This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
49 See Sec. 435. 50 See Sec. 276. 51 See Sec. 276. 52 See ch. XLVI. 53 See ch. XLVII.
54 See ch. XLIX. 55See ch. LXXXIV. 56See ch. LXXVII. 57 See ch. LXXXV.
50Sigerson v. Matthews, 61 U. S. (20 How.) 496, 15 L. ed. 989; Yeager v. Farwell, 80 U. S. (13 Wall.) 6, 20 L. ed. 476; Neal v. Wood, 23 Ind. 623; Cheshire v. Taylor, 29 la. 492; Schwartz v. Wilmer, 90 Md. 136, 44 Atl. 1059; Rindge v. Kimball, 124 Mass. 209; Toole v. Crafts, 193 Mass. 110, 118 Am. St. Rep. 455, 78 N. E. 775; Lockwood v. Bock, 50 Minn. 142, 52 N. W. 391; Sheldon v. Horton, 43 N. Y. 93, 3 Am. Rep. 669; Ross v. Hurd, 71 N. Y. 14, 27 Am. Rep. 1; Burgettstown National Bank v. Nill, 213 Pa. St. 456, 8 L. R. A. (N.S.) 1079, 63 Atl. 186.
"'The sole question is: Did the waiver of protest, made eighteen months after the maturity of the note and under the circumstances sworn to by the appellant, relate back to the date of the maturity of the note and bind him as indorser, as though he had received due notice of dishonor?'
"We think this question must be answered in the affirmative, and that, therefore, there was no error in making the rule absolute, and entering judgment against the defendant. There is a clear admission in the affidavit that the defendant knew the laches of the plaintiff before he signed the waiver of protest. The plaintiff's cashier called on the defendant in March or April, 1904, and secured his signature to the writing on the back of the note waiving protest. Until that time the defendant says he had no notice that Swaney, the maker, had not paid the note. He was then told, as averred in the affidavit, 'that the note in the form in which it then was, not having been protested and no notice of dishonor having been given to affiant or demand made upon affiant for the payment thereof, was objected to by the bank examiner.1 The defendant, therefore, knew before he signed the waiver of protest that no demand for payment had been made, and that no notice of the dishonor of the note had been given him as the indorser. Hence, he had full knowledge of the laches of the holder of the note when he waived protest of the instrument. Under these facts, which are disclosed by the affidavit of defense, the defendant could waive the laches of the holder in making demand for payment, and in giving notice of the dishonor of the note. 4 Am. & Eng. Enc. Law (Second Edition) p. 453; Day v. Ridgeway, 17 Pa. 303; Annville Nat. Bank v. Kettering, 106 Pa. 531, 51 Am. Rep. 536. 'An indorser is entitled to notice of protest of a negotiable note,' says Mr. Justice Coulter in delivering the opinion in Day v. Ridgway, 'because the contract is that the maker will pay at maturity; and the strict punctuality, which is the life of the commercial law, authorizes the indorser to presume that he has paid, in the absence of any notice to the contrary. But the right to receive notice in order to make him liable, like any other right, may be waived by the indorser.' In the Kettering Case, Sterrett, J., delivering the opinion says (p. 539 of 106 Pa., p. 536 jurisdictions, however, failure to make presentment and demand, or to give notice, has been regarded as terminating the obligation of 51' Am. Rep): 'No principle of the law-merchant is better settled than that demand and notice of the nonpayment of a negotiable note may be waived by the indorser, either orally or in writing, or by acts clearly calculated to mislead the holder and prevent him from treating the note as he otherwise would; but there is some diversity of opinion as to what constitutes a waiver of these necessary prerequisites to charge the indorser.' The indorser may waive protest after the date of maturity of the note with like effect as if done prior to that date. Barclay v. Weaver, 19 Pa. 396, 57 Am. Dec. 681; Hoadley v. Bliss, 9 Ga. 303; Sheldon v. Horton, 43 N. Y. 93, 3 Am. Rep. 669; Ross v. Hurd, 71 N. Y. 14, 27 Am. Rep. 1; Rindge v. Kimball, 124 Mass. 209; 1 Parsons, Notes & Bills, 594; 2 Randolph, Com. Paper, Sec. 1356. In Barclay v. Weaver, this court said (p. 401 of 19 Pa., p. 664 of 57 Am. Dec): 'It seems, therefore, that the duty of demand and notice, in order to hold an indorser, is not a part of the contract, but a step in the legal remedy, that may be waived at any time in accordance with the maxim quilibet potest renunciare juri pro se introducto.' In some jurisdictions it is held that the waiver, when made after the maturity of the note, must be with full knowledge of the indorser's laches, and that it requires a new consideration. But it is settled by numerous American authorities that a waiver of protest need not be supported by a new consideration. Neal v. Wood, 23 Ind. 523; Hughes v. Bowen, 15 Iowa 446; Cheshire v. Taylor, 29 Iowa 492; Sheldon v. Horton, supra; Tebbetts v. Dowd, 23 Wend. 379; Wall v. Bry, 1 La. Ann. 312; Lane v. Steward, 20 Me. 98.
