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chase and sale of the bill.284 If it is a payment when made, it cannot afterwards be turned into a purchase by a subsequent indorsement of the instrument.285 And by the law of Holland, if the drawee accepts and pays a renewal bill, it is a payment, and not a purchase, and his taking an assignment of the original collateral mortgage is no evidence of an intention to keep the bill alive.286

Discount by Drawee,

§ 1424. The drawee of a bill may discount it after refusing to accept, and may sue the drawer upon it.287 He may or may not be

coxon v. Logan, 91 N. C. 449; Swope v. Leffingwell, 72 Mo. 348. As to sucti payments, see § 1438, infra.

284 2 Daniel, Neg. Inst. 251; 2 Edw. Bills & N. 8 728. If a note is once paid, it cannot be upheld as a subsisting debt by a mere legal fiction of equitable. assignment. Rolfe v. Wooster, 58 N. H. 526. The following have been held to be a purchase: By equitable pledgee, note not canceled, Carter v. Burr, 113 U. S. 737, 5 Sup. Ct. 713; by bank acting as holder's agent on return from clearing house, Holm v. Bank, 28 C. C. A. 297, 81 Fed. 119; by maker procuring surrender of note for satisfaction of a judgment against the payee, and delivering the note to the judgment creditor, Flournoy v. Harper, 81 Ala. 497, 1 South. 545; by agent who sold paper, taking up coupons as business custom. Champion v. Investment Co., 45 Kan. 103, 25 Pac. 590; by officer of collecting bank, supposing he had made default, and taking transfer from bank, Fogarty v. Wilson, 30 Minn, 289, 15 N. W. 175; by a guarantor after discontinuing previous express agreement to pay checks of drawer, Voltz v. Bank, 158 Ill. 532, 42 N. E. 69. And the following hare been held to be a payment: By bank, having running account with maker, marking the paper paid, and charging it, and taking from maker other unsecured notes, United Waterworks Co. v. Farmers' Loan & Trust Co., 27 C. C. A. 92, 82 Fed. 144; by collecting bank having no power to sell (to discharge surety), Fuller v. Bennett, 55 Mich. 357, 21 N. W. 433; by guarantor taking up note indorsed "without recourse." and holding as against later notes secured by same collateral, Ferree v. Trust Co., 21 C, C. A. 83, 74 Fed. 769. The question is one of agreement between the holder and the third person making payment, irrespective of the understanding of the maker of the note with such third person. Binford v. Adams, 104 Ind. 41, 3 N. E. 753.

285 Moran v. Abbey, 58 Cal. 163; or by a subsequent agreement that a receipt already indorsed should take effect as a transfer, McCoon v. Biggs, 2 Hill (N. Y.) 121.

286 Wilkinson v. Simson, 2 Moore, P. C. 275. 287 Desha v. Stewart, 6 Ala. 852.

under an obligation to the drawer to accept and pay the bill.288 Thus, a bank is liable to its depositors, by implied agreement, to pay their checks when presented, 289 or, if not then in funds, within a reasonable time after receiving funds; 200 and it cannot refuse to pay a check on mere suspicion of fraud on the drawer's part (an executor or trustee) against the trust funds.291 But a London bank may, by custom, refuse payment of a postdated check even on the day it bears date.?

2 92

Payment by Maker.

§ 1425. If a promissory note is paid by the maker, it is, in general, extinguished, 293 and the payment discharges the indorsers and sure ties.284 Whether the payment was made by the maker or by an in dorser is a question of fact for the jury.29 A note ceases to be nego riable after it is paid.296 But a bill or note may be reissued after it

295

988 See 589, supra.

289 Rolin v. Steward, 14 C. B. 593; but not to pay checks in excess of the drawer's deposit, Decatur Nat. Bank v. Murphy, 9 ml. App. 112.

290 Marzetti v. Williams, 1 Barn. & Adol. 415.
291 Gray v. Johnston, 3 H. L. Cas. 1.
292 Emanuel v. Robarts, 9 Best & S. 121.

293 Ballard v. Greenbush, 24 Me. 336. And see § 682, supra. And it cannot afterwards be transferred by him, as against other parties, although indorsed to him by the last holder. Long v. Bank, 1 Litt. (Ky.) 290. But it has been held that receiving a town order in payment of taxes is not a payment of the order. Willey v. Greenfield, 30 Me. 452.

