between the holder of an instrument and a drawer or indorser to extend the time of payment, if made before the maturity of the instrument, constitutes a waiver of demand and notice.3 An agreement to renew paper after its maturity is a waiver, and is not affected by the failure of the indorser to fulfil his agreement.* The manner and effect of waiving notice of dishonor is considered in the next chapter.

102. Instrument dishonored by nonpayment.

a. Statutory provision.- The Negotiable Instruments Law provides that: The instrument is dishonored by nonpayment "when:

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

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

8

10

unpaid." A similar provision is contained in the English Bills of Exchange Act. This section is declaratory of the common law. We have already considered the necessity of presentment for payment in order to bind parties secondarily liable on the instrument, and also the necessity of a demand as a condition precedent to an action against the maker of a note, or the acceptor of a bill of exchange. It has been held that the holder of a note is not bound to present it a second time; and if there were no funds ready to pay it when first presented, it is immaterial that funds were subsequently deposited on the same day.1o A right of action accrues to the holder of a promissory note upon the day of its maturity, if a demand had been made within a reasonable time on such day, and payment had been refused.11 In such a case the refusal of payment constitutes a dishonor of the instrument. If there has been no express refusal the right of action does not accrue until the day after the day on which it falls due.12 b. Liability of person secondarily liable.— The Negotiable Instruments Law provides that: "Subject to the provisions of this act, when the instrument is dishonored by nonpayment, an immediate right of recourse to all parties secondarily liable 66 thereon, accrues to the holder.” 13 A similar provision is contained in the English Bills of Exchange Act.14 A distinction should be made between a right of recourse and a right of action. The holder's right of action against the drawer or indorser dates from the time when notice of dishonor is or ought to be received by such drawer or indorser.15

5. Neg. Inst. L. (N. Y.), § 143. For the same section in statutes of other States see Appendix.

6. English Bills of Exchange Act, 1882, § 47 (1).

7. In re East of England Banking Co., L. R., 4 Ch. (Eng.) 18.

8. See ante, § 90 (c). 9. See ante, § 90(b). 10. Etheridge v. Ladd, 44 Barb. (N. Y.) 69.

11. Vandesande v. Chapman, 48 Me. 262; Veazie Bank v. Winn, 40 Me. 62; Estes v. Tower, 102 Mass. 65, 3 Am. Rep. 439.

12. Moore v. Horsley, 42 Ark. 163; Holland v. Clark, 32 Ark. 697; Wilcombe v. Dodge, 3 Cal. 260 58 Am. Dec. 411; Raefle v. Moore, 58 Ga. 94; Sutcliffe v. Humphreys, E8 N. J. L. 42, 32 Atl. 706; Smith v. Aylesworth, 40 Barb. (N. Y.) 104.

There are authorities in this

13. Neg. Inst. L. (N. Y.), § 144. For the same section in statutes of other States see Appendix.

14. English Bills of Exchange Act, 1882, 47 (2).

15. Castrique v. Bernabo (1884), 6 Q. B. (Eng.) 498.

"As

When right of action accrues against drawer or indorser.- In the case of Kennedy v. Thomas, L. R., 1894, 2 Q. B. (Eng.) 759, section 47 of the English Bills of Exchange Act, from which this section was derived, was construed. The court said: regards section 47 of the act, I do not construe it as the plaintiff's counsel contends that it should be construed. It does not say that on the presentation and dishonor of the bill an immediate right of action against the drawer and the indorsers accrues to the holder, and I do not think that

country to the effect that a right of action immediately accrues to the holder against an indorser where, after the exercise of due diligence, notice of nonpayment of the instrument is sent to such indorser.10

103. Time of maturity.

a. Statutory provision.- The Negotiable Instruments Law provides that: "Every negotiable instrument is payable at the time fixed therein without grace. When the day of maturity falls upon Sunday or a holiday, the instrument is payable on the next succeeding business day. Instruments falling due or becoming payable on Saturday are to be presented for payment on the "next succeeding business day, except that instruments payable on demand may, at the option of the holder, be presented for payment before twelve o'clock noon on Saturday when that "entire day is not a holiday.'

99 17

Under the English Bills of Exchange Act, when the last day of grace falls on Sunday, Christmas day, Good Friday, or a day appointed by lawful proclamation as a public fast or thanksgiving day, the bill is due and payable on the preceding business day; but when the last day of grace is a bank holiday other than Christmas day or Good Friday, or when the last day of grace is a Sunday, and the second day of grace is a bank holiday, the bill is due and payable on the succeeding business day.18 The above section is that contained in the New York statute. The section as contained in other States has been modified to some extent. In

v.

is the meaning. It would be very the drawer and the indorsers earlier anomalous if, in respect to the same than he otherwise would." bill of exchange, rights of action 16. Rowland Rowe, 48 Conn. against different persons were to ac- 432; Bell v. Hagerstown Bank, 7 Gill crue at different times. In my opin- (Md.), 216; Flint v. Rogers, 15 Me. ion, section 47 means only that the 67; Shed v. Brett, 1 Pick. (Mass.) holder of the bill may, immediately 401, 11 Am. Dec. 209; New Engupon payment being refused by the land Bank v. Lewis, 2 Pick. (Mass.) acceptor, give notice to the drawer 125. and the indorsers, telling them that he shall hold them liable upon it. But they, as well as the acceptor, still have the whole of the last day of grace in which to pay the bill, and if it is not paid before the end of that day, the holder's right of action against them becomes complete. It is for the benefit of the holder that he should be able to give notice of dishonor on the last day of grace, because by so doing he obtains a right of action against

But in the case of Smith v. Bank of Washington, 5 Serg. & R. (Pa.) 317, a notice was sent to the indorser of a note by mail on the 13th, which would reach him on the 19th. It was held that a suit commenced on the 16th was too soon.

