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1. If the instrument is payable to the order of a third person he is liable to the payee and to all subsequent parties.

2. If the instrument is payable to the order of the maker or drawer, or is payable to bearear, he is liable to all parties subsequent to the drawer.

3. If he sign for the accommodation of the payee, he is liable to all parties subsequent to the payee.

Warranty.-Every person negotiating an instrument by delivery or by a qualified indorsement, warrants:

1. That the instrument is genuine and in all respects what it purports to be.

2. That he has good title to it.
3. That all prior parties had capacity to contract;

4. That he has no knowledge of any fact which would impair the validity of the instrument or render it valueless.

But when the negotiation is by delivery only, the warranty extends in favor of no holder other than the immediate transferee.

The provisions of subdivision three of this section do not apply to persons negotiating public or corporate securities, other than bills and notes.

Warranty of indorser without qualification. Every indorser who indorses without qualification, warrants to all subsequent holders in due course:

1. The matters and things mentioned in subdivisions one two and three of the next preceeding section: and,

2. That that the instrument is at the time of his indorsement valid and subsisting.

And in addition, he engages that on due presentment, it shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it is dishonored, and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to pay it.

Indorsement of instrument negotiable by delivery.When a person places his indorsement on an instrument negotiable by delivery he incurs all the liabilities of an indorser.

Indorsers liable in order of indorsement.-As respects one another, indorsers are liable prima facie in the order in which they indorse; but evidence is admissible to show that

as between and among themselves they have agreed otherwise. Joint payees and joint indorsees who indorse are deemed to indorse jointly and severally.

NOTE-A made and delivered to B a promissory note to the order of B, indorsed in blank by C for goods sold by B to A on the credit of C's indorsement, pursuant to a prior agreement by C. Held, that C was liable, as a prior indorser, to B; this being the intention of the parties and B being the real creditor, and A and C the real debtors.

Indorsements by two or more persons may be joint, as where partnership or otherwise joint payees are the indorsers.

Negotiation without indorsement by broker.-When a a broker or other agent negotiates an instrument without indorsement, he incurs all the liabilities prescribed by section 1677-5, unless he discloses the name of his principal, and the fact that he is acting only as an agent.



Presentment when necessary.- Presentment for payment is not necessary in order to charge the person primarily liable on the instrument. But except as herein otherwise provided, presentment for payment is necessary in order to charge the drawer and indorsers.

Instruments payable on demand.--Where the instrument is not payable on demand presentment must be made on the day it falls due. Where it is payable on demand, presentment must be made within a reasonable time after its issue, except that in the case of a bill of exchange, presentment for payment will be sufficient if made within a reasonable time after the last negotiation thereof.

ON THE DAY IT FALLS DUE. Grace is hereby abolished.

ON DEMAND. A note payable on demand must be presented within a reasonable time after transfer in order to charge the indorser.

Where the facts are undisputed the question whether such note was presented within a reasonable time one of law for the court. A delay of ten months after indorsement before presentation for payment, held unreasonable and to discharge the indorser.

Paper indorsed after due must be presented within a reasonable time.

Suficient presentment.-Presentment for payment to be sufficient, must be made:

1. By the holder or by some person authorized to receive payment on his behalf:

2. At a reasonable hour on a business day;
3. At a proper place as herein defined;

4. To the person primarily liable on the instrument, or if he is absent or inaccessible, to any person found at the place where the presentment is made.

Presentment at proper place.-Presentment for payment is made at the proper place:

1. Where a place of payment is specified in the instrument and it is there presented.

2. Where no place of payment is specified, but the address of the person to make payment is given in the instrument and it is there presented;

3. Where no place of payment is specified, and no address is given and the instrument is presented at the usual place of business or residence of the person to make payment;

4. In any other case if presented to the person to make payment wherever he can be found, or if presented at his last known place of business or residence.

NOTE. - Temporary absence or removal of the indorser from his place of residence or business is no excuse for non-presentment.

Service at the place of business must be during business hours, but service in the residence will be sufficient if made during any of the hours when members of a household are attending to their ordinary affairs.

