of notice of nonacceptance or nonpayment, the party entitled to notice is at once discharged, unless some excuse exist which exonerates the holder.3

This, then, is one of the most important branches of the law of negotiable paper.

4

§ 970a. Power of government to regulate notice.— In England, in France, and in other countries where there is no restraint by constitutional law upon the legislative department, interdicting its interference with contracts, it is within the power of that branch of the government to extend the time of payment of negotiable and other securities, and consequently to preserve the liability of a drawer or indorser without the preliminary steps respecting protest and notice being taken at the stipulated time of payment, according to the terms of the instrument. But in the United States, where the States are prohibited by the Federal Constitution from passing any law "impairing the obligation of contracts," it is not within the power of any State legislative body, whether a convention, or an ordinary representative assembly, by ordinance, resolution, or enactment, to alter contracts entered into; and as the condition of due notice is regarded as incorporated in the contract of the drawers and indorsers of negotiable paper, it would not be within their power to dispense with it, or change the time within which it must be given, so as to affect existing instruments. This view of the law in the United States was recently taken, and elaborately set forth by the Supreme Court of Appeals of Virginia, which held void an ordinance of the State convention, the effect of which was to dispense with demand, protest, and notice upon all checks, bills, and notes payable at a bank located in any city or town, if at the time of the maturity of such instruments, the town was occupied, invested, or access thereto interrupted by the public enemy; and also an Act of the General Assembly which extended the time for giving notice to ten days after the removal of the obstruction created by the presence of the enemy.

3. Rothschild v. Currie, 41 Eng. C. L. 43; Musson v. Lake, 4 How. 262; Merchants' State Bank v. State Bank of Philips, 94 Wis. 444, 69 N. W. 170; Patillo v. Alexander, 96 Ga. 60, 22 S. E. 646, citing text; Holmes v. Preston et al., 70 Miss. 152, 12 So. 202.

4. Rouquette v. Overman, L. R., 10 Q. B. 525 (1875).

5. Duerson's Admr. v. Alsop, 27 Gratt. 230 (1876). See also Farmers' Bank v. Gunnell, 26 Gratt. 144 (1875). See § 871, and Cook v. Googins, 126 Mass.

971. Failure to notify party entitled to notice discharges debt for which bill was drawn or indorsed. So absolute is the necessity for notice to an indorser, in order to charge him, that if a note has been indorsed to the holder in conditional payment of a debt, the failure to give notice to the indorser will not only discharge the indorser as a party to the note, but also a debtor upon the original consideration, even though it be secured by a mortgage or deed of trust. The note, then, is made an absolute discharge of his liability, and the indorsee must look solely to prior parties." And so in respect to the drawer of a bill given in conditional payment. The neglect to give notice to the drawer of a renewed bill not only discharges him from liability to pay that bill, but discharges him from liability to pay the prior bill, to satisfy which it was drawn ; and this although it be expressly agreed that the taking of such second bill shall not exonerate any of the parties to the first bill until actual payment."

SECTION II.

FORMAL AND ESSENTIAL ELEMENTS OF NOTICE.

§ 972. Notice may be verbal or written.-The notice need not be in writing; it is sufficient to be given verbally;10 but for precision and safety written notice is preferable. Verbal notice must be necessarily confined to those cases in which notice is directly

6. Shipman v. Cook, 1 Green, 251; Peacock v. Purcell, 14 C. B. (N. S.) 728. See also §§ 828, 1276, 1277; Benjamin's Chalmers' Digest, 180; Patillo v. Alexander, 96 Ga. 60, 22 S. E. 646, citing text; Carter et al. v. Odom, 121 Ala. 162, 25 So. 774.

7. Darrach v. Savage, 1 Show. 155 (1691); Bridges v. Berry, 3 Taunt. 130; Gale v. Walsh, 5 T. R. 239; Rogers v. Stephens, 2 T. R. 713; Allan v. Eldred, 50 Wis. 136; Batterton v. Roope, 3 Lea, 220; Rucker v. Hiller, 16 East, 43, 3 Campb. 217; Smith v. Miller, 43 N. Y. 171 (1870), 52 N. Y. 546 (1873); Edwards on Bills, 445. See supra, §§ 452, 828, and infra, § 1276.

