party in interest which would not have occurred or might possibly have been avoided had presentation and demand of payment been duly made by the collecting bank or by some suitable agent selected by it for that purpose. No such circumstances appear in this case. So far as appears from the record, the drawee bank was and is entirely solvent, the drawer had funds on deposit sufficient to pay the checks and the only reason why they were not honored was the notice received from the drawer to stop payment. The bank acted promptly, protested the notes at once, and gave due notice thereof to the payee and the several indorsers. The parties stand precisely in the same position which they would have occupied had some third person presented the checks over the bank's counter, and been met with the same refusal to pay. The notary who made the demand and protest was for the time being the agent of the transmitting bank, and we cannot see how such presentation and demand by him was any less efficient to protect such bank and all prior indorsers than would be the case had they been made by some other person who had been expressly authorized and employed to perform that service.

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Error is assigned upon the ruling of the trial court refusing to permit the appellant to testify to his want of knowledge of the custom of banks with respect to the manner of transmitting checks for payment. To this exception we think it a sufficient answer that want of knowledge by one who negotiates and indorses a check, as to the usage of banks relating to its presentation for payment, cannot prevent the application of the statute which makes such usage a factor in determining whether due diligence has been shown. So, also, it may be said that the usage or custom here relied upon is not one of mere private or local character, but one of general observance in the banking business and as such will be presumed to be known by all persons dealing with such institutions. * * * Appellant knew that the checks were negotiable in character and as such were liable to pass from one indorser to another in their transmission to the bank of payment, and when he negotiated them he must be held to have done so with reference to the usual and ordinary manner in which such business is transacted, and to have consented to presentation, demand of payment being made in the manner which generally prevails among prudent, well-conducted banks. Had he negotiated them to a merchant or farmer or other individual who in turn negotiated them to the appellee bank, appellant being sued upon his indorsement would not be heard to deny knowledge of the usage of banks with respect to such business, and we cannot see that such want of knowledge would be of any more avail in a case like the present one where he indorses the paper direct to the bank. His contract, implied from his indorsement, was that if, upon presentation and demand within a reasonable time, the checks were dishonored, and due notice given thereof, he would make them good to his indorsee, and it can make no difference whether he did or did not understand what in law would be held a reasonable time for such presentment. Other questions argued are ruled by those already discussed, and we need not further consider them. Of course, we are not to be understood as holding that banks are at liberty to adopt any usage or manner of business they see fit, and escape all imputation of negligence for resulting losses to those with whom they may deal. It is reasonable to hold that checks must go forward for presentation with due regard to the interest of the drawers and indorsers, and if

banks adopt unreasonably circuitous routes and methods whereby loss results they should bear the burden, but, ordinarily, the natural caution which is engendered by self-interest will be sufficient to insure promptness and dispatch in the discharge of duties of this nature. Where, however, there is reasonable ground upon which to base the charge of negligence, the case should go to the jury under proper instructions.

In the instant case we find nothing to support a finding of this nature, and the judgment of the district court is affirmed.

SECTION 4.-TIME OF PRESENTMENT OF CHECKS IN · ORDER TO CHARGE THE DRAWER

The preceding section shows that the time within which a demand bill of exchange must be presented to the drawee for payment in order to charge the drawer of a bill of exchange other than. a check and the indorsers upon all forms of bills of exchange, including checks, is the same—a reasonable time after the last negotiation. A special rule exists as regards the time within which a check must be presented for payment in order to charge the drawer. This result is brought about by the following sections: N. I. L. Section 70. * * * Except as herein otherwise provided, presentment for payment is necessary in order to charge the drawer and indorsers.

N. I. L. Section 71. * in the case of a bill of exchange, presentment for payment will be sufficient if made within a reasonable time after the last negotiation thereof.

N. I. L. Section 185. A check is a bill of exchange drawn on a bank payable on demand. Except as herein otherwise provided, the provisions of this act applicable to a bill of exchange payable. on demand apply to a check.

Sections 70 and 71 apply to drawers of bills of exchange other than checks, indorsers of bills of exchange including indorsers of checks.

