§ 1167. An offer to pay a part of the bill or note, without any objection made as to demand and notice, has been held sufficient to dispense with proof of demand and notice ;92 but it has been held otherwise where the drawer, on being arrested, offered as a compromise to give his bill at two months,93 and where the plaintiff's attorney offered to pay a part cash and secure the residue;" and such offers when refused seem to signify nothing but tenders of compromise, and not to be alone either acknowledgments of due demand and notice, or waivers of laches.

1168. Where the promise is only as to part of the sum, it is only a waiver pro tanto. Thus where the drawer of a bill for £200, who had not received notice, said: "I do not mean to insist on want of notice, but I am only bound to pay you £70," Abbott, C. J., said: "The defendant does not say that he will pay the bill, but that he is only bound to pay £70. I think the plaintiff must be satisfied with the £70." 95

If the part payment were made by the indorser as agent of the maker, or were otherwise explained, it would not operate as a waiver.96 Story considers that part payment is ordinarily a sufficient excuse for the omission of notice, because it evinces that the party so paying could not have sued on the note on payment thereof, and is in fact the true party for whose benefit the note was made.97

92. Dixon v. Elliott, 5 Car. & P. 437; Margetson v. Aitken, 3 Car. & P. 388; Harvey v. Troupe, 23 Miss. 538, Smith, C. J., said: "A promise to pay generally, or a promise to pay a part, or a part payment made, with a full knowl edge that he has been released from liability on the bill by the neglect of the holder, will operate as a waiver, and bind the party who makes it for the payment of the whole bill."

93. Cuming v. French, 2 Campb. 106.

94. Standage v. Creighton, 5 Car. & P. 406.

95. Fletcher v. Froggatt, 2 Car. & P. 569 (12 Eng. C. L.).

96. Whitaker v. Morrison, 1 Fla. 25.

97. Story on Notes, § 359; Porter v. Thom, 40 App. Div. 34, 57 N. Y. Supp. 479, citing the text.

CHAPTER XXXVI.

CIRCUMSTANCES WHICH WILL NOT EXCUSE FAILURE TO MAKE PRESENTMENT OR PROTEST, OR GIVE NOTICE.

§ 1169. Circumstances not infrequently arise under which the making presentment of the bill or note, or giving notice of its dishonor, would seem to be a useless formality, or a peculiarly onerous task, and which on these accounts have been often urged as excuses for failure to make such presentment, or give such notice; but they are of a character which the law does not recognize as sufficient to exonerate the holder from taking the usual steps in order to charge an indorser. They may be classified as follows: (1) The want of injury to the party.

(2) The bankruptcy or insolvency of the acceptor or maker. (3) The loss or mislaying of the bill or note.

(4) The appointment of drawer or indorser as executor or administrator.

(5) The transfer of the bill or note as collateral security. (6) The death of the maker or acceptor.

(7) The misdating of a bill or note by a foreign resident.

SECTION I.

THE WANT OF INJURY TO THE PARTY.

§ 1170. In the first place, the want of prejudice or injury to the drawer or indorser is never a sufficient excuse for default in making presentment or protest, or giving notice of dishonor. In some of the early cases, and indeed in some modern cases, and treatises also, the holder is said to be excused for his failure in making presentment and giving notice, when there are no funds in the drawee's hands, on the ground that there could be no prejudice or injury

1. Chitty on Bills (13th Am. ed.) [*439, 436], 490; 1 Parsons on Notes and Bills, 551, 630; Foster v. Parker, L. R., 2 C. P. Div. 19 (1876), Lindley, J.: "He (the indorser) would be damnified in the legal sense if he had a remedy over against any of them (prior parties), and was not bound, as between himself and them, to meet the bill." Hawley v. Jette, 10 Oreg. 31, 45 Am. Rep. 132, citing the text; Collingwood v. Merchants' Bank, 15 Nebr. 121; Kavanaugh v. Bank, 59 Mo. App. 540, citing text.

