the drawee. In no other case is presentment for acceptance Except as otherwise provided by the Statute, the holder of a bill required as just stated to be presented for acceptance must present it for acceptance or negotiate it within Failing to present. reasonable time; failing which, the drawer and all indorsers are discharged.2 At what time to be made. Presentment for acceptance must be made at a reasonable hour, on a business day, and before the bill is overdue, to the drawee or some one authorized to accept or refuse acceptance on his behalf." If addressed to two or more not partners the bill must be presented for acceptance to all of them, unless one is authorized to act for the rest, when presentment to him alone will suffice. Where the drawee is dead, presentment may be made to his personal representative. If the drawee has been adjudged bankrupt or insolvent, or has made an assignment for creditors, presentment may be made to him or to his trustee or assignee. 4 A bill may be presented for acceptance at any time when a negotiable instrument may be presented for payment. When (by the New York Statute) Saturday is not otherwise a holiday, presentment for acceptance may be made before noon thereof." A bill is dishonored by non-acceptance (1) when duly presented for acceptance, such acceptance as the Statute requires is What is dis- refused or cannot be obtained; or (2) where presentment for acceptance is excused and the bill is honor. not accepted." What to be done If a bill duly presented for acceptance is not accepted within the time prescribed, the person presenting it must treat the bill as dishonored or lose his right of recourse against the drawer and indorsers. If the bill is dishonored by non-acceptance immediate recourse may be had against the drawer and indorsers, and no presentment for payment is necessary." CHAPTER VIII. INDORSER'S CONTRACT (INCLUDING DRAWER'S, OF THE SAME TENor). § 1. DRAWER AND INDORSER: DEFINITION. In accordance with what was said in the chapter relating to the Drawer's Contract, all that part of the drawer's contract which is of the same tenor as the contract of an Subject for indorser will be considered under the present head, consideration. and that too without further mention, except so far as may be needful, of the drawer. That is to say, all that hereafter appears in regard to the indorser's contract will apply equally to the contract of drawer; what is peculiar to the drawer's contract having been considered in Chapter VII. 'Indorser' therefore should be taken to include drawer, in this chapter and others, so far as the contracts of the two are alike. 2 What consti Indorsement is an act whereby a person, not being acceptor or quasi-acceptor, surety or guarantor proper, writes his name upon the back or face1 of a duly executed, negotiable bill of exchange, promissory note, or cheque, with or tutes indorsewithout terms of contract or liability, according to the law merchant, or writes an equivalent contract on a separate paper, annexed to the bill, note, or cheque; to which act the 1 Shain v. Sullivan, 106 Cal. 208. 8 ment. 2 A negotiable cheque may be indorsed, with the usual consequences. Keene v. Beard, 8 C. B. N. s. 372; Shaw v. Jacobs, 89 Iowa, 713, 717; Doppelt v. National Bank, 175 Ill. 432; Gage Hotel Co. v. Union Bank, 171 Ill. 531. Thus, temporarily, a cheque may be made an instrument of credit, without certification. 3 N. I. L. § 38: The indorsement must be written on the instrument itself, or upon a paper attached thereto. The signature of the indorser, without additional words, is a sufficient indorsement.' If written on a paper annexed to the instrument, such paper is called an 'allonge.' drawing of a bill of exchange is, for the purpose now in hand, an equivalent. It has indeed been said that an unnegotiable instrument (a promissory note) may be indorsed by the payee so as to create the same rights and duties between the payee and the 'indorsee' as if the instrument were negotiable.' But that may well be doubted. The law merchant, by which alone such rights and duties are created, knows nothing of indorsement of non-negotiable paper. The so-called indorsement if followed by delivery would pass the title; but it would pass the title as of the common law, and nothing more, apart from statute or special agreement. In other words it would merely be evidence of a sale and assignment of the instrument.2 § 2. WHO MAY OR MUST INDORSE. Indorsement may be made by the holder of the instrument, or by one having no interest in it. When by the holder indorsement is an order upon the maker, drawee, or acceptor to pay the sum named to the next holder named, or to his order, or the bearer, according to its form, and has therefore a similar effect to drawing a bill of exchange. When done by one having no interest in the paper, indorsement merely adds security to the instrument. Instruments payable to order. If the instrument is on its face, or by indorsement, payable to order, indorsement by the holder is necessary to pass the title by the law merchant; that is, to give to the next holder legal ownership and a corresponding right of action upon the instrument. If the instrument is on its face, or by indorsement, payable to bearer, indorsement is not necessary to pass the title. The instrument in such a 1 Story, Promissory Notes, § 128. 