8. Bridges v. Berry, 3 Taunt. 130, 3 Maule & S. 362; Chitty on Bills [*433], 488 [*444], 500. See § 1276.

9. Reid v. Coates, Bro. P. C.; Chitty on Bills [*434], 488.

10. Boyd's Admr. v. City Savings Bank, 15 Gratt. 501; Glascow v. Pratte, 8 Mo. 366; First Nat. Bank v. Ryerson, 23 Iowa, 508; Cuyler v. Stevens, 4 Wend. 506; Thompson v. Williams, 14 Cal. 160; Pierce v. Schader, 55 Cal. 406; Merritt v. Woodbury, 14 Iowa, 299; Bank v. Brooking, 2 Litt. 41; Gilbert v. Dennis, 3 Metc. (Mass.) 495; Byles on Bills (Sharswood's ed.), 411; Story on Notes, § 341: 1 Parsons on Notes and Bills, 477; Thompson on Bills, 336; 2 Ames on Bills and Notes, 432; Tindal v. Brown, 1 T. R. 167; Housego v.

given to the party in person, or is sent by a messenger to his place of business or residence. It seems that a verbal notice is less strictly construed than a written one, especially when its sufficiency is impliedly admitted by the party's response." Thus, where the holder's clerk told the drawer that the bill had been duly presented, and that the acceptor could not pay it, and the drawer replied that he would see the holder about it, this was held to be sufficient evidence to warrant the jury in finding that the fact of the dishonor of the note was sufficiently communicated to the drawer. 12

Mere knowledge of dishonor does not constitute notice.13 Notice signifies more; but when the fact of dishonor is communicated by one entitled to call for payment, it becomes notice, as it is then to be inferred that the intention is to hold the party notified responsible.14

973. As to the form of the notice, no particular phrase or form is necessary. The object of it is to inform the party to whom it is sent: 1, that the bill or note has been presented; 2, that it has been dishonored by nonacceptance, or nonpayment; and, 3, that the holder considers him liable, and looks to him for payment. And in framing the notice, all that is necessary to apprise the party of the dishonor of the instrument is, to intimate that he is expected to pay it.

In order that a notice should answer these conditions, and duly intimate dishonor to the drawer or indorser, it should, therefore, either expressly or by just and natural implication, comprise the following elements: (1) A sufficient description of the bill or note to ascertain its identity. (2) That it has been duly presented for acceptance or payment to the drawee, acceptor, or maker. (3)

Cowne, 6 L. J. Exch. 110; Crosse v. Smith, 1 Maule & S. 545; Martin v. Brown, 75 Ala. 448; First Nat. Bank v. Hatch, 78 Mo. 13; Stanley v. McElrath (Cal.), 25 Pac. 16, citing the text; Standard Sewing Machine Co. v. Smith, 1 Marv. 330, 40 Atl. 1117.

11. Byles on Bills [*264], 211, 212; Phillips v. Gould, 8 Car. & P. 355 (34 Eng. C. L.).

12. Metcalf v. Richardson, 11 C. B. 1011 (73 Eng. C. L.).

13. Juniata Bank v. Hale, 16 Serg. & R. 157; Bank of Old Dominion v. McVeigh, 29 Gratt. 559, 26 Gratt. 852; Brown v. Ferguson, 4 Leigh, 37; Story on Bills, 375.

14. Caunt v. Thompson, 7 C. B. 400; Miers v. Brown, 11 M. & W. 372; Tindal v. Brown, 1 T. R. 167.

That it has been dishonored by nonacceptance or nonpayment. (4) That the holder looks to the party notified for payment.

