stipulation excluding days of grace, the right to grace may be waived by the party bound, as where a tender of payment is made on the day of maturity without grace and is refused on other grounds;78 but a mere waiver of demand, protest, and notice of dishonor is not a waiver of grace.79

[§ 621] 8. Persons Entitled. The right to days of grace exists, not only in favor of the maker of a note so and of the acceptor of a bill,81 but also in favor of the drawer of a bill 82 and of the indorsers of a bill or a note.83

[622] 9. Presumptions as to. Days of grace have been allowed on negotiable bills and notes so universally and for so long a time that the existence of the custom in other states and in England will be presumed in the absence of affirmative proof of a custom or a statute to the contrary.84 For the same reason it will be presumed, in the absence of proof to the contrary, that the number of days is three.85 The presumption of three days of grace has also been extended to a bill of exchange payable in France.86

[§ 623] 10. Effect of Special Custom or Usage. If a statute expressly allows a certain number of

May," without any date of acceptance, it was entitled to days of grace and did not mature until May 24. It will not be presumed that the words "due May 21st" were intended to include the days of grace, where it is not shown that the acceptance was sixty-three days before that date. Bell v. Chicago First Nat. Bank, 115 U. S. 373, 6 SCt 105, 29 L. ed. 409. (2) Where a note payable in a certain time with interest "until due, and no interest after," had on the margin a memorandum stating that it was "due" on a day named which was the last day of the time specified for payment, it was held that this was not an express stipulation, and that no grace should be allowed within the meaning of a statute. Perkins v. Franklin Bank, 21 Pick. (Mass.) 483. (3) But where a bill payable sixty days after sight was accepted under the date of September 12 and as payable November 14, it was held that the days of grace were included in the time specified, and that November 14 was the peremptory day of payment, and not the day from which days of grace were to be reckoned. Kenner v. His Creditors, 8 Mart. N. S. (La.) 36. See also Kenner v. Their Creditors, 1 La. 120.

78. Wyckoff v. Anthony, 90 N. Y. 442.

79. Steinau v. Moody, 100 Ga. 136, 28 SE 30. 80. Pickard v. Valentine, 13 Me. 412; Hogan v. Cuyler, 8 Cow. (N. Y.) 203.

81. Cook v. Renick, 19 Ill. 598; Brown v. Jones, 125 Ind. 375, 25 NE 452, 21 AmSR 227; McMurchey V. Robinson, 10 Oh. 496; Tassell v. Lewis, 1 Ld. Raym. 742, 91 Reprint 1397.

82. Pickard v. Valentine, 13 Me. 412.

83. Howe v. Bradley, 19 Me. 31; Central Bank v. Allen, 16 Me. 41; McDonald v. Smith, 14 Me. 99; Pickard v. Valentine, 13 Me. 412; Brown v. Harraden, 4 T. R. 148, 100 Reprint 943.

84. Wood v. Corl, 4 Metc. (Mass.) 203; Reed v. Wilson, 41 N. J. L. 29; Trask v. Martin, 1 E. D. Smith (N. Y.) 505; Cook v. Darling, 2 R. I. 385. 85. Wood v. Corl, 4 Metc. (Mass.) 203; Reed v. Wilson, 41 N. J. L. 29: Trask v. Martin, 1 E. D. Smith (N. Y.) 505.

86. Dollfus v. Froscn, 1 Den. (N. Y.) 367.

87. Mechanics' Bank v. Merchants' Bank, 6 Metc. (Mass.) 13; Staples v.

days of grace on commercial paper, the right thereto cannot be defeated by showing a local custom or usage to the contrary, since such a custom or usage would be void as contrary to law.87 But where the right to grace depends solely on the law merchant which is itself custom or usage, a local custom or usage not to allow grace, or to allow a greater or less number than three days, if known to the parties, or so general and well established that knowledge will be presumed, may be shown and will control;88 and a local custom or usage may entitle a party to days of grace on paper which is not entitled to grace by the law merchant.89

[ 624] 11. Operation and Effect. Where days of grace are allowed on an instrument, the allowance is now a matter of right and not as formerly a matter of grace.90 The allowance enters into, and forms a part of, the contract, and the instrument does not become due in fact or in law until the last day of grace.91 Since paper

91

Presentment, protest, and notice.

does not mature until the last day of grace, it must, to charge the drawer or the indorsers, be presented for payment on that day and not before or after,92 unless the rule is changed by a valid Franklin Bank, 1 Metc. (Mass.) 43, Va.-Jackson V. Henderson, 3 35 AmD 345; Perkins v. Franklin Leigh (30 Va.) 196. Bank, 21 Pick. (Mass.) 483.

