Where useless or ineffectual. It is an excuse that the conditions presented are such that demand or notice would be useless 79 or ineffectual,so as where the drawer and the drawee are actually or in effect the same person, so far as the drawer is concerned,81 or where the makers and the indorsers are practically identical.82 But it has been held that the fact that indorsers are directors of the corporation which is the maker of the note does not dispense with the necessity of notice of dishonor.83 And it is held that the fact that the indorser of a note held by a bank was, the president or other officer of the bank is no excuse for the omis sion to give him notice of dishonor, where it was not his duty to give notice of dishonor, in case of paper payable at the bank, nor was it his duty to see that notice was given.84 So the fact that a note is payable at the bank of which the indorser is president and director does not dispense with the necessity of notice to charge the indorser.85 If the bill or the note is in the possession of the indorser 86 or the drawer,87 at maturity, especially where the indorser is the agent of the indorsee for collection,88 demand or notice is not necessary to hold the party in possession. An injunction restraining payment is a good excuse both as to demand and notice.89 committed a fraud in sending plain- | 653]; Houser v. Fayssoux, 168 N. C. | cashier to have discharged this duty tiff the check and were not entitled to notice of nonpayment. Carson v. Fincher, 129 Mich. 687, 88 NW 570, 95 AmSR 449. 79. Burke v. McKay, 2 How. (U. S.) 68, 11 L. ed. 181; Usher v. A. S. Tucker Co., 217 Mass. 441, 105 NE 360; Ryerson v. Tourcotte, 121 Mich. 78, 79 NW 933; Bruce v Lytle, 13 Barb. (N. Y.) 163; Adams' Est., 24 Pa. Co. 444. [a] Rule applied, where the indorser has discharged the maker from liability by a release and settlement. Burke v. McKay, 2 How. (U. S.) 66, 11 L. ed. 181. 1, 83 SE 692. See also supra § 895. [a] Thus the fact that accommodation indorsers of a note are directors of the corporation which is the maker and constitute a majority of the board of directors does not deprive them of right to notice of dishonor. Houser v. Fayssoux, 168 N. C. 1, 83 SE 692. [b] This rule was discussed in Phipps v. Harding, 70 Fed. 468, 17 CCA 203, 30 LRA 513 [disappr Hull v. Myers, 90 Ga. 674, 16 SE 653, where the indorsers were the directors of a corporation which was the maker of the note, and it was [b] Previous refusal to pay as held that indorsers, occupying such a excusing presentment on day of ma- relation as these did to the affairs turity. Where defendant gave cer- of the corporation, were not entitled tain orders for the payment of mon- to notice of dishonor.' The corporaey to plaintiff, drawn on a third tion was insolvent. The individuals party and payable on the 10th of any who were the indorsers were the month, if plaintiff presented the or- ones who were charged with notice ders on any date, and the drawee re- as to the condition of the affairs of fused to pay them on the ground the company. Its property and asthat he did not owe defendant, it sets were under their control and was not necessary for plaintiff to pre-management. The reason of the law sent them again on the 10th of the month. Ryerson v. Tourcotte, 121 Mich. 78, 79 NW 933. [c] The ordinary rule that the drawer of a check is not liable thereon until it has been presented to the bank, payment refused, and notice of dishonor given does not apply, where by reason of the action of the drawer a presentation is useless. Usher V. A. S. Tucker Co., 217 Mass. 441, 105 NE 360. 80. Foster v. Beau de Zart, 13 Cal. A. 52, 108 P 875; Phoenix Ins. Co. v. Gray, 13 Mich. 191; Salisbury V. Bartleson, 39 Minn. 365, 40 NW 265. [a] The special circumstances should be such as to render it impossible to act earlier without damage or inconvenience beyond such as would be incidental to the ordinary course of business. Phoenix Ins. Co. v. Gray, 13 Mich. 191. 81. See supra § 893. 82. Hull v. Myers, 90 Ga. 674, 16 SE 653; Union Bank v. Sullivan, 214 N. Y. 332, 108 NE 558; In re Marquardt, (Pa.) 95 A 917. [a] Illustrations.-(1) Where the directors and the stockholders of the corporation gave a note to the corporation and some signed as makers and others as indorsers, but it was agreed that they all should be liable, and the indorsers had no right to expect or to require that the makers should alone pay, presentment for payment is not necessary to charge the indorsers. Union Bank v. Sullivan, 214 N. Y. 332, 108 NE 558. (2) Where directors, in order to discount stock subscription notes at a bank, gave as collateral a note made by one of their number to the order of another and indorsed by the other directors, it was not essential that the bank or its assignee should present the collateral note to the maker before having recourse against the other indorsers. In re Marquardt, (Pa.) 95 A 917. 