§ 189 Notice of Dishonor L. 1909, ch. 43 § 189. When protest need not be made; when must be made. Where any negotiable instrument has been dishonored it may be protested for non-acceptance or non-payment, as the case may be; but protest is not required, except in the case of foreign bills of exchange. This section was derived from the Negotiable Instruments Law of 1897, $ 189. When protest is necessary: see infra, § 260. What are inland and foreign bills of exchange: see infra, § 213. Waiver of protest: see supra, § 182. Declaratory of prior rule.- Before the enactment of this section, it was established that protest was not required of a bill of exchange or a promissory note made and payable in this state. Meise v. Newman, (1894) 74 Hun 341, 27 N. Y. S. 708. But protest had long been required to hold the indorser of a foreign bill of exchange. Commercial Bank v. Varnum, (1872) 49 N. Y. 269. Formal protest by a notary public is not essential to hold the indorser of a promissory note. McBride v. Illinois Nat. Bank, (1910) 138 App. Div. 339, 121 N. Y. S. 1041. Conflict of laws.—Where an instrument in the form of a bill of exchange, is drawn in this state by a firm doing business here, addressed to a firm in Austria, whether the bill is a foreign bill of exchange requiring protest is to be determined by the law of the state, and the drawer is discharged if protest is not made according to our law, though the instrument according to the law of Austria does not require protest. Amsinck v. Rogers, (1907) 189 N. Y. 252, 82 N. E. 134, 121 A. S. R. 858, 12 Ann. Cas. 450, 12 L. R. A. (N. S.) 875. Meaning of term "protest."-"The term protest in a strict technical sense is not applicable to promissory notes. The word, as I apprehend, has by general usage acquired more extensive signification, and in a case like the present includes all those acts which by law are necessary to charge an indorser. When among men of business a note is said to be protested, something more is understood than an official declaration of a notary. The expression would be used indifferently to indicate a series of acts necessary to convert a conditional into an absolute liability, whether those acts were performed by a mere clerk or a public officer." Coddington v. Davis, (1848) 1 N. Y. 186. L. 1909, ch. 43 Discharge ARTICLE 10 DISCHARGE $ 200 Section 200. Instrument; how discharged. 201. When persons secondarily liable on, discharged. 203. Renunciation by holder. 204. Cancellation; unintentional; burden of proof. 206. What constitutes a material alteration. § 200. Instrument; how discharged. A negotiable instrument is discharged: 1. By payment in due course by or on behalf of the principal debtor; 2. By payment in due course by the party accommodated, where the instrument is made or accepted for accommodation; 3. By the intentional cancellation thereof by the holder; 4. By any other act which will discharge a simple contract for the payment of money; 5. When the principal debtor becomes the holder of the instrument at or after maturity in his own right. This section was derived from the Negotiable Instruments Law of 1897, § 200. Discharge of bills drawn in sets: see infra, § 315. What constitutes payment in due course: see supra, § 148. Discharge of person secondarily liable: see infra, § 201. Renunciation by holder: see infra, § 203. Unintentional cancellation: see infra, § 204. Alteration of instrument: see infra, §§ 205, 206. Conflict of laws.-A bill of exchange drawn in this state, but payable in a foreign country, is, as to the performance thereof, controlled by the law of such foreign country; and a payment by the drawee under such circumstances that the bill is discharged according to the foreign law, discharges the drawer from liability in this state. Caras v. Thalmann, (1910) 138 App. Div. 297, 123 N. Y. S. 97. Presumption of payment.-A delay in bringing a suit on a note for a period less than the statute of limitations, affords no presumption of payment. Newcombe v. Fox, (1896) 1 App. Div. 389, 37 N. Y. S. 294, affirmed without opinion (1897) 154 N. Y. 754, 49 N. E. 1101. Payment by giving another instrument. The giving of a renewal note does not operate as a payment of the earlier note, but the question is one of intention. Brooklyn First Nat. Bank v. Gridley, (1906) 112 App. Div. 398, 98 N. Y. S. 445. Where the drawee of a bill of exchange gives a check therefor, such check is not a payment as between the drawee and the holder unless received as such. Kobbi v. Underhill, (1846) 3 Sandf. 277, where, in an action on a debt which the defendant claims was discharged by the giving $200 Discharge L. 1909, ch. 43 of a note of a third party, it appears that the note was given, though the question whether it was received as a payment is disputed, the plaintiff cannot recover on the original debt unless he shows the note to have been lost or some explanation is made of its non-production. Reehl v. Martens, (1899) 40 App. Div. 231, 57 N. Y. S. 1059. The taking of successive renewals does not extinguish the original debt or pay the original note, even though such note is cancelled and delivered up to the makers. It simply operates to extend the time of payment until the renewal note becomes due, when, if not paid, the creditor may sue upon the original demand and bring the renewal note into court to be given up on the trial. Friendship First Nat. Bank v. Weston, (1898) 25 App. Div. 414, 49 N. Y. S. 542. Part payment by one secondarily liable.