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SEC. 1362. NOT HELD IN DUE COURSE, PAPER IS SAME AS NONNEGO- Not held in due TIABLE. In the hands of any holder other than a holder in due course, course, paper is same as nonnegotia negotiable instrument is subject to the same defenses as if it were able. nonnegotiable. But a holder who derives his title through a holder in due course, and who is not himself a party to any fraud or illegality affecting the instrument, has all the rights of such former holder in respect of all parties prior to the latter.

course.

SEC. 1363. WHAT PRESUMPTION WHEN TRANSFEREE'S TITLE SHOWN Who deemed DEFECTIVE. Every holder is deemed prima facie to be a holder in due holder in due course; but when it is shown that the title of any person who has negotiated the instrument was defective, the burden is on the holder to prove that he or some person under whom he claims acquired the title as a holder in due course. But the last-mentioned rule does not apply in favor of a party who became bound on the instrument prior to the acquisition of such defective title.

SEC. 1364. LIABILITY OF MAKER.-The maker of a negotiable instrument, by making it, engages that he will pay it according to its tenor, and admits the existence of the payee and his then capacity to indorse. SEC. 1365. LIABILITY OF DRAWER. The drawer, by drawing the instrument, admits the existence of the payee and his then capacity to indorse, and engages that on due presentment the instrument will be accepted and paid, or both, according to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder or to any subsequent indorser who may be compelled to pay it. But the drawer may insert in the instrument an express stipulation negativing or limiting his own liability to the holder.

Liability of

maker.

Liability of drawer.

SEC. 1366. LIABILITY OF ACCEPTOR.-The acceptor, by accepting the Liability of instrument, engages that he will pay it according to the tenor of his acceptor. acceptance, and admits

First. The existence of the drawer, the genuineness of his signature, admission. and his capacity and authority to draw the instrument; and

Second. The existence of the payee and his then capacity to indorse. SEC. 1367. IRREGULAR INDORSEMENT.-A person placing his signature upon an instrument otherwise than as a maker, drawer, or acceptor is deemed to be an indorser, unless he clearly indicates by appropriate words his intention to be bound in some other capacity.

When person deemed indorser.

SEC. 1368. SIGNATURE IN BLANK BY STRANGER. Where a person not Signature in otherwise a party to an instrument places thereon his signature in blank blank by stranger. before delivery he is liable as indorser in accordance with the following rules:

First. If the instrument is payable to the order of a third person he is liable to the payee and to all subsequent parties.

Second. If the instrument is payable to the order of the maker or drawer, or is payable to bearer, he is liable to all parties subsequent to the maker or drawer.

Third. If he signs for the accommodation of the payee he is liable to all parties subsequent to the payee.

-rules of liability.

Warranty where

SEC. 1369. NEGOTIATING BY DELIVERY OR QUALIFIED INDORSEMENT. Every person negotiating an instrument by delivery or by a negotiation by dequalified indorsement warrants

First. That the instrument is genuine and in all respects what it purports to be.

Second. That he has a good title to it.

Third. That all prior parties had capacity to contract.

Fourth. That he has no knowledge of any fact which would impair

the validity of the instrument or render it valueless.

But when the negotiation is by delivery only the warranty extends

in favor of no holder other than the immediate transferee.

The provisions of subdivision three of this section do not apply to

livery.

Liability of general indorser.

Indorsing paper negotiable by delivery.

In what order indorsers liable.

Negotiations by

agent.

Presentment for payment.

or.

-not necessary

persons negotiating public or corporate securities other than bills and notes.

SEC. 1370. WHAT INDORSER WARRANTS TO SUBSEQUENT HOLDERS.Every indorser who indorses without qualification warrants to all subsequent holders in due course—

First. The matters and things mentioned in subdivisions one, two, and three of the next preceding section; and,

Second. That the instrument is at the time of his indorsement valid and subsisting.

And, in addition, he engages that on due presentment it shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder or to any subsequent indorser who may be compelled to pay it.

