ing that a note payable at a bank is in effect the equivalent of a check or draft on the bank in favor of the holder of a note, and that the bank is in default if it allows the paper to go to protest, in case the maker has money due him from the bank, on account, generally applicable to the payment of drafts or checks.58 In an Indiana case,59 Mitchell, J., said: "While we are not inclined to the view that a promissory note, negotiable and payable at a bank, is in all respects the equivalent of a check drawn by the maker against a fund on deposit in the bank, so as to require the banker to pay the note, on presentation, out of funds applicable to that purpose, we can conceive of no valid reason why a note or bill thus drawn shall not be held to authorize the banker to pay and thereby become subrogated to all the rights of the holder to the same extent as if it had purchased the paper after maturity. One who has drawn a note or bill payable at a bank must have done so for some purpose, and he cannot be heard to say, after his banker had paid a just debt for which he had given a note, to which the maker claims no defense, that the payment was wholly voluntary and unauthorized. In such a case the banker who has paid the note is entitled to hold it as the equitable owner or purchaser, and is entitled to set it off in a suit to recover a balance due the depositor on a general account." 58. Note payable at bank equiva- had become the holder of the notes in lent to check or draft.- Etna Nat. question, and that there then existed Bank v. Fourth Nat. Bank, 46 N. in favor of the banks a right of setY. 82; Indig v. National City Bank, off against any deposit which the 80 N. Y. 100; Griffin v. Rice, 1 makers may have had in the banks at Hilt. (N. Y.) 184; Commercial the maturity of the notes; the Bank v. Henninger, 105 Pa. St. 496; effect of the ruling in these cases German Nat. Bank v. Foreman, 138 is to prevent banks from waivPa. St. 474, in which case it appeared ing this right to the prejudice of that a bank which had discounted a indorsers. First Nat. Bank, 74 Fed. 276, 20 C. C. A. 181, it was held that the payment of a note by the bank at which it is made payable, although made under misapprehensions of the state of the maker's account with the bank, concludes the bank as against the holder of the note, who has surrendered it, and the payment cannot be recovered back of the holder. note had, when it matured, funds of In the case of Riverside Bank v. the maker on deposit applicable to the note and sufficient to pay it, but the maker, who conceived that he had a defense against the payee, induced the bank not to charge the note to his account, but to bring suit thereon against the payee, who was also indorser. It was held that the indorser was discharged by the bank's failure to collect the note out of the funds of the maker in its hands. It will be noticed upon an examination of the two Pennsylvania cases that the banks 59. Bedford Bank v. Acoam, 125 Ind. 584, 25 N. E. 713, 21 Am. St. Rep. 258, 9 L. R. A. 560. § 107. What constitutes payment in due course. The Negotiable Instruments Law provides as follows: "Pay" Iment is made in due course when it is made at or after the maturity of the instrument to the holder thereof in good faith "and without notice that his title is defective." 60 This is a statutory declaration of a general rule, and is inserted here because in the Negotiable Instruments Law it is included in the article on Presentment for Payment," which is made the basis of this chapter. We will consider this section in connection with a subsequent chapter on "Discharge of Negotiable Instruments. 66 60. Neg. Inst. L. (N. Y.), § 148. 61. Chap. 11, post. For same section in statutes of other States see Appendix. 61 CHAPTER IX. Notice of Dishonor. § 108. To Whom Notice of Dishonor Must be Given. a. Statutory provision. b. Protest; notice of dishonor. c. Effect of failure to give notice. d. Notice to a drawer, or one of successive indorsers. e. Notice of dishonor of nonnegotiable instruments. f. Notice to party or agent; statutory provision. g. Service of notice where party is dead; statutory provision. h. Notice to partners; statutory provision. i. Notice to persons jointly liable; statutory provision. j. Notice to bankrupt or insolvent; statutory provision. § 109. By Whom Notice to be Given. a. Statutory provision. b. General rule. § 110. Notice by Agent. a. Authority of agent; statutory provision. b. When agent may give notice; statutory rule. § 111. Benefits of Notice. a. Where notice is given by or on behalf of holder; statutory provision. b. Where given by or on behalf of party entitled to give notice; statutory rule. § 112. Sufficiency and Form of Notice. a. When notice sufficient. (1) Statutory provision. (2) Misdescription of instrument and mistake. b. Form of notice. (1) Statutory provision. (2) Notice may be oral. (3) General rule as to sufficiency of notice. § 113. Time Within Which Notice Must be Given. a. General and statutory rule. b. Delay in giving notice, when excusable; statutory provision. c. Where