"charged by such payment." 13 The same provision is contained in the English Bills of Exchange Act.14

14

d. Payer for honor entitled to the bill and the protest.- The Negotiable Instruments Law provides that: "The payer for

66

honor on paying to the holder the amount of the bill and the "notarial expenses incidental to its dishonor is entitled to re"ceive both the bill itself and the protest." 15 A similar provision is contained in the English Bills of Exchange Act. 16

13. Neg. Inst. L. (N. Y.), § 305. For the same section in statutes of other States see Appendix.

14. English Bills of Exchange Act, § 68 (7). To the same effect is the German Exchange Law, art. 62.

15. Neg. Inst. Law (N. Y.), § 306. For the same section in stat

utes of other States see Appendix.

16. English Bills of Exchange Act, § 68 (6). It is also provided in this section that, "If the holder do not on demand deliver them up, he shall be liable to the payer for honor in damages.

CHAPTER XVII.

Checks.

§ 166. Definition and Characteristics of a Check. a. Statutory definition.

b. Rules governing checks.

§ 167. Presentment of Check for Payment. a. In general.

b. Effect of delay in presentment.

c. Effect of delay as to indorser.

d. What constitutes reasonable time.

§ 168. Certification of Check.

a. Equivalent to acceptance.

b. Effect of certification.

§ 169. When Check Operates as an Assignment. a. Statutory provision.

b. General rule.

§ 166. Definition and characteristics of a check.

17

a. Statutory definition.— The Negotiable Instruments Law provides that: "A check is a bill of exchange drawn on a bank, "payable on demand." This definition is the same as that contained in the English Bills of Exchange Act.18 We have considered in another place the characteristics of a check and the features which distinguish it from a bill of exchange.' It is generally held that a check payable within a certain specified time after its date is an inland bill of exchange.20 There are, however, decisions to the effect that such a check is not a bill of

17. Neg. Inst. L. (N. Y.), § 321. 18. English Bills of Exchange Act, § 73.

19. See § 16, ante.

19

Harrison v. Nicollet Nat. Bank, 41 Minn. 488, 43 N. W. 336, 16 Am. St. Rep. 718, 5 L. R. A. 746; Pope v. Bank of Albion, 57 N. Y. 126; Bowen v. Newell, 8 N. Y. 190; Morrison v. Bailey, 5 Ohio St. 13, 64 Am. Dec. 632; Champion v. Gordon, 70 Pa. St. 474, 10 Am. Rep. 681.

20. Minturn v. Fisher, 4 Cal. 35; Henderson v. Pope, 39 Ga. 361; Georgia Nat. Bank v. Henderson, 46 Ga. 487; Culter v. Reynolds, 64 Ill. 321;

exchange.2 In most cases where the question has arisen as to whether an instrument was a check or bill of exchange, it was necessary to determine whether it was entitled to days of grace. The abolishing of days of grace in so many of the States has materially affected the importance of this question.

b. Rules governing checks. The Negotiable Instruments Law provides that: "Except as herein otherwise provided, the pro"visions of this act applicable to a bill of exchange payable on "demand, apply to a check." 22 This provision is also contained in the English Bills of Exchange Act.23 A check is a negotiable instrument and is subject to the same defenses, 24 and the rules governing the indorsement and transfer of bills of exchange and other negotiable instruments are also applicable to checks. Upon the nonpayment of a check after due presentment, a demand and notice of dishonor is necessary, in order that the holder may recover of the drawer.2

25

check rather than as a bill of exchange, and we see no valid objection to doing so." See also Raylor v. Wilson, 11 Metc. (Mass.) 44, 63 Am. Dec. 180; Westminister Bank V. Wheaton, 5 R. I. 30; In re Brown, Fed. Cas. No. 1,985, 2 Story (U. S.), 502.

21. Checks made payable at a it, and that it will then be paid, and future day.- Way v. Towle, 155 Mass. neither in the latter case any more 374, 29 N. E. 506. In this case the court than in the former would it be exsaid: "The question whether a check pected that the holder would present made payable on a day subsequent the check to the bank on which it was to its date should be regarded as a drawn for acceptance before payable, check or as a bill has been decided and, on its refusal to accept it, bring differently in different jurisdictions. suit forthwith against the drawer for In the present case the instrument the nonacceptance. We think it betappears to be upon one of the or- ter accords with the intent and undinary printed blanks of the bank derstanding of the parties and of on which it is drawn. It is dated bankers and of business men generally, August 31, 1889, and the only differ- to treat the instrument in suit as a ence that is suggested between it and the ordinary check is that it is made payable October 1, 1889. If it had been post-dated as of that date, it would not have been payable until then, but yet would in that case have been a check. It is possessed of the other characteristics of a check, and we cannot believe that it was intended by the parties, or would have been taken by the bank on which it was drawn, as anything else than a check. It is often convenient to make a check payable at a future day, and we see no valid distinction between post-dating it and making it payable at a subsequent date. In the latter case as in the former it is expected that it will be presented on the day when payable, which in the one instance would be the day of its date, and in the other the day fixed for its payment, and that there will be funds to meet

22. Neg. Inst. L. (N. Y.), § 321. For same section in statutes of other States see Appendix.

23. English Bills of Exchange Act, § 73.

24. Bell v. Stewart, 156 Mass. 508, 31 N. E. 386.

25. Herker v. Anderson, 21 Wend. (N. Y.) 372; Dolph v. Rice, 18 Wis. 397; Sherman v. Comstock, Fed. Cas. No. 12,764, 2 McLean (U. S.), 19. In the case of Kelly v. Brown, 5 Gray (Mass.), 108, it was held that a check addressed to the cashier of a bank must be presented to the bank