SEC. 1371. INDORSING PAPER NEGOTIABLE BY DELIVERY.- -Where a person places his indorsement on an instrument negotiable by delivery he incurs all the liabilities of an indorser.

SEC. 1372. IN WHAT ORDER INDORSERS LIABLE. As respects one another indorsers are liable prima facie in the order in which they indorse, but evidence is admissible to show that as between or among themselves they have agreed otherwise. Joint payees or joint indorsees who indorse are deemed to indorse jointly and severally.

SEC. 1373. NEGOTIATION BY AGENT.-Where a broker or other agent negotiates an instrument without indorsement he incurs all the liabilities prescribed by section thirteen hundred and sixty-nine of this act, unless he discloses the name of his principal and the fact that he is acting only as agent.

SEC. 1374. PRESENTMENT FOR PAYMENT, WHERE TO BE MADE.-Presentment for payment is not necessary in order to charge the person on principal debt- primarily liable on the instrument, but if the instrument is by its terms payable at a special place and he is able and willing to pay it there at maturity, such ability and willingness are equivalent to a -drawer and in- tender of payment upon his part. But, except as herein otherwise provided, presentment for payment is necessary in order to charge the drawer and indorsers.

dorsers.

When to be made.

What is suffi

SEC. 1375. WHEN TO BE MADE.-Where the instrument is not payable on demand presentment must be made on the day it falls due. Where it is payable on demand presentment must be made within a reasonable time after its issue, except that 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.

SEC. 1376. WHAT IS SUFFICIENT.-Presentment for payment to be cient presentment. sufficient must be made—

Place of presentment.

First. By the holder or by some person authorized to receive payment on his behalf.

Second. At a reasonable hour on a business day.

Third. At a proper place, as herein defined.

Fourth. To the person primarily liable on the instrument, or, if he is absent or inaccessible, to any person found at the place where the presentment is made.

SEC. 1377. Presentment for payment is made at the proper place— First. Where a place of payment is specified in the instrument and it is there presented.

Second. Where no place of payment is specified, but the address of the person to make payment is given in the instrument and it is there presented.

Third. Where no place of payment is specified, and no address is given and the instrument is presented at the usual place of business or residence of the person to make payment.

Fourth. In any other case if presented to the person to make pay

ment wherever he can be found or if presented at his last known place of business or residence.

Instrument

SEC. 1378. The instrument must be exhibited to the person from whom payment is demanded, and when it is paid must be delivered up must be exhibited, to the party paying it.

SEC. 1379. Where the instrument is payable at a bank presentment Where the in for payment must be made during banking hours, unless the person to strument, payable make payment has no funds there to meet it at any time during the at a bank. day, in which case presentment at any hour before the bank is closed

on that day is sufficient.

SEC. 1380. Where the person primarily liable on the instrument is Where principal dead, and no place of payment is specified, presentment for payment debtor is dead. must be made to his personal representative, if such there be, and if, with the exercise of reasonable diligence, he can be found.

Persons liable as

SEC. 1381. Where the persons primarily liable on the instrument are liable as partners, and no place of payment is specified, present- partners. ment for payment may be made to any one of them, even though there has been a dissolution of the firm.

SEC. 1382. Where there are several persons, not partners, primarily Presentment to liable on the instrument, and no place of payment is specified, present- joint debtors. ment must be made to them all.

When not re

drawer.

SEC. 1383. WHEN NOT REQUIRED TO CHARGE DRAWER OR INDORSER. Presentment for payment is not required in order to charge the drawer quired to charge where he has no right to expect or require that the drawee or acceptor will pay the instrument.

SEC. 1384. Presentment for payment is not required in order to charge an indorser where the instrument was made or accepted for his accommodation and he has no reason to expect that the instrument will be paid if presented.

-indorser.

Excuses for fail.

SEC. 1385. EXCUSES FOR FAILURE.-Delay in making presentment for payment is excused when the delay is caused by circumstances ure to present. beyond the control of the holder and not imputable to his default, misconduct, or negligence. When the cause of delay ceases to operate presentment must be made with reasonable diligence.