to the drawer or indorser,2 and at one time the question of injury seems to have been the criterion whether or not presentment or notice was excused.3 The reports exhibit frequent expressions of regret that the strict rule requiring presentment and notice has been even so far relaxed as to admit the exception arising from the want of funds; and it is now perfectly well settled that the question of injury does not enter at all into the consideration. The law requires presentment and notice as conditions precedent to the fixed liability of the drawer and indorser, not merely as an indemnity against actual injury, but as security against a possible injury, which might result from the holder's laches. It is true, that when the drawer has no funds in the drawee's hands, he can, as a general rule, suffer no injury from want of presentment or notice; but drawing in such a case would be a fraud, and it is for that reason, rather than the absence of actual injury, that presentment and notice are excused. Where it was endeavored to show excuse for want of notice by showing want of injury, Lord Kenyon. said: "I cannot hold the law to be so. The only case in which notice is dispensed with, is where there are effects of the drawer in the drawee's hands. This would be extending the rule still further than ever has been done, and opening new sources of litigation, in investigating whether in fact the drawer did receive a prejudice from the want of notice or not." 99 7

2. Cory v. Scott, 3 B. & Ald. 519; Mechanics' Bank v. Griswold, 7 Wend. 165; Commercial Bank v. Hughes, 17 Wend. 94; Edwards on Bills, 446, 636; Story on Bills, § 280.

3. Meggadow v. Holt, 12 Mod. 15 (1691); Mogadara v. Holt, 1 Show. 317; Chitty, Jr., on Bills, 57, 182.

4. Ex parte Heath, 2 Ves. & B. 240; Clegg v. Cotton, 3 Bos. & P. 239; Carter v. Flower, 16 M. & W. 743.

5. In Hill v. Martin, 12 Mart. 177, Porter, J., said: "The plaintiff read from Chitty on Bills, p. 151, to show that when the indorser was not injured by want of notice the laches to give it was cured. The rule is stated in a note to the edition of 1809, but it is not law." Foster v. Parker, 2 C. P. Div. 18, 19 Moak's Eng. Rep. 293, Denman, J.; French v. Bank of Columbia, 4 Cranch, 141, Marshall, C. J.; May v. Coffin, 4 Mass. 341; Nash v. Harrington, 2 Aitkens, 9; Hill v. Heap, Dowl. & R. 15; Bickerdike v. Bollman, 1 T. R. 405; Edwards on Bills, 636; Story on Bills, § 306.

6. Ante, chapter XXXI, section I.

7. Dennis v. Morris, 3 Esp. 158.

SECTION II.

THE BANKRUPTCY OR INSOLVENCY OF THE ACCEPTOR OR MAKER.

§ 1171. In the second place, the bankruptcy and insolvency of the drawee of a bill, however well known, constitute no excuse for neglect to make due presentment thereof for acceptance, or to give due notice of its dishonor 9 to the drawer and indorsers if it is not accepted. And the same rule applies as to the necessity of presentment for payment to the acceptor of a bill or maker of a note,10 and as to notice of its dishonor by nonpayment." This doctrine rests upon the twofold ground that it is a part of the contract of drawer and indorser that the bill or note should be presented for acceptance or payment, as the case may be, and due notice given if it be dishonored; and further, that it cannot be definitely settled without a presentment that the instrument will be dishonored, as through friends or resources unknown to others, the principal party may derive the means for payment.

§ 1172. The English and American cases are now uniform on this subject,12 and it was long ago said: "It sounds harsh that a known bankruptcy should not be equivalent to a demand or notice,

8. Chitty on Bills (13th Am. ed.) [*330], 369; Citizens' Nat. Bank, etc. v. Third Nat. Bank, etc., 19 Ind. App. 69, 49 N. E. 171, citing text.

9. Chitty on Bills (13th Am. ed.) [*330], 369. Bank v. Bradley, 117 N. C. 526, 23 S. E. 455, citing text, and holding that protest was not necessary, in case of an inland bill, but notice of dishonor must be given with the same promptness as in cases where protest is necessary. Phipps v. Harding, 17 C. C. A. 203, 70 Fed. 468.

10. Chitty on Bills [*354], 396; Story on Notes, § 286; Story on Bills, §§ 318, 326, 346; 1 Parsons on Notes and Bills, 446; Basenhorst v. Wilby, 45 Ohio St. 340.

11. Story on Notes, § 367; 1 Parsons on Notes and Bills, 528; Hawley v. Jette, 10 Oreg. 31, 45 Am. Rep. 132, approving the text.