[a] In Iowa, however, where a certificate of deposit on an insolvent bank was sent by an indorsee to defendant bank for collection and was protested for nonpayment on the day of its maturity, in an action to charge defendant with negligence in failing to allow grace and thereby discharging the indorser, it was held that evidence of a custom among the banks of the place to treat such certificates as payable without grace was admissible, and that defendant having acted in accordance with such custom was not chargeable with negligence, although the instrument was in fact negotiable and entitled to grace. Haddock v. Citizens' Nat. Bank, 53 Iowa 542, 546, 5 NW 766 (where the court said: "It was said by Chief Justice Marshall in Washington Bank v. Triplett, 1 Pet. 25, 7 L. ed. 37, that the bank was the agent of the holder, not of the drawer, and might consequently so act as to discharge the drawer without being liable to its principal.' If this be not true as applied to the case at bar, the case of Haddock v. Woods, 46 Iowa 433, before cited, is distinguishable from the present in a material and important particular. In that case there was no evidence tending to show the custom among bankers to regard certificates of deposit as being payable without grace").

[b] A usage of banks that bank
post notes payable at a future day
certain are not entitled to grace is
void. Mechanics' Bank v. Merchants'
Bank, 6 Metc. (Mass.) 13;. Staples v.
Franklin Bank, 1 Metc. (Mass.) 43,
35

AmD 345; Perkins V. Franklin
Bank, 21 Pick. (Mass.) 483.

88. U. S.-Cookendorfer v. Preston,
4 How. 317, 11 L. ed. 992; Washing-
ton Bank v. Triplett, 1 Pet. 25, 7 L.
ed. 37; Mills v. U. S. Bank, 11 Wheat.
431, 6 L. ed. 512; Runer v. Columbia
Bank, 9 Wheat. 581, 6 L. ed. 166; Hill
v. Norvell, 12 F. Cas. No. 6,497, 3
McLean 583.

Ky.-Goddin v. Shipley, 7 B. Mon.

575.

Md.-Bank of Columbia V. Fitzhugh, 1 Harr. & G. 239; Raborg v. Columbia Bank, 1 Harr. & G. 231; Columbia Bank v. Magruder, 6 Harr. & J. 172, 14 AmD 271; Jackson v. Union Bank, 6 Harr. & J. 146.

See also supra notes 57 [d], 58 [a]. [a] Proof of custom.-The special custom, however, must be clearly proved. It is not enough to show three or four instances in two years, all of which were confined to a particular bank. Adams v. Otterback, 15 How. (U. S.) 539, 14 L. ed. 805.

89. Trask v. Martin, 1 E. D. Smith (N. Y.) 505.

90. Blacker v. Ryan, 65 Mo. A. 230. "Formerly, 'days of grace' were days extended to the drawee of a bill or payor of a note, in the way of a favor from the holder; they were gratuitous merely, dependent on the pleasure of the holder of the bill or note and could not be claimed by the drawee or payor as a matter of right. By custom, however, they became universally recognized; and though still termed 'days of grace,' they are now considered wherever the law merchant prevails as entering into the constitution of every bill of exchange and negotiable note, both in England and the United States, and form so completely a part of it that the instrument is not due in fact or in law until the last day of grace." Blacker_v. Ryan, supra.

91. Blacker v. Ryan, 65 Mo. A. 230; Smith v. Merchants', etc., Bank, 14 Oh._ Cir. Ct. 199, 8 Oh. Cir. Dec. 176. To same effect Washington Bank v. Triplett, 1 Pet. (U. S.) 25, 7 L. ed. 37; Cook v. Renick, 19 IL 598; State Bank v. Smith, 7 N. C. 70.

92. U. S.-Washington Bank v. Triplett, 1 Pet. 25, 7 L. ed. 37; Lindenberger v. Beall, 6 Wheat. 104, 5 L. ed. 216; Bussard v. Levering, 6 Wheat. 102, 5 L. ed. 215; Hill v. Norvell, 12 F. Cas. No. 6,497, 3 McLean 583.

Ala.-Donegan v. Wood, 49 Ala. 242, 20 AmR 275; Hart v. Smith, 15 Ala. 807, 50 AmD 161; Brown v. Turner, 11 Ala. 752; Crenshaw v. McKiernan, Minor 295.

Ark.-Craig v. Price, 23 Ark. 633.
Cal.-McFarland V. Pico, 8 Cal.

626.

Conn.-Norton v. Lewis, 2 Conn.

478.

Ind.-Brown v. Jones, 125 Ind. 375, 25 NE 452, 21 AmSR 227; Piatt v. Eads, 1 Blackf. 81.

Iowa.-Edgar v. Greer, 8 Iowa 394, 74 AmD 316.

Ky. Strader V. Batchelor, 8 B.
Md. Sheppard v. Spates, 4 Md. 400.
Mass.-Jones v. Fales, 4 Mass. 245.

N. Y.-Trask v. Martin, 1 E. D. Mon. 168.
Smith 505. Compare Woodruff
Merchants' Bank, 25 Wend. 673.

V.

custom in the particular place.93 The last day of grace is also the day of maturity for the purpose of determining the time for protest and for giving notice of dishonor.94

Accrual of cause of action. From the fact that a bill or a note does not become payable until the last day of grace, it also follows that an action on the first or second day of grace or, according to the weight of authority, even on the third day of grace is premature, for the party is entitled to the whole of the third day of grace in which to pay.95 Some courts, however, have held that an action may be brought on the last day of grace after a demand and a refusal to pay, although not without such demand and refusal.96 The statute of limitations does not begin to run until the expiration of the last day of grace;97 and this is true, by the weight of authority, even though the paper is payable at a bank.98

Confession of judgment. Under a power of at

Pa.- -Coleman v. Carpenter, 9 Pa. 178, 49 AmD 552.