83. Phipps v. Harding, 70 Fed. 468, 17 CCA 203, 30 LRA 513 [disappr Hull v. Myers, 90 Ga. 674, 16 SE requiring notice of dishonor ceased when such a transaction arose. It is said in the opinion that a single director, or even a minority of the directors, indorsing a note for the corporation, might be entitled to notice of dishonor; for only one, or a small number, might have a right to suppose that the note would be attended to at maturity, but when the whole board, or a majority of its members, unite in the indorsement, the indorsers who, in their aggregate capacity, are the controlling power of the corporation are not enfitled to notice of dishonor]. 84. Frazee v. Phoenix Nat. Bank, 161 Ky. 175, 170 SW 532; Louisville First Nat. Bank v. Bickel, 154 Ky. 11, 156 SW 856. "We do not know of any authority, and have not been referred to any by counsel for appellant, holding that the vice-president of a bank is, by virtue of his office alone, charged with the duty of seeing that notice of the dishonor of paper is given to the person entitled thereto or liable in any manner if he fails to do so. Of course the vice-president of a bank or the president or any director, or indeed any other officer or employe might be charged by resolution of the bank or by its habit and custom of dealing with the duty of protesting paper or giving notice of its dishonor, but there is no showing in these cases that Bickel had ever been authorized by the bank to do these things or that there was any custom of the bank under which he did or should do them; and the vice-president of a bank, simply because he is vice-president, is under no duty to attend to these matters and is not to be held liable for his failure to do so. It is usual and customary for the cashier of the bank to look after matters of this kind, and in the absence of any showing that it was not the custom of the cashier of the First National Bank to attend to the protesting of paper and the giving of notice of dishonor, we must presume that it was the duty of the in respect to these notes. Nor do we think that the fact that Bickel was an officer of the bank relieved the bank from the necessity of giving him notice. Bickel signed the paper not as an officer of the bank but as an officer of another corporation borrowing money from the bank, and his rights and liability on the paper are precisely the same as those of the other parties who signed it. The statute, requiring that notice of dishonor shall be given, is peremptory, and all persons entitled to the notice are released from liability unless it is given, although they may be connected with the bank, whose duty it is to give notice, as officers or in some other capacity, with the ception that the bank officer whose duty it was to give notice would be of course estopped to plead want of notice as a defense to a suit by the bank against him." Louisville First Nat. Bank v. Bickel, 154 Ky. 11, 17, 156 SW 856. ex [a] "The reason of the rule seems to be that where the president or other officer of the bank is dealing in his individual capacity with the institution he, for the time, and for the purposes of the particular transaction, throws aside his official connection with the bank, and must therefore be considered as dealing with it at arm's length just as others would. We have therefore concluded that Frazee, as endorser, was entitled to notice of the dishonor, and none having been given, under the express terms of the statute, he was released from liability as such." Frazee V. Phoenix Nat. Bank, 161 Ky. 175, 186, 170 SW 532. [b] Notice of dishonor of papers, required by the statute to be given to the indorsers, to prevent their discharge from liability, must be, given an indorser of a note held by' a bank, although he is also an officer of the bank, he not having signed as such; except that the bank officer whose duty it is to give the notice would be estopped to plead want of notice as a defense, if he was an indorser. Louisville First Nat. Bank v. Bickel, 154 Ky. 11, 156 SW 856. 85. Ennis v. Reynolds, 127 Ga. 112, 56 SE 104. 86. Gleeson v. Lichty, 62 Wash. 656, 114 P 518. 87. Lomax v. Smyth, 50 Iowa 223. 88. Auten v. Manistee Nat. Bank, 67 Ark. 243, 54 SW 337, 47 LRA 329. 89. Lovett v. Cornwell, 6 Wend. (N. Y.) 369; Planters' Bank v. Keesee, 7 Heisk. (Tenn.) 200; Williams v. Bartlett, 4 Lea (Tenn.) 620. [a] If the bank is restrained by law (1) from paying out money or transacting business, presentment will be excused. Planters' Bank v. Keesee, 7 Heisk. (Tenn.) 200. (2) Where an injunction was served on a bank half an hour after it opened for business, by which its operations were suspended, it was held that the holder of a check received after banking hours on the preceding day was not bound to show a presentment of the check for payment to entitle him to recover on the origi A payee may sue an indorser on a note without first making a demand on the maker, where such indorser indorsed the note for his own benefit at the time of its execution and the money which it represented was procured at his request as well as at the request of other indorsers.90 Where the failure of a bank holding a check as indorsee to present it for payment is based on some omission of one of its agents