and (2) to evidence a contract. We come now to consider this contract. A negotiable paper is personal property and the seller of it is responsible to the immediate buyer on the usual principle of sales whether he endorses it or not. When he does endorse it his contract is not only with his endorsee but with all subsequent endorsees. Part of his contract is absolute and part conditional. He absolutely contracts (1) that the instrument is in every respect genuine; (2) that it is the valid instrument it purports to be; (3) that the ostensible parties are competent; and (4) that he has lawful title to it and the right to endorse it. If any of these engagements are not fulfilled, the drawer, the endorser or one who transfers without endorsing, or an endorser "without recourse" may be sued for the recovery of the original consideration which has failed, and this without proof of demand and notice. None of the above provisions may be violated, yet the instrument may not be paid. His contract includes further, that the bill or note will be accepted or paid as the case may be, according to its purport; but this engagement is conditioned upon due presentment, demand and notice. What constitutes due demand. and notice will be discussed in future chapters, but the student will not fail to observe that a strict compliance on the part of the holder with the above conditions is a condition precedent to the endorser's liability; that a failure on the part of the holder to observe the slightest formality will jeopardize his right of action against the endorser. When a negotiable paper is transferred by delivery only, the seller's liability extends only to the immediate transferee. CHAPTER XX. PRESENTMENT FOR ACCEPTANCE. 205. Why and When Necessary. -The drawer's contract is a conditional one. It is similar to the endorser's, and unless the holder complies with all the conditions which are implied in the drawer's contract, he will lose his right of action against him. For the purpose then of charging the drawer, also of fixing the day of maturity, drafts due a certain number of days after sight, also sight drafts when days of grace are allowed, should be presented to the drawee for acceptance. It is the right of the holder to present for acceptance a draft due a certain number of days from date, and if it be refused it need not be presented for payment when due, but notice should be sent the drawer at once. If such a draft is not presented for acceptance, the holder loses none of his rights by not doing so. When a bill payable at a certain time is placed in an agent's hands for negotiation or collection, it is his duty to present it for acceptance. With this exception, the general rule is that such a bill need not be presented for acceptance, but only for payment. 1900 Embers, Q, Oct. 23, 1900. watleyssight Pay to the Me reagle Dollars FORM OF ACCEPTANCE. 206. Effect of Acceptance. -The drawee is usually under no obliga tion to accept unless has he agreed to do so, and the holder cannot sue him even though he have funds belonging to the drawer for there is no contract between the holder and the drawee. If the drawee refuse to accept, and the holder has neglected to take the steps necessary to charge the drawer, he may lose the entire amount. He cannot give up the draft and seek recovery on the original debt. But an acceptance operates as a full legal assignment of the amount to the holder, and if payment be not made according to the terms of the instrument, the holder may sue the acceptor for there is now a contract between them. 207. Points to Be Observed. That every step to be taken to charge the drawer may be properly taken, the following must be duly considered: (1) By and to whom should presentment be made; (2) Where; (3) When; (4) How. 208. By and to Whom a Bill Should Be Presented.―The bill should be presented by the holder or his authorized agent, to the drawee or his authorized agent. The party in possession is presumed to have the right to present, and the drawee takes no risk when he accepts the draft for presentment, and protest for non-acceptance will inure to the benefit of the rightful holder. If drawn on a firm, presentment to any partner is sufficient, but if drawn on two persons not partners, it should be presented to both, and if the acceptance of one only is taken, it is at the risk of the holder. Greater care must be used to find the drawee or his agent in presentment for acceptance than in presentment for payment. A clerk in the drawee's office, and in apparent charge, is a competent party to whom to present a bill for either payment or acceptance. N. I.-When the drawee is an adjudged bankrupt or has assigned for the benefit of his creditors, presentment should be made to his trustee or assignee. 209. Where Should Presentment Be Made.-Presentment for acceptance should be made either at the drawee's office or at his domicile. Sometimes the draft is drawn payable at a certain place, but even in this case it should be presented for acceptance at the domicile or office, for the place of payment is immaterial until after acceptance. If he has removed, diligent inquiry should be made to ascertain his new domicile or place of business, and presentment should be made there. If he cannot be found, or has absconded, the bill should be treated as dishonored. 