If service of notice be promptly made at the dwelling house or place of business of the indorser, it is sufficient, although he did not in fact receive it.

Presentment and demand of payment of a promissory note at the abandoned place of business of the maker is insufficient to charge an indorser if the maker has another place of business or his place of residence is known or may be ascertained by reasonable diligence.

Exhibition of instrument.-The instrument must be exhibited to the person from whom payment is demanded, and when it is paid must be delivered up to the party paying it.

During banking hours. - Where the instrument is payable at a bank, presentment for payment must be made during banking hours, unless the person to make payment has no funds there to meet it at any time during the day, in which case presentment at any hour before the bank is closed on that day is sufficient.

In case of death. --- Where the person primarily liable on the instrument is dead, and no place of payment is specified, presentment for payment must be made to his personal representative, if such there be, and if, with the exercise of reasonable diligence, he can be found.

Partners.---Where the persons primarily liable on the instrument are liable as partners and no place of payment is specified, presentment for payment may be made to any one of them, even though there has been a dissolution of the firm.

Joint debtors.---Where there are several persons, not partners, primarily liable on the instrument, and no place of payment is specified, presentment must be made to them all.

In order to charge drawer.–Presentment for payment is not required in order to charge the drawer where he has right to expect or require that the drawee or acceptor will pay the instrument.

In order to charge indorser.-Presentment for payment is not required in order to charge an indorser where the instrument was made or accepted for his accommodation, and he has no reason to expect that the instrument will be paid if presented.

Delay, when excused. – Delay in making presentment for payment is excused when the delay is caused by circumstances beyond the control of the holder, and not imputable to his default, misconduct or negligence. When the cause of delay ceases to operate, presentment must be made with reasonable diligence.

NOTE. - As, by delay in mail. Sickness of the holder is no excuse, unless it was not only sudden, but so severe as not only to prevent him from making presentment, and giving notice himself, but from employing another to do so, and it must be shown that proper steps were taken as soon as the disability was removed. Where such sickness was fatal, yet a delay of the executrix to present the note for several months disdischarged the indorser.

Insolvency of maker is no excuse, although known to the indorser when the indorsement was made. Taking security by the indorser is no excuse. Nothing but a general assignment and transfer to the indorser of all the maker's effects, or the receipt by him of money or property to satisfy the note, will excuse such presentment and notice.

When dispensed with.- Presentment for payment is dispensed with:

1. Where after the exercise of reasonable diligence presentment as required by this chapter cannot be made.

2. Where the drawee is a fictitious person;
3. By waiver of presentment express or implied.

NOTE. - INSOLVENCY. Mere insolvency does not excuse presentment.


DISHONOR. By non-payment.--The instrument is dishonored by nonpayment when:

1. It is duly presented for payment and payment is refused or cannot be obtained; or,

2. Presentment is excused and the instrument overdue and unpaid.

Right of recourse of holder.-Subject to the provisions of this act, when the instrument is dishonored by non-payment, an immediate right of recourse to all parties secondarily liable thereon, accrues to the holder.

Without grace. Maturity.-Every negotiable instrument is payable at the time fixed therein without grace. When the day of maturity falls upon a Sunday, or a holiday, the instrument is payable on the next succeeding business day.

Time of payment. - Where the instrument is payable at a fixed period after date, after sight or after the happening of a specified event, the time of payment is determined by excluding the day from which the time is to begin to run, and by including the date of payment.

At a bank.-Where the instrument is made payable at a bank it is an equivalent to an order to the bank to pay the same for the account of the principal debtor thereon.

Payment in due course. -Payment is made in due course when it is made at or after the maturity of the instrument to the holder thereof in good faith and without notice that his title is defective.



Notice, how given.-Except as herein otherwise provided, when a negotiable instrument has been dishonored by non-acceptance or non-payment, notice of dishonor must be given to the drawer and to each indorser, and any drawer or indorser to whom such notice is not given is discharged.

NOTE. - Where an instrument is indorsed (or accepted) after maturity, the holder must in order to charge persons secondarily liable make a demand and give notice of non-payment within a reasonable time thereafter.

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