not having authority to make a presentation, it is not excused by the fact that such agent was ignorant of the existence of the check.91 The fact that a note is made payable at a particular time and place does not preclude the necessity for a demand for payment on the maker, in order to hold the indorser, although in such a case no demand is necessary to hold the maker." The fact that a worthless check is accepted in payment of a bill or a note is not an excuse for a failure on the part of the holder of a bill or a note to present it for payment and to give notice of dishonor.93 92 Exercise of due diligence. An exercise of due and reasonable diligence on the part of the holder to make demand or to give notice constitutes sufficient excuse, where such diligence is unavailing.9* The illness of the maker is no excuse for failure to make due presentment.95 vides that "delay" in making presentment for payment is excused, when caused by circumstances beyond the control of the holder and not imputable to his default, misconduct, or negligence; but that, when the cause of delay ceases to operate, presentment must be made with reasonable diligence." The same provision is enacted as to excuse for delay in giving "notice of dishonor."' 97 It also provides that presentment for payment "is dispensed with," where, "after the exercise of reasonable diligence," presentment cannot be made.98 Like provisions exist as to excuses for presentment for acceptance." It also expressly provides that "notice of dishonor" is "dispensed with" when, after the exercise of reasonable diligence, it cannot be given to, or does not reach, the parties sought to be charged;1 but this does not excuse a delay caused by the impossibility of giving notice personally, but only excuses a delay caused by the impracticability of giving notice either personally or by mail.2 3 [§ 960] C. Particular Facts as Excuses-1. Absconding, Removal, or Absence-a. Of Maker or Acceptor. The absconding of the maker or the acceptor before the maturity of a note or a bill, or his removal from the state or jurisdiction,5 without providing a place where demand may be made, is generally an excuse for not making demand. This The Negotiable Instruments Law expressly pro- is so, although his new place of residence is near his nal consideration, although it ap- Pa.-Smyth v. Hawthorn, 3 Rawle Minn. Salisbury v. Bartleson, 39 peared that the drawer had suffiMinn. 365, 40 NW 265; Herrick v. cient funds in the bank to pay the Vt.-Blodgett v. Durgin, 32 Vt. 361. | Baldwin, 17 Minn. 209, 10 AmR 161. check and that it would have been See also infra §§ 960, 961, 970. N. Y.-Adams v. Leland, 30 N. Y. paid had it been presented before the 95. Nowlin v. Roach, 4 N. B. 337. 309. service of the injunction. Lovett v. 96. Young v. Exchange Bank, 152 Cornwell, 6 Wend. (N. Y.) 369. Ky. 293, 153 SW 444, AnnCas1915B 148. 90. Becker v. Hofsommer, 186 Ill. A. 553. 91. Temple v. Carroll, 75 Nebr. 61, 105 NW 989. 92. Scribner State Bank v. Ransom, 35 S. D. 244, 151 NW 1023. 93. Young v. Exchange Bank, 152 Ky, 293, 153 SW 444, AnnCas1915B 148. [a] The reason for the rule is that "the failure to give the notice was not due to misfortune or casualty or unavoidable accident, or to any circumstance or condition beyond the control of the bank. It was due entirely to the voluntary act of the bank officers in accepting, in satisfaction of the draft, the check given to the bank by" certain persons. "It may be admitted that the bank offi.cers believed in good faith that the check would be paid, but this circumstance does, not bring the transaction within the scope of any of the exceptions that will excuse notice. If the holder of paper could absolve himself from the duty of giving notice by showing that he acted in good faith, or by showing that he mistakenly trusted to the solvency of parties whose paper he accepted in place of other paper, it is obvious that the excuse for not giving notice in this class of cases would rest entirely in the judgment and discretion of the party charged with the duty of giving notice. The failure to give notice would be due entirely to circumstances within his control and not to circumstances beyond his control." Young V. Kentucky Exch Bank, 152 Ky. 293, 306, 307, 153 SW 444, AnnCas1915B 148. 94. U. S.-Gallagher v. Roberts, 9 F. Cas. No. 5,195, 2 Wash. C. C 191. Cal.-Garver v. Downie, 33 Cal. 176. Conn.-Windham Bank v. Norton, 22 Conn, 213, 56 AmD 397. Ind-Hoffman v. Hollingsworth, 10 Ind. A. 353, 37 NE 960. N. Y.-Fonseca V. Hartman, 84 NYS 131. 355. 97. P 49, 98. 99. 1. 131. 2. Price v. Warner, 60 Or. 7, 111 See statutory provisions. Price v. Warner, 60 Or. 7, 111 3. See also supra §§ 929-939. Mo.-Plahto v. Patchin, 26 Mo. 389. Oh. McClelland v. Bishop, 42 Oh. Pa.-Lehman v. Jones, 1 Watts & [a] Removal into state in which holder resides.—It has been held to be immaterial that the removal of the maker or the acceptor is into the state in which the holder of the paper resides, if this fact is not known to the holder. Salisbury v. Bartleson, 39 Minn. 365, 40 NW 265. 6. U. S.