mission of liability is not sufficient; 27 but it is not necessary that a formal acknowledgment of liability should be superadded to a promise to pay.28 Conditional promise. The promise must be unconditional,29 except where the conditions are cepted.30 ac [§ 994] b. Giving Duplicate of Lost Instrument as Promise to Pay. Where the bill or the note is lost, there is no waiver of demand and notice by the act of the drawer or the indorser in executing a duplicate, after maturity, where it is done merely to supply written evidence of the former transaction,31 sion that the liability incurred by the bill is still subsisting. Bolling v. McKenzie, 89 Ala. 470, 7 S 658. 27. Cromer v. Platt, 37 Mich. 132, 26 AmR 503; Miller v. Thompson, 16 S. C. L. 526. especially where the indorser had no knowledge of his discharge from liability by laches;32 and writing the word " 'duplicate" across the instrument signifies that no new liability was created thereby.33 It is otherwise, however, where the drawer gives a new bill or note, treating the old transaction as canceled.34 [§ 995] c. Promise Made before Maturity. It is well settled that an express promise to pay a bill or a note, made by a drawer or an indorser before maturity, may amount to a waiver.35 So a promise to pay, made at the time of the negotiation of the in[a] Rule applied to a conditional | Mo. 210, 211 (where Bliss, J., dispromise to pay in land and to see cusses the rule). that plaintiff loses nothing. Burke v. Elliott, 15 U. C. Q. B. 610. [b] Only to the extent stipulated (1) will it constitute a waiver. Cardwell v. Allan, 33 Gratt. (74 Va.) 160. (2) It must be accepted on the condition stipulated. Pickin v. Graham, 1 Cromp. & M. 725, 149 Reprint 591. [a] Illustration. Where the holders of a note demanded payment from the indorser who replied that he had not expected to have it to pay, and that it was impossible to [c] Offer substantially accepted. pay it at present, there was no suf--But, where the drawer of a bill ficient promise to pay to make the offered to pay the holder by installindorser liable, in the absence of the ments, it was held that, although the taking of proper steps to fix his lia- offer was not formally accepted, yet bility. Cromer v. Platt, 37 Mich. in consequence of his unqualified ac132, 26 AmR 503. knowledgment of the debt and his positive assurances of payment the holder granted him a delay of seven months before bringing suit, thus substantially accepting the offer, and that it operated as a waiver. Union Bank v. Grimshaw, 15 La. 321. [b] A mere general admission of supposed liability to pay will not be sufficient. Miller v. Thompson, 16 S. C. L. 526. 28. Bogart v. McClung, 11 Heisk. (Tenn.) 105, 27 AmR 737. 29. Iowa.-Campbell v. Varney, 12 Iowa 43. La.-Penn v. Poumeirat, 2 Mart. N. S. 541. N. J.-Richardson v. Kulp, 81 N. J. L. 123, 78 A 1062; Jordan v. Reed, 77 N. J. L. 584, 71 A 280. N. Y.-Cuyler v. Merrifield, 5 Hun 559. Eng.-Hicks v. Beaufort, 4 Bing. N. Cas. 229, 33 ECL 684, 132 Reprint 776; Dennis v. Morrice, 3 Esp. 158; Nicholson v. Gouthit, 2 H. Bl. 609, 126 Reprint 732. [a] What constitutes conditional promise. (1) It is not a waiver for a foreign drawer to say, "I am not acquainted with your laws; if I am bound to pay it, I will" (Dennis v. Morrice, 3 Esp. 158), (2) for an indorser to say that if the bill is presented to him, duly protested, he will have to pay it (Penn v. Poumeirat, 2 Mart. N. S. (La.) 541), (3) or to say that, if the acceptor does not pay, he must, but for the holder to exhaust all his influence with the, acceptor first (Hicks v. Beaufort, 4 Bing. N. Cas. 229, 33 ECL 684, 132 Reprint 776). (4) A statement by the indorser of a note, discharged for want of notice of dishonor, that "it is impossible for me to pay the note at the present time," is not such an unconditional promise to pay as to constitute a waiver. Richardson v. Kulp, 81 N. J. L. 123, 78 A 1062. 30. Ala.-Isbell v. Lewis. 98 Ala. 550, 13 S 335; Kennon v. McRea, 7 Port. 175. La. Keith v. Mackey, 5 Rob. 277; Laporte v. Landry, 5 Mart. N. S. 359. Mich.-Newberry v. Trowbridge, 13 Mich. 263. N. J. Barkalow v. Johnson, 16 N. J. L. 397. N. Y.-Sice v. Cunningham, 1 Cow. 397; Agan V. McManus, 11 Johns. 180. Pa.-Lititz Nat. Bank v. Siple, 145 Pa. 49, 22 A 208. Va.-Cardwell v. Allan, 33 Gratt. (74 Va.) 160; Tardy v. Boyd, 26 Gratt. (67 Va.) 631. Eng.-Pickin v. Graham, 1 Cromp. & M. 725, 149 Reprint 591. Ont.