294 2 Edw. Bills & N. $8 721, 724; Woods v. Woods, 127 Mass. 141. So, a payment by the maker's executor, although the indorser had given his own note in renewal, and said he meant to hold the original note against the maker's estate (which was insolvent), and afterwards had it transferred to a

Borst v. Bovee, 5 Hill (N. Y.) 219. And payment by the maker is a defense at law, and therefore no ground for an injunction in equity. Williams v. Stewart, 56 Ga. 663.

296 Woods v. Woods, supra. But although the maker's name appears as second and as fourth indorser, it will not be presumed, in an action against the third indorser, that it was the maker who afterwards took up and indorsed the note. Currie v. Bank of Mobile, 8 Port. (Ala.) 360.

294 Blake v. Sewell, 3 Mass. 556. And school bonds or other securities of a municipal corporation cannot be reissued after they have been paid. Board of Education v. Sinton, 41 Ohio St. 501; Mitchell v. Inhabitants of Albion, 81 Me. 482, 17 Atl. 546.

third person.

is paid, without prejudice to other parties. 27 And although the payment by the maker is made indirectly to the payee, and through him to the holder, it will discharge all indorsers.298 And it has been held that, if a note is paid by a transfer of land by the maker, it cannot be afterwards revived between the maker and payee by a fresh consideration moving to the maker, 299 although in such case the party who reissues the note is estopped from alleging the payment in his own defense 300

But even if a note is paid by the maker with borrowed money it is a payment, and the maker cannot keep it or a collateral lien alive by a subsequent transfer to the lender of the money. 301

On the other hand, the maker may purchase his own note as agent for another, and reissue it,302 without discharging other parties. 303 So,

297 Eaton v. McKown, 34 Me. 510; but not otherwise, Cochran v. Wheeler, 7 N. H. 202; Havens v. Huntington, 1 Cow. (N. Y.) 387. And the purchaser of a paid note after maturity takes it subject to defense, although without notice. Elgin v. Hill, 27 Cal. 372.

298 Brown v. Davies, 3 Term R. SO. 299 Ryan v. Doyle, 79 Ky. 363.

300 International Bank v. Bowen, 80 I11. 511. And where a promissory note, secured by mortgage to a trustee, is paid by the maker by other notes secured by another mortgage to the same trustee, and the original note is reissued by the maker to a bona fide holder before maturity, through the same trustee, both maker and trustee are estopped from setting up satisfaction of the first note in favor of the second mortgagee. Jordan v. Forlong, 19 Ohio St. 89.

301 Turnbull v. Thomas, 1 Hughes, 172, Fed. Cas. No. 14.243. So, a fortiori, where the maker borrows the money to pay the second and third notes secured by a mortgage (but does not pay them), and agrees with the lender that he should be subrogated to the mortgage, and the payee of the notes neither receives the payment nor assents to the agreement, but has received from the maker payment of the first note secured by the mortgage. Hoyle v. Cazabat, 25 La. Ann. 438. For cases where the borrower himself makes the payment, acting as agent for the maker or as a purchaser at the maker's request, see infra, 8 1440.

302 Bowman v. St. Louis Times, 87 Mo. 191. But see, contra, as to effect on surety, Cason v. Heath, S6 Ga. 438, 12 S. E. 678. And where a bill, accepted for the drawer's accommodation, is discounted for the drawer, and the proceeds used to take up a note made by the drawer, which is thereupon returned to him and sent by him to the accommodation acceptor, and the

303 Du Bois v. Stoner, 11 111. App. 403; the maker, in this case, taking the note by an indorsement in blank.

he may discount and transfer it again before maturity, and his possession before maturity will raise no presumption that it has been paid; 304 and the note will be valid in the hands of a bona fide purchaser before maturity, 305 but subject to defense at the suit of purchasers after maturity.:

306

Payment by Joint Maker.

$ 1426. A joint note, 307 or a joint and several note,308 is discharged by payment made by one of the makers; and a verdict in favor of one joint maker on a plea of payment is a discharge of all.309 One cannot pay a note and reissue it, so as to bind his co-maker,310 but he may have his action against the other for contribution; 311 and, if he transfers the note for value after paying it, it will transfer his right to

bill is afterwards paid by the acceptor, and the amount reimbursed to him by the payee, on a retransfer of the note to the payee, it has been held that the note was not paid by the maker, and was still in force in the hands of the payee. Hopkins v. Detwiler, 25 W. Va. 734.

