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NEGOTIABLE INSTRUMENTS LAW

CHAPTER 38 OF THE CONSOLIDATED LAWS

Article 1. Short title; definitions (SS 1, 2).

2. General provisions (S$ 3–7).
3. Form and interpretation (S$ 20–42).
4. Consideration (S$ 50–55).
5. Negotiation (S$ 60–80).
6. Rights of holder (S$ 90–98).
7. Liabilities of parties (SS 110–119).
8. Presentment for payment (S$ 130–148).

9. Notice of dishonor (S$ 160-189).
10. Discharge (S$ 200–206).
11. Bills of exchange; form and interpretation (S$ 210–

215). 12. Acceptance (S$ 220–230). 13. Presentment for acceptance (S$ 240–248). 14. Protest (S$ 260–268). 15. Acceptance for honor (S$ 280–289). 16. Payment for honor (S$ 300—306). 17. Bills in set (S$ 310–315). 18. Promissory notes and checks (S$ 320–326). 19. Notes given for patent rights and for a speculative

consideration (S$ 330–332). 20. Laws repealed; when to take effect (SS 340–341). The report of the Board of Statutory Consolidation is dated June 26, 1907, and the Consolidated Laws were enacted in 1909. The legislation for 1908 was examined by the board and any changes that affected the laws as reported in 1907 were embodied in the laws as reported by the board to the legislature of 1909.

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§ 1. Short title. This chapter shall be known as the “Negotiable Instruments Law.”

The original Negotiable Instruments Law was chapter 50 of the “General Laws,” being L. 1897, ch. 612.

Application of chapter: see infra, 6.

Usurious rate of interest on negotiable instruments: see GENERAL BUSINESS LAW, $ 370 et seq.; BANKING LAW, $ 74.

History of uniform negotiable instruments laws.—“The adoption in recent years of the Negotiable Instruments Act by so many of the states has been in response to the general desire for uniformity in respect to commercial paper. This statute is the outgrowth of many years of effort on the part of bar associations, jurists, publicists, bankers and citizens generally, to secure uniformity in the law relating to commercial paper. The act was drafted by a committee appointed by the State Boards of Commissioners for · Promoting Uniformity of Legislation, at the National Conference held in Detroit in August, 1895. At the Conference held in 1896 the draft of the committee was considered, amended in some particulars and recommended to the legislatures of the states for adoption. Prior to the adoption of this act by the various states in which it is in force, there was a great lack of uniformity in the statutes of those states and in the decisions of the courts with reference to the law merchant. The act was formulated and adopted not with a view of making any radical changes in the law as generally understood and administered, but to remove the doubt, as well as conflict, that had in some instances come into existence from the difference in statutory laws as well as court opinions. In its provisions it pursues and largely reproduces the British Bills of Exchange Act of 1882, which was drawn by His Honor Judge Chalmers and submitted to recognized authorities on the commercial law and practice of England. The act has become the law in all but a small number of the states of the Union. As a rule the draft recommended by the Commissioners for Promoting Uniformity of Legislation has been adopted without alteration; in some states, however, slight changes have been made.” 3 R. C. L. 852.

Negotiable Instruments Law as a codification.— The Negotiable Instruments Law is a codification of the law merchant on the subjects treated. Commercial Nat. Bank v. Zimmerman, (1906) 185 N. Y. 210, 77 N. E. 1020.

Construction in furtherance of uniformity.-The Negotiable Instruments Law should be so construed as to effectuate the general purpose to make uniform the laws of those states which enact it; and, except where the courts of this state have passed on a specific question as to the construction of a section, the decisions of courts of other states interpreting parallel sections of their statutes should be given weight in the construction of the statute of this state. Century Bank v. Breitbart, (1915) 89 Misc. 308, 151 N. Y. S. 588. To the same effect, see Brown v. Brown, (1915) 91 Misc. 220, 154 N. Y. S. 1098; Broderick, etc., Rope Co. v. McGrath, (1913) 81 Misc. 199, 142 N. Y. S. 497.

Consideration of prior statutes and decisions.—“ Prior to 1897 the Law of Negotiable Instruments was almost altogether the common law, and in inter: preting and applying the present codified law it may be well to consider the

L. 1909, ch. 43

Short Title; Definitions

82

decisions and the few statutes then in force.” Matter of Mandelbaum, (1913) 80 Misc. 475, 141 N. Y. S. 319, affirmed 159 App. Div. 909, 144 N. Y. S. 1128.

§ 2. Definitions. In this chapter, unless the context otherwise requires :

“Acceptance means an acceptance completed by delivery or notification.

"Action" includes counter-claim and set-off.

“ Bank” includes any person or association of persons carrying on the business of banking, whether incorporated or not.

“ Bearer” means the person in possession of a bill or note which is payable to bearer.

“Bill ” means bill of exchange, and“ note” means negotiable promissory note.

“ Delivery" means transfer of possession, actual or constructive, from one person to another.

Holder" means the payee or indorsee of a bill or note, who is in possession of it, or the bearer thereof.

Indorsement means an indorsement completed by delivery. “Instrument" means negotiable instrument. .

means the first delivery of the instrument, complete in form, to a person who takes it as a holder.

“Person” includes a body of persons, whether incorporated or not.