R. I. Cook v. Darling, 2 R. I. 385. S. C.-Wartenburgh v. Lovel, 10 S. C. L. 83. Tenn.- -Broddie v. Searcy, Peck 183. Vt.-Ripley v. Greenleaf, 2 Vt. 129. Eng.-Wiffen v. Roberts, 1 Esp. 261. 93. Washington Bank v. Triplett, 1 Pet. (U. S.) 25, 7 L. ed. 37. Effect of custom and usage see supra § 623.

94. U. S.-Bell v. Chicago First Nat. Bank, 115 U. S. 373, 6 SCt. 105, 29 L. ed. 409.

Ala. Crenshaw

Minor 295.

V. McKiernan,

Me.-King v. Crowell, 61 Me. 244, 14 AmR 560.

Mass.-Pierce V. Cate, 12 Cush. 190, 59 AmD 176; Boston Bank v. Hodges, 9 Pick. 420; Blanchard v. Hilliard, 11 Mass. 85.

N. H.-Dennie v. Walker, 7 N. H. 199.

N. Y.-Corp v. McComb, Johns. Cas. 328.

Pa.-Coleman v. Carpenter, 9 Pa. 178, 49 AmD 552.

W. Va.-Thornburg v. Emmons, 23 W. Va. 325.

Eng.-Leftley v. Mills, 4 T. R. 170, 100 Reprint 955.

95. Cal.-Bell v. Sackett, 38 Cal. 407; Wilcombe v. Dodge, 3 Cal. 260, 58 AmD 411.

Ill-Roberts v. Corby, 86 Ill. 182; Collins v. Montemy, 3 Ill. A. 182; McCoy v. Babcock, 1 Ill. A. 414.

Ind. Benson v. Adams, 69 Ind. 353, 35 AmR 220.

torney in a note to enter an appearance and to confess judgment on its maturity, entry of an appearance and confession of judgment before the expiration of the last day of grace confer no jurisdiction, and the judgment is a nullity."

Transfer before maturity. The last day of grace is also the time of maturity of a bill or note for the purposes of transfer. Öne therefore who purchases and takes a transfer of negotiable paper on the first or the second day of grace, or, by the weight of authority, at any time on the third day of grace, is entitled to claim the rights of a purchaser before maturity.1

Interest "from maturity." It has been held that, where a note is payable with interest "from maturity," interest begins to run from the time of payment specified and not from the end of the days of grace, and that the holder is entitled to interest for the days of grace.2 [§ 625] 12. Computation. In computing days

237.

Tex.-Hamilton Gin, etc., Co. V. Sinker, 74 Tex. 51, 11 SW 1056; Watkins v. Willis, 58 Tex. 521; Cox v. | Reinhardt, 41 Tex. 591; Moore v. Hollaman, 25 Tex. Suppl. 81; McDowell v. Nicholson, 2 Tex. A. Civ. Cas. § 268.

Wash.-Joergenson v. Joergenson, 28 Wash. 477, 68 P 913.

Eng. Kennedy v. Thomas, [1894] 2 Q. B. 759; Fergusson v. Douglas, 6 Bro. P. C. 276, 2 Reprint 1078; Gaskin v. Davis, 2 F. & F. 294; Brown v. Harraden, 4 T. R. 148, 100 Reprint 943.

Man.-Willoughby v. Wainwright, 23 Man. 289.

Ont.-Hill v. Lott, 13 U. C. Q. B. 463. Contra Sinclair v. Robson, 16 U. C. Q. B. 211 (holding that suit might be brought after close of the business hours of the bank where the note was payable).

Mass.-Estes v. Tower, 102 Mass. 65, 3 AmR 439; Gordon v. Parmelee, 15 Gray 413; Staples V. Franklin Bank, 1 Metc. 43, 35 AmD 345; Shed v. Brett, 1 Pick. 401, 11 AmD 209. But see Butler v. Kimball, 5 Metc. 94.

N. H.-Manchester Bank v. Fellows, 28 N. H. 302.

S. C. McKenzie v. Durant, 43 S.
C. L. 61; Furnan v. Harman, 13 S.
C. L. 436; Wilson v. Williman, 10 S.
C. L. 440.
Tenn.-Coleman V. Ewing, 4
Humphr. 241.

Ont. Sinclair v. Robson, 16 U. C.
Q. B. 211.

Que. Ontario Bank V. Foster, 6
Montr. Leg. N. 398. Contra Demers
v. Rousseau, 1 Que. Super. 440.
See also supra § 602.

97. See cases supra notes 95, 96. 98. Benson v. Adams, 69 Ind. 353, 35 AmR 220; Farmers' Nat. Bank v. Salina Paper Mfg. Co., 58 Kan. 207, 48 P 863; Oothout v. Ballard, 41 Barb. (N. Y.) 33; Smith v. Aylesworth, 40 Barb. (N. Y.) 104.

