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ARTICLE I.

GENERAL PROVISIONS.

Section 1. Short title.

2. Definitions and meaning of terms.

3. Person primarily liable on instrument.
4. Reasonable time, what constitutes.

5. Time, how computed; when last day falls on
holiday.

6. Application of chapter.

7. Rule of law merchant; when governs.

Section 1. Short title.- This act shall be known as the negotiable instruments law (a).

(a) The law is confined to negotiable instruments. No attempt is made to deal with instruments which are non-negotiable; and they are not governed by the statute. In determining whether the rules of the statute will apply to any particular instrument, it is first necessary to ascertain whether such instrument is negotiable, according to the terms of the statute. In many instances the rules will be the same for instruments of either kind; but that is not because instruments which are non-negotiable are governed by the statute, but because the statute is a codification of common law rules which before its adoption applied equally to both classes of instruments. In other words, a negotiable instrument is governed by the statute and a non-negotiable instrument by the rules of the common law, though frequently these rules will be the same. For example, if a note drawn payable at a bank contains terms which render it non-negotiable, the provision of section 87, that "where the instrument is made payable at a bank it is equivalent to an order to the bank to pay the same for the account of the principal debtor thereon," would not apply; but the case would be governed by the rule of the common law, which is the same as the statutory rule in some of the States, but dif

ferent in others. This distinction must be carefully borne in. mind, or much confusion will result.

In a case arising under the laws of another State the court will not take judicial notice that the Negotiable Instruments Law has been enacted in that State; but, in the absence of evidence on the subject, will presume that the law of such State is the same as the common law before the enactment. Demelman v. Brazier, 193 Mass. 589. In construing the Act. however, the courts will notice the fact that its adoption was the result of an effort to bring about a uniform system of law respecting negotiable instruments. Rockfield v. First Nat. Bank of Springfield (Ohio) 83 N. E. Rep. 392; Downey v. O'Keefe, 26 R. I. 571; Thorpe v. White, 188 Mass. 333; Toole v. Crafts, 193 Mass. 110; Gibbs v. Guaraglia (N. J.) 67 Atl. Rep. 81; Baumeister v. Kuntz (Fla.) 42 South. Rep. 886; Farquahar Co. v. Higham (N. D.) 112 N. W. Rep. 557; Vander Ploeg v. Van Zuuk (Iowa) 112 N. W. Rep. 807. In Baltimore & Ohio R. R. Co. v. First National Bank of Alexandria (102 Va. 757, 758), it was said: "This opinion might be greatly prolonged by the citation of conflicting cases, and a discussion of the discordant views entertained by courts and text-writers of the greatest ability upon these questions; but the object, as we understand it, of the codification of the law with respect to negotiable instruments was to relieve the courts of this duty, and to render certain and unambiguous that which had theretofore been doubtful and obscure, so that the business of the commercial world, largely transacted through the agency of negotiable paper, might be conducted in obedience to a written law emanating from a source whose authority admits of no question."

§ 2. Definitions and meaning of terms.-In this act, unless the context otherwise requires:

"Acceptance" means an acceptance completed by delivery or notification.

"Action" includes counter-claim and set-off.

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Bank" includes any person or association of persons carrying on the business of banking, whether incorporated

or not.

"Bearer" means the person in possession of a bill or note which is payable to bearer.

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Bill" means bill of exchange, and note means negotiable promissory note.

"Delivery" means transfer of possession, actual or constructive, from one person to another.

"Holder" means the payee or indorsee of a bill or note, who is in possession of it, or the bearer thereof.

"Indorsement means an indorsement completed by

delivery.

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Instrument means negotiable instrument.

'Issue" means the first delivery of the instrument, complete in form, to a person who takes it as a holder.

"Person" includes a body of persons, whether incorporated or not.

"Value" means valuable consideration. "Written" includes printed, and writing includes

print.

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§ 3. Person primarily liable on instrument. The person primarily" liable on an instrument is the person who by the terms of the instrument is absolutely required to pay the same. All other parties are "secondarily " liable (a).