-Burke v. Elliott, 15 U. C. Q. B. 610. [d] Instances of unaccepted of fers. (1) An unaccepted offer of an indorser to indorse a renewed note has been held not to amount to a waiver. Laporte v. Landry, 5 Mart. N. S. (La.) 359. (2) The same has been held of an offer by an indorser to give his own note in satisfaction of an indorsed note. Sice v. Cunningham, 1 Cow. (N. Y.) 397; Agan v. McManus, 11 Johns. (N. Y.) 180. (3) So an offer to give or to indorse a note for half of the amount if the holder would apply to the payment of the other half certain money previously paid by the maker, and an offer to pay half of the note and be relieved from further liability, have been held insufficient as waivers. Isbell v. Lewis, 98 Ala. 550, 13 S 335. (4) So an offer to pay a note partly in cash and to give a note for the balance, payable at a future day, has been held insufficient. Barkalow v. Johnson, 16 N. J. L. 397. (5) An offer on the part of the indorser of a bill to pay part of the amount and the costs, and to give a warrant of attorney for the residue, will not dispense with the proof of notice of dishonor. Standage V. Creighton, 5 C. & P. 406, 24 ECL 628. (6) In the same way an offer to pay a note in Confederate money (Tardy v. Boyd, 26 Gratt. (67 Va.) 631), (7) or in depreciated bank bills (Newberry v. Trowbridge, 13 Mich. 263), does not amount to a waiver. [e] Where condition of promise is unfulfilled.-The agreement of the payee and the indorser of a negotiable note to accept the maker's draft for the amount due thereon has been held not to operate as a waiver where the draft is drawn for a materially larger amount, which was known to the bank that discounted the note, and the payee refused to pay such increased amount. Lititz Nat. Bank v. Siple, 145 Pa. 49, 22 A 208. 31. Benton v. Martin, 52 N. Y. 570, 40 N. Y. 345; Gilby Bank v.. Farnsworth, 7 N. D. 6, 72 NW 901, 38 LRA 843; Lewis v. Commercial Nat. Bank, 37 Tex. Civ. A. 241, 83 SW 423; Aebi v. Evansville Bank, 124 Wis. 73, 79, 102 NW 329, 109 AmSR 925, 68 LRA 964. See also Moody v. Mack, 43 "Doubtless, when a check has been lost or destroyed, so that the payee or his assigns has not received the money thereby ordered paid, the drawer may give a new and independent check, treating the old transaction as canceled, and in that case the rights and liabilities of all parties may be as if the new check were given upon any other consideration. Equally, however, the parties may proceed on the purpose of merely supplying written evidence of the former transaction, to take the place of that lost, simply to facilitate proceedings or perfect records. In that case no new contract is made. All rights grow out of the original transaction or contract, and are exactly the same as if such transaction were proved orally instead of by the new or duplicate written evidence which the parties have supplied." Aebi v. Evansville Bank, 124 Wis. 73, 79, 102 NW 329, 109 AmSR 925, 68 LRA 964. [a] Reason for rule.-The giving by the drawer of a duplicate of a lost draft after he is discharged by the laches of the payee does not as a matter of law import a promise to pay the draft, but merely an intent to accommodate the payee by putting into his hands a paper which would enable him to collect the money from the drawee. Gilby Bank v. Farnsworth, 7 N. D. 6, 72 NW 901, 38 LRA 843. [b] Illustration.-Where an original check was drawn Dec. 2, 1902, and indorsed to and deposited with plaintiff for collection and credit, and plaintiff did not discover its loss until Aug. 20, 1903, when it obtained a duplicate from the maker, which was also indorsed by the payee, during which time the maker became insolvent, the payee was discharged from liability on his indorsement by plaintiff's laches in presenting the original check for payment. Lewis v. Commercial Nat. Bank, 37 Tex. Civ. A. 241, 83 SW 423. 32. Aebi v. Evansville Bank, 124 Wis. 73, 102 NW 329, 109 AmSR 925, 68 LRA 964. 33. Benton v. Martin, 40 N. Y. 345; Lewis v. Commercial Nat. Bank, 37 Tex. Civ. A. 241, 83 SW 423. 34. Benton v. Martin, 31 N. Y. 382; Aebi V. Evansville Bank, 124 Wis. 73, 102 NW 329, 109 AmSR 925, 68 LRA 964. 35. U. S.-Sigerson v. Mathews, 20 How. 496, 15 L. ed. 989. Ark.-Lary v. Young, 13 Ark. 401, 58 AmD 332. Conn.-Norton v. Lewis, 2 Conn. 478. Del.-Seaford First Nat. Bank v. Connoway, 9 Del. 206. Kan.-Markland V. McDaniel, 51 Kan. 350, 32 P 1114, 20 LRA 96. Me.-Keyes v. Winter, 54 Me. 399; Marshall v. Mitchell, 35 Me. 221, 58 AmD 697; Lane v. Steward, 20 Me. 98. Md.-Seldner v. Mt. Jackson Nat. Bank, 66 Md. 488, 8 A 262, 59 AmR 190; Schley v. Merritt, 37 Md. 352. Mo.-State Bank v. Bartle, 114 Mo. 276, 21 SW 816. where the indorser told the holder before the note fell due that he should have no trouble about the note, and that he, the indorser, would pay it, this promise was held to amount to a waiver of demand and notice.37 So where an indorser told the holder that he need not take steps to collect the note, as it would be paid at maturity, it was held to be a waiver.88 But, where the indorser assured the holder that he would stand good for the payment of the note, it was held that this agreement did not operate as a waiver of demand and notice, on the ground that agreements of this sort are always to be strictly construed.39 So a statement at the time of the in Mont. Quaintance v. Goodrow, 16 | did not have the Mont. 376, 41 P 76. N. Y. Bruce v. Lytle, 13 Barb. 163; Savage v. Bevier, 12 How Pr 166; Leffingwell v. White, 1 Johns. Cas. 99, 1 AmD 97. Oh. Boyd v. Toledo Bank, 32 Oh. St. 526, 30 AmR 624; Kyle v. Green, 14 Oh. 490. Pa.