cases the note is in effect a draft on the bank in favor of the holder, and in discharge of the indorser. German National Bank v. Foreman, 138 Pa. St. 474, 479; Commercial National Bank v. Henninger, 105 Pa. 496. But it is also held in that State that while a bank which has discounted a promissory note may appropriate to the payment of the note funds in its hands belonging to any party to the note, when payment is not made at the time and place named, yet it is not bound to do so as to any party except the makers. Mechanics' and Traders' Bank v. Seitz, 150 Pa. St. 632. § 148. What constitutes payment in due course.-Payment is made in due course when it is made at or after the maturity of the instrument (a) to the holder (b) thereof in good faith and without notice that his title is defective. (a) Payment before the day is a defense which binds only the party receiving payment and those who stand in his shoes. Watson v. Wyman, 161 Mass. 96, 99. (b) It is the duty of the maker or acceptor to require a production of the paper before paying the same, and possession is generally the only adequate evidence upon which he has any right to rely. Loizeaux v. Fremder, 123 Wis. 193; Adair v. Lenox, 15 Oregon 489. The rule is that if a bill or note be paid at maturity, in full, by the acceptor or maker, or other party liable to a person having a legal title in himself by indorsement, and having the custody and possession of the bill ready to surrender, and the party paying has no notice of any defect of title or authority to receive, the payment will be good. But if upon such payment the holder has not the actual possession of the paper ready to be delivered, and does not in fact surrender it, but gives a receipt or other evidence of the payment, and it turns out that the party thus receiving had not a good right and lawful authority to receive and collect the money, but that another person has such right, the payment will not discharge the party paying, but will be a payment in his own wrong. Wheeler v. Guild, 20 Pick. 545, 553; Trustees of the I. I. Funds v. Lewis, 34 Fla. 424, 428. Concerning this rule, the Supreme Court of Wisconsin said in a late "It is so simple, and, once understood, furnishes so easy and sure a means for both debtor and owner to protect themselves case: against unauthorized acts of others, that it ought not to be weakened or confused. The holder can always be safe by retaining the instrument in his possession; the debtor, by refusing payment without actual presentation. It is justified in application to negotiable paper distinctively from other property by the very dominant purpose of easy and probable transfer at any moment, so that what may be true as to ownership of such paper on one day is likely to have changed on the next. On the probability of such change the negotiability of the instrument is a continual warning." Loizeaux v. Fremder, 123 Wis. 193, 198. Such rule applies generally to all negotiable paper independently of the existence of any mortgage or other security. Marling v. Nommensen, 127 Wis. 363. Payment made to the original holder, after indorsement and delivery of the paper even as collateral security, is no defense to a suit on the note by the indorsee, although the payment was made by the maker without notice or knowledge of the transfer. Gosling v. Griffin, 85 Tenn. 737. But while a person not in the actual possession of negotiable paper is presumed from that fact alone to have no authority to receive payment thereon, yet such presumption may be rebutted and overcome by evidence showing actual authority. Swengle v. Wells, 7 Ore. 222. The original payee of a negotiable note in possession thereof, is presumed to be the owner, and has ostensible authority to receive payment, although the note bears the blank indorsement of such payee. Home Savings Bank v. Stewart (Neb.), 110 N. W. Rep. 947. 8 ARTICLE VIII. NOTICE OF DISHONOR. Section 160. To whom notice of dishonor must be given. 161. By whom given. 162. Notice given by agent. 163. Effect of notice given on behalf of holder. 164. Effect where notice is given by party entitled thereto. 165. When agent may give notice. 166. When notice sufficient. 167. Form of notice. 168. To whom notice may be given. 169. Notice where party is dead. 171. Notice to persons jointly liable. 172. Notice to bankrupt. 173. Time within which notice must be given. 174. Where parties reside in same place. 175. Where parties reside in different places. 178. Notice to subsequent parties, time of. 179. Where notice must be sent. 180. Waiver of notice. 181. Whom affected by waiver. 182. Waiver of protest. 183. When notice dispensed with. 184. Delay in giving notice; how excused. Section 187. Notice of non-payment where acceptance re fused. 188. Effect of omission to give notice of non-ac ceptance. 189. When protest need not be made; when must be made. § 160. To whom notice of dishonor must be given.Except as herein otherwise provided, when a negotiable instrument has been dishonored by non-acceptance or nonpayment, 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 (a). (a) The burden of proving that due notice was given is on the holder. Marks v. Boone, 24 Fla. 177. Where a note gives the holder an option to declare the whole sum due upon default in the payment of interest, he must allege and prove presentment and notice of dishonor in order that he may hold an indorser. Galbraith v. Shepard, 43 Wash. 698. The cashier of a bank, when informed of an outstanding check, after it had been placed in the mails for transmission to the drawee for payment, stated to the cashier of the bank remitting the check that it would be paid if the drawer had sufficient funds when the check was received, otherwise not: Held, that such information did not constitute a dishonor of the check, so as to require the holder to give notice to the indorser before payment had, in fact, been refused on the receipt of the check by the drawee. Citizens Bank v. First Nat. Bank (Iowa), 113 N. W. Rep. 481. The rule as to notice does not apply to guarantors. Brown v. Curtiss, 2 N. Y. 225; Allen v. Rightmere, 20 Johns. 365; Breed v. Hillhouse, 7 Conn. 523; Roberts v. Hawkins, 70 Mich. 566; Hungerford v. O'Brien, 37 Minn. 306. And proceedings against the maker are necessary only where there is a guaranty of collection. Brown v. Curtiss, supra. § 161. By whom given.-The notice may be given by or on behalf of the holder, or by or on behalf of any party to the instrument who might be compelled to pay it to the holder, and who, upon taking it up, would have a right to reimbursement from the party to whom the notice is given (a). (a) It was once held that no party could give a valid notice unless he was the holder at the time. Tindal v. Brown, 1 Term Rep. 167. But this doctrine, after having been followed in other cases (ex parte Barclay, 7 Ves. 597; Stewart v. Kennett, 2 Camp. 177), was expressly overruled in the case of Chapman v. Keane (3 Adol. & Ellis, 193), in which most of the previous decisions were reviewed. But notice by a stranger is not sufficient. Lawrence v. Miller, 16 N. Y. 235, 237; Chanoine v. Fowler, 3 Wend. 173; Brailsford v. Williams, 15 Md. 151. And a party who has been discharged by laches, and cannot in any event bring an action on the instrument, is deemed a stranger for this purpose. Harrison v. Ruscoe, 15 L. J. Exch. 110; 15 M. & W. 231. A drawee who refuses acceptance cannot give notice. Stanton v. Blossom, 14 Mass. 116. A firm executed two promissory notes payable to the order of a member of the firm, which notes were first indorsed by J. and then by the firm, and were delivered before maturity to the plaintiff bank. The notes not being paid at maturity, notice of protest was served upon the firm and with it, under separate cover, addressed to J in care of the firm, was a notice of protest directed to J, which the firm were requested to forward to him. The other member of the firm immediately mailed such notice of protest to J, at the latter's regular address for receiving mail in the city of New York:- Held, that while J was presumptively an accommodation indorser for the firm which made the notes, and while the firm could not, therefore, in their own behalf, give him a valid notice of protest, the firm could and did, on behalf of the plaintiff bank, and as its agents, give such a notice. Traders' Nat. Bank v. Jones, 104 App. Div. (N. Y.) 433. § 162. Notice given by agent.- Notice of dishonor may be given by an agent either in his own name (a) or in the name of any party entitled to give notice, whether that party be his principal or not (b). |