2 There appears to be no authority for the statement in Story. 8 The maker of a note payable to his own order must himself indorse it, to pass the title. Ewan v. Brooks-Waterfield Co., 55 Ohio St. 596. But the indorsement will not affect his liability as maker. Id. An instrument payable to ‘—————— order' may be indorsed, so as to pass the title, by the maker or drawer. Chamberlain v. Young, 1893, 2 Q. B. 206. case passes by delivery; and where the instrument itself is payable to bearer, that will still be true though a special indorsement (as Pay to the order of A') be written upon it. But the special indorser will be liable to those only who make title through his indorsement.' Unnecessary indorsements may be struck out. If the instrument is on its face payable to a person named, without words of negotiability, there can be no proper indorsement of it; 8 but if on its face there are words of negotiability, it may be indorsed after an indorsement making it payable to a person named, without addition of the words or order' or the like. Where indorsement is required to pass the (legal) title, transfer without indorsement, though with full intent to pass title, is no more than an assignment, and passes only an equitable title to the instrument. Standing on such a title, the new holder can have no better rights than the person from whom he took the paper. For example: A is payee of a note payable to his order, but illegal in his hands. He transfers the paper to B for value and without notice, but without indorsement. The note is invalid in B's hands.5 By the law merchant, apart from statute, indorsement need not, it has been held, be in the name of the indorser; enough 1 N. I. L. § 47. 2 Id. § 55; Middleton v. Griffith, 57 N. J. 442; Dugan v. United States, 3 Wheat. 172. 8 Ante, p. 84. 4 So of an assignment in fact, by separate paper. Gaylord v. Nebraska Bank, 54 Neb. 104. 5 Lancaster Bank v. Taylor, 100 Mass. 18; Goshen Bank v. Bingham, 118 N. Y. 349; Jenkinson v. Wilkinson, 110 N. C. 532; Slater v. Foster, 62 Minn. 150; Beard v. Dedolph, 29 Wis. 136; N. I. L. § 56. But if the omis sion of indorsement was due to mistake, the transferee could compel indorsement by suit in equity. Brown v. McHugh, 35 Mich. 50, 52. And if that proceeding were had before maturity and before knowledge of the invalidity of the paper, the result would be to give the transferee a perfect title, as if there had been an indorsement in the first place. Lancaster Bank v. Taylor, supra. After maturity it would be too late, according to that case, and also according to Whistler v. Forster, 14 C. B. N. s. 248. See Goshen Bank v. Bingham, supra, and note to N. I. L. § 56. But see Beard v. Dedolph, supra. Name of indorser. that it is his act, intended as indorsement.1 For example: The payee of a bill of exchange payable to his order writes upon the bill 1, 2, 8,' for a substitute for his signature as indorser, and transfers the instrument to the plaintiff. The act is held to be indorsement. Again: The wife of the payee in such a case, acting as the authorized agent of the payee, writes her own name upon the note. That is deemed indorsement by the payee. When indorsement is required, in order to pass title, the act must be done by him who has the legal title, though the entire Holder of legal beneficial interest be in another. Thus, one to title to indorse. whose order as trustee a promissory note is payable must indorse it, to pass the title to another; indorsement by the cestui que trust would pass the equitable title only, and payment could not be enforced in favor of the indorsee. So where paper is made payable to A, to the order of B, the meaning is that it is payable to A only upon the order of B; hence, B must indorse it in order to give to A the full right of legal ownership. Again, upon the death of the holder of paper the legal title passes to his executor if he left a will, or to his administrator if he died intestate; and this though the deceased gave the 1 It must be the act of the owner, unless it is an accommodation indorsement; indorsement of the owner's name by another person of the same name, without authority, would not pass the title. It would be forgery. Beattie v. National Bank, 174 Ill. 571; Cochran v. Atchison, 27 Kans. 728. 2 Brown v. Butchers' Bank, 6 Hill, 443. In case of a mistake in the name or spelling of the name of the payee or indorsee such person may indorse in the name or spelling given, and add, if he think fit, his proper signature. N. I. L. § 50. 3 Stevens v. Beals, 10 Cush. 291. This is an exception to the fundamental rule that the instrument itself should disclose the parties and their rights, so that external evidence need not be resorted to. Such indorsements would certainly be contrary to the custom, and in sound theory should be good only where the peculiar indorsement is explained on the instrument itself. The truth appears to be that 'indorsements' like those of the text have been interpreted as if the transaction were one of the common law, an essentially unsound view. So he who has the legal title is the person to sue upon the instrument. Berney v. Steiner, 108 Ala. 111. |