SEC. 1386. WHEN DISPENSED WITH.-Presentment for payment is dispensed with

First. Where, after the exercise of reasonable diligence, presentment as required hereby can not be made.

Second. Where the drawee is a fictitious person.
Third. By waiver of presentment, express or implied.

SEC. 1387. WHEN INSTRUMENT IS DISHONORED. The instrument is dishonored by nonpayment when

First. It is duly presented for payment and payment is refused or can not be obtained; or,

Second. Presentment is excused and the instrument is overdue and unpaid.

SEC. 1388. RIGHT OF ACTION ON NONPAYMENT.-Subject to the provisions hereof, when the instrument is dishonored by nonpayment an immediate right of recourse to all parties secondarily liable thereon accrues to the holder.

When presentment dispensed with.

When instrument is dishonored by nonpayment.

Liability of persecondarily

son
liable.

Time of matur

SEC. 1389. WHEN NEGOTIABLE INSTRUMENT IS PAYABLE.-Every negotiable instrument is payable at the time fixed therein, without ity. grace. When the day of maturity falls upon Sunday or a holiday the instrument is payable on the next succeeding business day. Instruments falling due on Saturday are to be presented for payment on the next succeeding business day, except that instruments payable on demand may, at the option of the holder, be presented for payment before twelve o'clock noon on Saturday when that entire day is not a holiday. The following days in each year, namely, the first day of Holidays. January, commonly called New Year's Day; the twenty-second day of

February, known as Washington's Birthday; the Fourth of July; the thirtieth day of May, commonly called Decoration Day; the first Monday in September, known as Labor's Holiday; the twenty-fifth day of December, commonly called Christmas Day; every Saturday, after twelve o'clock noon; any day appointed or recommended by the President of the United States as a day of public fasting or thanksgiv ing, and the day of the inauguration of the President, in every fourth year, shall be holidays in the District within the meaning of this sec --falling on Sun- tion. Whenever any day set apart as a legal holiday shall fall on Sun day. day, then and in such case the next succeeding day shall be a holiday: and in such cases and in all cases in which a Sunday and a holiday shall fall on successive days all commercial paper falling due on any of said days shall, for all purposes of presenting for payment or acceptance, be deemed to mature and be presentable for payment or acceptance on the next secular or business day succeeding.

Time, how computed.

Where instru

SEC. 1390. Where the instrument is payable at a fixed period after date, after sight, or after the happening of a specified event the time of payment is determined by excluding the day from which the time is to begin to run and by including the date of payment.

SEC. 1391. Where the instrument is made payable at a bank it is ment payable at a equivalent to an order to the bank to pay the same for the account of the principal debtor thereon.

bank.

Payment due course, what con

stitutes.

Notice of dishonor.

SEC. 1392. Payment is made in due course when it is made at or after the maturity of the instrument to the holder thereof in good faith and without notice that his title is defective.

SEC. 1393. NOTICE OF DISHONOR.-Except as herein otherwise provided, when a negotiable instrument has been dishonored by nonac-to whom given. ceptance 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.

-by whom.

-given by an agent.

-given on behalf of the holder.

-given by party entitled, etc.

Agent may give notice.

When notice sufficient.

Form of notice.

SEC. 1394. 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. SEC. 1395. Notice of dishonor may be given by an agent, either in his own name or in the name of any party entitled to give notice, whether that party be his principal or not.

SEC. 1396. FOR WHOSE BENEFIT.- -Where notice is given by or on behalf of the holder it inures for the benefit of all subsequent holders and all prior parties who have a right of recourse against the party to whom it is given.

SEC. 1397. Where notice is given by or on behalf of a party entitled to give notice it inures for the benefit of the holder and all parties subsequent to the party to whom notice is given.

SEC. 1398. Where the instrument has been dishonored in the hands. of an agent, he may either himself give notice to the parties liable thereon or he may give notice to his principal. If he give notice to his principal he must do so within the same time as if he were the holder, and the principal, upon the receipt of such notice, has himself the same time for giving notice as if the agent had been an independent holder.