99. Bannon v. Peo., 1 Ill. A. 496. 1. Conn.-New Haven Sav. Bank v. Bates, 8 Conn. 505.

Ga.-Haug v. Riley, 101 Ga. 372, 29 SE 44, 40 LRA 244.

Ill-Walter v. Kirk, 14 III. 55. Iowa.-Goodpaster v. Voris, 8 Iowa 334, 74 AmD 313.

Kan.-Fox v. Kansas City Bank, 30 Kan. 441, 1 P 789.

La.-Holton V. Hubbard, 49 La.

Que.-Dupuis v. Hudon, 12 Que.
Super. 227; Demers v. Rousseau, 1
Que. Super. 440.
Sask.-Westaway V. Stewart, 1 Ann. 715, 22 S 338.
Sask. L. 200, 8 WestLR 907.
See also supra § 602.

In Westaway V. Stewart, supra
[foll Kennedy v. Thomas, [1894] 2
Q. B. 759] it was held that a prom-
issory note does not become due
when it is presented for payment and
dishonored on the last day of grace,
that the holder thereof cannot take
action for the recovery of the amount
of such note until the expiration of
such day of grace, and that a seizure
under a chattel mortgage given as
collateral security to a promissory
note effected after dishonor of the
note, but before the complete expira-
tion of the last day of grace, is pre-
mature and unlawful; and it was held
also that the measure of damages
in an action for unlawful seizure is
La.-Kimball v. Fuller, 13 La. Ann. the value of the goods seized less the
amount due to the party making the
Mich.-Wiesinger v. Benton Har-seizure by virtue of the security un-
bor First Nat. Bank, 106 Mich. 291, der which the seizure was made.
64 NW 59.
96. Ark.-Heise V. Bumpass, 40
V. Thomason, 19 Ark. 545; Holland v. Clark, 32 Ark.
697.

Iowa. Seaton V. Hinneman, 50 Iowa 395; Hudson v. Matthews, Morr.

94.

Kan.-Farmers' Nat. Bank v. Salina Paper Mfg. Co., 58 Kan. 207, 48 P 863.

602.

Miss.-Wiggle

Miss. 452.

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

N. Y.-Continental Nat. Bank v. Townsend, 87 N. Y. 8; Evertson v. Newport Nat. Bank, 66 N. Y. 14, 23 AmR 9; Herman v. Bencke, 8 NYSt 345.

Pa.-Dilworth v. Ackley, 1 Walk. 180, 31 LegInt 373.

Tex.-First Nat. Bank v. Beck, 2 Tex. A. Civ. Cas. § 832.

Contra Pine V. Smith, 11 Gray (Mass.) 38.

[a] Although a statute authorizes a full defense to a bill or note indorsed "after the day on which it is made payable," yet where another statute provides that bills and notes shall have three days' grace the ordinary rule of the law merchant prevails that a bill or note transferred before the end of the days of grace is transferred before maturity. Fox v. Kansas City Bank, 30 Kan. 441, 1 P 789.

2. Letchford v. Starns, 16 La. Ann. 252; Weems v. Ventress, 14 La. Ann. 267; Wheeless v. Williams, 62 Miss. 369, 52 AmR 190.

1].

3. Generally see Time [38 Cyc

The

of grace the day on which the paper becomes nominally due and payable is not to be counted.* following day is the first day of grace. Ordinarily three days of grace are allowed, but if the third day falls on Sunday or on a legal holiday only two days are allowed, unless it is otherwise provided by statute, the last day of grace in such case being Saturday or the day preceding the holiday. If the nominal day of maturity falls on Sunday or

on a legal holiday, the paper is nevertheless entitled to three days of grace, and three only, beginning with the day following."

In some jurisdictions, by express statutory, provision, where paper falls due on Sunday or on a legal holiday, whether it is entitled to grace or not, the following day is the day of maturity, while under other statutes the preceding day is the day of maturity."

XVIII. EXTENSIONS AND RENEWALS

[§ 626] A. Definitions. "Extension" of time of payment means a valid and binding agreement to delay the enforcement of the instrument.10 The term renewal," as applied to a note, means the reëstablishment of the particular contract for another period of time.11 There may be a change of parties or an increase of security, but there is no renewal unless the obligation is the same.12

4. See cases infra notes 5-7. 5. Bell v. Sackett, 38 Cal. 407; Serrell v. Rothstein, 49 N. J. Eq. 385, 24 A 369.

6. U. S.-Adams v. Otterback, 15 How. 539, 14 L. ed. 805; Bussard v. Levering, 6 Wheat. 102, 5 L. ed. 215; Irwin v. Brown, 13 F. Cas. No. 7,080, 2 Cranch C. C. 314; McElroy v. English, 16 F. Cas. No. 8,782, 2 Cranch C. C. 528; Mandeville v. Rumney, 16 F. Cas. No. 9,016, 3 Cranch C. C. 424. Ala.-Wooley v. Clements, 11 Ala. 220; Sanders v. Ochiltree, 5 Port. 73, 30 AmD 551.

Conn-Kilgore v. Bulkley, 14 Conn. 362; Shepard v. Hall, 1 Conn. 329. See also Barlow v. Gregory, 31 Conn.

261.

Ky.-Offut v. Stout, 4 J. J. Marsh.