-Sieger V. Allentown Second Nat. Bank, 132 Pa. 307, 19 A 217; Moyer's App., 87 Pa. 129. Wis.-Hale v. Danforth, 46 Wis. 554, 1 NW 284. Que.-Ranger v. Aumais, 5 Que. Pr. 450. See also Kent v. Warner, 12 Allen (Mass.) 561 (discussing the rule). [a] Statement by the indorsers before maturity, to the holder, that the note would be paid at maturity, excuses demand and notice. Roch v. London, 24 Misc. 384, 53 NYS 261 [rev on other grounds 25 Misc. 533, 54 NYS 996]. [b] The words "I hold myself responsible for the note," written and signed by the indorser on the face of the note, amount to a waiver of protest. Ranger v. Aumais, 5 Que. Pr. 450. 36. Boyd V. Cleveland, 4 Pick. (Mass.) 525; Souther v. McKenna, 20 R. I. 645, 40 A 736. To same effect Lane v. Steward, 20 Me. 98; Fuller McDonald, 8 Me. 213, 23 AmD V. 499. [a] Illustration.-An agreement by the indorsers of a note, at the time it was discounted for their benefit, themselves to pay the note at its maturity to the discounting bank, waives their rights, as indorsers, to presentment and demand of the maker and of notice to them of nonpayment. Souther v. McKenna, 20 R. I. 645, 40 A 736. 37. Quaintance v. Goodrow, 16 Mont. 376, 17 P 76 (waived by the indorser stating to the holder, before and after maturity, that he was to look to him, the indorser, and no one else, for payment). [a] Similarly, if the indorser of a note before the maturity of the same tells the holder to give himself no uneasiness about the note, that it will be paid at maturity, that he is collecting money for the maker, and that he will see that the note is paid, this is a waiver of demand, notice, and protest. Bryant v. Wilcox, 49 Cal. 47. To same effect Leonard v. Gary, 10 Wend. (N. Y.) 504. 38. Sigerson v. Mathews, 20 How. (U. S.) 496, 15 L. ed. 989. 39. Wright v. Liesenfeld, 93 Cal. 90, 28 P 849; Worley v. Johnson, 60 Fla. 294, 53 S 543, 33 LRANS 639 and note; Isham v. McClure, 58 Iowa 515, 12 NW 558; Freeman v. O'Brien, 38 Iowa 406. dorsement, where the indorsee objected that the makers were insolvent, that his, the indorser's, name made the note good is not a waiver.40 66 43 [§ 996] I. Scope of Express Waivers. It is well settled that agreements waiving protest are not to be construed or extended beyond the fair import of their terms.41 But, inasmuch as the term "protest" when applied to notes and inland bills has in its commercial sense come to mean those steps necessary to charge an indorser,42 a waiver of protest by an indorser is usually held to dispense with both demand and notice, and a fortiori waiver of protest and notice includes waiver of demand.44 So a waiver of 'demand of protest" has been construed to mean money to pay the purpose of a waiver is to supersede note, but that he was liable thereon the ordinary steps and avoid trouble and, if the holder would sue the and expense. To waive the mere act makers and should fail to recover of the notary, and yet suffer the duty from them, he, the indorser, would of making demand and giving notice pay the note, his action was not in- of its result to remain, would consistent with or a waiver of his scarcely be thought of by business right to have due presentment to the men.' Annville Nat. Bank v. Ketmakers for payment made and notice tering, 106 Pa. 531, 534, 51 AmD 536. of dishonor given him as a prerequi- [b] Where the payees of several site to his liability. Worley v. Johnson, notes, one of which was due, exe60 Fla. 294, 53 S 543, 33 LRANS 639. cuted a writing waiving "notice of [b] An understanding at the time protest on the notes," the writing of the indorsement that the holder should be construed as waiving prowould "come back on" the indorser test, presentment, and demand. Parr if he could not collect from the v. City Trust, etc., Surety Co., 95 maker was held not a waiver. Wright Md. 291, 52 A 512. v. Liesenfeld, 93 Cal. 90, 28 P 849. 40. Andrews v. Simms, 33 Ark. 771. 41. A. 160. Blatchford v. Harris, 115 Ill. 42. See supra § 865. Cal. San Diego First Nat. Bank v. Conn.-Cooke v. Pomeroy, 65 Conn. Ga.