-McGruder v. Washington Bank, 9 Wheat. 598, 6 L. ed. 170. Iowa.-Leonard v. Olson, 99 Iowa 162, 68 NW 677, 61 AmSR 230, 35 LRA 381; Whitely v. Allen, 56 Iowa 224, 9 NW 190, 41 AmR 99. Ky.-Taylor v. Illinois Bank, 7 T. B. Mon. 576. 27. N. H.-Caldwell y. Porter, 17 N H N. Y.-Smith v. Poillon, 87 N. Y. 590, 41 AmR 402; Adams v. Leland, 30 N. Y. 309; Foster v. Julien, 24 N. Y. 28, 80 AmD 320; Taylor v. Snyder, 3 Den. 145, 45 AmD 457; Cummings v. Fisher, Anth. N. P. 1. S. C.-Gillespie v. Hannahan, 15 S. Eng. Anonymous, 1 Ld. Raym. But see Glaser v. Rounds, 16 R. I 235, 14 A 863 (holding that, if the maker of a note has a known domicile within the state, it is incumbent on the holder, in order to charge the indorser, to present the note there for payment, notwithstanding his belief of the maker's absence). [a] In Massachusetts, however, a different rule prevails, and the holder is bound to demand payment at the maker's or the acceptor's last residence or place of business if he can find it by the use of due diligence. Pierce v. Cate, 12 Cush. 190, 59 AmD 176 [overr Putnam v. Sullivan, 4 Mass. 45, 3 AmD 206]. N. C.-Moore v. Coffield, 12 N. C. Oh.-Gist v. Lybrand, 3 Oh. 307, Pa.-Reid v. Morrison, 2 Watts & S. 401; Becker v. Levy, 5 PaLJR 298. S. C.-Gillespie v. Hannahan, 15 S C. L. 503; Galpin v. Hard, 14 S. C. L. 394, 15 AmD 640. Wis.-Eaton v. McMahon, 484. 42 Wis. Eng. Starke v. Cheeseman, 1 Ld. [a] The burden is on plaintiff to show that the maker had then removed from the state, or that due diligence was used to find him or to ascertain his place of residence. Eaton v. McMahon, 42 Wis. 484. [b] Question of diligence not wholly a question for the jury, it seems, in Ontario. Browne v. Boul5. U. S.-McGruder v. Washington, 9 U. C. Q. B. 64. ton Bank, 9 Wheat. 598. 6 L. ed. 170. Iowa. Leonard v. Olson, 99 Iowa 162, 68 NW 677, 61 AmSR 230, 35 LRA 381. Mass.-Grafton Bank V. Cox, 13 [c] In Massachusetts it is held that demand should be made at the maker's or the acceptor's last place of abode or business in the state or jurisdiction from which he has removed. Wheeler v. Field, 6 Metc. former domicile." Removal to new residence within same jurisdiction. Where, after the making of a note or the accepting of a bill, the maker or the acceptor removes to another locality within the same jurisdiction, it seems not to be disputed that it devolves on the holder to make endeavors to find the new domicile of the maker or the acceptor and to make demand there.s Temporary absence of maker or acceptor from jurisdiction. The mere absence of the maker or the acceptor, if he has a known domicile or place of business within the state, will not dispense with a demand at such domicile or place of business,' although it has been held that, if the acceptor resides at a hotel, but leaves it for several days, an inquiry for him at the hotel is sufficient and will excuse a failure to make further efforts for presentment.10 11 As excusing notice to indorser. The absconding or removal of the maker or the acceptor is, however, excuse for the timely observance of the usual precedent conditions as to him only, and does not excuse the giving of notice of nonpayment to the indorser.16 [ 961] b. Of Indorser. The removal or absconding of the indorser is a good excuse for failure to give him due notice of dishonor where his whereabouts cannot be ascertained by ordinary diligence.17 [§ 962] 2. Absence of Funds or Reasonable Expectation of Acceptance. 18 Where the drawer has no funds in the hands of the drawee, no reasonable expectation of afterward having such funds, or no reasonable belief or right to assume that the bill or check will be honored, formal presentment or notice is unnecessary to charge him," 19 although Absconding or removal in case of paper payable at specified place. Where a bill or a note is made payable at some specified place, it must be presented when due at that place, and the fact that the maker or the acceptor has absconded, or has removed into another jurisdiction,12 will not excuse diligence in this respect; but it has been held that a removal from the state will excuse want of demand, 290; Grafton Bank v. Cox, 13 Gray | (La.) 643, 13 AmD 345; Selden v. 503 (holding that, if the maker of a note leaves the commonwealth, abandoning simultaneously both his residence and his place of business, although his family remains a few months at the former, it is sufficient to charge one who indorsed a note to plaintiff after the maker's removal to make a demand at the maker's last place of business, without inquiry at his last residence or of the indorser for the maker's present residence). 7. McGruder v. Washington Bank, 9 Wheat. (U. S.) 598, 6 L. ed. 170. But see Wheeler v. Field, 6 Metc. (Mass.) 290 (intimating that the rule might be otherwise in Massachusetts). 8. Oakey v. Beauvais, 11 La. 487; Louisiana State Ins. Co. V. Shamburgh, 2 Mart. N. S. (La.) 511; Nailor v. Bowie, 3 Md. 251; Anderson V. Drake, 14 Johns. (N. Y.) 114, 7 AmD 442; Reid v. Morrison, 2 Watts & S. (Pa.) 401. See also supra § 938. 9. Ark.