332.

Me.-Homes v. Smith, 20 Me. 264. Md. Sheppard v. Spates, 4 Md. 400. Mass.-Staples v. Franklin Bank, 1 Metc. 43, 47, 35 AmD 345; Barker Parker, 6 Pick. 80; City Bank v. Cutter, 3 Pick. 414; Farnum v. Fowle, 12 Mass. 89, 7 AmD 35.

V.

Minn.-Roberts v. Wold, 61 Minn. 291, 63 NW 739.

Miss.-Barlow v. Planters' Bank, 8 Miss. 129; Fleming v. Fulton, 7 Miss. 473.

Mo.-Kuntz v. Tempel, 48 Mo. 71. Nebr.-Capital Nat. Bank v. American Exch. Nat. Bank, 51 Nebr. 707, 71 NW 743.

N. J.-Reed v. Wilson, 41 N. J. L. 29: Ferris v. Saxton, 4 N. J. L. 1.

Α

8

renewal, as distinguished from a mere extension, is usually evidenced by a new note or other instrument.

[§ 627] B. Agreements and Sufficiency Thereof -1. In General.13 It is often difficult to determine whether, in the particular case, there has actually been an agreement to extend.14 The time may be extended by taking a new bill or note payable at a by the law merchant or by a statute | 122 Ga. 489, 492, 50 SE 396; Sponhaur that where the last day of grace falls v. Malloy, 21 Ind. A. 287, 52 NE 245. on a holiday paper shall be payable "An obligation is renewed when on the next secular day preceding. the same obligation is carried forSo to hold does not violate the con- ward by the new paper or undertakstitutional prohibition of laws im-ing, whatever it may be. There may pairing the obligation of contracts. be a change of parties. There may Barlow v. Gregory, 31 Conn. 261. be an increase of security, but there 7. Wooley v. Clements, 11 Ala. 220. is no renewal unless the obligation 8. See Brennan v. Vogt, 97 Ala. is the same. What makes the re647, 11 S 893; and also supra § 597. newal is an extension of time in [a] But in Nebraska the rule that which to discharge the obligation. where the last day of grace on a bill If the obligation changes, there can or note falls on Sunday it matures on be no renewal, because there can be the preceding day is not abrogated no such thing as the reëstablishment by the Nebraska statute (Gen. St. c of an old obligation by the creating 32 § 8), which specifies certain days of a new obligation different in charas legal holidays, and declares that acter." Lowry Nat. Bank v. Fickett, they shall be treated as Sunday for supra. the purposes of presentment of commercial paper, and of protest, notice, etc., and that when any of such days shall occur on Monday a bill or note which but for the act would fall due on such Monday shall become due on the day thereafter. Capital Nat. Bank v. American Exch, Nat. Bank, 51 Nebr. 707, 71 NW 743 [overr Hastings First Nat. Bank v. McAllister, 33 Nebr. 646, 50 NW 1040].

9. Bartlett v. Leathers, 84 Me. 241, 24 A 842.

[a] Statute construed.(1) In Maine a statute providing that paper falling due on Sunday or on a legal holiday shall be payable on the preceding day has reference, when days of grace are allowed on the paper, not merely to the nominal day of N. Y.-Sheldon v. Benham, 4 Hill maturity, but to the last day of 129, 40 AmD 271; Ransom v. Mack, 2 grace falling on Sunday or on a holiHill 587, 38 AmD 602; Mechanics', day, and where paper is nominally etc., Bank v. Gibson, 7 Wend. 460; due on Sunday, but with days of Ontario Bank v. Petrie, 3 Wend. 456; grace on Wednesday, it is due under Johnson v. Haight, 13 Johns.470; such a statute on Wednesday and not Griffin v. Koff, 12 Johns. 423; Jack-on Tuesday. Bartlett v. Leathers, 84 son v. Richards, 2 Cai. 343; Lewis v. Me. 241, 24 A 842. (2) And in South Burr. 2 Cai. Cas. 195; Osborne V. Dakota where a statute makes paper Smith, 14 Conn. 366 (an otherwise due on Sunday or on a holiday payunreported New York case). able on the following day, a note nominally due on Sunday but entitled to grace becomes due on Wednesday and not on Thursday. Roberts V. Wold, 61 Minn. 291, 63 NW 739 (construing a Dakota statute). effect Morris v. Bailey, 10 S. D. 507, 74 NW 443.

S. C.-Furnan v. Harman, 13 S. C. L. 436.

Tenn.-Colms Baxt. 422.

V. State Bank, 4

Eng. Bynner v. Russell, 1 Bing. 23, 8 ECL 383, 130 Reprint 10: Tassell v. Lewis, 1 Ld. Raym. 743, 91 Reprint 1397; Morris v. Richards, 45 L. T. Rep. N. S. 210.

See also supra § 597.

[a] Statute of limitations. It has been held that when the last day of grace falls on Sunday so that a note becomes due and payable on Saturday, the statute of limitations runs from the latter day. Morris v. Richards, 45 L. T. Rep. N. S. 210.