-Williams v. Lewis, 69 Ga. 825. [c] In California this is so by express provision of statute. San Diego First Nat. Bank V. Falkenhan, 94 Cal. 141, 29 P 866; Wilkie v. Chandon, 1 Wash. 355, 25 P 464. [d] In Louisiana, (1) however, a waiver of demand and protest is not a waiver of notice of dishonor. Wisdom v. Bille, 120 La. 700, 45 S 554; Wilkins v. Gilkis, 20 La. Ann. 538, 96 AmD 425; Ball v. Greaud, 14 La. Ann. 305, 74 AmD 431; Cox v. McIntyre, 6 La. Ann. 470; Wall v. Bry, 1 La. Ann. 312. Contra Harvey v. Nelson, 31 La. Ann. 434, 33 AmR 222. (2) But, even under these deMont-cisions, if such an indorsement was made on the very day of maturity and the circumstances attending the acts were such that one might naturally and fairly infer that the waiver was made on a personal agreement with the holder of the bill and that the indorser had knowledge that the drawee had failed to meet the same, Parsons, 140 such an indorsement would constitute waiver of notice. Marsh v. Waterman, 21 La. Ann. 377; Carmena v. Mix, 15 La. 165. (3) The rule is undoubtedly changed by the provisions of the Negotiable Instruments Law. Ind.-Fitch v. Citizens' Nat. Bank, 97 Ind. 211. Kan.-Baker v. Scott, 29 Kan. 136, 44 AmR 628. v. Md.-Parr v. City Trust, etc., Co., 91. 29 Mo.-Jaccard v. Anderson, 37 Mo. N. Y.-Coddington v. Davis, 1 N. N. C.-Shaw v. McNeill, 95 N. C. Oh.-McIlvaine v. Bradley, 1 Disn. 194, 12 Oh. Dec. (Reprint) 570. See also Seymour v. Francisco, 4 Oh. Dec. (Reprint) 12, 1 ClevLRec 9. Pa.-Valley Nat. Bank V. Urich, 191 Pa. 556, 43 A 354; Lancaster First Nat. Bank v. Hartman, 110 Pa. 196, 1 A 271; Annville Nat. Bank v. Kettering, 106 Pa. 531, 534, 51 AmD 536; Day v. Ridgway, 17 Pa. 303; Huckenstein v. Hermann, 34 LegInt 232. Compare Savage v. Bell, 1 Woodw. 52. Tex.-Smith V. Pickham, 8 Tex. Va.-Broun v. Hull, 33 Gratt. (74 Wash.-Wilkie v. Chandon, 1 Wash. [a] Illustration. Where an dorser of a note before its maturity was informed by the holder that the makers denied liability and had told him that they would not pay the note at maturity or at any other time, and the indorser stated that he Man.-Rat Portage Lumber Co. v. Reason for rule.-"The very (2) [e] Nonnegotiable note.-(1) It has been held that, where the expression "waiver of protest" is applied to a nonnegotiable note which cannot or is not required to be protested, it is equivalent to a waiver of demand and notice, since otherwise it would have no effect whatever. San Diego First Nat. Bank v. Falkenhan, 94 Cal. 141, 29 P 866. But in some states presentment and notice are unnecessary in the case of nonnegotiable instruments, and in those jurisdictions a waiver would of course be useless and immaterial. Pool v. Anderson, 116 Ind. 88, 18 NE 445, 1 LRA 712; Stix, v. Matthews, 75 Mo. 96. (3) In Texas it has been held that, the law of protests not applying to any but negotiable instruments, a waiver of protest would not be a waiver of the right of the assignor of a nonnegotiable instrument to have the maker sued at the first term of the court after the transfer, or at the second term with reasons shown for delay. Burke v. Ward, (Tex. Civ. A.) 32 SW 1047. 44. Ida.-Montpelier Bank v. Montpelier Lumber Co., 16 Ida. 730, 102 P 685. a waiver of both demand and notice.45 On the other hand, it is held by the weight of authority that a mere waiver of notice of demand does not dispense with the demand itself;46 nor does the waiver of notice of protest relieve from the duty to make a demand for payment, and to give due notice of nonpayment;48 but a waiver of demand of payment constitutes a waiver of notice of nonpayment.49 Of course waiver of demand for payment waives presentment.50 "Acceptance waived." Where the words "Acceptance waived" are embodied in a bill, it has been held that the drawer is not entitled to notice of dishonor.51 The Negotiable Instruments Law expressly provides that a waiver of protest, whether in the case of a foreign bill of exchange or other negotiable instrument, is deemed to be a waiver, not only of a for XXVII. [§ 999] A. In General.59 1. Scope of Subdivision. In determining what are, and what are not, defenses to actions on bills and notes, it will be unnecessary to repeat what has already been stated in regard to matters which are often urged as defenses, such as want of presentment of a bill for acceptance and want of acceptance,60 implied warranties of Ind. Gordon v. Montgomery, 19 Ind. 110. Kan. Baker v. Scott, 29 Kan. 136, 44 AmR 628. La.-O'Leary v. Martin, 21 La. Ann. 389; Guyther v. Bourg, 20 La. Ann. 157. 96. Utah.-Walker v. Popper, 2 Utah 45. Porter v. Kemball, 53 Barb. (N. Y.) 467. 46. Iowa.-Whitely v Allen, 56 Iowa 224, 9 NW 190, 41 AmR 99; Voorhies v. Atlee, 29 Iowa 49. Me.-Lane v. Stewart, 20 Me. 98; Burnham v. Webster, 17 Me. 50; Drinkwater v. Tebbetts, 17 Me. 16. Mass.-Berkshire Bank v. Jones, 6 Mass. 524, 4 AmD 175. Mo.-Jaccard v. Anderson, 37 Mo. 91. But see Johnson County Sav. Bank v. Lowe, 47 Mo. A. 151 (holding that an indorsement that "notice of demand and protest is waived" constitutes a waiver of all the steps necessary to fix the indorser's liability). N. Y.