parties reside in the same place; statutory provision. d. Where parties reside at different places; statutory provision. e. Notice to successive indorsers; statutory provision. § 114. Service of Notice by Mail. a. In general. b. Diligence to ascertain address. c. Miscarriage in mails. d. What constitutes deposit in post-office; statutory provision. § 115. Where Notice Must be Sent. a. Statutory provision. b. Sufficiency of address. § 116. Waiver of Notice. a. In general. b. How waiver of notice may be made; statutory provision. d. Waiver, express or implied. e. By whom made. f. Whom affected by waiver; statutory provision. g. Effect of waiver of protest. § 117. When Notice May be Dispensed With. a. Statutory provision. b. In general. c. Diligence required. d. When notice need not be given to drawer; statutory provision. e. When notice need not be given to indorser; statutory provision. § 118. Notice of Dishonor by Nonacceptance. a. Notice not required where notice of nonacceptance has been given. b. Necessity for notice. § 119. Protest of Negotiable Instrument. 108. To whom notice of dishonor must be given. a. Statutory provision.- The Negotiable Instruments Law provides as follows: "Except as herein otherwise provided, when a negotiable instrument has been dishonored by nonacceptance or nonpayment, notice of dishonor must be given to the drawer and "to each indorser, and any drawer or indorser to whom such "notice is not given is discharged." 62 A similar provision is contained in the English Bills of Exchange Act.63 62. Neg. Inst. L. (N. Y.), § 160. For same section in statutes of other States see Appendix. Section construed, Phillips & Ebling Brewing Co. v. Reinheimer, 32 Misc. (N. Y.) 594, 66 N. Y. Supp. 458. charged unless he can show that the 63. English Bills of Exchange Act, b. Protest; notice of dishonor. In a strict and technical sense the term "protest" is not applicable to promissory notes; technically it means only the formal declaration drawn up and signed by a notary. In the Negotiable Instruments Law a protest is applied to a foreign bill dishonored by nonacceptance, or if duly accepted, dishonored by nonpayment. But in a popular sense, 64 65 and as used among men of business, the term includes all the steps necessary to charge a drawer or indorser. A notice of dishonor, as will be observed hereafter, does not require the formality of a technical protest. It implies that the drawer of a bill, and each indorser of a negotiable instrument shall be notified of the instrument's dishonor, and the fact that such drawer or indorser already has knowledge of the dishonor of the instrument is not material; the notice must inform him that the instrument has been duly presented for payment; that it has been dishonored, and that the holder looks to him for payment.67 In this chapter, as in the Negotiable Instruments Law, the term "notice of dishonor" will be used, and it should be distinguished in its meaning from that of the term "protest" as more technically used, in relation to foreign bills of exchange, in a subsequent chapter of this work. c. Effect of failure to give notice. The drawer of a bill of exchange, or an indorser of any negotiable instrument will not be liable thereon, where the instrument has been dishonored by nonacceptance or nonpayment, unless a notice of such dishonor be given to such drawer or indorser.68 The necessity of notice and 64. Coddington v. Davis, 1 N. Y. 186; Townsend V. Lorain Bank, 2 Ohio St. 345; Story on Bills, § 276. 65. Neg. Inst. L. (N. Y.), § 260. See post, chap. XIV, § 164, p. 609. formed by a mere clerk or a public officer." See also Townsend v. Lorain Bank, 2 Ohio St. 345; White v. Keith, 97 Ala. 668, 12 South. 611. 67. Meaning of term "notice."66. Meaning of term "protest."- Jagger v. National German-AmeriIn the case of Coddington v. Davis, can Bank, 53 Minn. 386, 55 N. 1 N. Y. 186, the court said: "The W. 545. In the case of Burg v. Legge, term 'protest' in a strict techni- 5 M. & W. (Eng.) 418, 420, the court cal sense is not applicable to prom- said: "There must be proof of a issory notes. The word, however, as notice given from some party entitled I apprehend, has by general usage ac- to call for payment of the bill, and quired a more extensive signification, conveying in its terms intelligence of and in a case like the present in the presentment, dishonored, the parcludes all those cases which by law ties to be held liable in consequence. are necessary to charge the indorser. That is the true meaning of the word When among men of business a note notice,' when used in declarations of is said to be protested, something this kind, and the mere knowledge of more is understood than an official the party is not enough." See also declaration of a notary. The expres- Carter v. Flower, 16 M. & W. (Eng.) sion would be used indefinitely to in- 749; Brown v. Ferguson, 4 Leigh dicate a series of acts necessary to (Va.), 37, 24 Am. Dec. 707. confer an additional into an absolute liability whether its acts were per 68. McGruder v. Union Bank, 3 Pet. (U. S.) 90, 7 L. Ed. 612; Pryor v. |