[b] Holiday created after execution of note.-Where a statute creating a legal holiday is enacted after the execution of a note, the last day of grace for the payment of which falls on the holiday so created, the note is subject to the rule established

10. See infra §§ 627-632.

To same

11. Lowry Nat. Bank v. Fickett, 122 Ga. 489, 50 SE 396; Kedey v. Petty, 153 Ind. 179, 54 NE 798. To same effect Brenneke v. Smallman, 2 Cal. A. 306, 83 P 302.

con

[a] New maker.—“Counsel tend that a person cannot, by giving his own note, renew the note of another person, because 'to renew is to make new again,' 'to re-establish,' 'to restore to vigor,' etc., and that the note of William Malloy could not have been made new or re-established by the note of appellee and appellant. This objection is based on phraseology rather than substance. Anderson's Dictionary of Law defines 'renewal' as 'the substitution of a new right or obligation for another of the same nature.' The same author says. 'It is not a word of art; it has no legal or technical signification.'" Sponhaur v. Malloy, 21 Ind. A. 287, 52 NE 245, 247.

13. Cross references: Amount of recovery in action on a renewal note where usurious see Usury [39 Cyc 1009]. Renewal notes as usurious see Usury [39 Cyc 903, 969].

14. Oswego Second Nat. Bank v. Poucher, 56 N. Y. 348; Tallahassee First Nat. Bank V. McCord, (Tex. Civ. A.) 39 SW 1003; Lawrence v. Thom, 9 Wyo. 414, 64 P 339.

[a] A letter from the indorsee to the indorser, stating that the makers of the note had promised to pay it within sixty days and adding: "As this meets with your views, we extend the note for sixty days, and trust they will come to time. If they do not, we will do as you request,' does not show any extension to the makers preventing suit at any time. Tallahassee First Nat. Bank v. McCord, (Tex. Civ. A.) 39 SW 1003.

[b] An agreement on the part of a bank to "carry" a note is not an [a] The term "renewed" or "re- agreement to suspend the right of newal," as applied to promissory action on and to extend the time of notes in commercial or legal parlance, payment of the note itself; but simmeans something more than the sub-ply that it will from time to time, stitution of another obligation for according to the mode of discountthe old one. It means to reëstablishing paper, discount a like note which a particular contract for another it will accept in place of one then period of time. It means to restore held, if presented when the latter beto its former conditions. Kedey v. Petty, 153 Ind. 179, 54 NE 798.

later day,15 or simply by entering into a valid con-
tract based on a sufficient consideration not to
require payment for a certain time;16 and a note
may by its own terms provide for its renewal or
extension.17 When a note is given, or afterward
if there is a consideration, the parties may agree
that the maker shall have the privilege of renew-
ing the note at maturity;18 but if there is an agree-
ment for renewal at the holder's option, the ex-
ercise of the option must be proved by one who
alleges an extension thereby,19 and he must show
performance of all conditions.20 Where an agree-

when the one held becomes due, the
latter becomes payable according to
its terms, and all parties thereto are
at once liable for its payment. Such
an agreement therefore does not dis-
charge indorsers. Oswego Second
Nat. Bank v. Poucher, 56 N. Y. 348.
15. Gates v. Union Bank, 12 Heisk.
(Tenn.) 325. See also infra § 630.
16. Stein v. Steindler, 1 Misc. 414,
20 NYS 839. See infra §§ 628, 643.
[a] A covenant by the holder of
a note that no action shall be taken
by him thereon, and that he shall not
be at liberty to prosecute it until the
maker thereof shall make default in
a certain payment which by the
terms of the agreement containing
the covenant is made payable on a
day subsequent and fixed, is a cove-
nant to extend the payment of the
note until that day. Stein v. Steind-
ler, 1 Misc. 414, 20 NYS 839.

17. Kleinsorge v. Kleinsorge, 133 Cal. 412, 65 P 876; Sawyers v. Campbell, 107 Iowa 397, 78 NW 56; Milan First Nat. Bank v. Wells, 98 Mo. A. 573, 73 SW 293.

[a] Rule has been applied: (1) Where a secured note provided: "If this note is not paid at maturity, it is hereby renewed from year to year, at the option of the holder, until paid; and during such year the maker shall not have the right to pay the same." Kleinsorge v. Kleinsorge, 133 Cal. 412, 65 P 876. (2) A provision in a note for an extension on request of the "makers" includes sureties, where they signed as makers, although the payee knew they were sureties only. Sawyers v. Campbell, 107 Iowa 397, 78 NW 56.

[b] Subsequent verbal agreement without consideration does not take the case without the rule. Milan First Nat. Bank v. Wells, 98 Mo. A. 573, 73 SW 293.

ment to renew a note, made at the time of executing, does not state the number of renewals, it must be construed as an agreement to renew only once.21

[ 628] 2. Necessity for Valid and Binding Contract. The elements of certainty,22 mutuality, and consideration 23 are necessary to constitute a valid agreement for an extension of time.24 It is essential that an agreement for an extension shall constitute a valid and binding contract between the holder and the other party, precluding him from enforcing payment; 25 and this is true under the Canada Bank v. Jones, 1 Ont. Pr. 185; Harper v. Paterson, 14 U. C. C. P. 538.