210. When Should Presentment Be Made.-Under this head it will be proper to consider, (1) the time of day, and (2) the period of time within which presentment for acceptance should be made. It should be made within the usual business hours, and except in case of a bank, these usually extend until bed-time. It matters not when it be made, provided some authorized person be seen. But if made at an unreasonable hour, and no answer be given, it is a nullity. What might be a reasonable time for one class of business would not be for another. 211. Presentment within a Reasonable Time.-The bill should be presented within a reasonable time after its receipt, and unless it is, the drawer will be discharged, even though he has suffered no damage by the delay. What is a reasonable time must be determined from the facts of each case. A more definite rule cannot be laid down. Great latitude will be given when the bill goes into circulation, and each holder retains it only a short time. The facilities for communication between the parties will also be considered. A delay of twentyone days to forward sight drafts received at Detroit and drawn on Chicago, was held by the court to be too long. It should not be pre sented on a holiday. 212. Excuses for Delay in Presentment.-There are some reasonable excuses such as sickness, inevitable accidents, war, etc., that will excuse delay. But they must be beyond the holder's control. Presentment is also excused when the drawee is dead though it may be presented to the personal representative. It is also excused if the drawee has absconded or does not have capacity to contract. 213. How a Bill Should Be Presented.-The holder should make an actual exhibit of the bill to the drawee or his agent, and request acceptance. The drawee can insist on writing his acceptance on the face of the bill, and this he cannot do unless it be actually presented. The drawee has the right to hold the bill for twenty-four hours to examine his account with the drawer, and determine whether he will accept the bill or not. If he neglect or refuse to return the bill it can, by the statutes of some states, be considered as accepted. 214. Incompetent Drawee.-The drawer's implied contract with the payee is that the drawee is competent to accept. If therefore, the holder finds on presentment that the drawee is incompetent, for instance, is an infant, an idiot, or lunatic, he may protest the bill at once, even though the drawee is willing to accept. 215. Qualified Acceptance.-Any form of acceptance that introduces a new condition into the instrument, or that varies in any way its tenor, is called a "qualified acceptance. The holder can insist on an unconditional acceptance or none, indeed, if he accept a qualified acceptance he thereby releases the drawer from all liability. According to the general rule of decisions, a draft may be accepted payable at a particular bank in the city where the drawee lives, and it will not be such a conditional acceptance as will release the drawer, but the drawee should not be permitted to make it payable outside. of the city where he lives or it will release the drawer and endorsers. 75 Ga 33. (See form, sec. 205.) 216. What Acceptance Admits.-By the act of acceptance the drawee admits the signature of the drawer, and he cannot afterwards deny it, even though the draft prove to have been forged. It admits that he has funds of the drawer's in his hands, and also that the drawer is competent to contract. But it does not admit that the body of the draft has not been altered since it left the drawer's hands. It also admits the capacity of the payee to endorse. 217. Proceedings for Non-Acceptance.-If the drawee refuse or neglect to accept the draft when a proper presentation has been made, or when presentation is excused, the bill is said to be dishonored, and notice should be immediately sent to all who are conditionally liable. This includes all endorsers and the drawer. If the bill be a foreign one, it should be protested, and then notices should be sent. If the draft is by its terms due a certain number of days from date, while it need not be presented for acceptance, yet it is the holder's privilege to do so, and if acceptance be refused, notice should be sent as before described, and suit can be instituted against the drawer and prior endorsers at once. This doctrine of notice applies only to drawers and endorsers of negotiable instruments, and the rule need not be observed in case of non-negotiable paper. It is regarded as part of the drawer and endorser's contracts, that they will only be liable in case of proper demand and notice. FORM OF ACCEPTANCE OF Draft, PAYABLE "AFTER DATE," ACCEPTED. JOHN DOE. IF PAYABLE "AFTER SIGHT,” ACCEPTED. Aug. 15, 1901. JOHN DOE. TO MAKE PAYABLE AT BANK, ACCEPTED. August 15, 1901. Merchants National Bank. JOHN DOE. |