(a) This section is to be construed in connection with section 37, which provides that "no person is liable on the instrument whose signature does not appear thereon;" and also with section 211, which provides that "the drawee is not liable on the bill unless and until he accepts the same; " and with section 325, which provides that "the bank is not liable to the holder unless and until it accepts or certifies the check." These are not, by the terms of the instrument, absolutely required to pay the same until such acceptance or certification. In Rouse v. Wooten (140 N. C. 557, 558) it was said: "A surety comes squarely within the definition of a person whose liability is primary, for he is by the terms of the instrument absolutely required to pay the same." But obviously this would not be so in the case of one signing as

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guarantor," since he is liable only where there is default by the party whose obligation he has guaranteed.

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§ 4. Reasonable time, what constitutes. In determining what is a reasonable time" or an "unreasonable time," regard is to be had to the nature of the instrument, the usage of trade or business (if any) with respect to such instruments, and the facts of the particular case (a).

(a) Where the facts are doubtful or disputed, the question of reasonable time is a mixed question of law and fact. But when the facts are clear and undisputed, the question is one of law for the court. Commercial Nat. Bank v. Zimmerman, 185 N. Y. 310; German Am. Bank v. Mills, 99 App. Div. (N. Y.) 312; Prescott Bank v. Coverly, 7 Gray, 217; Gilmore v. Wilbur, 12 Pick. 124; Holbrook v. Burt, 22 Pick. 555; Northwestern Coal Co. v. Bowman, 69 Iowa, 153; Aymar v. Beers, 7 Cow. 705; Tomlinson Carriage Co. v. Kinsella, 31 Conn. 273. See note to section 131.

§ 5. Time, how computed; when last day falls on holiday. Where the day, or the last day, for doing any act herein required or permitted to be done falls on Sunday or on a holiday, the act may be done on the next succeeding secular or business day (a).

(a) As to the mode of computing time, see the New York Statutory Construction Law (§§ 26, 27).

§ 6. Application of chapter. The provisions of this act do not apply to negotiable instruments made and delivered prior to the passage hereof (a).

(a) The time when the statute was to take effect is provided for by section 341. In New York this was October 1st, 1897. But while the law did not go into effect until then, its application is not limited to instruments made after that date. An instrument made and delivered after the passage of the act was equally within its operation after October 1st. For example, if a note payable four months after date was dated and delivered on July 15th, 1897, it must, at maturity, have been presented for payment in the manner prescribed by the statute; and if dishonored, the

statutory rules as to giving notice of dishonor must have been complied with. But in the case of a note dated and delivered April 15th, 1897, and payable six months after date, none of the provisions of the statute apply.

7. Law merchant; when governs. In any case not provided for in this act the rules of the law merchant shall govern (a).

(a) It is to be observed that the rules governing in such cases are not those which existed by virtue of a statute. All prior statutes upon the subject of bills and notes are repealed; and where a case arises which is not provided for in the Negotiable Instruments Law, it is not to be determined by resort to any of the former statutes, but by reference to the rules of the law merchant. As to the presumption concerning the law of another State, see Demelman v. Brazier, 193 Mass. 588. In the late case of Columbian Banking Co. v. Bowen (114 N. W. Rep. 451) it was said by the Supreme Court of Wisconsin: "Counsel for appellant have presented quite an extended argument, referring to many authorities, as to the law antedating and independently of the negotiable instrument statute (chapter 356, p. 681, Laws 1899) to support the proposition, that appellant was released from liability on the instrument in question, because of the period intervening between his parting therewith and the presentation thereof to the drawee for payment. Such statute was enacted for the purpose of furnishing, in itself, a certain guide for the determination of all questions covered thereby relating to commercial paper, and, therefore, so far as it speaks without ambiguity as to any such question, reference to case law as it existed prior to the enactment is unnecessary and is liable to be misleading. The negotiable instrument law is not merely a legislative codification of judicial rules previously existing in this state making that written law, which was before unwritten. It is, so far as it goes, an incorporation into written law of the common-law of the state, so to speak, the law-merchant generally as recognized here, with such changes or modifications and additions as to make a system harmonizing, so far as practicable, with that prevailing in other states. That it contains some quite material changes in previous rules governing commercial paper we have had occasion heretofore to point out. Hodge v. Smith, 130 Wis. 326; Aukland v. Arnold (Wis.) 111 N. W. Rep. 212."

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