CHAPTER XX PRESENTMENT FOR PAYMENT The student should carefully distinguish between presentment for acceptance, which has been discussed in the preceding chapter, and presentment for payment, which is the subject of this chapter. Wherever the word presentment is used alone in this chapter, it means presentment for payment. 207. When Presentment for Payment is Necessary. The acceptor of a draft and the maker of a note are the parties who are primarily liable, for they have engaged absolutely to pay the paper on the day of its maturity. No formal presentment is necessary to charge either of them, for it is their duty to pay it, and if they fail in this, suit may be brought against them at once. If no place of payment is specified in the instrument, it is the duty of the party primarily liable to seek out the holder and make a tender to him. If a place of payment be designated in the instrument, and the maker or acceptor is ready and willing to pay the instrument at that place, his readiness there amounts to a tender. On the other hand the contract of the drawer of a draft after acceptance, and of the indorsers of a draft or note, is conditional upon the proper presentment of the instrument to the party primarily liable and his refusal to pay it. Presentment for payment is therefore a preliminary to charging those parties who are secondarily liable, for their contract to pay is conditioned on presentment to the acceptor or maker and his refusal to pay. 208. By Whom Presentment Should be Made. Presentment of the instrument for payment must be made by the holder, or by some person authorized to receive payment in his behalf. So far as the acceptor or maker is concerned, payment may be safely made to anyone who appears by the instrument, or its indorsements, to be the legal holder. A presentment by such a person will be sufficient to charge the drawer or indorsers in the event of refusal to pay. 209. To Whom Presentment Should be Made. Presentment for payment should be made to the person who is primarily liable on the instrument, or if he is absent or inaccessible, to the person apparently in charge at the place where the presentment is made. If the instrument be a draft the presentment should be made to the acceptor; if a note, to the maker. If the primary liability be joint, the presentment must be made to all makers or acceptors. Should the maker or acceptor be dead, the presentment should be made to his personal representative, who is either the executor or administrator. 210. Where Presentment Should be Made. When the paper is payable generally, that is, when no place of payment is designated, it should be presented at the place of business of the maker or acceptor, or at his home. If his address be unknown and cannot be discovered, the presence of the instrument in the city named in the hands of the holder or his agent on that day will be sufficient. Presentment is usually made by sending the instrument to some bank for collection. The bank then makes the necessary demand. Under all circumstances, due diligence must be used to find the principal debtor, and present the paper to him, or if a place of payment be specified, to present the instrument at that place, and that place alone. 211. Time of Presentment. Presentment must be made on the day of maturity. If made either before, or after, the presentment is insufficient to charge those parties who are secondarily liable. Not only must the presentment be made on the proper day, but it must be made at a reasonable hour. If the place of presentment be at a business office, the usual business hours of the day form the time limit for presentment; if payable at the maker's or acceptor's home, the limits are the hours of rising and retiring customarily followed in the community. Presentment is necessary to charge the parties secondarily liable, they having agreed to pay in the event that the maker or acceptor is given a reasonable and proper opportunity to pay, and refuses. It would be unreasonable to call one out of bed at midnight to pay a draft or note, and it would be improper to ask the maker or acceptor to pay before the paper became due. Therefore such a presentment will not be sufficient to throw the responsibility for the maker's or acceptor's refusal upon the drawer or indorsers. 212. Presentment of Checks. A check must be presented for payment within a reasonable time after its issue or the drawer will be discharged from liability thereon to the extent of the loss caused by the delay. Checks are drawn on a bank, requiring the bank to pay the payee out of the funds of the drawer on deposit in the bank. The drawer has impliedly promised to pay if the bank fails to do so. His contract is conditioned on the presentment of the check for payment within a proper time, because should the check be outstanding for a long period the bank might become insolvent and fail and the money which he had left there to pay the check might be lost. The rule is designed to cause the payee, who has slept on his rights, to be the loser in such a case, rather than the drawer of the check. Reasonable Time. It is generally considered among business men that twenty-four hours is a reasonable time to hold a check, and that it should be presented for payment, started on its route of collection, or indorsed to another person within that period. Business usage allows each indorser twenty-four hours as a reasonable time in which to dispose of the check. 