-The part payment by the guarantor of an instrument to the holder does not discharge the obligation of the maker, and the holder can subsequently sue the maker for the full amount, notwithstanding the part payment, and the recovery will inure to the benefit of the guarantor to the extent of the payment made by him. Assets Realization Co. v. Mercantile Nat. Bank, (1915) 167 App. Div. 757, 153 N. Y. S. 156. Where the indorser of a note pays a part thereof to the holder, and the payment is not made as an agent for the maker, but simply in discharge of his liability as an indorser, the payment does not inure to the benefit of the maker, and the holder may maintain an action against the maker to recover the entire amount of the note. Madison Square Bank v. Pierce, (1893) 137 N. Y. 444, 33 N. E. 557, 33 A. S. R. 751, 20 L. R. A. 335. And the same situation arises when a payment is made by a subsequent indorser, for the payment is not a defense which will avail a prior indorser. New York Twelfth Ward Bank v. Brooks, (1901) 63 App. Div. 220, 71 N. Y. S. 388. Payment of check through clearing house. The adjustment of balances through a clearing house constitutes a sort of tentative or provisional payment, but that adjustment occurs without an opportunity to the members to examine the items, verify signatures, compare the amounts with the drawers' accounts, and the like, and regardless of whether the checks are good; and therefore the question of payment is not ultimately decided until the bank upon which the check is drawn has had an opportunity at its banking house to examine the check. Columbia-Knickerbocker Trust Co. v. Miller, (1915) 215 N. Y. 191, 109 N. E. 179, Ann. Cas. 1917A 348, affirming 156 App. Div. 810, 142 N. Y. S. 440. See also Hentz v. National City Bank, (1913) 159 App. Div. 743, 144 N. Y. S. 979. 'Payment is a matter of intent, and it seems quite clear that the mere entry of items upon a sheet in the clearing house is not intended as a payment." Eastman Kodak Co. v. National Park Bank, (1916) 231 Fed. 320. Payment by third party.-Where a third party calls upon the holder of a note after its maturity and pays the amount due thereon, but says nothing about buying the note other than by declining to have it cancelled, the transaction will be held to be a satisfaction of the note, so as to prevent a suit thereon by a subsequent holder. Burr v. Smith, (1855) 21 Barb. 262. Authority of agent to receive payment.—The mere possession of a note by an agent of the payee, without any other sustaining facts, the note being unindorsed, is not sufficient to authorize a payment by the maker to such agent. Doubleday v. Kress, (1872) 50 N. Y. 410, 10 Am. Rep. 502. Where the authority of an agent is to receive the interest thereon for the payee and to take a note with an indorser, but the maker pays both the principal and interest to such agent, the note is not discharged, and the principal may recover the amount thereof from the maker. Doubleday v. Kress, (1872) 50 N. Y. 410, 10 Am. Rep. 502. Payment by party accommodated.- Under this section and section 202, th payment of an accommodation note by the party accommodated discharges the instrument. N. Y. S. 101. Royal Bank v. Goldschmidt, (1906) 51 Misc. 822, 101 L. 1909, ch. 43 Discharge 8 201 Surrender to maker.-Where, in consideration of a part payment of a note, it is surrendered to the maker, a prior holder cannot maintain an action on the note for the balance. Schwartzman v. Post, (1904) 94 App. Div. 474, 84 N. Y. S. 922, 87 N. Y. S. 872. "The rule seems to be well settled by the authorities that where an obligee delivers up the obligation he holds against another party, with the intent and for the purpose of discharging the debt, where there is no fraud or mistake alleged or proven, that such surrender operates in law as a release and discharge of the liability thereon; nor is any consideration required to support such a transaction when it has been fully instituted." Larkin v. Hardenbrook, (1882) 90 N. Y. 333, 43 Am. Rep. 176. Prior to the adoption of the Negotiable Instruments Law, it was generally held that, if a note was surrendered by the payee to the maker, the whole claim was discharged. Schwartzman v. Post, (1904) 94 App. Div. 474, 84 N. Y. S. 922, 87 N. Y. S. 872. "There certainly could not be higher evidence of an intention to discharge and cancel a debt than by the destruction and surrender of the instrument which created it, to a party who is liable by virtue of the same." Larkin v. Hardenbrook, (1882) 90 N. Y. 333, 43 Aṁ. Rep. 176. "In his own right."