Section 186 contains a special rule applicable only to drawers of checks. It is as follows:

A check must be presented for payment within a reasonable time after its issue, or the drawer will be discharged from all lia-bility thereon to the extent of the loss caused by delay.

The nature of the liability of the drawer of a check is substantially different from that of the drawer of other forms of bills of exchange. A failure to make a due presentment to the drawee of a bill of exchange other than a check works an absolute discharge of all liability of the drawer upon the instrument. In the case of a check, failure to make a due presentment upon the drawee bank does not work an absolute discharge of the liability of the drawer, for in no case will a drawer of a check be discharged to an extent greater than the loss caused by the holder's delay in making presentment; that is, the drawer of a check, when sued by the holder,

who has failed to make a due presentment, will be liable for the full amount in spite of such failure of the holder to make a due presentment. The only way for the drawer of a check to avoid or cut down his liability to the holder of his check is to show that he (the drawer) lost by reason of the holder's failure to present to the drawee. In the case of the drawer of any other form of a bill of exchange, the drawer avoids all liability on the instrument by merely showing failure of the holder to make due presentment. He is not required to show affirmatively that he actually sustained a loss because of the delay. The effect, therefore, is virtually to make the liability of this drawer of the check an absolute liability, instead of a conditional liability; at least this should be so, and would be so, were it not for the unfortunate wording of section 89, which provides that a failure to give due notice of dishonor absolutely discharges the drawer of all bills of exchange, and this section includes drawers of checks.

Under what circumstances will the drawer of a check be able to show that he sustained a loss arising from the holder's failure to present? Suppose the drawer delivers his check to the payee, and the payee or some indorsee holds the check for several weeks, months, or even years, just so long that the statute of limitations has not run, and at this late date the holder presents, and he finds that the drawer now has no funds in the drawee bank. In the meantime the drawer has either drawn out his deposit or checked. it out to creditors. The holder sues the drawer. May the drawer defeat liability by claiming that, if the check had been presented within a reasonable time after issue and while he still had funds in the bank, the check would have been paid? Most certainly not. The drawer here cannot show any loss to him caused by the holder's delay, for the simple reason that the drawer himself used all the funds then standing to his credit in the drawee bank.

About the only case where the drawer is able to show an actual loss arising from the failure of the holder to present the check to the drawee bank for payment within a reasonable time after its issue is to show that the drawee bank became insolvent. This is a real loss to the drawer. If the check was delivered before the bank closed, upon presentment, the check would have been paid. If the holder waited an unreasonable time after issue before presenting, and if in the meantime the drawee became insolvent, the drawer will be discharged to the extent of his loss. Note that the "reasonable time" begins to run from the date of issue of the check, not from the date of the last negotiation.

To illustrate: The drawer delivers his check to the payee at 9 o'clock Monday morning. The drawer then has funds in the bank sufficient to cover the check. The payee or any indorsee has a reasonable time from 9 o'clock Monday within which to present. During the running of this reasonable time the holder runs no risk; that is, if the bank closed its doors at 10 o'clock Monday, the holder could still recover from the drawer the full amount of the

check. Let X equal the period of time which is here called reasonable. If, during the period X, the drawee becomes insolvent, and passes into the hands of a receiver, and the holder has not presented, the holder may recover the full amount from the drawer. But, if the doors of the bank were closed in accordance with the law at just one minute after period X expired and the holder had not yet presented, then the holder cannot recover the full amount from the drawer, because the drawer has sustained a loss arising from the delay of the holder to present while period X was running. How much will the holder recover from the drawer? The holder will recover that proportion of the face of the check which the total dividends paid by the receiver of the insolvent bank to the drawer bore to the drawer's deposit as the deposit stood at the moment period X expired. For example, suppose at the moment the drawer had on deposit $1,000, and that the check was drawn. for $100, and suppose, further, that the receiver of the insolvent. bank paid a total dividend to the drawer of $500, then the holder of this check would recover from the drawer just $50. The loss caused by the delay was $50. The next case illustrates this rule and lays down the test for determining how many hours or days are to be included in the period allowed to the holder to present.