12. Nicholson v. Gouthit, 2 H. Bl. 609; Bowes v. Howe, 5 Taunt. 30; Warrington v. Furbor, 8 East, 242; Esdaile v. Sowerby, 11 East, 114; Thackeray v. Blackett, 3 Campb. 164; Smith v. Becket, 13 East, 187; Cory v. Scott, 3 B. & Ald. 619; Leach v. Hewitt, 4 Taunt. 731; Free v. Hawkins, 8 Taunt. 92; Russell v. Langstaffe, Doug. 496; Armstrong v. Thurston, 11 Md. 148; May v. Coffin, 4 Mass. 341; Clair v. Barr, 2 Marsh, 255; Benedict v. Caffee, 5 Duer, 226; Watkins v. Crouch, 5 Leigh, 522; Hunt v. Wadleigh, 26 Me. 271; Barton v. Baker, 1 Serg. & R. 334; Hightower v. Ivy, 2 Pont. 308; Denny v. Palmer, 5 Ired. 610; Nash v. Harrington, 2 Aik. 9; Hawley v. Jette, 10 Oreg. 31, 45 Am. Rep. 132, citing the text. The maker was insolvent and in prison. See Chitty on Bills [*438]; Bank of Seaford v. Connoway, 4 Houst. 206. But contra, Bogy v. Keil, 1 Mo. 743; Strothart v. Parker, 1 Overt. 260.

but the rule is too strong to be dispensed with," 13 though at one time a different view obtained.14

The same rule applies where the insolvency arises between drawing or indorsing and maturity;15 and where the insolvency is known to the party at the very time when he signs his name,'

16

13. Nicholson v. Gouthit, 2 H. Bl. 609; Chitty on Bills [*449]. 14. De Berdt v. Atkinson, 2 H. Bl. 336. In Jackson v. Richards, 2 Cai. 343, Kent, C. J., said: "Within two years subsequent to the decision (in De Berdt v. Atkinson) the same court decided directly the contrary in the case of Nicholson v. Gouthit. I think the reasoning in the last decision the best, and ought to be followed."

15. Crossen v. Hutchinson, 9 Mass. 205.

16. In Brown v. Ferguson, 4 Leigh, 53, it was said by Tucker, P.: "It has been long since settled that notice, or rather knowledge, by anticipation will not dispense with the necessity of notice of nonpayment. Even the known insolvency of the drawee will not have that effect; for as many means of securing payment may exist through the assistance of friends, or otherwise, it is reasonable that the drawer or indorsers shall have notice that the holder designs to look to them, in order that they may have the opportunity of availing themselves of such means. Knowledge of the fact of insolvency, or that a bill will be dishonored, is one thing, and notice of protest for nonpayment is another. For, until the drawer or indorser receives such notice, he has no reason to conclude that resort will be had to him. He is lulled into security, instead of being awakened to the necessity of providing for his own indemnity." In the case (4 Leigh, 49), Carr, J., said: "Upon the reason and justice of the case, I at first felt doubts whether the drawer was entitled to strict commercial notice. There is no doubt that he was authorized to draw the bill, for the jury find that the drawees owed him the sum for which it was drawn. This, under the general rule, would entitle the drawer to notice. But it is also found that, before the bill was presented for acceptance, the drawees having been advised of it, wrote a letter to the drawer on the subject, in answer to which letter he (the drawer) writes: 'I am sorry you will be unable to retire the draft. When the draft is nearly due, you can draw on me at sixty days, to enable you to take it up.' It is found also that when the time for paying the bill drew near, the drawees did draw on Ferguson (the drawer) for the purpose of meeting it; that this bill was sold on condition that Ferguson should accept it, and was sent on and presented to him and dishonored by him. These facts seemed to me to show clearly that Ferguson (the drawer) had, if not a perfect knowledge, the strongest grounds to conclude that Foster and Moore (the drawees) would not pay the bill he had drawn on them, and, therefore, was not entitled to strict notice. An examination of the subject, however, has satisfied me that my first impressions are in opposition to the fixed and settled law of the subject. Nicholson v. Gouthit, 2 H. Bl. 609, is the leading case on the point, which has been since uniformly followed. In Esdaile v. Sowerby, 11 East, 117, the indorser of a bill had full knowledge of the bankruptcy of the drawer, and the insolvency of the acceptor, before and at the time when