-The words in subdivision 5 "in his own right" merely exclude such a case as that of a maker acquiring the instrument in, purely, a representative capacity. Schwartzman v. Post, (1904) 94 App. Div. 474, 84 N. Y. S. 922, 87 N. Y. S. 872. Where an indorser pays a note at its maturity in order to prevent its protest, the maker, who has not paid the same, is not discharged from liability to such indorser, merely because in some manner he obtains possession of the note, for the maker does not thereby become a holder "in his own right" as the expression is used in this section. Korkemas v. Mack soud, (1909) 131 App. Div. 728, 116 N. Y. S. 85. Cited. Pavenstedt v. New York Life Ins. Co., (1906) 113 App. Div. 866, 99 N. Y. S. 614, affirmed (1911) 203 N. Y. 91, 96 N. E. 104, Ann. Cas. 1913A 805. § 201. When persons secondarily liable on, discharged. A person secondarily liable on the instrument is discharged: 1. By any act which discharges the instrument; 2. By the intentional cancellation of his signature by the holder; 3. By the discharge of a prior party; 4. By a valid tender of payment made by a prior party; 5. By a release of the principal debtor, unless the holder's right of recourse against the party secondarily liable is expressly reserved; 6. By any agreement binding upon the holder to extend the time of payment or to postpone the holder's right to enforce the instrument, unless the right of recourse against such party is expressly reserved. This section was derived from the Negotiable Instruments Law of 1897, § 201. Who are secondarily liable on instrument: see supra, § 3. Discharge of instrument: see supra, § 200. Rights of party discharging instrument: see infra, § 202. Strictissimi juris.-The obligation of an accomodation indorser, as a surety, is strictissimi juris. National Park Bank v. Koehler, (1912) 204 N. Y. 174, 97 N. E. 468. 8 201 Discharge L. 1909, ch. 43 Payment.-Where, in an action on a note, the surety of the maker on his appeal bond pays the judgment finally rendered against the maker, the note is paid and discharged as against an accommodation indorser who was not served with process in the action. State Bank v. Kahn, (1906) 49 Misc. 500, 98 N. Y. S. 858. On the payment of a check by the bank on which it is drawn, an indorser thereof is discharged. Balsam v. Mutual Alliance Trust Co., (1911) 74 Misc. 465, 138 N. Y. S. 325; Poess v. New York Twelfth Ward Bank, (1904) 43 Misc. 45, 86 N. Y. S. 859. When a check is presented to a bank for deposit, though drawn directly upon itself, it is the same as though the payment in any other form was demanded. It is the right of the bank to reject it, or to refuse to pay it, or to receive it conditionally, but if it accepts such a check and pays it, either by delivering the currency or giving the party credit for it, the transaction is closed between the bank and such party, provided the paper is genuine. Oddie v. National City Bank, (1871) 45 N. Y. 735, 6 Am Rep. 160; Consolidated Nat. Bank v. Middletown First Nat. Bank, (1908) 129 App. Div. 538, 114 N. Y. S. 308, affirmed (1910) 199 N. Y. 516 mem. Cancellation of indorser's signature.—An indorser is discharged by the intentional cancellation of his signature by the holder, although there is no consideration for the cancellation. McCormick v. Shea, (1906) 50 Misc. 492, 99 N. Y. S. 467. Discharge of maker. If the holder of a note so deals with the maker thereof that the latter is discharged as against subsequent indorsers, such indorsers are discharged as against the holder. Spies v. National City Bank, (1903) 174 N. Y. 222, 66 N. E. 736, 61 L. R. A. 193, wherein it was said: "While the holder of a note may enforce collection from either the maker or indorser, or both, he must take care not to impair the remedy of the indorser against the maker, for to the extent that he destroys the indorser's claim against the maker he releases his claim against the indorser." Where the holder of a note signs an instrument releasing the maker from all claims, and there is nothing in the instrument reserving a right of recourse against the indorser, the latter is discharged. Ziegfried v. Stein, (1909) 117 N. Y. S. 900. If the holder of a demand note delays a demand so long that the maker is discharged, the holder cannot recover of the indorser, for a discharge of the maker to the indorser is a discharge of the indorser to the holder. Shutts v. Fingar, (1885) 100 N. Y. 539, 3 N. E. 588, 53 Am. Rep. 231. But the fact that, after the giving of a note which is secured by a chattel mortgage, the maker and the holder substitute a new chattel mortgage, does not discharge the indorser, although the substitution is made without his knowledge or consent, there being no proof that the security is diminished by the substitution or that any other lien bas obtained prfority by the change. Keeler v. Hollweg, (1899) 36 App. Div. 490, 55 N. Y. S. 821. Deposit by maker in bank at maturity of note.—The fact that after the maturity of a note held by a bank, the maker has a deposit in the bank sufficient to pay it, but the bank does not appropriate the deposit for that purpose, does not release the indorser, in the absence of any direction or agreement that the deposit shall be used for the satisfaction of the note. Far Rockaway Bank v. Norton, (1906) 186 N. Y. 484, 79 N. E. 709; National Bank v. Smith, (1876) 66 N. Y. 271, 23 Am. Rep. 48. Extension of time.- Prior to the adoption of the Negotiable Instruments Law, it was well settled that a valid and subsisting agreement to extend the time of payment between the holder of a promissory note and the principal debtor, without the knowledge or consent of a surety or indorser, operated to release the latter. National Citizens' Bank v. Toplitz, (1904) 178 N. Y. 464, 71 N. E. 1; Pomeroy v. Tanner, (1877) 70 N. Y. 547; Billington v. Wagoner, (1865) 33 N. Y. 31. "It is a well established rule of law that an indorser of negotiable paper, like any surety, is entitled to have the engagement of the principal debtor preserved without variation, and any change or extension of |