Sec. 114. Notice Of Dishonor Necessary To Charge Drawer And Indorser

Notice to the drawer of a bill or check and to the indorser of a bill, check or note, that it has been dishonored by non-payment, or non-acceptance, as the case may be, is necessary to charge such drawer and indorser; otherwise they are discharged; except where owing to the circumstances of the particular case, notice is excused, or where it has been waived.

A party secondarily liable on negotiable paper is entitled to immediate notice that the party who should have accepted it, or paid it, has failed or refused to do so. Accordingly the law provides in detail as to the time, manner and sufficiency of the notice. And unless notice is given according to the provisions of the law, any party entitled to such notice, who did not receive it, is discharged. See sections 89 to 118 in Appendix A in connection with this text.

Sec. 115. What Notice Sufficient

In order to charge parties secondarily liable on a negotiable instrument notice of dishonor must be given to such party (1) by the holder, or any one who might be compelled to pay it to the holder, or an agent duly authorized, (2) within the times provided by the law, (3) at the place provided by law; unless owing to peculiar circumstances notice is excused, or has been waived.

148. Id. Secs. 89-118.

(1) By whom notice to be given.

"The notice may be given by or on behalf of any party to the instrument who might be compelled to pay it to the holder and who upon taking it up would have a right of re-imbursement from the party to whom the notice is given." (And see also Sections 91 to 94, Appendix A.)

(2) Notice to be given within what time.

If the parties reside in the same place notice must be given before the close of business hours if given at the place of business, and before the usual hours of rest if given at his place of residence. See Section 103, Appendix A, post. If the parties reside in different places it must be deposited in the mail the day following the day of dishonor or given in any other way to reach the party in the time it would have reached him if given by mail. See Section 104 in Appendix A, post.

If notice is properly addressed and mailed it is as sufficient although it does not reach the sendee.

(3) Form of notice.

The essential thing is that the party secondarily liable shall have notice. As a matter of practice form should be in writing and signed; but it is legally sufficient if oral, or partly oral, or if unsigned. It should describe the instrument with sufficient definiteness to designate it.

(4) Place of notice.

See Section 108 in Appendix A for the requirements.

Sec. 116. When Notice To Drawer Is Excused

Notice to drawer is excused when after the exercise of reasonable diligence it cannot be given to or does not reach such drawer, where drawer is fictitious or lacks capacity contract, or where drawer is the person to whom the instrument is presented for payment, or where drawer has no right to expect or require the drawee or acceptor to honor the instrument, or where the drawer has countermanded payment.

The law does not require notice to a drawer of an instrument where it would be superflous, or where there is no right to expect it, or where it cannot with reasonable diligence be given.

Sec. 117. Where Notice To Indorser Excused

Notice to indorser is excused where after the exercise of reasonable diligence it cannot be given or does not reach such indorser, or where indorser at the time of the indorsement knew that the drawee was fictitious or had no capacity to contract, or where indorser is the person to whom the instrument is presented for payment, or where the instrument was made or accepted for his accommodation.

Sec. 118. When Notice Of Dishonor Waived

The party entitled to notice may waive it by waiver embodied in the instrument or in his indorsement, or by word or deed, before or after time for giving notice.

A party otherwise entitled to notice may waive it. This he may do either by his express language or by his conduct. The waiver may be embodied in the instrument itself, and in that case, it binds all who indorse the instrument or it may be in the individual indorsement. Waiver may be made at any time, even after the right to have notice has gone by. Thus if an indorser promises to pay the instrument when he would be discharged by lack of notice, that operates as a waiver and he will be bound.

Where one "waives protest," he thereby also waives presentment and notice of dishonor.