ARTICLE X.*

BILLS OF EXCHANGE; FORM AND INTERPRETATION.

Section 210. Bill of exchange defined.

211. Bill not an assignment of funds in hands of drawee.

212. Bill addressed to more than one drawee.

213. Inland and foreign bils of exchange.

214. When bill may be treated as promissory note. 215. Drawee in case of need.

§ 210. Bill of exchange defined.-A bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer.

Jarvis v. Wilson, 46 Conn. 91.

§ 211. Bill not an assignment of funds in hands of drawee. -A bill of itself does not operate as an assignment of the funds in the hands of the drawee available for the payment thereof, and the drawee is not liable on the bill unless and until he accepts the same (a).

(a) Harris v. Clark, 3 N. Y. 93; Mandeville v. Welch, 5 Wheat. 286; Brill v. Tuttle, 81 N. Y. 454; Alger v. Scott, 54 N. Y. 14; Munger v. Shannon, 61 N. Y. 251; Commonwealth v. Am. Life Ins. Co. 167 Pa. St. 586; Reilly v. Daly, 159 Pa. St. 605; Bailey v. Southwestern R. R. Bank, 11 Fla. 266. But when, for a valuable consideration from the payee, the order is drawn upon a third party

* The numbers of the sections of this article in other States than New York are as follows: Colorado, Connecticut, District of Columbia, Florida, Massachusetts, North Carolina. North Dakota, Pennsylvania, Oregon, Tennessee, Utah, Virginia and Washington, 126-131; Maryland, 145-150; Rhode Island, 134-139; Wisconsin, 1680-1680-6.

†The word or" omitted in the original New York statute supplied by Laws N. Y. 1898, c. 336.

and made payable out of a particular fund, then due or to become due, from him to the drawer, the delivery of the order to the payee operates as an assignment pro tanto of the fund, and the drawee is bound, after notice of such assignment, to apply the fund, as it accrues, to the payment of the order and to no other purpose, and the payee may, by action, compel such application. Brill v. Tuttle, 81 N. Y. 454, 457. An intention to make an assignment of the funds in the hands of the drawee may be inferred from the circumstances attending the delivery of the draft and the conduct of the parties. Throop Grain Cleaner Co. v. Smith, 110 N. Y. 83.

§ 212. Bill addressed to more than one drawee.-A bill may be addressed to two or more drawees jointly, whether they are partners or not; but not to two or more drawees in the alternative or in succession (a).

(a) In the Wisconsin Act the words " or succession" are omitted.

§ 213. Inland and foreign bills of exchange.—An inland bill of exchange is a bill which is, or on its face purports to be, both drawn and payable within this State. Any other bill is a foreign bill (a). Unless the contrary appears on the face of the bill, the holder may treat it as an inland bill.

(a) Commercial Bank of Kentucky v. Varnum, 49 N. Y. 269; Life Insurance Company v. Pendleton, 112 U. S. 696; Armstrong v. American Ex. National Bank, 133 U. S. 433; Buckner v. Finley, 2 Peters, 586; Joseph v. Solomon, 19 Fla. 632; Phoenix Bank v. Hussey, 12 Pick. 483; Thompson v. Commercial Bank, 3 Caldw. 49; Union Bank v. Fowlkes, 2 Sneed, 556.

§ 214. When bill may be treated as promissory note. -Where in a bill the drawer and drawee are the same person, or where the drawee is a fictitious person, or a person not having capacity to contract, the holder may treat the instrument, at his option, either as a bill of exchange or a promissory note (a).

(a) See section 36.

§ 215. Referee in case of need.-The drawer of a bill and any indorser may insert thereon the name of a person to whom the holder may resort in case of need, that is to say, in case the bill is dishonored by non-acceptance or non-payment (a). Such person is called the referee in case of need. It is in the option of the holder to resort to the referee in case of need or not as he may see fit.

(a) The usual form is: "In case of need, apply to Messrs. C and D, at E." Chitty on Bills, 165.

ARTICLE XI.*

ACCEPTANCE OF BILLS OF EXCHANGE.

Section 220. Acceptance, how made, et cetera.

221. Holder entitled to acceptance on face of bill. 222. Acceptance by separate instrument.

223. Promise to accept; when equivalent to accept

ance.