-Hayward v. Empire State Sugar Co., 105 App. Div. 21, 93 NYS 449 [aff 191 N. Y. 536 mem, 84 NE 1114 mem] (holding that, where an indorser of a note, executed by a corporation of which he was president, waived "all notice of presentment, dishonor and protest," he did not thereby waive presentment and demand for payment); Buckley V. Bentley, 42 Barb. 646; Backus V. Shipherd, 11 Wend. 629. Or. Sprague v. Fletcher, 8 Or. 367, 34 AmR 587. Vt.-Buchanan v. Marshall, 22 Vt. 561. See Halley v. Jackson, 48 Md. 254 (holding that an indorsement by the payee of a note that he holds himself "responsible for the within note, without notice or protest," is of no other effect than to waive protest and notice as a necessary step to fix his liability in case the drawer fails to pay the note at maturity). Contra Matthey v. Gally, 4 Cal. 62, 60 AmD 595. a transferor, actions before the maturity of the instrument,62 extension of the time of payment,93 renewal of the instrument,64 laches in suing,65 presentment for payment and demand, protest,67 and notice of dishonor.68 So defenses to accommodation paper, where peculiar thereto, have been treated of under another subdivision." 69 The defense of diskinson v. Skidmore, 152 Ky. 413, 153 SW 456. [a] In California an express waiver of notice of nonpayment of a negotiable instrument is equivalent to an admission that such instrument has been presented, or that it need not be presented. Matthey v. Gally, 4 Cal. 62, 60 AmD 595. [b] Waiver of notice and protest for like reasons does not dispense with demand. Buckley v. Bentley, 42 Barb. (N. Y.) 646. 47. Blatchford v. Harris, 115 Ill. A. 160 (waiver of notice of "protest"). 48. Moffat v. Griswold, 1 Nebr. 415 (holding that an indorser of a note who waives notice of protest will be relieved from liability thereon if the holder does not notify him within a reasonable time of its nonpayment nor use due diligence to collect it of the maker). V. 49. Baumeister v. Kuntz, 53 Fla. 340, 346, 42 S 886 [cit Cyc]; Dye v. Scott, 35 Oh. St. 194, 35 AmR 604; Furth v. Baxter, 24 Wash. 608, 64 P 798. See also National Exch. Bank v. Kimball, 66 Ga. 753 (holding that a written waiver of "demand and notice" on the part of the indorser of a note payable at bank is in effect a waiver of demand and refusal and protest therefor). Contra Hall Crane, 213 Mass. 326, 327, 100 NE 554 (where the court said: "The liability of an indorser is conditional, the conditions being first, that at the maturity of the note there shall be a demand upon the maker for payment, and second, that if the note be not then paid due notice thereof shall be given to the indorser. And these two conditions are distinct and independent of each other. Either can be waived and the other insisted upon. Neither upon principle nor by the great weight of authority is a waiver of one without more a waiver of the other as matter of law"). 50. Burton V. Goffin, 5 Br. C. 454. 51. Denegre v. Milne, 10 La. Ann: 324; English v. Wall, 12 Rob. (La.) 132; Webb v. Mears, 45 Pa. 222; Carson v. Russell, 26 Tex. 452. See also Liggett v. Weed, 7 Kan. 273 (where the instrument contained these words). 52. Montpelier Bank v. Montpelier Lumber Co., 16 Ida. 730, 102 P 685 (holding thereunder that an indorser who waives "protest and notice of protest" waives presentment and demand and notice of the same); At 53. Cleveland Second Nat. Bank v. McGuire, 33 Oh. St. 295, 31 AmR 539. 54. Knight v. Fox, Morr. (Iowa) 305. 55. Gibson v. Parlin, 13 Nebr. 292, 13 NW 405. 56. U. S.-In re Buzzini, 183 Fed. 827. Fla.-Baumeister v. Kuntz, 53 Fla. 340, 42 S 886. La.-Atkins v. Dixie Fair Co., 135 La. 622, 65 S 762; Union Nat. Bank v. Lee, 33 La. Ann. 301. Mo.-Belch v. Roberts, (A.) 177 SW 1062. Or.-Moll v. Roth Co., 152 P 235. Pa.-Burgettstown Nat. Bank V. Nill, 213 Pa. 456, 63 A 186, 110 AmSR 554, 3 LRANS 1079, 5 AnnCas 476. R. I-Pawtucket First Nat. Bank v. Adamson, 25 R. I. 73, 54 A 930 (waiver as indorser not as guarantor). [a] Removes the defenses of want of presentment and notice. Belch v. Roberts, (Mo. A.) 177 SW 1062. [b] Insolvency of maker not condition precedent.-An indorser of a note who waives protest and notice thereof secures to the holder the rights secured by a timely protest; and it is not necessary to show the insolvency of the maker to fix the liability of the indorser. Costin v. Burton-Lingo Co., 57 Tex. Civ. A. 634, 123 SW 177. 57. In re Buzzini, 183 Fed. 827; Stanley v. McElrath, 86 Cal. 449, 25 P 16, 10 LRA 545. 58. Stix v. Matthews, 75 Mo. 96; Burke v. Ward, (Tex. Civ. A.) 32 SW 1047. 59. In actions on renewal notes see supra §§ 658, 659. 