-Levy v. Drew, 14 Ark. 334. Ky. Lawrence v. Ralston, 3 Bibb 102. La.-Puig v. Carter, 20 La. Ann. 82. - N. H.-Dennie v. Walker, 7 N. H. 199. Eng. Sands v. Clarke, 8 C. B. 751, 65 ECL 751, 137 Reprint 703. 10. Belmont Bank v. Patterson, 17 Oh. 78. 11. Michaud v. Lagarde, 4 Minn. 43; Sands v. Clarke, 8 C. B. 751, 65 ECL 751, 137 Reprint 703. 12. Farwell v. St. Paul Trust Co., 45 Minn. 495, 48 NW 326, 22 AmSR 742. 13. Leonard v. Olson, 99 Iowa 162, 68 NW 677, 61 AmSR 230, 35 LRA 381. 14. 'Bradley v. Patton, 51 Ala. 108; Orleans Bank v. Whittemore, 12 Gray (Mass.) 469, 74 AmD 605; Spies v. Gilmore, 1 N. Y. 321 [aff 1 Barb. 158]; Taylor v. Snyder, 3 Den. (N. Y.) 145, 45 AmD 457; Gist v. Lybrand, 3 Oh. 307, 17 AmD 595. See also supra §§ 929-931. 15. Hepburn v. Toledano, 10 Mart. Washington, 17 Md. 379, 79 AmD [a] Inquiry for the maker at the 16. Ill-Hilborn v. Artus, 4 Ill. 344. Iowa.-Leonard v. Olson, 99. Iowa Mass.-Grafton Bank v. Cox, 13 Minn. Michaud V. Lagarde, 4 N. Y.-Williams V. Ga.-Haynes V. Wesley, 112 Ga. 668, 37 SE 990, 81 AmSR 72. Il-Kupfer v. Galena Bank, Ill. 328, 85 AmD 309; Brower V. Rupert, 24 Ill. 182; Thom v. Sinsheimer, 66 Ill. A. 555. Ind. Culver v. Marks, 122 Ind. 554, 23 NE 1086, 17 AmSR 377, 7 LRA Matthews, 3 489; Fletcher v. Pierson, 69 Ind. 281, 35 AmR 214. "The purpose of such notice is to inform the indorser of the fact of non-payment that he may proceed for his own protection, and it seems to us that the same reasons exist for giving the notice where. because of the facts, demand is excused, as when demand is made." Leonard v. Olson, 99 Iowa 162, 174, 68 NW 677, 61 AmSR 230, 35 LRA 381. 17. Williams v. U. S. Bank, 2 Pet. (U. S.) 96, 7 L. ed. 360; Nailor v. Bowie, 3 Md. 251; Becker v. Levy, 5 PaLJR 298; Walwyn v. St. Quintin, 1 B. & P. 652, 126 Reprint 1115; Crosse v. Smith, 1 M. & S. 545, 105 Reprint 204; Bowes V. Howe, 5 Taunt. 30, 1 ECL 29, 128 Reprint 596; Sturges v. Derrick, Wightw. 76, 145 Reprint 1180. 18. Application of rule to accommodation drawers or indorsers see supra § 444. 19. U. S.-Dickens v. Beal, 10 Pet. 572, 9 L. ed. 538; French v. Columbia Bank, 4 Cranch 141, 2 L. ed. 576; Allen v. King, 1 F. Cas. No. 226, 4 McLean 128; Baker v. Gallagher, 2 F. Cas. No. 768, 1 Wash. 461; Cox v. Simms, 6 F. Cas. No. 3,306, 1 Cranch C. C. 238; Hopkirk v. Page, 12 F. Cas. No. 6,697, 2 Brock. 20: Read v. Wilkinson, 20 F. Cas. No. 11,611, 2 Wash. 514; Valk v. Simmons, 28 F. Cas. No. 16,815, 4 Mason 113. Ala.-Industrial Trust, etc., Co. v. Weakley, 103 Ala. 458, 15 S 854, 49 AmSR 45; Tarver v. Nance, 5 Ala. 712; Foard v. Womack, 2 Ala. 368; Armstrong v. Gay, 1 Stew. 175; Hill v. Norris, 2 Stew. & P. 114. Iowa.-Hamlin V. Simpson, 105 Iowa 125, 74 NW 906, 44 LRA 397; Kimball v. Bryan, 56 Iowa 632, 10 NW 218. Ky. Clarke v. Castleman, 1 J. J. Marsh. 69; Clark v. Hines, 6 Ky. Op. 556. La-Blum v. Bidwell, 20 La. Ann. 43; Anderson v. Folger, 11 La. Ann. 269; Bradford v. Cooper, 1 La. Ann. 325; Crain v. Robert, 3 Mart. N. S. 145. Me.-Foster v. Paulk, 41 Me. 425; Burnham v. Spring, 22 Me. 495; True v. Thomas, 16 Me. 36; Carle v. White, 9 Me. 104. Md.-Orear V. McDonald, 9 Gill 350, 52 AmD 703; Cathell v. Woodwin, 1 Harr. & G. 468; Eichelberger v. Finley, 7 Harr. & J. 381, 16 AmD 312. Mass.-Beauregard V. Knowlton, 156 Mass. 395, 31 NE 389; Shaw v. 'Stone, 1 Cush. 228; Kinsley y Robinson, 21 Pick. 327; Stanton v. Blossom, 14 Mass. 116, 7 AmD 198; Bond v. Farnham, 5 Mass. 170, 4 AmD 47. Mich.-Carson V. Fincher, 138 Mich. 666, 101 NW 844; Compton v. Blair, 46 Mich. 1, 8 NW 533. Miss. Avent v. Maroney, 12 S 209; Wood v. Gibbs, 35 Miss. 559; Cook v. Martin, 13 Miss. 379. Mo.-Taylor v. Newman, 77 Mo. 257; Harness v. Davies County Sav. Assoc., 46 Mo. 357; Merchants' Bank v. Easley, 44 Mo. 286, 100 AmD 287; Commercial Bank v. Barksdale, 36 Mo. 563. Nebr.-Shaffer v. Maddox, 9 Nebr. 205, 2 NW 464. N. Y.-Brush v. Barrett, 82 N. Y. 400, 37 AmR 569; Mobley v. Clark notice is still necessary to charge an indorser.20 28 Barb. 390; Franklin v. Vanderpool, N. C.-Spear v. Atkinson, 23 N. C. 262; v. Stanton, 2 N. C. 271. Oh.-Miser v. Trovinger, 7 Oh. St. 281. Pa.-Case v. Morris, 31 Pa. 100; Wollenweber v. Ketterlinus, 17 Pa. 389. R. I.-Aborn v. Bosworth, 1 R. I. 401. S. C.-Hubble v. Fogartie, 37 S. C. L. 413, 45 AmD 775; Yongue v Ruff, 34 S. C. L. 311; Printems v. Helfried, 11 S. C. L. 187. the drawing of a bill, when the drawer knew that he had no effects in the hands of the drawee, was a fraud, or that a knowledge that it would probably be dishonored was tantamount to notice, held that mere lack of funds in the hands of the drawee was of itself sufficient to excuse notice;25 but it may now be said to be well established that the drawer is Mich.-Detroit First Nat. Bank v. Currie, 147 Mich. 72, 110 NW 499, 118 AmSR 537, 9 LRANS 698, 11 AnnCas 241. Mo.-Glasgow v. Copeland, 8 Mo. Russell, 5 Nebr. 268. Nebr.-Steele v. 211. N. Y.-Mohawk v. Broderick, 10 N. C.-Denny v. Palmer, 27 N. C. 610. Tenn.-Harwood v. Jarvis, 5 Sneed 375. Eng.-Foster v. Parker, 2 C. P. D. 18; Walwyn v. St. Quintin, 1 B. & P. 652, 126 Reprint 1115; Brown v. Maffey, 15 East 216, 104 Reprint 826; Saul v. Jones, 1 E. & E. 59, 102 ECL 59, 120 Reprint 829; Wilkes v. Jacks, Tenn.