17. Neg. Inst. L. (N. Y.), § 145. For the same section in statutes of other States see Appendix.

18. English Bills of Exchange Act, 1882, § 14(1).

those States which have adopted the act, where the Saturday half-holiday was observed, the section as stated above is retained. 19 b. General rule as to instruments payable on Sunday or a holiday. The statute has changed the general rule; in most jurisdictions, unless it has been otherwise established by statute, it is held that where an instrument matures on a Sunday or a holiday, that a demand of payment should be made on the preceding business day.20 The general tendency of legislation on this subject in all the States has been toward a modification of the rule established by the custom of merchants, and the rule as to instruments falling due on Sunday or a holiday, as stated in the statute, is now almost universally applicable in this country.

c. Instruments payable on Saturday. The provisions of the statute relating to the presentment for payment of instruments falling due or becoming payable on Saturday is inserted in recognition of the statutes of the several State creating a Saturday half-holiday. In Michigan, under a statute providing that every Saturday from twelve o'clock noon until twelve o'clock at night, as regards the presentment of notes for payment, shall be a halfholiday, and that such notes shall be payable and presentable for acceptance and payment on the business day next succeeding such half-holiday, but that every Saturday shall, for the holding of a court or the transaction of any business authorized by law, be deemed a business day, it was held that presentment for payment of a note maturing on Sunday should be made on Monday."

19. See the statute as contained in

the Appendix, with notes indicating the sections of the act in the several States which have adopted it.

20. Presentment on preceding day when instrument falls due on Sunday or a holiday, see:

United States.- Thornton v. Stoddert, Fed. Cas. No. 14,000; Doremus v. Burton, Fed. Cas. No. 402, 5 Biss. 57. California.- Hibernia Bank v. O'Grady, 47 Cal. 579.

Kentucky. Chamberlain v. Maitland, 5 B. Mon. 448; Offut v. Stout, 4 J. J. Marsh. 332.

Maine.- Homes v. Smith, 20 Me.

264.

Maryland.- Sheppard v. Spates, 4 Md. 400.

Massachusetts.- Barker v. Parker, 6 Pick. 80; Farnum v. Fowle, 12 Mass. 89, 7 Am. Dec. 35.

22

New York.- Ransom v. Mack, 2 Hill, 587, 38 Am. Dec. 602; Mechanics & Farmers' Bank v. Gibson, 7 Wend. 460; Johnson v. Haight, 13 Johns. 470.

South Carolina.- Furnan v. Harman, 2 McCord, 436.

Texas. Hirshfield v. Fort Worth Nat. Bank, 83 Tex. 452, 18 S. W. 743, 29 Am. St. Rep. 660, 15 L. R. A. 639.

21. Among the States which have adopted the Saturday half-holiday are Maine (Laws 1897, chap. 259); Massachusetts (Act of May 28, 1895); Michigan (Laws 1893, chap. 185); New Jersey (Laws 1895, chap. 43); New York (Laws 1897, chap. 614); Pennsylvania (Act of May 31, 1983).

22. Hitchcock v. Hogan, 99 Mich. 124, 57 N. W. 1095; Hagerty v. Engle, 43 N. J. L. 299.

8 104. Days of grace.

a. Statutory provision.- Under the Negotiable Instruments Law, as adopted in most of the States, a negotiable instrument is payable at the time fixed therein without grace.23 In some of the States adopting the act days of grace are still retained in certain cases and under certain conditions. As in Massachusetts where the act was originally enacted containing the provision abolishing days of grace, and was afterward amended to provide "that on all drafts and bills of exchange made payable within the commonwealth at sight, three days of grace shall be allowed "unless there is an express stipulation to the contrary." 24 A similar provision is also contained in the Rhode Island Act.25 It is provided in the North Carolina Act that the laws in force in that State with regard to days of grace "shall remain in force and shall not be construed to be repealed by this act." 26 But in many States, where the Negotiable Instruments Law has not been adopted, days of grace have been abolished.27 And in some States grace is allowed on bills payable at sight, but not on any other instruments;28 while in others grace is allowed on all instruments except those payable on demand or at sight;20 and in others it is allowed on all negotiable instruments, regardless of the date of their maturity.30 Days of grace were abolished by the French Code, and by most if not all of the various European Codes since framed, more or less, on that model, and now, with the exception possibly of Russia, exist among the English-speaking races only.32 The English Bills of Exchange Act retains days of grace, although at the time of its adoption there was considerable sentiment in favor of the abolishment thereof.33

31

23. Neg. Inst. L. (N. Y.), § 145. See ante, § 103(a).

24. Massachusetts Acts 1899, chap.

130.

29. Georgia, Kansas.

Indiana,

30. Alabama, Arizona, Mississippi, New Mexico, Oklahoma, and South Carolina.

25. Neg. Inst. L. (R. I.), § 93. In the following States grace is al26. Neg. Inst. L. (N. C.), § 197. lowed on all negotiable instruments 27. The following States have, be- except those payable on demand: sides those which have adopted the Kentucky, Michigan, Minnesota, Misact, abolished days of grace: Cali- souri, Nebraska, and Texas. fornia, Delaware, Idaho, Illinois, 31. Code de Commerce, liv. 1, tit. Montana, New Hampshire, New 8, art. 135. Jersey, Vermont, and West Virginia.

28. Maine, Wyoming, and Massachusetts and Rhode Island under Negotiable Instruments Law.

32. Byles on Bills (16th ed.), 282. See German Exchange Law, Art. 33; Italian Code, Art. 290.

33. English Bills of Exchange Act, 1882, § 14. See Appendix.