consideration; though if he pursues the latter course he must be prepared to surrender the bill or note upon the trial or account for its non-production.1 § 1428. Extension of time. If the taking of the bill or note is accompanied by an agreement for an extension of time until the maturity of the instrument, the seller cannot before that time sue for the price upon tendering back the instrument; but where there is no separate agreement for an extension, it is held that the mere acceptance of a bill or note for a demand due at once does not amount to an extension or prevent the seller from suing for the price before the maturity of the instrument if he is ready upon the trial to restore it,2 though upon this point the English and many American cases maintain the contrary, holding that the acceptance of the implies an agreement to wait until its maturity. 1 Randolph, Com. Paper (2d ed.), § 1582. Production at the trial is sufficient; it need not previously have been tendered back. Hoopes v. Strasburger, 37 Md. 390, 11 Am. R. 538; Glenn v. Smith, 2 G. & J. (Md.) 493. 20 Am. Dec. 452; Wyman v. Rae, 11 G. & J. 416, 37 Am. Dec. 70; Jackson v. Brown (1897), 102 Ga. 87, 29 S. E. R. 149; Otto v. Halff (1896), 89 Tex. 384, 34 S. W. R. 910. 2 Randolph, Com.` Paper (2d ed.), S$ 1569, 1570. In Moore v. Fitz (1880), 59 N. H. 572, it was held that where the price of goods is payable on demand, the seller, by subsequently taking the buyer's time notes for the amount, does not extend the time of payment unless the notes are specially agreed to be received in pay. ment (citing many cases in that State). Whether it was so received in payment is a question of fact. Wilson v. Hanson, 20 N. H. 375; Foster v. Hill, 36 N. H. 526. To same effect: Shaw v. Presbyterian Church (1861), 39 Pa. St. 226. Graham v. Negus (1890), 55 Hun (N. Y.), 440, 8 N. Y. paper Supp. 679, follows Moore v. Fitz, supra, and distinguishes Claflin v. Taussig, 7 Hun, 223: Jagger Iron Co. v. Walker, 76 N. Y. 521; Fleischmann v. Stern, 90 N. Y. 110. 3 Thus, Randolph, Com. Paper (2d ed.), § 1569: "Where the creditor takes a bill or note payable at a future day, his right of action on the original debt will be suspended until the paper becomes due (Benj. Chalm. Dig., art. 251; 2 Daniel, Neg. Inst. 295; 1 Edw. Bills & N., § 283; 2 Pars. Notes & B. 155; Story, Bills, § 419; Hoppy v. Mosher, 48 N. Y. 313; Brewster v. Bours, 8 Cal. 502; Blunt v. Walker, 11 Wis. 334; Pitt v. Acosta, 18 Fla. 270). So, if he takes a renewal of the original bill or note (Kendrick v. Lomax, 2 Cr. & J. 405; In re London, etc. Bank, 34 Law J. Ch. 418). But his action is only suspended where the bill is negotiable and might, by its transfer, give right of action to another person (Webster v. Bainbridge, 13 Hun (N. Y.), 180).” In England, see Davis v. Reilly, [1898] 1 Q. B. 1. § 1429. Acceptance of forged or invalid note. The acceptance of the bill or note of a third person necessarily presupposes, in the absence of any understanding to the contrary that the paper is a genuine and valid instrument. Hence, though accepted as payment, if the instrument was void for usury1or proves to be a forgery, or the maker is shown to have been incompetent, the effect of the paper as payment is destroyed, and a recovery may be had upon the original consideration. 1430. Note of insolvent.- For like reasons, where the seller accepted in payment the note of a third person who had previously, but without the knowledge of either buyer or seller, become insolvent and suspended payment, it was held that there was no payment and that an action for the price could be maintained. "We do not intend to say," remarked the court, "that the parties could not have agreed that this note should be received in payment whether the makers had 1 1 Gerwig v. Sitterly (1874), 56 N. Y. 214, where the court says: "It is well settled that when a valid debt exists and a usurious security is taken for it, the avoidance of the usurious security revives the debt." Citing Cook v. Barnes, 36 N. Y. 520; Winsted Bank v. Webb, 39 N. Y. 325, 330. 2 First Nat. Bank v. Buchanan (1888), 87 Tenn. 32, 1 L. R. A. 199, and note; Second Nat. Bank v. Wentzel (1892), 151 Pa. St. 142, 24 Atl. R. 1087; Emerine v. O'Brien (1881), 36 Ohio St. 491; Albright v. Griffin (1881), 78 Ind. 182. 