213. Drafts Payable on Demand. The general rule that presentment must be made on the day of maturity does not apply to sight drafts, for the obvious reason that they are matured whenever presented. The only requirement as to them is that they must be presented within a reasonable time or the parties secondarily liable will be discharged. This length of time depends upon business usage. It has already been noted that under the N. I. L. instruments payable "at sight," are treated as payable on demand. 214. Holidays. In fixing the period of maturity of negotiable paper, the question as to presentment of paper becoming due on a holiday is often of importance. Each state fixes its own holidays, and negotiable paper becoming due on a legal holiday, as Christmas, Thanksgiving, or New Year's Day, or on a Sunday, is properly presentable the day following, or on the next succeeding business day (except in States where days of grace are still allowed). Thus, when paper falls due on Saturday, the Fourth of July, it is properly presentable on Monday. 215. Manner of Presentment. Presentment for payment should be made by an actual exhibition of the paper. This is for the reason that the acceptor or maker has the right to demand that on his payment the instrument should be delivered to him. If the place of payment be at a bank, the presence of the instrument in the bank at maturity, ready to be delivered to any one who may be entitled to it on payment of the amount due, will be sufficient. Delay in making presentment for payment until after the day of maturity is excused only when the delay is caused by circumstances beyond the control of the holder, and is not due to his fault or misconduct. If there be such delay the holder must prove that it was due to unavoidable circumstances. 216. Presentment Dispensed With. Presentment for payment is not necessary in order to charge the drawer or indorsers, (1) when after the exercise of reasonable diligence it is impossible to find the party primarily liable and presentment cannot be made; and (2) when presentment has been expressly or impliedly waived by the parties secondarily liable. A waiver of presentment is made if the indorsers write on the instrument words similar to "Presentment and notice waived," or if they have at or about the time of maturity entered into an agreement with the holder that they will pay the instrument, because of the threatened dishonor by the maker or acceptor. The first is an express waiver; in the second instance the waiver is implied. 217. The Instrument is Discharged if, upon presentment for payment, it is paid. The drawer and indorsers are relieved of all further liability, and the instrument itself is usually delivered to the party making payment, or is canceled upon its face, or (usually) both. 218. When Payment is Refused, the instrument is said to be dishonored, and the holder's rights against the parties secondarily liable, the drawer or indorsers, become important. If the holder has performed the necessary acts of presentment for payment, and the instrument is dishonored, only one more process remains necessary for him to perform before he can charge the drawer or indorsers with the payment of the instrument. This process is called protest and notice of dishonor and is designed to protect the parties secondarily liable by requiring that they be given notice of the dishonor by a formal method. 219. A Protest is a form of solemn declaration written by a notary public to be attached to the instrument, or to a copy of it, stating that he duly presented the note or draft for payment and that it was dishonored. Protest is required in the case of a foreign draft, as distinguished from inland drafts and notes, and is usually made even when not required, because the signed and sealed statement of a notary public is effective evidence that the presentment was properly made and payment refused. Business usage is for the holder to employ some notary public to make this presentment, and in the event of dishonor, to make, on the day of the dishonor, a certificate of protest of the instrument. The protest is usually written on a blank form and enumerates the following facts: (1) Time of presentment; (2) Place of presentment; (3) Fact of, manner of, and reason for presentment; (4) Fact that payment was demanded; (5) Fact of dishonor; (6) Name of party to whom presented; (7) Name of party by whom presented; (8) Copy of the instrument presented, attached to protest. State of Illinois, }ss. Certificate of Protest Be it Known, That on this 30th day of January, in the year of our Lord one thousand nine hundred and sixteen, I, E. J. Hoskins, a Notary Public, duly commissioned and sworn, and residing in the City of Chicago, in said County and State, at the request of W. F. Cadwell, went with the original note, a copy of which is hereto attached, to the office of Oscar E. Bartlett, and demanded payment thereon, which was refused. Whereupon I, the said Notary, at the request of the aforesaid, did Protest, and by these Presents, do Solemnly Protest, as well against the maker of said note and the endorsers thereof, as all others whom it may or doth concern, for exchange, re-exchange, and all costs, charges, damages, and interest already incurred by reason of the non-payment of the said note. And I, the said Notary, do hereby certify that on the same day and year above written, within forty-eight hours from the time of such protest, due notice of the foregoing Protest was put in the Postoffice at Chicago, Ill. as follows: Notice for Samuel H. Phillips, Ottawa, Ill., notice for Harry Watkins, LaGrange, Ill., notice for M. J. Morris, Chicago, Ill. Each of the above named places being the reputed place of residence of the person to whom this notice was directed. (Place for Seal.) In Testimony Whereof, I have hereunto set my hand and affixed my Official Seal, the day and year first above written. E. J. HOSKINS, Notary Public. |