60. See supra §§ 468, 506. charge of defendant in bankruptcy is treated of in another article.70 [§ 1000] 2. Nature and Kinds-a. In General. In some states statutes other than the Negotiable 'Instruments Law, at one time or another, have laid down certain rules as to defenses, which rules, of course, govern as far as applicable and not repealed. Independent of statute, the availability of matter as defense to actions on bills and notes is governed largely by the general law of contracts.72 The defense must, however, be relevant and conform to the issue,73 be confined to the contract sued on,74 and be intended as an avoidance of the matter declared on.75 So too defendant can plead only such equities as operate in his own favor.76 In some jurisdictions it would seem that a defense in an action between the original parties must in some manner be connected with the consideration of the note or with its negotiation;7 ;77 and this rule is more broadly applied where the action is by an indorsee, although he takes the same after maturity or with notice.78 In most of the code states inconsistent defenses may be set up.79 [ 1001] b. Legal or Equitable Defenses. In the code states at least equitable defenses may be interposed in an action at law on a bill or a note,80 the 70. See Bankruptcy §§ 704-731. 71. Mutual Nat. Bank v. Richardson, 33 La. Ann. 1312; Rochester First Nat. Bank v. Harris, 108 Mass. 514; Thayer v. Buffum, 11 Metc. (Mass.) 398. up [a] In Louisiana a statute providing that, on proof of the signature which is denied by defendant, such defendant might not set other defenses, was held to apply only to the personal signature of defendant and not to a denial of the signature of a partner. Mutual Nat. Bank V. Richardson, 33 La. Ann. 1312. [b] In Massachusetts (1) the word "defense," as used in a statute providing that in any action on a note, payable on demand, by an indorsee against the promisor, any matters might be deemed a legal defense which would be a legal defense to a suit on the same note if brought by the promisee, means an equitable defense, such as payment, set-off, etc., and does not refer to the disability to sue. Thayer V. Buffum, 11 Metc. 398. (2) The provisions of Gen. St. c 53 § 10, concerning defenses to notes payable on demand, do not apply to checks on banks. Rochester First Nat. Bank v. Harris, 108 Mass. 514. 72. See Contracts [9 Cyc 213]. 73. Ball v. Consolidated Franklinite Co., 32 N. J. L. 102; East Tennessee Iron Mfg. Co. v. Gaskell, 2 Lea (Tenn.) 742. 74. Geradi v. Christie, 148 Mo. A. 75, 127 SW 635; Veriscope Co. V. Brady, 77 NYS 159. same as in other actions.81 Under the old commonlaw practice, however, if a defense put in issue intricate matters, partly foreign to the subject matter of the suit, the determination of which was peculiarly the province of a court of equity, it could not be urged in a purely legal action on the note.82 Where a defense is clearly available at law, equity will not interpose.83 91 Like [§ 1002] 3. Defenses Personal to Obligor.84 Defenses to the original transaction which are personal to the obligor, and which may either be set up or be waived by him, cannot be set up by a stranger thereto.85 Thus an accommodation indorser cannot set up a breach of warranty as to the quality of the articles for which the note was given.86 So sureties cannot set up the defense that the original contract was secured by fraudulent representations.87 wise usury is a defense personal to the borrower.88 Furthermore the maker of a note cannot rely on defenses personal to the indorser,89 or to a third person to pay whose debt the instrument was executed.90 Thus, the maker cannot ordinarily defend on the ground that the officer of the payee corporation, who indorsed the note, lacked authority so to do, or that an accommodation indorsement was Cal.-Mohr v. Byrne, 135 Cal. 87, | Fraud as available to comaker see 67 P 135. infra 1045. Illegality of consideration as personal defense see infra § 1031. Right of maker of note to set up defense that name of comaker was forged see infra § 1028. Right of acceptor of bill to set up want of consideration between drawer and payee see infra § 1058. To whom defense inures see infra § 1009. Want or failure of consideration as personal to maker see infra § 1018. 85. Queen City Sav. Bank, etc., Co. v. Reyburn, 163 Fed. 597 [aff 171 Fed. 609, 96 CCA 373]; Kirkpatrick v. Oldham, 38 La. Ann. 553; Hennen v. Bourgeat, 12 Rob. (La.) 522; Bowman v. Pope, 33 Miss. 94; Sheary v. O'Brien, 75 App. Div. 121, 77 NYS 378; Crouch v. Wagner, 63 App. Div. 526, 71 NYS 607. Mo.-Mattoon v. McDaniel, 34 Mo. 138; Crawford v. Johnson, 87 Mo. A. 478. Vt.-Walbridge v. Kibbee, 20 Vt. 543. Eng.-Chalmers V. Lanion, 1 80. Isenburger v. Hotel Reynolds Co., 177 Mass. 455, 59 NE 120; Sachleben v. Heintze, 117 Mo. 520, 24 SW 54; Judy v. Louderman, 48 Oh. St. 562, 29 NE 181. See also Brown v. Crowley, 39 Ga. 376, 99 AmD 462 (for Georgia practice). [a] Recoupment has been held not to be an equitable defense. Isenburger v. Hotel Reynolds Co., 177 Mass. 455, 59 NE 120. 