[a] Time of exercising option.Where there is an agreement to renew on request of the debtor, the request is in time if made before the note matures, suit not having been brought thereon. Hart v. Pennsylvania Germicide Co., 19 Phila. (Pa.) 425.

20. Glapion v. Montamat, 10 La. Ann. 768; Chapin v. Murphy, 5 Minn. 474; Houston v. Newsome, 82 Tex. 75, 17 SW 603; White v. Sabiston, 12 Que. Super. 345.

[a] Thus, where the maker of a note before its maturity deposits with the holder the note of a third person as collateral, and it is agreed that his note, when it matures, will be renewed, in the absence of a stipulation as to time of payment of the renewal note, defendant must prove the time fixed and must tender the renewal note, although the holder has previously declared that he will not receive it. Glapion v. Montamat, 10 La. Ann. 768.

[b] Giving notice.-Under the provision of a note, that at its maturity the maker should have the privilege of extending the time of its payment by giving the holder written notice of his intention, the giving of the notice at that time is essential to the right of extension. Houston v. Newsome, 82 Tex. 75, 17 SW 603.

[c] Time of tender of renewal note. Where the maker of a note has the privilege of renewing the same at its maturity, he is obliged, if he wishes to avail himself of the privilege, to tender a renewal note at the date of maturity. A tender three weeks after the maturity of the previous note is too late to entitle him to avail himself of the right of renewal. White v. Sabiston, 12 Que. Super. 345.

18. Cooper V. Indian Territory Bank, 4 Okl. 632, 46 P 475; Citizens' Nat. Bank v. Piollet, 126 Pa. 194, 17 A 603, 12 AmSR 860, 4 LRA 190; [d] Payment of interest.-(1) A Solenberger v. Gilbert, 86 Va. 778, note, payable in one year, with inter11 SE 789; Elmore v. Hoffman, 6 Wis. est at four per cent a month, con68. Compare Minzey v. Marcy Mfg. taining the following words after Co., 25 Oh. Cir. Ct. 593 (holding that, the signature, "With privilege of two where, in an action on a note, ac- years by paying interest annually at companied by an agreement that de-four per cent. per month," is for one fendant was to be employed for a year, with the right in the maker, in certain time, and, if the note was not case he pays interest at the end of paid when due, he was to be entitled the first year, to retain the money for to a renewal of the balance for six the second year, and if he fails so to months, it appeared that defendant do, the note becomes due at the end was discharged from plaintiff's em- of the first year. Chapin v. Murphy, ployment for sufficient cause, plain- 5 Minn. 474. (2) But where the holdtiff was released from any further ob- er of a note, by a written instrument, ligation under the contract, and the agreed that the note should be reaction on the note was not prema- newed for a certain length of time ture, on the ground that defendant if the maker should need that time was entitled to a renewal of six in which to pay it, and the instrumonths). ment also stipulated that the interest was to be paid by the maker at every renewal, it was held that the agreement to renew was not conditioned on the payment of the interest by the maker. Solenberger v. Gilbert, 86 Va. 778, 11 SE 789.

[a] A collateral writing whereby the payee agreed to let the note run until the happening of a certain contingency is admissible to defeat premature action, as it is part of the original contract. Elmore v. Hoffman, 6 Wis. 68.

a

25. U. S.-McLemore v. Powell, 12 Wheat. 554, 6 L. ed. 726; StrombergCarlson Tel. Mfg. Co. v. Simmons, 199 Fed. 256 [aff 209 Fed. 1006 mem]; Ex p. Balch, 2 F. Cas. No. 789, 2 Lowell 440, 13 NatBankrReg 160.

Ala. Kyle v. Bostick, 10 Ala. 589. Fla.-Clark v. United Grocery Co., 69 Fla. 624, 68 S 766.

Ill.-Crossman v.. Wohlleben, 90 Ill.

537.

Iowa.-Miller v. McCallen, 69 Iowa 681, 29 NW 942.

Kan.-Costello v. Wilhelm, 13 Kan.

229.

Ky.-Corydon Deposit Bank v. McClure, 140 Ky. 149, 152, 130 SW 971, AnnCas1912B 484 [cit Cycl; Anderson v. Mannon, 7 B. Mon. 217; Fagan v. Elam, 2 Ky. Op. 365.

51.

Me.-Pierce v. Whitney, 22 Me. 113.
Mass.-Veazie v. Carr, 3 Allen 14.
Mo.-Russell v. Brown, 21 Mo. A.

N. Y.-Vilas v. Jones, 1 N. Y. 274. Okl.-Adams v. Ferguson, 44 Okl. 544, 147 P 772.

S. D.-Whiffen v. Hollister, 12 S.
D. 68, 80 NW 156.
Tenn.-Wilson V. Langford, 5
Tex.-Caskey v. Douglas, (Civ. A.)
95 SW 562.

Humphr. 320.

Wis.-Meiswinkle v. Jung, 30 Wis. 361, 11 AmR 572.

Eng.-Philpot v. Briant, 4 Bing. 717, 13 ECL 708, 130 Reprint 945, 3 C. & P. 244, 14 ECL 549.

