ARTICLE XVII.

PROMISSORY NOTES AND CHECKS.

Section 184. Promissory note defined. 185. Check defined.

186. Within what time a check must be presented.

187. Certification of check-effect of.

188. Effect where holder of check procures it to be certified.

189. Check does not operate as an assignment.

§ 184. Promissory note defined.-A negotiable promissory note within the meaning of this act is an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand, or at a fixed or determinable future time, a sum certain in money to order or to bearer. Where a note is drawn to the maker's own order, it is not complete until indorsed by him.

Non-negotiable notes-Presumption as to consideration.-This section makes a change in the law of New York as regards the presumption of consideration in the case of non-negotiable notes. The terms of the former New York statute included a note payable to a person named therein without words of negotiability. Carnwright v. Gray, 127 N. Y. 92. But as that statute has been repealed, and as the provisions of the Negiotiable Instruments Law apply only to negotiable promissory notes, it is now necessary to prove consideration in actions upon non-negotiable notes. Deyo v. Thompson, 53 App. Div. (N. Y.) 12; St. Lawrence Nat. Bank v. Watkins, 153 Id. 551. The rules on the subject have differed in the different States. See Daniel on Negotiable Instruments, section 163. In Connecticut the act has made no change in the law; for the rule in that State has been that a non-negotiable note does not import a consideration. Bristol v. Warner, 19 Conn. 17.

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Recital value received" in non-negotiable note.-The recital "value received" in the body of a non-negotiable note is an admission that the instrument was issued for a sufficient consideration. Owens v. Blackburn, 161 App. Div. (N. Y.) 827; Hamilton v. Hamilton, 127 Id. 871.

Certificate of deposit-Coupons.-A certificate of deposit in the ordinary form is a negotiable promissory note within the meaning of this section. Forrest v. Safety Banking & Trust Co., 174 Fed. Rep. 345. See also Jensen v. Wilself, 36 Nev. 37; Curran v. Witter, 68 Wis. 16; Maxwell v. Agnew, 21 Fla. 154. And so are coupons payable to bearer. Trustees of the I. I. Fund v. Lewis, 34 Fla. 424. 、

Where note is drawn to maker's own order.-Under the statute, a maker indorsing a note payable to his own order incurs a separate and distinct liability as indorser, and may be sued as such. National Exchange Bank v. Lubrano, 29 R. I. 64. But if the note is wholly void, as, for example, where it has been given to secure an usurious loan, the maker's indorsement adds nothing to the strength of the paper, since he is only warranting his own contract. Sabine v. Paine, 166 App. Div. (N. Y.) 9. For other cases applying this provision of the section, see Sherman v. Goodwin, 12 Ariz. 42; Alexander v. Hazelrigg, 123 Ky. 677; Hibernia Bank & Trust Co. v. Dresser, 132 La. 532.

Party indorsing before maker.-Under this section it is no defense to an indorser of a note drawn to the order of the maker that he signed his name on the back of the paper before it was indorsed by the maker. Yonkers National Bank v. Mitchell, 156 App. Div. (N. Y.) 318.

Former law in New York.-The former statute of New York provided that "notes made payable to the order of the maker thereof shall if negotiated by the maker, have the same effect, and be of the same validity, as against the maker and all persons having knowledge of the facts as if payable to bearer," and hence the indorsement of the maker was not required. 1 Rev. Stat. 768. See Irving Nat. Bank v. Alley, 79 N. Y. 536.

Oral conditions.-The maker will not be allowed to prove an oral condition that would defeat, or contradict the terms of, the note, as, for example, that he was not to pay it unless he should receive the amount from another person. Torpey v. Tebo, 184

Mass. 307. Or that it was to be paid by installments. Cauley v. Dunn, 167 N. C. 32. Or that certain moneys were to be credited on it. Orange Co. Trust Co. v. Miller, 149 App. Div. (N. Y.) 292. So, one maker of a joint and several note may not prove an oral agreement that each maker should be liable for a proportionate part. Woods v. Finley, 153 N. C. 497. See also Pitt v. Little, 58 Wash. 355. Nor may the maker show that he was to be liable as indorser. Lumbermen's Nat. Bank v. Campbell, 61 Ore. 123. But an agreement to renew is a collateral agreement, which does not contradict the note. Keith v. Radway, 221 Mass. 515.

Pleading. In an action upon a promissory note payable to the order of the maker, it is necessary to allege that the note was indorsed by the maker. Edelman v. Rams, 58 Misc. (N. Y.) 561. An allegation in a complaint in an action upon a non-negotiable note that the instrument was executed and delivered for a "valuable consideration" is a statement of fact, and not a conclusion of law. St. Lawrence Nat. Bank v. Watkins, 153 App. Div. 551 See note to section 24.

§ 185. Check defined.-A check is a bill of exchange drawn on a bank payable on demand. Except as herein otherwise provided, the provisions of this act applicable to a bill of exchange payable on demand apply to a check.

When check payable upon demand.-Unless a specific date of payment is mentioned, the check is payable upon demand under section 7. Riddle v. Bank of Montreal, 145 App. Div. (N. Y.) 207.