-American Nat. Bank v. Junk 1 Peake N. P. 202; Goodall v. Dolley, Bros. Lumber, etc., Co., 94 Tenn. 624, 1 T. R. 712, 99 Reprint 1336. 30 SW 753, 28 LRA 492; Jackson Ins. [a] An indorser is entitled to noCo. v. Sturges, 12 Heisk. 339; Plant-tice (1) of the dishonor of the bill, ers Bank v. Keesee, 7 Heisk. 200; Planters Bank v. Merritt, 7 Heisk. 177; Golladay v. Union Bank, 2 Head 57; Oliver v. State Bank, 11 Humphr. 74. Tex.-Armendiaz v. Serna, 40 Tex. 291; Kottwitz v. Alexander, 34 Tex. 689; Lewis v. Parker, 33 Tex. 121; Wood v. McMeans, 23 Tex. 481; Durrum v. Hendrick, 4 Tex. 495. Va.-Bell v. Alexander, 21 Gratt. (62 Va.) 1. Wis.-Mehlberg v. Tisher, 24 Wis. 607. Eng.-Wirth v. Austin, L. R. 10 C. P. 689; Carew v. Duckworth, L. R. 4 Exch. 313; Terry v. Parker, 6 A. & E. 502, 33 ECL 273, 112 Reprint 192; Cory v. Scott, 3 B. & Ald. 619, 5 ECL 356, 106 Reprint 787; Norton v. Pickering, 8 B. & C. 610, 15 ECL 302, 108 Reprint 1169; Van Wart v. Woolley, 3 B. & C. 439, 10 ECL 204, 107 Reprint 797, R. & M. 4, 21 ECL 690; Lafitte v. Slatter, 6 Bing. 623, 19 ECL 282, 130 Reprint 1421; Hill v. Heap, D. & R. N. P. 57, 16 ECL 435; Legge v. Thorpe, 12 East 171, 104 Reprint 68; Orr v. Maginnis, 7 East 359, 103 Reprint 139; Chaters v. Bell, 4 Esp. 48; Dennis v. Morrice, 3 Esp. 158; Gale v. Walsh, 5 T., R. 239, 101 Reprint 134; Bickerdike v. Bollman, 1 T. R. 405, 99 Reprint 1164. Ont.-Blackley v. McCabe, 16 Ont. A. 295. [a] It is well settled that want of effects in the hands of the drawee of a bill excuses presentment and notice of dishonor as between the holder and the drawer. Blackley v. McCabe, 16 Ont. A. 295.. [b] Delays in presentation are immaterial (1) therefore in such case. Hoyt v. Seeley, 18 Conn. 353; Emery v. Hobson, 63 Me. 32; Eichelberger v. Finley, 7 Harr. & J. (Md.), 381, 16 AmD 312. (2) Delay in presentment of a check for payment and failure to give notice of dishonor constitute no defense to the drawer, where the latter had no funds in the bank to meet the check and had no expectation that it would be paid. Carson v. Fincher, 138 Mich. 666, 101 NW 844. 20. U. S.-Ramdulollday v. Darieux, 20 F. Cas. No. 11,543, 4 Wash. C. C. 61. Ark. Churchill V. Yeatman-Gray Grocer Co., 111 Ark. 529, 164 SW 283. Cal-Applegarth v. Abbott, 64 Cal. 459, 2 P 43. Ky. Slack 166. v. Longshaw, 8 KyL although the drawer may have had 21. Legge v. Thorpe, 12 East 171, 104 Reprint 68; Rogers v. Stephens, 2 T. R. 713, 100 Reprint 384; Bickerdike v. Bollman, 1 T. R. 405, 99 Reprint 1164. [a] A foreign bill need not be protested to bind the drawer if he had no funds in the hands of the drawee and no right to draw the bill, or has admitted his liability on the bill or promised to pay it. Lawrence v. Hammond, 4 App. (D. C.) 467. 22. Ill. Lawrence v. Schmidt, 35 Mass.-Usher v. A. S. Tucker Co., [a] If the drawer of a check (1) has no funds in the bank at the time of drawing the check, or subsequently withdraws them, he is liable without presentment or notice of dishonor. Thom v. Sinsheimer, 66 Ill. A. 555. (2) Where a check indorsed by the payee came through the clearing house to the bank, and the paying teller thereof overlooked a stop payment order of the drawer, but on the discovery of the mistake the bank refused payment and credited the amount back to the drawer, but did not return the check to the clearing house in time to avoid liability, and assigned the check to the teller, the teller who was liable to the bank was a holder for a valuable consideration and could recover from the drawer. Usher v. A. S. Tucker Co., 217 Mass. 441, 105 NE 360. 23. Ransom v. Wheeler, 12 AbbPr (N. Y.) 139. 24. U. S.-In re Brown, 4 F. Cas. No. 1,985, 2 Story 502. D. C.-Deener v. Brown, 8 D. C. 350. Ind. Culver v. Marks, 122 Ind. 554, 23 NE 1086, 17 AmSR 377, 7 LRA 489; Fletcher v. Pierson, 69 Ind. 281, 35 AmR 214. Me.-Emery v. Hobson, 63 Me. 32. Mo.-Moody v. Mack, 43 Mo. 210. N. Y.-Conroy v. Warren, 3 Johns. Cas. 259, 2 AmD 156. S. C. Sutcliffe v. McDowell, 11 S. C. L. 251. Wis.-Kinyon v. Stanton, 44 Wis. 479, 28 AmR 601. [a] Withdrawal of deposit after reasonable time.-If the drawer should withdraw his deposit before the presentation of his check for payment, although after a reasonable time had elapsed for presenting it, he would still be liable. Nothing short of the retention of his deposit there until the bank's failure, or until the statute of limitations has released him, operates as a discharge of the debt. Kinyon v. Stanton, 44 Wis. 479, 28 AmR 601. 25. Ala.-Foard v. Womack, 2 Ala. 368. Ill. Brower v. Rupert, 24 Ill. 182. Ky.-Baxter V. Graves, 2 A. K. Marsh. 152, 12 AmD 374. N. Y.-Franklin v. Vanderpool, 1 N. Y. Super. 78. Pa. Case v. Morris, 31 Pa. 100. Eng.