721 ; Bank of United States v. Hatch, 6 Peters, 250 ; Mottram v. Mills, 2 Sandf. S. C. 189 ; Greely v. Dow, 2 Met. 176.
Leland, 4 Cush. (Mass.) 456; Stoddard v. Fitzpatrick, 4 Gray (Mass.), 89; Fisher v. Kimball, Id. 604.
such conditional assignment.