224. Time allowed drawee to accept.

225. Liability of drawee retaining or destroying bill. 226. Acceptance of incomplete bill.

227. Kinds of acceptances.

228. What constitutes a general acceptance.

229. Qualified acceptance.

230. Rights of parties as to qualified acceptance.

§ 220. Acceptance; how made, et cetera.-The acceptance of a bill is the signification by the drawee of his assent to the order of the drawer (a). The acceptance must

* The numbers of the sections in other States than New York are as follows: Colorado, Connecticut, District of Columbia, Florida, Massachusetts. North Carolina, North Dakota, Pennsylvania, Oregon, Tennessee, Utah, Virginia and Washington, 132-142; Maryland, 151-161; Rhode Island, 140-150; Wisconsin, 1680f-1680p.

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be in writing and signed by the drawee* (b). It must not express that the drawee will perform his promise by any other means than the payment of money.

(a) The acceptance is a response to the direction contained in the bill, and the language of the bill and the acceptance are but parts of one entire contract in writing. Meyer v. Beardsley, 29 N. J. Law, 236. But this contract is regarded as a new contract. Superior City v. Ripley, 138 U. S. 93. The usual mode of making an acceptance is by writing the word accepted," and subscribing the drawee's name. Byles on Bills, 190. But the drawee's signature alone is sufficient. Spear v. Pratt, 2 Hill, 582; Wheeler v. Webster, 1 E. D. Smith, 1.

(b) 1 Rev. Stat. N. Y. 768, section 6; Laws of Pa. 1881, 17. The English Bills of Exchange Act, following previous English statutes (1 and 2 George IV., C. 78; 19 and 20 Victoria, C. 78) requires that the acceptance be written on the bill. The Ameriçan statutes do not generally require this; and such a requirement would sometimes work inconvenience. Thus, it has been held that a bank can accept a check by telegraph, and such an acceptance has been deemed to be within the terms of a statute requiring acceptances to be in writing, North Atchison Bank v. Garretson, 51 Fed. Rep. 167; but to require the acceptance to be on the instrument itself would preclude the giving of an acceptance by telegraph either by a bank or by any other drawee.

§ 221. Holder entitled to acceptance on face of bill. -The holder of a bill presenting the same for acceptance may require that the acceptance be written on the bill, and if such request is refused, may treat the bill as dishonored.

1 Rev. Stat. N. Y., section 9.

§ 222. Acceptance by separate instrument.—Where an acceptance is written on a paper other than the bill itself, it does not bind the acceptor, except in favor of a person to

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*The word drawee" substituted for drawer by Laws N. Y. 1898, c. 336.

whom it was shown and who, on the faith thereof, receives the bill for value.

1 Rev. Stat. N. Y., 768, section 7.

§ 223. Promise to accept; when equivalent to acceptance. An unconditional promise in writing (a) to accept a bill before it is drawn is deemed an actual acceptance in favor of every person who, upon the faith thereof, receives the bill for value (b).

Griswold, 72 N. Y.

(a) An absolute authority to draw is equivalent to an unconditional promise to pay the draft within the statute. Ruiz v. Renauld, 100 N. Y. 256; Merchants' Bank v. 472, 479; Barney v. Wortington, 37 N. Y. 112. The promise must be unconditional. Germania National Bank v. Tooke, 101 N. Y. 442; Shover v. Western Union Telegraph Co., 57 N. Y. 459, 463. But restrictions as to the time or amount do not prevent the promise from being treated as unconditional and absolute as to drafts within the limitation. Bank of Michigan v. Ely, 17 Wend. 508; Ulster Co. Bank v. McFarlan, 5 Hill, 432. It is also held that an authority given to an agent to draw "from time to time, as may be necessary in the purchase of lumber," or as "you want more funds," operates simply as an instruction to the agent, and does not, as to persons dealing with him in good faith, constitute a condition. Merchants' Bank v. Griswold, 72 N. Y. 472; Bank of Michigan v. Ely, 17 Wend. 508. The party dealing with the agent may rest upon his representation, express or implied, that the draft is in the business of the principal, or that the funds are needed, and he is protected, although it turns out that the representation is false. N. Y. & N. H. R. R. Co. v. Schuyler, 34 N. Y. 30; Merchants' Bank v. Griswold, 72 N. Y. 472. The requirement that the promise shall be in writing is wholly statutory. At common law an oral promise was sufficient. Dull v. Bricker, 76 Pa. St. 255; Scudder v. Union Nat. Bank, 91 U. S. 406; Williams v. Winans, 2 Gr. (N. J.) 239; Jarvis v. Wilson, 46 Conn. 91. A telegraphic authority is sufficient. Johnson v. Clark, 39 N. Y. 216; North Atchison Bank v. Garretson, 51 Fed. Rep. 167; Franklin Bank v. Lynch, 52 Md. 270. As to countermanding by telegraph an offer to accept, see First Nat. Bank. v. Clark, 61 Md. 400. A promise to accept is governed by the law of the State