GORDON v. LEVINE,

(Supreme Judicial Court of Massachusetts, 1907. 194 Mass. 418, 80 N. E. 505, 10 L. R. A. [N. S.] 1153, 120 Am. St. Rep. 565, 10 Ann. Cas. 1119.) Action by Samuel R. Gordon against Max Levine. Judgment in favor of plaintiff, and defendant brings exceptions.

MORTON, J. This is an action upon a check by the plaintiff as payee against the defendant as drawer. The check was dated December 30, 1905, though there was some question whether it was actually drawn and delivered on that day, or the 31st.. The plaintiff is described in the writ as of Chelsea and the defendant as of Boston. The bank on which the check was drawn was in Boston and the check was drawn and delivered there. The plaintiff testified that the defendant asked him not to present the check for a couple of days as he did not have sufficient funds to meet it, but that he presented it Monday morning and was told there were no funds, and that he went to see the defendant at his place of business but did not see him. The plaintiff also testified that in the afternoon of the same day he passed the check to one Saievitz in payment of a bill which he owed him receiving the balance in cash. And there was testimony tending to show that on the next day Saievitz indorsed it to one Rootstein who deposited it on January 4th, in the Faneuil Hall National Bank, Boston, for collection, and that that bank's messenger went with it on the afternoon of the following day, Friday, January 5th, to the bank on which it was drawn, the Provident Securities & Banking Company, and found its doors closed. The plaintiff also testified that he told the defendant the bank had failed and that the defendant promised to make the check good. The defendant denied this and also the plaintiff's statement that he had asked the plaintiff not to present the check for a couple of days, and

introduced testimony tending to show that at the time when the check was drawn he had sufficient funds on deposit at the bank to meet it, and continued to have down to the failure of the bank. It was admitted that the bank failed Friday, January 5th, and the defendant introduced evidence tending to show that he had received no payment or dividend on account of his deposit. There was a verdict for the plaintiff and the case is here on exceptions by the defendant to the refusal of the court to give certain instructions that were requested and to the admission of certain testimony.

The defendant, in substance, asked the court to instruct the jury that a check must be presented for payment in a reasonable time and that in order to have been presented within a reasonable time the check in suit should have been presented before the close of banking hours on Monday; that its transfer to successive holders would not extend the time for presentment and a presentment on January 5th would not be within a reasonable time and if the bank failed in the meantime and the defendant sustained a loss in consequence of delay in presenting the check, he would be discharged from liability to that extent. The court gave in part the instruction thus requested, and refused it in part. It instructed the jury that the check must have been presented for payment within a reasonable time, and that if it was presented on Monday that would be within a reasonable time. But it refused to instruct the jury that the transfer to successive holders would not extend the time, or that a presentment on Friday was not within a reasonable time. On the contrary, it instructed them that "the court had occasion to consider that in one case in this commonwealth (referring. we assume to Taylor v. Wilson, 11 Metc. 44, 45 Am. Dec. 180), and it is there stated that a check may also be passed from hand to hand and a reasonable time is allowed to each party receiving the same to present it for payment." And after calling their attention to the provisions of the statute * * * that in considering what a reasonable time is "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 each particular case," left it to them to determine whether the check was presented on Monday, or, if they were not satisfied that it was, then to determine whether if it passed from hand to hand and each one had a reasonable time to present it the presentment on Friday was within a reasonable time. For aught that appears the jury may not have been satisfied that the check was presented on Monday and may have found for the plaintiff on the ground that the presentment on Friday was within a reasonable time. The question is therefore distinctly raised whether a presentment on Friday could have been found to be within a reasonable time.

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The general rule is as was stated by the court and as is provided in the Negotiable Instruments Act * that a check must be presented for payment within a reasonable time after it is issued. If it is not so presented and the drawer sustains a loss by reason of the failure of the drawee he will be discharged from liability to the extent of such loss, continuing liable otherwise. This results from the nature of the instrument, which, though defined in the Negotiable Instruments Act as "a bill of exchange drawn on a bank payable on demand," is intended for immediate use ** and not to circulate as a promissory note, and it consequently would be unjust to subject the drawer to the loss, if any, resulting from failure to pre

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