81. See Actions §§ 176-178. 82. Burnes v. Scott, 117 U. S. 582, 6 SCt 865, 29 L. ed. 991 [appr and dist Union Bank v. Crine, 33 Fed. 809, where the defense was a purely legal one]; Mowles v. Lorimer, 212 Fed. 155, 129 CCA 11; Boggs v. Wann, 58 Fed. 681; Courtright v. Burnes, 13 Fed. 317, 3 McCrary 60; Moseby v. Lewis, 4 Litt. (Ky.) 159; Steinback v. Ellis, 1 Mo. 414; Lee v. Field, 9 N. M. 435, 54 P 873. See Crosley v. Reynolds, 196 Fed. 640, 116 CCA 314 (holding that the defense was not an equitable one). [a] Want of consideration.-A defense that a note was given with the understanding that payment was motion of a corporation, which en- [a] Illustration. Hence inas- conditioned on the successful promuch as the contract by an accommodation indorser is one of indorsement merely, he cannot set up as a I defense that the note was given in a partnership transaction between the maker and the payee, in which no final accounting had been had. Veriscope Co. V. Brady. 77 NYS 159. See also Smith v. Erwin, 77 N. Y. 466. 75. State Bank v. Byrd, 14 Ark. 496. 76. Ran v. Latham, 11 La. Ann. 276 (not those which belong to a party to whom he is liable). See also infra § 1002. 77. Case v. Maxey, 6 Cal. 276; Mattoon v. McDaniel, 34 Mo. 138. 78. Ala. Andrews V. McCoy, Ala. 920, 42 AmD 669 [appr Kyle v. Thompson, 11 Oh. St. 616]. 8 83. Mobile Bank v. Poelnitz, 61 84. Cross references: Failure of consideration for instru- 86. Gillespie v. Torrance, 25 N. Y. 306, 82 AmD 355; Fleitmann v. Ashley, 60 App. Div. 201, 69 NYS 1099 [aff 172 N. Y. 628 mem, 65 NE 1116 mem]; Veriscope Co. v. Brady, 77 NYS 159. See also supra §§ 449453. 87. Elliott v. Brady, 192 N. Y. 221, 85 NE 69, 127 AmSR 898, 18 LRANS 600 and note. 88. Cain v. Gimon, 36 Ala. 168; Bullard v. Raynor, 30 N. Y. 197. 89. Carrier V. Sears, 4 Allen (Mass.) 336, 81 AmD 707; Gamel v. Hynds, 34 Okl. 388, 125 P 1115, Ann Cas1914C 233 and note; City Bank v. Bryan, 72 W. Va. 29, 78 SE 400. See also infra § 1058. [a] "The maker of a promissory note cannot, in an action brought against him by the indorsee or transferee thereof, litigate questions that can properly arise only between the holder and his immediate indorser." Gamel v. Hynds. 34 Okl. 388, 389, 125 P 1115, AnnCas1914C 233 and rote. 90. Carr v. Rountree, 9 Ga. A. 393, 71 SE 589. But see Northwest Thresher Co. v. Hulburt, 103 Minn. 276, 115 NW 159 (where, under the facts shown, the rule was not applied). [a] Limitations and duress.-Carr v. Rountree, 9 Ga. A. 393, 71 SE 589. 91. City Bank v. Bryan, 72 W. Va. 29, 78 SE 400. See also infra §§ 1055-1059. [a] Thus, in a suit by the indorsees of notes payable to a cor 93 De without authority.92 But a surety or an accommodation indorser may himself plead any defense not personal to the maker of which the latter could take advantage.9 Thus, indorsers of a note as sureties, sued jointly with the maker, may avail themselves of a counterclaim arising out of the execution of the instrument, especially where asserted by the maker.94 [§ 1003] 4. As Dependent on Who Is Plaintiff— a. Defenses against Real Party in Interest. fenses available against the real party in interest may be set up, although the action is brought by a nominal party.95 Thus defenses against the true owner of a bill or a note are available against one having title merely for collection.96 So a defense against a firm may be urged against an indorsee partner, and since knowledge of one partner is knowledge of all, a defense against a partner is available poration, it is no defense that the treasurer who indorsed them lacked authority, the corporation itself not complaining and having no right to complain. Wheeling City Bank v. Bryan, 72 W. Va. 29, 78 SE 400. 92. Wheeling City Bank v. Bryan, 72 W. Va. 29, 78 SE 400. 93. La. Satterfield v. Compton, 6 Rob. 120; Johnson V. Marshall, 4 Rob. 157. Mo.-Weimer v. Shelton, 7 Mo. 237. N. Y.-Sawyer V. Chambers, 44 Barb. 42. Pa.-Gunnis v. Weigley, 114 Pa. 191, 6 A 465. 94. Iroquois Door Co. v. Leavenworth Apartment Co., 77 Misc. 462, 137 NYS 122. 95. D. C.-Dexter First Nat., Bank v. Fox, 40 App. 430. Iowa. Farwell v. Tyler, 5 Iowa 535. Ky.-Choteau Trust, etc., Co. V. Smith, 133 Ky. 418, 424, 118 SW 279 [quot Cyc]. Me.-Herbert v. Ford, 29 Me. 546. Mass.-Berenson V. Conant, 214 Mass. 127. 101 NE 60. Minn.-Felsenthal V. Hawks, 50 Minn. 178, 52 NW 528. N. Y. Ogilby v. Wallace, 2 N. Y. Super. 553. "It is also recognized as a rule, that where the plaintiff on the record is a mere trustee for another, the defendant may avail himself of any defence, (except probably a set off,) which he might set up against the real owner, if the suit were in his name." Ogilby v. Wallace, 2 N. Y. Super. 