Presentment of a note to the maker thereof, or of an accepted bill to the acceptor thereof at its maturity, Is not necessary to fix the liability of such maker or acceptor. But if a place of payment Is provided in the instrument, and the party liable thereon has funds there at maturity to pay it, but no presentment is there and then made, that will bar further interest and costs, and the right to have the Instrument paid at such place.
The neglect of a holder of negotiable paper to present it for payment at its maturity to the party primarily liable thereon (maker of a note, or acceptor of a bill or check) will not operate to discharge such parties. Such a rule is highly reasonable. For instance, if one has borrowed $5,000 for one year and given his note therefor, and the holder has not on the maturity of such note presented it for payment, it would be most unconscionable to hold that the holder of the note had thereby lost his cause of action. He does not even lose his right to interest, for the burden is on the maker of such note to see that it is paid when it matures.
We must note, however, at this point, the effect of failure to present for payment to the maker or acceptor when there is a place for payment stated. First, note that no peculiar results follow and the rule is the same as where no place of payment is specified unless the party liable was at such place, that is, has funds there, for the payment of the instrument. If he was at such place to make payment, but did not find the instrument there for delivery to him on payment, he is excused from paying interest accruing after maturity, from paying costs incidental to further presentment, and from any obligation to go to the place named to make payment. By failing to have the paper at such place of payment at its maturity the holder has forfeited the right to have it there paid. When, however, he thereafter makes actual presentment to the party liable, payment must be made, for tender must be kept good.
If an instrument is payable at a certain bank, and on the date of the maturity of the instrument the party liable thereon has funds on deposit at such bank, is the bank authorized to pay out of such funds, there being no express direction? Courts have held both ways. But the Negotiable Instruments Act settles it that a provision in an instrument that it is payable at a bank, is equivalent to an order upon the bank to pay the instrument if there are funds sufficient for that purpose.40a
Presentment for payment at maturity to the party primarily liable, Is necessary to charge parties secondarily liable; except where excused or waived.
To fix the liability of the drawer and the in-dorsers on a bill (which has not been previously
40a. Illinois and Nebraska have omitted this section.
dishonored by non-acceptance) it is necessary to present the bill for payment at the maturity to the drawee or acceptor. To fix the liability of the in-dorsers on a promissory note, it is necessary to present the note for payment at its maturity to the maker. If this step of presentment is not taken, the drawer or indorser might well enough claim that if the presentment had been made to the party primarily liable thereon, he might have paid it. That being so, the party only secondarily liable ought not to have to pay it. Accordingly he is discharged. There are certain exceptions. Presentment may be waived by the drawer or indorser, or the circumstances may excuse presentment.
In order to charge parties secondarily liable, presentment for payment must be made (1) by the holder or his agent in that behalf; (2) on the day of the maturity of the Instrument; (3) at a proper hour as by the law defined; (4) at a proper place, as by the law defined; (5) to the person primarily liable, or in his absence or Inaccessibility, to any person found at the place of presentment; (6) by exhibiting the paper and demanding payment thereof.
The law sets forth clearly and in detail what presentment shall be deemed sufficient and reference is made to section 70-78, Appendix A in connection herewith.
(1) Presentment by whom.
This must be the holder or his agent in that behalf. Possession of a negotiable instrument payable to bearer, or properly indorsed shows prima facie authority to receive payment. One may hold paper merely as an agent to receive payment, as shown by the form of the indorsement, or by any other evidence.
If the holder is dead, his personal representative should make presentment.
(2) Date of presentment.
This is the date of its maturity. If it is demand paper it must be presented within a reasonable time to charge the drawer or indorsers. What time is reasonable depends on circumstances. Paper matures on the date specified for payment, without grace, for grace, which was allowed at common law, has been abolished in most states. If, however, this day is a holiday, or Saturday or Sunday, the following business day is the proper day on which to make presentment, though demand paper may be presented before 12 o'clock noon on Saturday when not a holiday.
Time is computed by excluding the day on which it begins to run and including the day of payment. A month is a calendar month.
Thus, a note payable 30 days after date, and which is dated May 30th would be due on the thirtieth day after May 30th. That is, the first of the thirty days would be May 31st. The last of such thirty days would be June 29th, and this would be the day of maturity on which presentment must be made to charge the indorsers, if any, though of course failure to then present it would not discharge the maker. A note dated January 31st, due one month from date would be due February 28th, or, if leap year, February 29th. A note dated
January 15th, due one month from date would be due February 15th.
(3) Hour of presentment.
This must be a reasonable hour or if payable at a bank, during banking hours, unless the party liable have no funds there during banking hours, in which case presentment before the bank is closed is sufficient. What is a reasonable hour depends on the particular customs of the community. What might be a reasonable hour in a rural district might not be such in a large city.
(4) Place of presentment.
If there is a place of presentment specified, of course that governs. If there is no place specified, then the law provides the place of presentment. We may say that the instrument must be presented (1) at the place specified, or if none, then (2) at the address given, or, if none, then (3) at usual place of business or residence, or, (4) in any other case where the party can be found, or at his last known place of residence.
(5) To whom presented.
This must be to the person himelf, or to his agent, or if he is absent or inaccessible, then to any person found at the place where presentment is made. If the person liable is dead, his personal representative must be sought out, if with reasonable diligence he can be found.
Where several parties are liable as co-makers or co-acceptors, whether presentment must be made to all, or may be made to only one, depends on their relationship to each other. If they are partners presentment may be to any one, unless a place of presentment is stated. If not partners, then presentment must be to all, unless a place of presentment is stated, or unless one or more of them is agent of the others in that regard.
(6) Instrument exhibited.
The party called upon to pay an instrument is entitled to have it exhibited. Therefore due presentment has not been made without such exhibition. It has been held however that if the instrument is lost or mislaid, presentment of a copy with a promise of reasonable indemnity, is a good presentment to charge the drawer and indorsers.
Presentment for payment is not required when the circumstances excuse it or it is waived. In these cases the party secondarily liable is not discharged, notwithstanding such lack of presentment.
(1) Where drawer has no right to expect or require .the drawee or acceptor to pay, presentment Is not required.
If one draws on another without reasonable grounds for believing that the drawee will pay, he has not right to require presentment for payment. This depends on the circumstances. Even if he has no funds with the drawee, he may reasonably expect acceptance.
(2) Where an instrument is made or accepted to accommodate an indorser, he cannot require presentment for payment.
We may thus illustrate the text: A for B's accommodation, that is, to loan B his credit, makes a note to B, which B indorses to C. B is in this case the only real debtor, and A has indorsed on the theory that B will pay when the instrument is due. B therefore has no right to complain because it was not presented to A, for payment.
(3) Presentment for payment is dispensed with, where after the exercise of reasonable diligence it cannot be made.
What constitutes reasonable diligence depends on the circumstances. Looking one up in a directory and not availing one's self of other available means of information would not be reasonable diligence. But it is impossible to lay down definite rules. One must simply do what an ordinarily prudent person would do under the circumstances where one has made no presentation. The burden of showing that he exercised reasonable diligence is on him.
(4) Presentment for payment is dispensed with where the drawee is a fictitious person.
(5) Parties entitled to presentment may waive It by word or conduct.
A waiver of presentment for payment (as well as other steps to fix liability) is often embodied in the instrument itself. If so, all parties are bound by it including all subsequent indorsers. Sometimes a waiver is embodied in the individual indorsement. Any one could also waive right to presentment in any separate instrument or by his conduct.