Distinguishing characteristic.-One of the characteristics which distinguish a check from a bill of exchange is that a check is always drawn on a bank or banker. Harris v. Clark, 3 N. Y. 93, 115; In the Matter of Brown, 2 Story's Rep. 502. See also Bull v. Bank of Kasson, 123 U. S. 105; Rogers v. Durant, 140 U. S. 298; Espy v. Bank of Cincinnati, 18 Wall. 620; Merchants' Bank v. State Bank, 10 Wall. 604; Chapman v. White, 6 N. Y. 412; Harker v. Anderson, 21 Wend. 373; Murray v. Judah, 6 Cow. 484; Cruger v. Armstrong, 3 Johns. 5; Ridgeley Bank v. Patton, 109 Ill. 484; Harrison v. Nicollet Nat. Bank, 41 Minn. 489; Northwestern Coal Co. v. Bowman, 69 Iowa, 152; Planters' Bank v. Keese, 7 Heisk. 200; Blair v. Wilson, 28 Gratt. 170; Dodd v. Jette, 10 Oregon, 31; Hopkinson v. Forster, L. R. 18 Eq. 74. For cases applying the

statute, see Wedge Mines Co. v. Denver Nat. Bank, 19 Colo. App. 182; Boswell v. Citizens' Savings Bank, 123 Ky. 485.

Cashier's Checks.-Under the statute cashier's checks, whether certified or otherwise, are classed with bills of exchange payable on demand. Singer Mfg. Co. v. Summers, 143 N. C. 103.

Draft not payable immediately.-There has been some conflict in the decisions as to whether a draft upon a bank not payable immediately was a check or bill of exchange. The latter view was adopted in New York. Bowen v. Newell, 8 N. Y. 190; 13 N. Y. 390. To the same effect also are the following cases: Ivory v. Bank of the State, 36 Mo. 475; Harrison v. Nicollet National Bank, 41 Minn. 488; Georgia National Bank v. Henderson, 46 Ga. 496; Minturn v. Fisher, 4 Cal. 36; Morrison v. Bailey, 5 Ohio St. 13. Contra: Champion v. Gordon, 70 Pa. St. 474; Westminster Bank v. Wheaton, 4 R. I. 30; In re Brown, 2 Story, 502. In all of these cases the particular question presented was whether the instrument was entitled to grace. But now that grace has been abolished the distinction is of little, if any, practical importance.

Necessity for presentment and notice.-Presentment and notice of dishonor are necessary in order that the holder may recover of the drawer. Herker v. Anderson, 21 Wend. 372; Dolph v. Rice, 18 Wis. 397. But unless the check answers the description of a foreign bill protest is not required. Wittich v. First Nat. Bank of Pensacola, 20 Fla. 843. See section 118.

§ 186. Within what time a check must be presented. -A check must be presented for payment 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.

Variant readings.-In Illinois, after the words "reasonable time after its issue " the following is interpolated: " and notice of dishonor as provided for in the case of bills of exchange."

Rights of indorsers. It will be noted that this section applies only to the drawer. The rights of indorsers are governed by section 71. See note to that section. As the drawer can sustain a loss only by the failure of the bank, this section will apply only

in such cases; but delay in presentment may result in loss to an indorser by the insolvency of the drawer or the withdrawal of the deposit.

Where drawer is not damaged by delay.-The holder's laches in presenting a check for payment constitutes no defense in an action against the drawer unless he is damaged by the delay, and then only to the extent of his loss. A check purports to be made upon a deposit to meet it, and presupposes funds of the drawer in the hands of the drawee. But if the drawer has no such funds at the time of drawing his check, or subsequently withdraws them, he commits a fraud upon the payee, and can suffer no loss or damage from the holder's delay in respect to presentment or notice. In such case he is liable and cannot insist upon a formal demand or notice of non-payment. First National Bank of Portland v. Linn County National Bank, 30 Oregon 296; Industrial Bank of Chicago v. Bowes, 165 Ill. 70.

Rule as respects indorsers.-But while as between the holder and drawer of a check, presentment may be made at any time, and delay in presentment does not discharge the drawer, unless loss has resulted to him, a different rule obtains as between holder and indorser. The holder, on accepting the check, assumes the obligation to present the same for payment within the time prescribed by law, and if payment is refused to give notice of nonpayment. A failure to do this discharges the indorser from liability as such irrespective of any question of loss or injury. Carroll v. Sweet, 128 N. Y. 19; Smith v. Janes, 20 Wend. 192.

What is a reasonable time. The general rule is that the reasonable time allowed for presentment ends with the next day after the delivery of the check. Dehoust v. Lewis, 128 App. Div. (N. Y.) 131; Smith v. Janes, 20 Wend. 192; Carroll v. Sweet, 128 N. Y. 19, 22; Turner v. Kimble, 37 Okla. 92. For instances of unreasonable delay see Industrial Trust Title and Savings Co. v. Weakley, 103 Ala. 458; Gifford v. Hardell, 88 Wis. 538; First National Bank of Wymore v. Miller, 43 Neb. 791; Comer v. Dufour, 95 Ga. 376; Grange v. Reigh, 93 Wis. 552; Western Wheeled Scraper Co. v. Sadilek, 50 Neb. 105; Gregg v. Beane, 69 Vt. 22; Holmes v. Roe, 62 Mich. 199. For instances of presentment in due time, see Loux v. Fox, 171 Pa. St. 68; Willis v. Finley, 173 Pa. St. 28; First Nat. Bank v. Buckhannon Bank, 80 Md. 475; Lloyd v. Osborne, 92 Wis.