3 Randolph, Com. Paper, § 1526: Montgomery v. Forbes (1889), 148 Mass. 249, 19 N. E. R. 342 (where a supposed corporate maker had no legal existence); Little v. American, etc. Machine Co. (1879), 67 Ind. 67 (where a married woman's note had been taken for the debt of her husband. Said the court: "The taking of the note of a married woman, which is utterly void, cannot operate, prima facie, as payment of a debt for which it was given "). To like effect: Godfrey v. Crisler (1889), 121 Ind. 203, 22 N. E. R. 999. 4 Randolph, Com. Paper, § 1532; Roberts v. Fisher (1870), 43 N. Y. 159, 3 Am. R. 680. But in Bicknall v. Waterman (1857), 5 R. I. 43 (followed in Burgess v. Chapin, 5 id. 225; Beckwith v. Farnum, 5 id. 230), where there was a contract of sale with payment to be made in the note of a third person, it was held to be no defense for not delivering the goods that before the contract the maker had failed though this was unknown to both parties. The court held that there was no implied warranty of solvency, distinguishing Roget v. Merritt, 2 Caines (N. Y.), 117, and citing Sutherland v. Pratt, 11 M. & W. 296; Hastie v. Couturier, 9 Exch. 102, 20 Eng. L. & Eq. 535. But compare Benedict v. Field (1858), 16 N. Y. 595. failed or not, or even if they had failed. But that is not this case." § 1431. Acceptance of note induced by fraud.— So, where the acceptance of the bill or note as payment has been procured through the fraudulent representations or practices of the buyer, as where he represents a worthless note to be good, and the like, it is held that the seller may disaffirm the agreement to receive it as payment and may recover the price of the goods, restoring the note upon the trial. The same result will ensue where the note received is, by mistake, not the one which the seller agreed to receive,' if he has done nothing to waive his right to insist upon the correct one. § 1432. Conflict of laws.- The question whether the giving and accepting of the bill or note operates as a payment and extinguishment of the debt is one which goes to the force and effect of the contract itself and is not a mere rule of evidence. It is to be determined, therefore, by the law of the place where the payment is made, and not by that of the place where the action is brought.3 § 1433. Check or draft as payment. The principles referred to in the preceding sections apply in general to the case 1 Susquehanna Fertilizer Co. v. White (1886), 66 Md. 444,7 Atl. R. 802; Hoopes v. Strasburger, 37 Md. 390, 11 Am. R. 538 [distinguishing Masson v. Bovet, 1 Den. (N. Y.) 69, 43 Am. Dec. 651; Fisher v. Fredenhall, 21 Barb. (N. Y.) 82, and Clements v. Smith, 9 Gill (Md.), 156]; Case v. Seass, 44 Mich. 195, 6 N. W. R. 227. See also Riverside Iron Works v. Hall, 64 Mich. 165, 31 N. W. R. 152. 2 Thus in Goodspeed v. South Bend Plow Co., 45 Mich. 237, 7 N. W. R. 810, the seller of goods to a firm agreed to take the firm note. After the goods had been sent the firm dissolved, and one of the former partners then exe cuted a note in the firm name for the goods, which the seller received knowing of the dissolution. The other partner repudiated the note, and the seller sued for the price. It was held that the receipt of the note did not estop the seller, as the other partner might have acquiesced in it, but that when he repudiated it, it then became a different note from that agreed to be received, and that therefore an action could be maintained upon the original account. 3 Thomson-Houston Co. v. Palmer, 52 Minn. 174, 53 N. W. R. 1137, 38 Am. St. R. 536; Ward v. Howe, 38 N. H. 35. of checks and drafts. A check or draft is not money and does not of itself satisfy an obligation to pay cash. The parties may, however, agree to accept it as money, and where they do so the paper will be treated as such; but in the absence of such an agreement the check or draft is deemed conditional payment only, and will not satisfy the obligation unless the money is in fact received upon it, or unless the holder is guilty of laches causing loss to the drawer.3 1 In Gibson v. Tobey, 46 N. Y. 637, 7 Am. R. 397, plaintiff sold a quantity of hogs to defendant. On their delivery and the computation of the amount, defendant