553, 557. against his copartner.98 3 [ 1004] b. Defenses against Payee and Others Not Bona Fide Holders.99 Both by the express provisions of the Negotiable Instruments Law,' and under the law merchant, negotiable paper, as between the parties thereto and all others not bona fide holders in due course, is subject to the same defenses as apply to nonnegotiable paper. The defenses available in an action by a holder not a bona fide holder in due course are the same as those in an action by the payee. However, as in the case of nonnegotiable instruments, no subsequently arising transactions can affect the rights of a holder. So while a purchaser of a note after maturity takes subject to equities which exist between the maker and the payee, he does not take subject to equities existing between the maker and any intermediate holder.5 not a bona fide holder of the note. Quinn v. Fitzgerald First Nat. Bank, 8 Ga. A. 235, 68 SE 1010. (2) But in an assignee's action on notes, a demurrer to defendant's pleas was properly sustained, regardless of the question of the negotiability of the notes, where they failed to show any meritorious defense against the payee. Gamble v. Malsby, 67 Fla. 30, 64 S 437. First Nat. Bank, 8 Ga. A. 235, 68 SE [a] "Between the original parties, 3. Ariz.-Fidelity Title Guaranty Co. v. Ruby, 16 Ariz. 75, 141 P 117. Cal.-Russ Lumber, etc., Co. V. Muscupiabe Land, etc., Co., 120 Cal. 521, 52 P 995, 65 AmSR 186. Ga.-Dorris v. Farmers', etc., Bank, 86 SE 1093. Ky. Hopper v. Holtzclau, 2 Ky. Op. 665; Ford v. Crockett, 1 Ky. Op. 382. v. Perry, 73 Me. Mass.-Baxter v. Little, 6 Metc. 7, 39 AmD 707. See also Breen v. SewPard, 11 Gray 118. Minn.-Linn V. Rugg, 19 Minn. Mo.-Morbrose Inv. Co. v. Flick, 683. S. D.-M. Rumely Co. v. Anderson, 181. 35 S. D. 114, 150 NW 939. As against purchaser after maturity see also supra § 697. [a] If an indorsee does not require notes in good faith, for value and without notice, they are subject in his hands to all defenses available against the payee. Russ Lumber, etc., Co. v. Muscupiabe Land, etc., Co., 120 Cal. 521, 52 P 995, 65 AmSR 186. [b] An assignee of a purchasemoney note, who took with knowledge of the facts on which defendant based its claim of want of consideration, should be treated as standing in the shoes of the seller. Morbrose Inv. Co. v. Flick, 187 Mo. A. 528, 174 SW 189. [c] Where a note payable to or[a] Where one sues as a mere ac- der was transferred without indorsecommodation to the indorser and not ment or written assignment, that a as an innocent holder, although he third person guaranteed payment has so acquired the instrument, the without the knowledge or consent of action is subject to any defense the makers does not affect the available against the indorser. Dex-makers' liability or deprive them of ter First Nat. Bank v. Fox, 40 App. (D. C.) 430. [b] The same defenses are available against a payer supra protest at the request of a payee, as against the drawee himself. Konig v. Bayard, 1 Pet. (U. S.) 250, 7 L. ed. 132. 96. Baltimore Second Nat. Bank v. Alma Bank, 99 Ark. 386. 138 SW 472; Dexter First Nat. Bank v. Fox, 40 App. (D. C.) 430. 97. 213. 98. 398. Vezina v. Piché, 13 Que. Super. Hubbard v. Galusha, 23 Wis. See also supra §§ 575, 576. Particular defenses see infra §§ 1010-1066. 99. defenses available against the payee [d] A note given for a contingent [e] In South Dakota, where a surety on notes was discharged by acts of the payee while in possession, such defense was available as against a transferee after maturity, under Civ. Code § 1994. M. Rumely Co. v. Anderson, 35 S. D. 114, 150 NW 939. [f] To let in a meritorious defense, (1) the maker of a note sued thereon may show that plaintiff is S. D.-Fillmore State Bank V. Hayes, 16 S. D. 365, 82 NW 1068. Tenn.-Fields V. Stunston, 1 Coldw. 40; Gatewood v. Denton, 3 Head 380. Va.-Davis v. Miller, 14 Gratt. (55 Va.) 1; Ritchie v. Moore, 5 Munf. (19 Va.) 388, 7 AmD 688. W. Va.-Davis v. Noll, 38 W. Va. 66, 17 SE 791, 45 AmSR 841. Wis.-Marling V. Fitzgerald, 138 Wis. 93, 120 NW 388, 131 AmSR 1003, 23 LRANS 177. [a] Illustration.-In an action by an assignee of a note given for the price of land sold by the payee to the maker, the fact that the payee had committed a trespass on the land was not a defense, in the absence of a showing that the cause of action for the trespass accrued before the assignment of the rote, and that the payee was insolvent at the time of the assignment, or before the maker had notice of it. Carlton v. Smith, 110 SW 873, 33 KyL 647. 5. Ala.-McKenzie v. Hunt, 32 Ala. 494. Cal.-Hayward v. Stearns, 39 Cal. 58; Vinton v. Crowe, 4 Cal. 309. Ill. Favorite v. Lord, 35 Ill. 142; Root v. Irwin, 18 Ill. 147. N. C.-Hill v. Shields, 81 N. C. 250, 31 AmR 499. S. C.-Perry v. Mays, 18 S. C. L. 354; English v. Nixon, 14 S. C. L. 549. |