-Cory v. Scott, 3 B. & Ald. 619, 5 ECL 356, 106 Reprint 787: Fitzgerald v. Williams, 6 Bing. N. Cas. 68, 37 ECL 512, 133 Reprint 27; Clegg v. Cotton, 3 B. & P. 239, 127 Reprint 132; Bickerdike v. Bollman, 1 T. R. 405, 99 Reprint 1164; Ex p. Heath, 2 Ves. & B. 240, 35 Reprint 310. "It is sometimes said that this exception to the general rule is placed on the ground that it was a fraud to draw the bill when the drawer knew that it would not be paid. At other times it is said that the drawer's knowledge that it would be dishonored is tantamount to demand and notice: Cory v. Scott, 3 B. & Ald. 619. 5 ECL 356, 106 Reprint 787. But whatever may be the grounds for that decision, it is very certain that it introduced an exception to a plain and intelligible rule of commercial law, which many eminent and experienced judges have since regretted. It is adhered to on the principle of stare decisis, but it is not to be extended a single step: Cory v. Scott, 3 B. & Ald. 619, 5 ECL 356. 106 Reprint 787; Lafitte v. Slatter, 6 Bing. 623, 19 ECL 282, 130 Reprint 1421; Clegg v. Cotton, 3 B. & P. 239, 127 Reprint 132; Rucker v. Hiller, 16 East 43, 104 Reprint 1005; Legge V. Thorpe, 12 East 171, 176, 104 Reprint 68; Orr V. Maginnis, 7 East 359, 362, 103 Reprint 139. Where the drawer has no effect in the hands of the drawee, and has no reason to expect any, or to believe that the bill will be paid, notice of the dishonour of it could do him no good, and may therefore be dispensed with. On this ground, the decision in Bickerdike V. Bollman, 1 T. R. 405, 99 Reprint 1164, may be supported, Cory v. Scott, 3 B. & Ald. 619, 5 ECL 356, 106 Reprint 787. And the principle to be extracted from the cases is. that wherever the presentment for payment and notice of dishonour could be of benefit to the drawer, it may be dispensed with." Case v. Morris, 31 Pa. 100, 104. entitled to notice if he had reasonable ground to expect that his bill would be honored, although he had no effects in the drawee's hands.26 33 indebted to the drawer, it was held that there could be no reasonable expectation that the draft would be paid.31 So there is a reasonable ground to expect that the bill will be honored, where the drawer has made ar is making a consignment to the drawee and draws before the consignment comes to hand,32 and the drawer is therefore entitled to notice," although the acceptance is refused because of the damaged condition of the goods on their arrival;34 but if the bill of lading against which the bill of exchange is drawn is pledged as security for the payment of the bill, and acceptance is refused because the bill of lading is not delivered to the drawee, the drawer would not be entitled to notice; 35 and the consignment will be a reasonable ground of expectation of payment, although its value is not equal to the amount of the bill, in consequence of loss 36 or depreciation in value.37 Reasonable ground for such expectation exists also 28. Hamlin v. Simpson, 105 Iowa | Williams v. Brashear, 19 La. 370 125, 74 NW 906, 44 LRA 397; Cathell (where, however, it appeared that v. Goodwin, 1 Harr. & G. (Md.) 468, the drawer had made a consign471; Lafitte v. Slatter, 6 Bing. 623, ment of molasses to the drawee, 19 ECL 282, 130 Reprint 1421. which had been lost in consequence of the rains, and the drawee had accepted the bill). What justifies a "reasonable expectation" that a bill will be honored, or in other words insures to the drawer the right to demand and notice, depends on the attendant circumstances of the particular case; but they should be such as would induce a merchant of common prudence and ordinary regard for his commercial credit to draw a like bill.28 There exists a reasonable ground to expect that the bill will be honored where there is a running account between the drawer and the drawee;29 but although a shifting of the balance between the two will not dispense with the necessity of notice,30 yet where the drawer and the drawee had a settlement of accounts between them after the draft was drawn, no mention being made of such outstanding draft, and it appeared that the drawee was not [a] Leading case is Bickerdike v. Bollman, 1 T. R. 405, 99 Reprint 1164 (which case is generally cited as the first to establish the exception). [b] It will be presumed that he had funds in the drawee's hands unless the contrary is shown by the holder. Baxter v. Graves, 2 A. K. Marsh, (Ky.) 152, 12 AmD 374; Adams v. Darby, 28 Mo. 162, 75 AmD 115. 26. U. S.-Knickerbocker L. Ins. Co. v. Pendleton, 112 U. S. 696, 5 SCt 314, 28 L. ed. 866; French v. Columbia Bank, 4 Cranch 141, 2 L. ed. 576; In re Brown, 4 F. Cas. No. 1,985, 2 Story 502; Hopkirk v. Page, 12 F. Cas. No. 6,697, 2 Brock. 20; Mackall v. Goszler, 16 F. Cas. No. 8,835, 2 Cranch C. C. 240; Olshausen Lewis, 18 F. Cas. No. 10,507, 1 Biss. 419. 114. V. Ala.-Hill v. Norris, 2 Stew. & P. Fla.-Joseph v. Salomon, 19 Fla. 623; Pitts v. Jones, 9 Fla. 519. Ill. Welch v. B. C. Taylor Mfg. Co., 82 Ill. 579; Walker v. Rogers, 40 Ill. 278, 89 AmD 348; Kupfer v Galena Bank, 34 Ill. 328, 85 AmD 309. Iowa.-Hamlin V. Simpson, 105 Iowa 125, 74 NW 906, 44 LRA 397. Ky.-England V. Bricken, 7 Ky. Op. 199 (allegation of "no funds" insufficient). La. Johnson v. Flanagan, 26 La. Ann. 689; Gardner v. McDaniel, 26 La. Ann. 472; Eastin v. Osborn, 26 La. Ann. 153; Louisiana State Bank v. Buhler, 22 La. Ann. 83; Scott v. McCulloch, 16 La. Ann. 242; Williams v. Brashear, 19 La. 370; Bloodgood v. Hawthorn, 9 La. 124. Me.