said he would have to go to the bank for the money and asked plaintiff which he preferred, the cash or a draft on New York. Plaintiff replied that he preferred the draft. The hogs were then delivered and defendant went to the bank. He returned with the draft payable to plaintiff's order, and the plaintiff accepted it without the defendant's indorsement. The draft was dishonored, and plaintiff, after tendering it back to defendant, sued for the price. Held, that the facts showed that the draft had been accepted as absolute payment. In National Park Bank v. Levy, 17 R. I. 746, 24 Atl. R. 777, 19 L. R. A. 475, the payee had indorsed the check away and it had become the absolute property of another, and this was held to be sufficient evidence that it had been accepted as payment. In Kirkpatrick v. Puryear, 93 Tenn. 409, 24 S. W. R. 1130, upon the delivery of the check, the debtor's note was delivered to him and a receipt given. It was held that this was evidence that the check was received in payment. 2 Barnet v. Smith, 30 N. H. 256, 64 Am. Dec. 290; Goodwin v. Mass. L. & Tr. Co., 152 Mass. 189, 25 N. E. R. 100; Strong v. King, 35 Ill. 1, 85 Am. Dec. 336; Burrows v. State, 137 Ind. 474, 37 N. E. R. 271, 45 Am. St. R. 210; Fleig v. Sleet, 43 Ohio St. 51, 54 Am. R. 800, 1 N. E. R. 24; Good v. Singleton, 39 Minn. 340, 40 N. W. R. 359; National Bank of Commerce v. Chicago, etc. R. Co., 44 Minn. 224, 46 N. W. R. 342, 9 L. R. A. 263, 20 Am. St. R. 566; Koones v. District of Columbia, 4 Mackey, 339, 54 Am. R. 278; Comtoir D'Escompte v. Dresbach, 78 Cal. 15, 20 Pac. R. 28; Steinhart v. National Bank, 94 Cal. 362, 29 Pac. R. 717, 28 Am. St. R. 132; Weaver v. Nixon, 69 Ga. 699; Hatcher v. Comer, 75 Ga. 728; Stewart Paper Co. v. Rau, 92 Ga. 511, 17 S. E. R. 748; Barton v. Hunter, 59 Mo. App. 610; Johnson-Brinkman Com. Co. v. Central Bank, 116 Mo. 558, 22 S. W. R. 813, 38 Am. St. R. 615; Henry v. Conley, 48 Ark. 267, 3 S. W. R. 181; Bibb v. Snodgrass, 97 Ala. 459, 11 S. R. 880; Kansas City R. Co. v. Coal Co., 97 Ala. 705, 12 S. R. 395; Lowenstein v. Bresler, 109 Ala. 326, 19 S. R. 860. 3 Anderson v. Gill, 79 Md. 312, 29 Atl. R. 527, 47 Am. St. R. 402; Carroll v. Sweet, 128 N. Y. 19, 27 N. E. R. 763, 13 L. R. A. 43. § 1434. Certification does not affect. The fact that the check has been certified before its delivery does not alter the presumption.1 § 1435. —— Burden of proof. The burden of showing an agreement to accept the check as payment rests upon him who alleges it, and the sufficiency of the evidence to establish such an agreement is ordinarily a question for the jury.3 § 1436. Dishonored or forged check.- A check, moreover, is supposed to be drawn upon funds, and this presumption enters into any agreement to receive it as payment. Even if such an agreement were made, therefore, if the drawer had neither funds nor credit at the bank upon which it was drawn, the check is worthless, and its falsity relieves the creditor from his agreement whether the debtor acted in good faith or not.* . The same result ensues where the check was a forgery. § 1437. Payment in seller's own note or debt.— Where the sale is to be for cash-and this, as has been seen, is the presumption where no other agreement is made,- delivery and payment, as has likewise been seen, are to be concurrent acts, and the buyer is not entitled to the goods unless he at the same time pays for them. If, in relying upon immediate payment, the seller delivers the goods to the buyer, he may recover them if the buyer does not forthwith pay. The buyer having thus received the goods cannot keep them and tender in payment 1 Larsen v. Breene, 12 Colo. 480, 21 Pac. R. 498; Born v. First Nat. Bank, 123 Ind. 78, 24 N. E. R. 173. 7 L. R. A. 442, 18 Am. St. R. 312; Cincinnati Oyster Co. v. National Bank, 51 Ohio St. 106, 36 N. E. R. 833, 46 Am. St. R. 560; Bickford v. First Nat. Bank, 42 Ill. 238, 89 Am. Dec. 436; Andrews V. German Nat. Bank, 9 Heisk. (Tenn.) 211, 24 Am. R. 300. 2 Brown v. Scott, 51 Pa. St. 357; League v. Waring, 85 Pa. St. 244. 3 Shepherd v. Busch, 154 Pa. St. 149, 26 Atl. R. 363, 35 Am. St. R. 815; 4 Fleig v. Sleet, 43 Ohio St. 51, 54- 5 Springer v. Hubbard, 82 Me. 299, 19 Atl. R. 439. See this general subject discussed, ante, § 554 et seq. |