THE

NEGOTIABLE INSTRUMENTS LAW.1

A GENERAL ACT RELATING TO NEGOTIABLE INSTRUMENTS (BEING AN ACT TO ESTABLISH A LAW UNIFORM WITH THE LAWS OF OTHER STATES ON THAT SUBJECT).2

TITLE I.

NEGOTIABLE INSTRUMENTS IN GENERAL.

ARTICLE I.

FORM AND INTERPRETATION.

SECTION 1. Be it enacted, etc., An instrument to be negotiable must conform to the following requirements:

1 This Act does not affect the right of parties to non-negotiable instruments. Westberg v. Chicago Lumber Co., 117 Wis. 589, 94 N. W. 572.

2 For cases rightly favoring a liberal construction of the law in the interest of uniformity, see Brewster v. Shrader, 26 Misc. R. 480, 57 N. Y. S. 906; Payne v. Zell, 98 Va. 249, 36 S. E. 379; B. & O. Ry. Co. v. First Nat. Bank, 102 Va. 753, 47 S. E. 837; Trustees of American Bank v. McComb, 105 Va. 473, 54 S. E. 14; Vander Ploeg v. Van Zuuk (Iowa), 112 N. W. 807; Rockfield v. First Nat. Bank (Ohio), 83 N. E. 392; Columbian Banking Co. v. Bowen, 114 (Wis.) N. W. 451.

Contra, and construing the law strictly in favor of the pre-existing law of the State, are Sutherland v. Mead, 80 App. Div. 103, 80 N. Y. S. 504; Roseman v. Mahoney, 86 App. Div. 377, 83 N. Y. S. 749; Hover v. Magley, 48 Misc. Rep. 430, 96 N. Y. S. 925; Haddock v. Haddock, 118 App. Div. 412, 103 N. Y. S. 584; Rockfield v. First Nat. Bank, 8 Ohio C. C. (N. s.) 290.

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1. It must be in writing and signed by the maker or drawer;

2. Must contain an unconditional promise or order to pay a sum certain in money;

3. Must be payable on demand, or at a fixed or determinable future time;

4. Must be payable to order or to bearer;1 and,

5. Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable

certainty.

Sec. 2. The sum payable is a sum certain within the meaning of this act, although it is to be paid,

I. With interest; or

2. By stated instalments; or

3. By stated instalments, with a provision that upon default in payment of any instalment or of interest 2 the whole shall become due; or

4. With exchange, whether at a fixed rate or at the current rate; 3 or

5. With costs of collection or an attorney's fee, in case payment shall not be made at maturity.1

Sec. 3. An unqualified order or promise to pay is unconditional within the meaning of this act, though coupled with —

1. An indication of a particular fund out of which reimbursement is to be made, or a particular account to be debited with the amount; or

2. A statement of the transaction which gives rise to the in

strument.

But an order or promise to pay out of a particular fund is not unconditional.

Sec. 4. An instrument is payable at a determinable future time, within the meaning of this act, which is expressed to be payable,

1. At a fixed period after date or sight; or

1 "A negotiable bill may be payable either to order or to bearer." B. E. A. s. 8 (2).

2 The words "or of interest" are omitted in the English Act. B. E. A. s. 9 (1) (c).

3 "According to an indicated rate of exchange, or according to a rate of exchange to be ascertained as directed by the bill." B. E. A. s. 9 (1) (d).

Not in B. E. A.

2. On or before a fixed or determinable future time specified therein; or

3. On or at a fixed period after the occurrence of a specified event, which is certain to happen, though the time of happening be uncertain.

An instrument payable upon a contingency is not negotiable, and the happening of the event does not cure the defect.2

Sec. 5. An instrument which contains an order or promise to do any act in addition to the payment of money is not negotiable. But the negotiable character of an instrument otherwise negotiable is not affected by a provision which

I. Authorizes the sale of collateral securities in case the instrument be not paid at maturity; 3 or

2. Authorizes a confession of judgment if the instrument be not paid at maturity; or

3. Waives the benefit of any law intended for the advantage or protection of the obligor; 5 or

4. Gives the holder an election to require something to be done in lieu of payment of money.*

But nothing in this section shall validate any provision or stipulation otherwise illegal.

Sec. 6. The validity and negotiable character of an instrument are not affected by the fact that

I. It is not dated; or

2. Does not specify the value given, or that any value has been given therefor; or

3. Does not specify the place where it is drawn or the place where it is payable; or

4. Bears a seal; or

1 Not in B. E. A.

2 "An instrument expressed to be payable on a contingency is not a bill, and the happening of the event does not cure the defect." B. E. A. s. 11 (2).

3 "A note is not invalid by reason only that it contains also a pledge of collateral security with authority to sell or dispose thereof." B. E. A. s. 83 (3). The B. E. A. appears to make no similar provision as to bills. #

4 Not in B. E. A.

6 Not in B. E. A., except that section 16 (2) provides that the drawer of a bill and any indorser may insert therein an express stipulation "waiving as regards himself some or all of the holder's duties."

The English Act omits the words "and negotiable character." B. E. A. s. 3 (4).

7 "In the case of a corporation, where, by this Act, any instrument or writing is

5. Designates a particular kind of current money in which payment is to be made.1

But nothing in this section shall alter or repeal any statute requiring in certain cases the nature of the consideration

to be stated in the instrument.1

Sec. 7. An instrument is payable on demand

I. Where it is expressed to be payable on demand, or at sight, or on presentation; or

2. In which no time for payment is expressed.

Where an instrument is issued, accepted, or indorsed when overdue, it is, as regards the person so issuing,2 accepting, or indorsing it, payable on demand.

Sec. 8. The instrument is payable to order where it is drawn payable to the order of a specified person or to him or his order.3 It may be drawn payable to the order of

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1. A payee who is not maker, drawer, or drawee; or

2. The drawer or maker; or

3. The drawee; or

6. The holder of an office for the time being.

Where the instrument is payable to order the payee must be named or otherwise indicated therein with reasonable certainty."

Sec. 9. The instrument is payable to bearer

1. When it is expressed to be so payable; or

2. When it is payable to a person named therein or bearer;7 or

required to be signed, it is sufficient if the instrument or writing be sealed with the corporate seal. But nothing in this section shall be construed as requiring the bill or note of a corporation to be under seal." B. E. A. s. 91 (2).

1 Not in B. E. A.

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2 The words “issued ” and “issuing" are omitted in the English Act. B. E. A. S. 10 (2).

8 "A bill is payable to order which is expressed to be so payable, or which is expressed to be payable to a particular person, and does not contain words prohibiting transfer or indicating an intention that it should not be transferable." B. E. A. s. 8 (4). See also infra, p. 27, n. 3, and p. 37, n. 3.

4 Not in B. E. A.

5 "A bill may be made payable to two or more payees jointly, or it may be made payable in the alternative to one of two, or one or some of several payees." B. E. A. s. 7 (2). 6 When the bill is not payable to bearer, the payee must be named or otherwise indicated therein with reasonable certainty." B. E. A. s. 7 (1).

7 Not in B. E. A. Chalmers (6th ed. 25) says a bill payable 'to J. C. or bearer' is of course payable to bearer."