-Campbell v. Pettengill, 7 Me. 126, 20 AmD 349. Mass.-Grosvenor v. Stone, 8 Pick. 79; Stanton v. Blossom, 14 Mass. 116, 7 AmD 198; Blakely v. Grant, 6 Mass. 386. Miss.-Dunbar v. Tyler, 44 Miss. 1; Richie v. McCoy, 21 Miss. 541. Mo.-Merchants' Bank v. Easley, 44 Mo. 286, 100 AmD 287; Commercial Bank v. Barksdale, 36 Mo. 563. N. Y.-Robinson V. Ames, 20 Johns. 146, 11 AmD 259. N. C.-Austin v. Rodman, 8 N. C. 194, 9 AmD 630. Tex.-Cole v. Wintercost, 12 Tex. 118; Durrum v. Hendrick, 4 Tex. 495. Eng.-Rucker v. Hiller, 16 East 43, 104 Reprint 1005; Legge v. Thorpe, 12 East 171, 104 Reprint 68; Staples v. Okines, 1 Esp. 332. [a] If the drawer is damaged thereby, a failure to present a check for payment will release him, although he has not sufficient funds on deposit to meet it, if he has grounds for belief that it will be honored. Hamlin v. Simpson, 105 Iowa 125, 74 NW 906, 44 LRA 397. 27. See cases infra notes 29-51. "The reasonable grounds required by law are not such as would excite an idle hope, a wild expectation, or a remote probability, that the bill might be honored, but such as create a full expectation, a strong probability of its payment." Cathell v. Goodwin, 1 Harr. & G. (Md.) 468, 471. [a] Illustration. The drawer of a check had on deposit with the bank drawn on two thousand dollars, for which he held a certificate of deposit, but he had no general funds to his credit. He claimed that he had an arrangement whereby he was permitted to check against such certificate, and in fact had been allowed to overdraw his general account. It was held that he had reasonable ground to believe that the check would be paid. Hamlin v. Simpson, 105 Iowa 125, 74 NW 906, 44 LRA 397. [b] Effect of pending action."It is conceded that a bill or note indorsed after maturity is in the nature of a new bill, payable on demand, and that, to hold an indorser thereon, the same strictness as to demand and notice is required as in the case of the drawer of an ordinary inland bill. But it is insisted that upon the facts shown the indorsers were not entitled to notice; that the rule is that if the drawer had not at the time reasonable grounds to expect that the bill would be honored, he is not entitled to notice; and that as at the time of the indorsement the indorsers were vainly attempting to collect the note by suit, they had no reasonable grounds to expect that the maker would pay it to the indorser. We are inclined to think that the facts as stated do not make an exception to the ordinary rule, and that no demand and notice having been shown the indorsers were not liable.' Swartz v. Redfield, 13 Kan. 550, 555. [c] Funds payable to executor.— Where the funds which are in the drawee's hands are payable to the drawer as an executor he would have no reasonable expectation that a bill drawn by him in his individual capacity would be honored. Yongue v. Ruff, 34 S. C. L. 311. 29. U. S.-Dickens v. Beal, 10 Pet. 572, 9 L. ed. 538; Hopkirk v. Page, 12 F. Cas. No. 6,697, 2 Brock. 20. Ala. Hill v. Norris, 2 Stew. & P. 114. Ill. Welch v. B. C. Taylor Mfg. La.-Gardner v. McDaniel, 26 La. Mo.-Adams v. Darby, 28 Mo. 162, 75 AmD 115. Eng.-Blackhan v. Doren, 2 Campb. 503. "When the drawer has a right to expect that his bill will be honored, as when there are running accounts between the drawer and drawee, he is entitled to notice, although in point of fact he had no funds in the hands of the drawee when the bill was drawn." Williams v. Brashear, 19 La. 370, 371. [a] Illustration.-Where there was no account between the drawer and the drawee of a bill, and a statement thereof had been sent by the drawer to the drawee previously to drawing his bill, showing a balance equal to the amount of the bill, and this statement was not questioned by the drawee, it was held that there was sufficient evidence to show that the drawer in good faith supposed that the drawee was his debtor to the amount of the bill, and that he was discharged in the absence of notice of dishonor, although the drawee was actually not indebted to the drawer. Welch v. B. C. Taylor Mfg. Co., 82 Ill. 579. 30. Case v. Morris, 31 Pa. 100; Orr v. Maginnis, 7 East 361, 103 Reprint 139. 31. Stewart v. Millard, 7 Lans. (N. Y.) 373. 32. U. S.-Dickins v. Beal, 10 Pet. 572, 9 L. ed. 538. 623. Fla.-Joseph v. Salomon, 19 Fla. 79. V. N. Y.-Robinson v. Ames, 20 Johns. 146, 11 AmD 259. Eng.-Robins v. Gibson, 1 M. & S. 288, 105 Reprint 108. [a] Subsequent drafts, for payment of which subsequent consignments are made, do not constitute a fraudulent interception of funds originally in the hands of the drawee, against which original draft was drawn. Orear v. McDonald, 9 Gill (Md.) 350, 52 AmD 703. 33. Joseph v. Salomon, 19 Fla. 623; Robins v. Gibson, 1 M. & S. 288, 105 Reprint 108. 34. Rucker v. Hiller, 16 East 43, 104 Reprint 1005. 35. Schuchardt v. Hall, 36 Md. 590, 11 AmR 514. 36. Robins v. Gibson, 3 Campb. 334. 37. Robinson v. Ames, 20 Johns. (N. Y.) 146, 11 AmD 259; Williams v. Brashear, 19 La. 370. |