A bill of exchange is, as has been noted, an order drawn by one person upon another in favor of a named payee, or order, or of bearer. Such person upon whom the order is drawn is called the drawee. We shall see hereafter that some bills of exchange are drawn to be accepted by the drawee prior to time for payment; and others may be presented for acceptance. The failure to present for payment in cases where that is requisite; the refusal to accept in any case; are in their consequences considered hereafter. In this chapter, as a subdivision of the subject of the formation of the negotiable contract, we are concerned only with the fact and manner of the acceptance.
"The acceptance of a bill is the significance by the drawee of his assent to the order of the drawer. The acceptance must be in writing and signed by the drawee. It must not express that the drawee will perform his promise by any other means than the payment of money." 70
Acceptance consists in the expression of the drawee's assent to the bill and his willingness to be bound thereon.
70. Nego. Instru. Law, SEC. 132.
He then becomes the party primarily liable on the instrument, the drawer and the indorsers being secondarily liable, that is, liable in case only the acceptor does not pay, the proper procedure being taken to charge them.
If the holder demand, acceptance must be on the face of the bill. Otherwise he may treat the bill as dishonored. But a bill may be accepted by a separate paper in which case it will be binding only in favor of one who received the bill for value. So an absolute promise to accept a bill thereafter to be drawn will operate as an acceptance in favor of any one who on the faith thereof received the bill for value.
An acceptance must be in writing. If the holder demand, the acceptance must be on the face of the bill, otherwise the holder can treat the bill as dishonored, that is, unaccepted. But otherwise there may be an acceptance by way of extrinsic document, before or after the bill is drawn. An absolute promise to accept a certain described bill, or an extrinsic written acceptance of a bill already drawn is a good acceptance as to any one who on the faith thereof has received the bill for value, but not as to any one else.
Example 32. A bill of exchange is drawn by A upon C to order of B. C states orally that he accepts it. C cannot be held on this acceptance. C says he will write an acceptance, but not upon the face of the bill. B may, but need not receive such acceptance. He may insist upon a general acceptance written on the face of the bill, or else treat the bill as dishonored by nonacceptance.
"Where a drawee to whom a bill is delivered for acceptance destroys the same, or refuses within twenty-four hours after such delivery, or within such other period as the holder may allow, to return the bill accepted, or non-accepted to the holder, he will be deemed to have accepted the same.71
A Wisconsin decision72 construing the above provision of the Wisconsin Act (which adds "Mere retention of the bill is not acceptance") says:
"Upon delivery for acceptance the drawee is not bound to act at once. He has a right to a reasonable time, usually 24 hours, to ascertain the state of accounts between himself and the drawer, and until expiration of that time the holder has no right to demand an answer, nor without categorical answer, to deem the bill, either accepted or dishonored; not accepted, because of the right of drawee to consider before he binds himself; not dishonored, because both drawer and drawee have the right that their paper be not discredited during such period of investigation. After the expiration of that reasonable time the holder has a right to know whether the drawee assumes liability to him by accepting, and if not, he has a right to return of the document, so that he may protest or otherwise proceed to reserve his rights against the drawer. The consensus of authority is, however, that the duty rests on the holder to demand, either acceptance or return of the bill, and that mere inaction on the part of the drawee has no effect. After expiration of this time for investigation, the drawee may, by retention of the bill, accompanied by other circumstances, become bound as acceptor; not, however, by mere retention. There seem to be two phases of conduct recognized by the authorities as charging the drawee: one purely contractual, as where the retention is accompanied by such custom, promise, or notification as to warrant the holder to the knowledge of the drawee, in understanding that the retention declares acceptance; the other where the conduct of the drawee, is substantially tortious, and amounts to a conversion of the bill. This is the phase of conduct which our negotiable instruments statute * * * has undertaken to define and limit as refusal (not mere neglect) to return the bill, or destruction of it; reiterating the common law rule that mere retention of the bill is not acceptance."
71. Nego. Instru. Law, SEC. 137. This section is omitted in the Illinois law.
72. Westberg v. Chicago Lumber & Coal Co., 117 Wis. 589.
This is an excellent statement of the common law rule and the reasons therefor. Some cases, however, have held that mere retention is sufficient to constitute acceptance. It has been suggested that inasmuch as the drawee has 24 hours in which to decide whether to accept the act ought to be that if after 24 hours he refuses to return it or destroys it, he will be deemed to have accepted it. In any event it is not believed that it will be generally held that mere retention without demand, or without some tortious or wrongful refusal will be held an acceptance.
A wilful destruction is an acceptance.72a
Acceptances are either general or qualified. The holder may demand a general and refuse a qualified acceptance.73
72a. Bailey v. S. W. Veneer Co., 207 S. W. (Ark.) 34. 73. Nego. Instru. Law, Sec 139.
(1) What constitutes general acceptance. Any acceptance which does not vary the terms of the bill is a general acceptance.
To this acceptance the holder is entitled. He may treat the bill as dishonored if such acceptance is refused. But if he choose he may take a qualified acceptance. An acceptance is still general though it name a particular place for payment, unless it expressly states that the bill is to be paid there and not elsewhere.
(2) What constitutes qualified acceptance. An acceptance is qualified which varies any term of the bill.
"An acceptance is qualified, which is:
1. Conditional, that is which makes payment by the acceptor dependent on the fulfillment of a condition therein stated;
2. Partial, that is to say, an acceptance to pay part only of the amount for which the bill is drawn;
3. Local, that is to say, an acceptance to pay only at a particular place;
4. Qualified as to time;
5. The acceptance of some one or more of the drawees but not of all."74
By custom an acceptance is not deemed to be qualified which recites a place of payment unless it further recites that it is payable only at such a place.
It binds the acceptor according to the tenor thereof. It discharges the drawer and previous indorsers unless they consent thereto. They do assent thereto when after notice of such
74. Id. SEC. 141.
acceptance, they neglect within a reasonable time to dissent to the holder.
An acceptor is of course bound by any acceptance made by him and consented to by the holder. But the qualified acceptance discharges drawer and indorsers unless they consent thereto, but failure to dissent within a reasonable time after receiving notice, is consent.
Certification of check by the drawee bank is an acceptance thereof; and charges the bank according to the tenor of the check; but certification at the request of the holder discharges drawer and indorsers.
Checks are as far as possible governed by rules which govern other bills of exchange. Acceptance of a check is sometimes termed "certification." The bank thereupon becomes primarily liable to pay the check. If at the holder's request, the check is certified, that discharges previous indorsers and the drawer, because such holder might have received payment.75 A certification at his request amounts practically to a deposit by him. If at the drawer's or indorser's request such drawer and indorser remain secondarily liable.
75. Id. SEC. 188; First Nat. Bk. v. Leach, 52 N. Y. 350.