304 Mishler v. Reed, 76 Pa. St. 76. So, if discounted by the maker on thie day of its date, with names of indorsers indorsed on it. Eckert v. Cameron, 43 Pa. St. 120.

305 Byles, Bills, 173; Story, Prom. Notes, $ 180; Mishler v. Reed, 76 Pa. St. 76; Eckert v. Cameron, 43 Pa. St. 120. And see § 680.

306 But if transferred to the maker before maturity, and by him, after maturity to the plaintiff, a co-maker will be liable to such plaintiff. Gordon v. Wansey, 21 Cal. 77.

307 Cox v. Hodge, 7 Blackf. (Ind.) 146; Swem v. Newell, 19 Colo. 397, 35 Pac. 734. So, where one partner takes up a note made by the other partner for a firm debt, it extinguishes the note, and he can hold the maker only by an accounting. Sprague v. Ainsworth, 40 Vt. 47.

308 Beaumont v. Greathead, 2 C. B. 494. 809 Lenoir v. Moore, 61 Miss. 400.

310 Patch v. King, 29 Me. 448; James v. Yaeger, 86 Cal. 184, 24 Pac. 1005; although the maker who pays is surety for the other. Hopkins v. Farwell, 32 N. H. 425.

311 McClatchie v. Durham, 44 Mich. 435, 7 N. W. 76; Judd v. Small, 107 Ind. 399, 8 X. E. 284; but not in the payee's name, although only half the amount is receipted on the note (with the understanding that the payee should collect the balance, for the maker who paid, from his co-maker), Davis v. Stevens, 10 N. H. 186. He is entitled, however, to be subrogated (for the protection of his right to contribution) to whatever rights and securities may be held by the payee. Durac v. Ferrari, 25 La. Ann. 80; Ackerman's Appeal, demand contribution from the other makers.313 If several joint makers are discharged by the statute of limitations, and one who is not discharged is obliged to pay, he may bring suit for contribution against either of the others without joining all of them.313 And if the joint maker who pays the note signed it for the accommodation of his comaker, he is entitled to be exonerated by him.314

Part payment by one joint maker inures to the benefit of all.316 And if a payment made by one partner in an attempted compromise is insufficient for that end, by a mistake made in the amount, it will avail as a satisfaction pro tanto for all. 316 Where the several makers are. however, members of an unincorporated company, it is a question of intention whether the one who paid the note became a purchaser of it, or satisfied and discharged it.317

Payment by Drawer.

$ 1427. If a bill of exchange is paid by the drawer, it is not thereby discharged, 318 but the acceptor still remains liable on it.319

An acceptor for the drawer's accommodation will, however, be discharged

20 Cent. Law J. 97, 15 Wkly. Notes Cas. 294; Fitch v. Hammer, 17 Colo. 591, 31 Pac. 336.

312 The note being available as evidence of the payment. Dillenbeck v. Dygert, 97 N. Y. 303.

813 Boardman v. Page, 11 N. H. 431.

814 And may sue at his option, either on the implied agreement or on the defendant's written agreement to the same effect. Gibbs v. Bryant, 1 Pick. (Mass.) 118.

316 And also binds all; e. g. by barring the statute of limitations. Turner v. Ross, 1 R. I. 88. But a part payment by one joint maker for his personal discharge will not release the other, Winslow v. Brown, 7 R. I. 95; especially where the payment is made by a surety with money furnished by his principal and co-maker, and the liability of the latter is expressly reserved, Harrison v. Close, 2 Johns. (N. Y.) 448.

316 Easton v. Strother, 57 Iowa, 506, 10 N. W. 877. 317 Kipp v. McChesney, 66 Ill. 460. 818 Benj. Chalm. Dig. art. 234. 819 Callow y. Lawrence, 3 Maule & S. 95. But see, contra, if paid in anticipation of acceptance, Bacon v. Searles, 1 H. Bl. 88. And if the drawer voluntarily pays the statutory damages before the bill is protested for nonacceptance he cannot recover them from the acceptor.

Morris v. Tarin, 1 Dall. 147.

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