" Value” means valuable consideration. “Written ” includes printed, and “writing” includes print.

“ Issue

This section was derived from the Negotiable Instruments Law of 1897, § 2.

Negotiation: see infra, $ 60. Holder in due course: see infra, ß 91. Bill of exchange: see infra, $ 210. Inland and foreign bills of exchange: see infra § 213. Promissory note: see infra § 320. Check: see infra § 321.

Action as used in Code of Civil Procedure: see Code Civ. Pro., § 3343, subd. 20. Bank

as used in Banking Law: see BANKING LAW, § 2. Unauthorized use of term bank: see PENAL LAW, $ 302. “ Person

as used in other laws: see CONSERVATION LAW, $ 380, subd. 3, § 430, subd. 7; GENERAL BUSINESS LAW, $ 142; GENERAL CONSTRUCTION LAW, $ 37; LIQUOR TAX LAW, $ 2; PUBLIC SERVICE COMMISSIONS LAW, § 2, subd. 4; SECOND CLASS CITIES Law, $ 245. “Writtenand writing": see GENERAL CONSTRUCTION LAW, § 56; PENAL LAW, 3, subd. 8.

Delivery. If there is an actual transfer of an instrument, there is a delivery of it. Grannis v. Stevens, (1916) 216 N. Y. 583, 111 N. E. 263. And see, infra, s 35 as to the efficacy and presumption of delivery.

As to when delivery is effectual and when presumed, see infra, & 35.

Constructive delivery.-Where the drawer of a check requires that it be indorsed by the payee to a third person and delivers it to the payee with instructions to deliver it to such third party, there is a constructive delivery of the check to the third person, though no actual delivery is made. Wolfin

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v. New York Security Bank, (1915) 170 App. Div. 519, 156 N. Y. S. 474, affirmed (1916) 218 N. Y. 709 mem.

Cited.-A. E. McBee Co. v. Shoemaker, (1916) 174 App. Div. 291, 160 N. Y. S. 251; Barkley v. Muller, (1914) 164 App. Div. 351, 149 N. Y. S. 620; Lyons v. Union Exch. Nat. Bank, (1912) 150 App. Div. 493, 135 N. Y. S. 121; Linick v. Nutting, (1910) 140 App. Div. 265, 125 N. Y. S. 93; Manufacturer's Commercial Co. v. Blitz, (1909) 131 App. Div. 17, 115 N. Y. S. 402; Schwartzman v. Post, (1904) 94 App. Div. 474, 87 N. Y, S. 872; Albert v. Hoffman, (1909) 64 Misc. 87, 117 N. Y. S. 1043; Hengen v. Lewis, (1904) 91 N. Y. S. 77.

L. 1909, ch. 43

General Provisions

$$ 3, 4

ARTICLE 2

GENERAL PROVISIONS

Section 3. Person primarily liable on instrument.

4. Reasonable time, what constitutes.
5. Time, how computed; when last day falls on holiday.
6. Application of chapter.
7. Law merchant; when governs.

The person

§ 3. Person primarily liable on instrument. “primarily” liable on an instrument is the person who by the terms of the instrument is absolutely required to pay the same. All other parties are “secondarily” liable.

This section was derived from the Negotiable Instruments Law of 1897, § 3.

Offset in equity by indorser.- Before the enactment of the Negotiable Instruments Law of 1897, it was the law that the indorser of a promissory note which was made for his accommodation by another, could, upon the insolvency of the bank holding such note before the maturity thereof, elect to have such note due and payable at once and had an equitable right to offset the amount of the note against his deposit in the bank; and this section has not abrogated such equitable right of offset. Building, etc., Co. v. Northern Bank, (1912) 206 N. Y. 400, 99 N. E. 1044.

Accommodation maker.—The maker of a note for the accommodation of an indorser thereof is “primarily” liable thereon, though the indorsee has full knowledge of the circumstances under which the note is made. National Citizens' Bank v. Toplitz, (1903) 81 App. Div. 593, 81 N. Y. S. 422, affirmed on other grounds (1904) 178 N. Y. 464, 71 N. E. 1.

Cited.- National Citizens' Bank v. Toplitz, (1904) 178 N. Y. 464, 71 N. E. 1, affirming 81 App. Div. 593, 81 N. Y. S. 422; Schwartzman v. Post, (1904) 94 App. Div. 474, 87 N. Y. S. 872.

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8 4. Reasonable time, what constitutes. In determining what

“reasonable time” or an “unreasonable time” regard is to be had to the nature of the instrument, the usage of trade or business (if any) with respect to such instruments, and the facts of the particular case.

This section was derived from the Negotiable Instruments Law of 1897, § 4.

Reasonable time for presentment of demand note: see infra, § 131. Reason able time for presentment of check : see infra, § 322.

Determination of reasonable time.”-After the issue of a note payable on demand, what constitutes reasonableness of time for its presentment cannot be determined by any fixed rules; for, plainly, the particular circumstances may be such as to evidence some intention of the parties as to its continuance and certainly they may be sufficient to justify an inference of unreasonable delay. The question of what is a reasonable time for the presentment of a demand note in order to charge the parties thereon is determinable on the facts. That question, if the facts are unsettled and

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