SEC. 1399. FORM OF NOTICE.-A written notice need not be signed, and an insufficient written notice may be supplemented and validated by verbal communication. A misdescription of the instrument does not vitiate the notice unless the party to whom the notice is given is in fact misled thereby.

SEC. 1400. The notice may be in writing or merely oral, and may be given in any terms which sufficiently identify the instrument and indicate that it has been dishonored by nonacceptance or nonpayment. It may in all cases be given by delivering it personally or through the mails.

SEC. 1401. TO WHOM GIVEN.-Notice of dishonor may be given either to the party himself or to his agent in that behalf.

To whom given.

-when party

dead.

SEC. 1402. WHEN PARTY DEAD.-When any party is dead, and his death is known to the party giving notice, the notice must be given to a personal representative, if there be one, and if, with reasonable diligence, he can be found. If there be no personal representatives, notice may be sent to the last residence or last place of business of the deceased. SEC. 1403. PARTNERS.-Where the parties to be notified are partners, Notice to partnotice to any one partner is notice to the firm, even though there has ners. been a dissolution.

SEC. 1404. JOINT PARTIES.-Notice to joint parties who are not Persons jointly partners must be given to each of them, unless one of them has author- liable. ity to receive such notice for the others.

SEC. 1405. BANKRUPT, AND SO FORTH.-Where a party has been adjudged a bankrupt or an insolvent, or has made an assignment for the benefit of creditors, notice may be given either to the party himself or to his trustee or assignee.

Bankrupts.

SEC. 1406. MAY BE GIVEN AS SOON AS INSTRUMENT IS DISHONORED.— Time within Notice may be given as soon as the instrument is dishonored; and which notice must unless delay is excused, as hereinafter provided, must be given within be given.

the time fixed by this act.

SEC. 1407. WHEN TO BE GIVEN IF HOLDER AND PARTY RESIDE IN When parties reSAME PLACE. Where the person giving and the person to receive side in same place. notice reside in the same place, notice must be given within the fol

lowing times:

First. If given at the place of business of the person to receive notice, it must be given before the close of business hours on the following day.

Second. If given at his residence, it must be given before the usual hours of rest on the day following.

Third. If sent by mail, it must be deposited in the post-office in time to reach him in the usual course on the day following.

-in different

SEC. 1408. WHEN IF THEY RESIDE IN DIFFERENT PLACES.-Where the person giving and the person to receive notice reside in different places. places, the notice must be given within the following times:

First. If sent by mail, it must be deposited in the post-office in time to go by mail the day following the day of dishonor, or, if there be no mail at a convenient hour on that day, by the next mail thereafter.

Second. If given otherwise than through the post-office, then within the time that notice would have been received in due course of mail if it had been deposited in the post-office within the time specified in the last subdivision.

SEC. 1409. MAILING NOTICE SUFFICIENT. - Where notice of dishonor Mailing notice is duly addressed and deposited in the post-office the sender is deemed sufficient. to have given due notice, notwithstanding any miscarriage in the mails.

SEC. 1410. Notice is deemed to have been deposited in the post-office-deposit in postwhen deposited in any branch post-office or in any letter box under the office, what consticontrol of the Post-Office Department.

tutes.

SEC. 1411. PARTY NOTIFIED ALLOWED WHAT TIME.-Where a party Notice to subsereceives notice of dishonor he has, after the receipt of such notice, the quent parties; time same time for giving notice to antecedent parties that the holder has after the dishonor.

of.

SEC. 1412. TO WHAT ADDRESS SENT.-Where a party has added an To what address address to his signature, notice of dishonor must be sent to that address; sent.

but if he has not given such address, then the notice must be sent as

follows:

First. Either to the post-office nearest to his place of residence, or to the post-office where he is accustomed to receive his letters; or, Second. If he live in one place and have his place of business in another, notice may be sent to either place; or,

SUP R S VOL 2-116

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