Story Case

Edward Earl delivered the following instrument to Albert Lackner:

"$100. January 14,1915.

Pay to the order of Albert Lackner in thirty days, one hundred dollars, payable at the Second National Bank, Chicago, Illinois. To Alfred Kenna, 34 Bond Street, (Signed)

Chicago. Edward Earl."

When this bill was presented to Kenna, he wrote on the back of it: " Accepted - Alfred Kenna." On February 14,1915, Kenna presented himself at the Second National Bank, ready to pay. Lackner, however, did not appear. On March 2,1915, Lackner started suit on the note against Kenna without having made any demand for payment. Can Lackner collect on the instrument?

Ruling Court Case. Farmers' National Bank Vs. Vevner, Volume 192 Massachusetts Reports, Page 53l

Vevner executed a note, payable to himself or order, on demand. The note was dated "New York City, May 14, 1892," and was payable at the office of Wilson, Cobston, and Company, Baltimore, Vevner indorsed the note to the Farmers' National Bank. Without having made any demand for payment of this note, the Farmers' National Bank began suit against Vevner as maker. Vevner contended, among other things, that no action could be maintained upon this note because no demand was made for its payment at the office of Wilson, Cobston, and Company, in Baltimore.

Decision: Both the maker of a note and the acceptor of a bill are parties of primary liability. Each promises subsequent holders that he will pay the instrument, according to its terms at the time the note was made or the bill was accepted. Thus, a holder is under no duty to present for payment, but at maturity may begin suit immediately. Mr. Justice Morton said:

"It is settled in the state, both at common law and recently by statute and by the weight of authority in this country, contrary to the law in England, that, where a note or bill of exchange is payable at a particular time and place, no demand or presentment at the place named is necessary in order to entitle the holder to maintain an action upon the note or bill against the maker or acceptor. We see no valid distinction between a note payable on time at a particular place and a note payable on demand at a particular place. No demand is necessary, before suit, where a note is payable generally on demand, and, as we have seen, no demand is necessary when a note is payable on time at a particular place, and it seems to us the fact that both circumstances are found in the same note cannot operate to change the rule and render a demand necessary when it would not be required." Judgment was given for Farmers' National Bank.

Ruling Law. Story Case Answer

In respect to their liability, the parties to a negotiable instrument are classified as parties of primary liability and parties of secondary liability. A party of primary liability is one who engages or promises to pay the instrument, according to its tenor, under all circumstances. Both the maker of a promissory note and the acceptor of a bill of exchange are primary parties. Since they engage to pay at all events, the holder of an instrument is under no obligation to present it for payment at the time and place appointed, in order to bring suit upon the same. But, if the instrument is payable at a stated time and at a particular place, if the party of primary liability is ready and willing to pay the instrument at the time and place appointed, his readiness and willingness constitute a good tender. The effect of tender is to relieve him of interest and costs, but does not discharge his liability on the instrument. In the Story Case, Lackner can collect the face value of the instrument as of the day it was due.