See also Lawrence County Nat. Bank v. Kaufman, 44 Pa. Super. 567 (holding that, where a bank promises an accommodation maker of a note that it will give the principal all the time that he needs within which to pay the note, if the latter will renew the note from time to time, pay the interest, and what he is able, by partial payments, on the principal, and the bank, after several renewals, payments of interest, and partial payments on the principal, refuses to renew the note, although it accepts the interest and a partial payment, but demands a larger payment, the makers cannot be deemed in default in not tendering another renewal note after the date when the previous note which has been refused becomes due).

[a] "By a valid agreement to give time is meant an agreement for the breach of which the maker or the acceptor has a remedy either at law or in equity." Veazie v. Carr, 3 Allen (Mass.) 14, 15. To same effect Greely v. Dow, 2 Metc. (Mass.) 176.

[b] Action at law need not lie.An agreement to give time to the maker of a note, sufficient to discharge an indorser, need be such only as will prevent the indorsee from proceeding against him and need not be such "that the maker of said note could sustain an action against the plaintiff if he violated it." Pierce v. Whitney, 22 Me. 113.

[c] Signature of agreement.-An agreement extending the time for the payment of a note secured by a deed of trust and signed by the maker who is also the grantor is binding.

21. Farmers', etc., Bank v. Laird, 188 Mo. A. 322, 175 SW 116. 22. See infra § 629. See infra §§ 643-649. Minnehaha Nat. Bank v. Tor- although not signed by the trustee or the holder, where the holder has

19. Francis v. Earle, 77 Fed. 712; California State Bank v. Webber, 110 Cal. 538, 42 P 1066; Hart v. Pennsylvania Germicide Co., 19 Phila. (Pa.) 425. To same effect Upper rey, 10 S. D. 379, 73 NW 193.

23.
24.

accepted, the acceptance cannot be withdrawn.30
A renewal obtained by fraud may be repudiated
by the holder, and the indorsers or the sureties will
not be discharged.31

[§ 629] 3. Necessity That Agreement Be Defi-
nite. To constitute a renewal or extension of the
time for payment of a bill or a note, so as to pre-
vent a suit or to discharge indorsers, there must
be a definite and binding agreement postponing the
time for payment.82
The gen-

Definiteness as to time of extension.

Ky.-Alley v. Hopkins, 98 Ky. 668, 34 SW 13, 17 KyL 1227, 56 AmSR 382.

La. Fortineau v. Boissiere, 18 La. 470; Hefford v. Morton, 11 La. 115. Me.-Mariners' Bank v. Abbott, 28 Me. 280.

Md. Gray v. Farmers' Nat. Bank, 81 Md. 631, 32 A 518. Mass.-Agricultural Bank v. Bishop, 6 Gray 317.

Mich.-Travis v. Watson, 134 Mich. 249, 96 NW 28. Miss.-Brown v. Prophit, 53 Miss.

Nebr.-Parker v. Taylor, 91 NW N. Y.-Wood v. Jefferson County Bank, 9 Cow. 194. V. Bedford Chair Co., 41 Oh. St. 17; Jones v. Brown, 11 (Reprint) 541; 12 Oh. Dec. Oh. St. 601; Tinan v. Wayne Disn. 148, Thompson v. Marshall, 2 Oh. Dec. (Reprint) 506, 3 WestLMonth 386.

Pa.-Lebanon Nat. Bank v. Long, 220 Pa. 556, 69 A 1033; Siebeneck v. Anchor Sav. Bank, 111 Pa. 187, 2 A 485; People's Bank v. Legrand, 103 Pa. 309, 49 AmR 126; Henderson v. Ardery, 36 Pa. 449.

S. C.-Ehrick v. Haslett, 10 S. C. L. 116.

Tex.-Frois v. Mayfield, 33 Tex.

Wis.-Racine County Bank v. Lathrop, 12 Wis. 466.

B. C.-Stone v. Rossland Ice, etc., Co., 12 B. C. 66, 3 WestLR 55.

Ont.-Molson's Bank v. McDonald, 40 U. C. Q. B. 529; Thompson v. McDonald, 17 U. C. Q. B. 304.

[a] Illustrations.—(1) bank refuses to accept a renewal note, acceptance is not shown by the fact that, when it wanted to make a deon the original note, it atmand tached to it the renewal note, so that Allentown Nat. Bank v. both could be restored to the maker on payment. Clay Product Supply Co., 217 Pa. 128, 66 A 252. (2) Notice to the maker of a note on the last day of grace, to indischarge the pay his note "by nine o'clock to-morrow," does not Ehrick v. Haslett, 10 S. C. dorser. (3) Where the holder of a L. 116. note sells the same and extends the time within which the purchaser is to pay him therefor beyond the day when the note becomes due, this does not extend the time for payment of Perker v. Taylor, (Nebr.) (4) Where the holder the note. 91 NW 537. of a note agreed with the maker to sue the indorser and, if he failed to collect the debt, then to receive security from the maker at two years, the agreement did not take away the holder's right to sue the maker, nor Wood Cow. did it discharge the indorser. v. Jefferson County Bank, 9 (N. Y.) 194. (5) Where a note was its date the payable one year after its date, and several months after maker agreed with the payee to sell