15

$974. Description of the bill or note dishonored. The notice should describe the bill or note in unmistakable terms; should state where the note is, that the party notified may find it; should state who the holder is, and who gives the notice, or at whose request it is given. Such, at least in theory, are the requisites of a proper notice; and a good business man should never neglect to comply with them. But the courts are not strict in requiring this thorough description of the dishonored instrument; and the requirements of the law are considered as satisfied by any description which, under all the circumstances of the case, so designates the bill or note as to leave no doubt in the mind of the party, as a reasonable man, what bill or note was intended." 16

§ 975. The object of the law in requiring a correct description of the bill or note to be given in the notice to the drawer or indorser is, that he may be put upon notice of the extent of his liability, and placed in possession of the material facts necessary to enable him to secure the liability of others over to him, and his own reimbursement upon payment of the note. The rule was not intended to subserve a technical purpose, but to promote substantial justice; and when it sufficiently appears that the drawer or indorser, at the time of receiving the notice, knew what particular piece of paper was referred to, and could not have been prejudiced by the failure to describe it, he should not be permitted to object that his information was not communicated in a

15. Bank of Old Dominion v. McVeigh, 29 Gratt. 558; Thompson v. Williams, 14 Cal. 162; Story on Notes, § 348.

16. Gilbert v. Dennis, 3 Metc. (Mass.) 495; Shelton v. Braithwaite, 7 M. & W. 436; 1 Parsons on Notes and Bills, 472, 474; Glicksman v. Earley (Wis.), 47 N. W. 272. Where sundry notes are given, payable in three, six, nine, and twelve months after date, and a contemporaneous written agreement with provision, "that if default be made in payment of any of the notes constituting a particular series, as above provided, all notes of subsequent series held by us, and all portion of our several claims then unpaid, shall be due and payable immediately, and the making of this agreement shall in no way prejudice our right to the immediate enforcement of our said claims." Held, that due notice of the dishonor of the first note to the indorsers thereon, is sufficient to hold and charge the indorsers upon all of the notes. Creteau v. Glass Co., 40 App. Div. 215, 57 N. Y. Supp. 1103; King v. Hurley, 85 Me. 525, 27 Atl. 463.

VOL. II-3

particular manner. 17 Accordingly, it has been held in California that where the holder verbally informed the indorser that "he had demanded payment of that note, and should endeavor to make him liable," the indorser was bound, although the note was neither produced nor described, as it appeared that he knew what note was referred to, and was in no respect misled.18 Describing a bill as having been left for collection by the indorser, when in fact it was left by the holder, would make no difference.19

§ 976. Circumstances may be regarded in testing sufficiency of description. Story says that "the description of the note should be sufficiently definite to enable the indorser to know to what one in particular the notice applies; for an indorser may have indorsed many notes of very different dates, sums, and times of payment, and payable to different persons, so that he may be ignorant, unless the description in the note is special to which it properly applies or which it designates." 20 This is undoubtedly the correct statement of the general rule, as to the best mode of preparing notice; but if it were intended to confine the parties to the mere face of the notice to ascertain its sufficiency, it would be clearly erroneous. For there is no doubt that the circumstances of each particular case, and the indorser's or drawer's knowledge of them, may be looked to, to ascertain whether or not the notice is sufficient. And if the drawer or indorser could not reasonably confound the bill or note mentioned in the notice with another, the notice would be sufficient, although meager in its description. And if full and ample in setting forth the terms of the note, it would make no difference that the notice left the indorser in doubt as to what instrument it referred to, it being his misfortune, if from his having indorsed several notes, a complete description of one of them, in every essential feature, does not enable him to identify it.2

17. Thompson v. Williams, 14 Cal. 162, language of Cope, J.

18. Thompson v. Williams, supra.

19. Billson v. Hodd, 5 Vict. R. 125.

20. Story on Promissory Notes, § 349; Cook v. Litchfield, 9 N. Y. 289; Glicksman v. Earley, 78 Wis. 223, 47 N. W. 272.

21. Hodges v. Shuler, 22 N. Y. 115 (1860). The defendant executed a number of notes in all respects alike, and distinguishable only by the numbers marked on the margin. It was held that the omission to state the number in a notice of nonpayment of one of them, did not vitiate it.