§ 167. Presentment of check for payment.

a. In general. The provisions of the Negotiable Instruments Law, relating to the presentment of negotiable instruments for payment, are applicable to checks. The several rules relating to such presentment are considered and discussed in the chapter on "Presentment for Payment.' " 26

b. Effect of delay in presentment.- The Negotiable Instruments Law provides that: "A check must be presented for pay"ment within a reasonable time after its issue or the drawer will "be discharged from liability thereon to the extent of the loss "caused by the delay." 27 This provision is declaratory of the general rule. The want of due presentment of a check does not discharge the drawer, unless he has suffered some loss or injury thereby; this is one point of difference between a check and a bill of exchange.29 The only way in which the drawer of a check would be liable to be injured by a failure to present it within a reasonable time is where subsequent to its delivery and prior to its presentment the bank upon which it is drawn becomes insolvent. In such a case in respect to the check the drawer will be discharged to the extent of the loss he has sustained thereby.30

for payment in order to charge the it by the post to some person at the drawer; and proof that it was in- latter place on the next day after it tended by the parties as evidence of is received, and the person to whom money alone, and was not intended it is sent will not be required to to be presented to the bank for pay- present it for payment until the day ment, is inadmissible to support the action against the drawer on the check; and in the case of Commercial Nat. Bank v. First Nat. Bank, 119 N. C. 783, 24 S. E. 524, it was held that the holder of a check cannot sue the drawer thereon until it has been presented to the drawee and payment refused.

26. See ante, chap. VIII. 27. Neg. Inst. L. (N. Y.), § 322. For same section in statutes of other States see Appendix.

28. Delay on presenting check.Story on Promissory Notes (p. 493) lays down a rule, that if the payee or holder of a check receives it from the drawer in the same town or city where it is payable, he is bound to present it for payment on the next succeeding day after it is received; but where he receives the check from the drawer in a place distant from the place of payment, it will be sufficient for him to forward

after it has reached him in the regular course of mail. In the case of Industrial Bank v. Bowes, 165 Ill. 70, 46 N. E. 10, the court says, in speaking of this rule, that it only applies where, in the intermediate time between the drawing of the check and presentment, there has been a change of circumstances affecting the interests of the drawer, in respect to the banker upon whom the check was drawn. Where there has been a change, the rule is strictly applied."

29. In re Brown, Fed. Cas. No. 1,985, 2 Story (U. S.), 502; Morris v. Eufaula Nat. Bank, 106 Ala. 383, 18 South. 11; Heartt v. Rhodes, 66 Ill. 351; Industrial Bank v. Bowes, 165 Ill. 70; First Nat. Bank v. Buckhannon Bank, 80 Md. 475, 31 Atl. 302, 27 L. R. A. 332; Harbeck v. Craft, 4 Duer (N. Y.), 122; Kilpatrick v. Home Building & Loan Assn., 119 Pa. St. 30, 12 Atl. 754.

30. Story on Promissory Notes,

In speaking on this subject, Judge Story says:31 "If a bank or banker still remains in good credit and is able to pay the check, the drawer will still remain liable to pay the same, notwithstanding many months may have elapsed since the date of the check, and before the presentment for payment and notice of the dishonor. So if the drawer, at the date of the check or at the time of the presentment of it for payment, had no funds in the bank or banker's hands, or if, after drawing the check and before its presentment for payment and dishonor, he had withdrawn his funds, the drawer would remain liable to pay the check, notwithstanding the lapse of time."

c. Effect of delay as to indorser.—- While as between the drawer and the holder of a bill, delay in presentment does not discharge the liability of the drawer unless loss to him has resulted, a different rule exists as between the holder and the indorser of a check. As between such parties the holder assumes the obligation to present the check to the bank for payment within the time prescribed by the law merchant, that is to say, not later than the next day after its date, and if such presentment is not made, the indorser will be discharged from his obligation.32 The law

$497. In the case of Farwell v. Curtis, Fed. Cas. No. 4,690, it was held that the creditor who receives for his payment the debtor's check on the bank, although it is accepted, not in payment but as a means of payment, impliedly undertakes to present it within a reasonable time, and if, through his delay, the bonds are lost by failure of the bank, he must bear the loss. See also Industrial Trust, Title & Sav. Co. v. Weakley, 103 Ala. 458, 15 South. 854.

31. Story § 498. 32. Effect of delay as to indorser.Carroll v. Sweet, 128 N. Y. 195, 27 N. E. 763, 13 L. R. A. 43. In this case it appeared that the check was dated August 22, 1887, and was drawn on the Asbury Park National Bank, and was, on the same day, indorsed and delivered by the defendant to the plaintiff at the place where the bank was located. It was not presented until the 31st of August, nine days after it was received by the plaintiff. The court said: "The defendant was, by such delay, discharged from liability as in

on Promissory Notes,

dorser of the check, irrespective of any question of loss or injury. Presentment in due time, as fixed by the law merchant, was a condition, upon performance of which the liability of the defendant as indorser depended, and this delay was not excused, although the drawer of the check had no funds, or was insolvent, or because presentment would have been unavailing as a means of procuring payment."

Check deposited with bank for collection. A bank, on crediting to the depositor the check of the third party drawn on another bank and indorsed by the depositor, assumes the obligation to present it for payment within a reasonable time; and if it omits so to do, and the check is dishonored, through the failure of the bank on which it was drawn, while if it had been duly presented it would have been paid from funds of the drawer provided to meet it, both the indorser and the drawer are discharged; and if the depositor in ignorance of the facts pays the amount of the check to his bank under his supposed liability as indorser, he has a good cause of action against the bank for the re