"We know of no decision of this court holding that such waiver must be supported by a new consideration. The contrary rule, however, is distinctly recognized in Barclay v. Weaver, supra. In that case Mr. Justice Lowrie, in construing the contract of an indorser of negotiable paper, says (p. 400 of 19 Pa., p. 663 of 57 Am. Dec.): 'The most, therefore, that can be said of an indorsement of negotiable paper, is that from it there is implied a contract to pay, on condition of the usual demand and notice, and that this implication is liable to be changed on the appearance of circumstances inconsistent with it, whether those circumstances be shown orally or in writing. But it may well be questioned whether the condition of demand and notice is truly part of the contract, or only a step in the legal remedy upon it. If it is part of the contract, how can it be effectually dispensed with without a new contract for a sufficient consideration, especially after the maturity of the note? Yet there are decisions without number that a waiver of it during the currency or after the maturity of the note will save from the consequences of its omission. This could not be if it was a condition of the contract, for then the omission of it would discharge the indorser both morally and legally; and no new promise afterwards, even with full knowledge of the facts, could be of any validity. If, however, an indorsement without other circumstances be regarded as an implied contract to pay, provided the holder use such diligence that the indorser loses nothing by his negligence or indulgence, then it accords with all these decisions. Then the law, and not the contract, declares the usual demand and notice to be in all cases conclusive, and in of the indorser absolutely,59 and accordingly the subsequent promise of the indorser to pay such instrument in spite of such omission to make presentment and demand, or to give notice, is inoperative unless it is supported by a new consideration.60 In one of the cases in which this view was expressed, however, the actual decision was not based upon this rule, but on the rule that even if such waiver had been operative, it did not discharge the holder of the instrument from his obligation to use due diligence in the future; and since it appeared that if he had used diligence after such waiver, he could have collected the full amount of the insome cases necessary evidence of such diligence. * * * It (the law) is therefore perfectly consistent in declaring that an indorser is hound by a new promise, after he knows of the omission of demand and notice; for this is an admission that he was not entitled to it, or has not suffered for want of it. It declares demand and notice necessary, in some cases, to save the indorser from loss, and it declares that his own admission may be substituted for them.' It is manifest, therefore, that from the nature of the indorsees contract a new consideration is not required to support a waiver of protest before or after maturity of the paper." Burgettstown National Bank v. Nill, 213 Pa. St. 456, 3 L. R. A. (N.S.) 1079, 63 Atl. 186.
59 Huntington v. Harvey, 4 Conn. 124.
60 Huntington v. Harvey, 4 Conn. 124; Sebree Deposit Bank v. More-land, 96 Ky. 150, 29 L. R. A. 305, 28 S. W. 153.
"There is no doctrine more firmly established than that negotiable paper, when dishonored, requires actual protest and notice to those who are the mere accommodation indorsers or drawers in order to hold them responsible. This is the rule of the law-merchant, and applicable to notes discounted in bank and placed on the footing of foreign bills by our statute. And to recognize a doctrine that in effect dispenses with the performance of conditions by the holder upon which the indorser agrees to become bound, and hold him liable upon a subsequent promise to pay, although released, destroys the virtue of commercial paper, and places the indorser at the mercy of those who, in great commercial transactions, are seeking to hold those liable who have been once released, upon the plea that the laches of the holder redounds at last to his benefit, if he can establish a promise on the part of the indorser, although released from the payment of the dishonored paper.
"There is no rule of commercial law more rigidly applied than that requiring notice of protest to those who are the mere indorsers of negotiable paper, and there is but little reason, it seems to us, for dispensing with this rule, or nullifying the conditions upon which the indorser becomes and is to remain bound, for the purpose of releasing the holder from the effect of his own laches. When the question of a want of notice is in issue, it would be competent to show a subsequent promise to pay, as a circumstance showing that the party had received notice, but to make such a promise conclusive, or a waiver of the right to a notice, is a doctrine in which we can not concur." Sebree Deposit Bank v. Moreland, 96 Ky. 150, 29 L. R. A. 305, 28 S. W. 153.
The Negotiable Instruments Law provides: "Notice of dishonor may be waived, either before the time of giving notice has arrived, or after the omission to give due notice, and the waiver may be express or implied."62 Such statute is undoubtedly intended to change the pre-existing rule of law and to make waiver by the indorser final and conclusive, although no consideration exists therefor. While this has been recognized in jurisdictions in which it had been held before the passage of the Negotiable Instruments Law, that such waiver needed a consideration, this holding was made in a case in which the indorser agreed to renew, but did not agree to pay the instrument without a renewal, and in which, accordingly, it was held that no waiver existed.63 Such holding, although clearly correct, was an obiter in this case.