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.
Delivery of a promissory note,1 whether executed by the that they were not taken in absolute payment will not be disturbed.5 Delivery of a note and chattel mortgage has been held not prima facie payment of a debt secured by mortgage,8 nor is delivery of a bond prima facie payment of an overdue installment of interest on a debt secured by mortgage.7 Even if the instrument is taken as conditional payment only, failure to present it to the maker at maturity converts it into absolute payment.8 Delivery of negotiable instrument has been held not to be payment of a contemporaneously created debt,9 whether the notes were executed by the debtor10 or by a third party.11 Delivery of a draft, whether drawn by the debtor12 or by a third person,13 is not according to the weight of authority prima facie payment of an antecedent debt. Some courts, however, treat a draft as prima facie payment of an antecedent debt.14 Delivery of a draft has been held to be prima facie payment of a contemporaneous debt.15 Omission of the creditor to use proper diligence in collecting the draft,16 will make the draft operate as a payment to the extent of the injury thus caused. Delivery of a check, either one drawn by the debtor,17 even if certified,18 or by a third person,19 is prima facie not payment. Thus A sold wheat to B and gave B a bill of lading. B delivered to A therefor his check on a bank in which he had not funds to meet such check B indorsed the bill of lading over to the bank, which took with knowledge of the facts. The check was not paid. It was held that the vendor could retake the goods from the bank.20 Under somewhat similar facts the vendor was allowed to retake the goods even from an innocent holder of the bill of lading.21 If, however, the payee of a check has it certified,22 or fails to present it for payment promptly whereby the indorser is damaged through the subsequent insolvency of the maker,23 or deposits the check to his own credit evn though he does not check against it,24 he thereby accepts it in payment. The creditor must therefore show either that the check was returned or that it was duly presented but not paid.25 So payment was held to exist where A gave B a check on a bank Y in which A had funds; and B deposited it in his bank X, which gave him credit therefor and sent it to Y which gave X credit therefor.20 If A an attorney for a creditor receives funds from the debtor and the debtor agrees that the attorney shall send his check to the creditor for such debt, this constitutes payment.27 If a note is indorsed to a bank for collection a check on the indorsing bank drawn by one who has an account therein is payment.28 A cashier's check29 is not prima facie payment, though if there is any evidence tending to show that it was so accepted it is error to withdraw such question from the jury.30 The fact that the creditor does not give immediate notice of dishonor but waits and collects a dividend out of the estate of the drawer bank is not conclusive that payment was intended.31 A certificate of deposit, indorsed by the debtor to the creditor, is not prima facie payment,32 and the creditor need not protest such certificate for non-payment to hold the debtor.33 Delivery of a time certificate, as where it is executed by one of several joint debtors,34 is not prima facie payment.
1 Johnston v. Barrills, 27 Or. 251; 50 Am. St. Rep. 717; 41 Pac. 656.
2 London, etc., Bank v. Parratt, 125 Cal. 472; 73 Am. St. Rep. 64; 58 Pac. 164.
3 Coleman v. Whitney, 62 Vt. 123; 9 L. R. A. 517; 20 Atl. 322.
4 Caldwell v. Hall, 49 Ark. 508; 4 Am. St. Rep. 64; IS. W. 62; Dug-gan v. Broom Co., 6 Wash. 593; 36 Am. St. Rep. 182; 34 Pac. 157; Mansfield v. Dameron, 42 W. Va. 794; 57 Am. St. Rep. 884; 26 S. E. 527.
5 Borland v. Bank, 99 Cal. 89; 37 Am. St. Rep. 32; 33 Pac. 737.
6 Feder v. Ervin (Tenn. Ch. App.), 36 L. R. A. 335.
7 Grant v. School Town, 71 Ind. 58.
8 Green v. Disbrow, 79 N. Y. 1 ; 35 Am. Rep. 496.
9 Borland v. Bank, 99 Cal. 89; 37
Am. St. Rep. 32; 33 Pac. 737; Burton v. Willin, 6 Houst. (Del.) 522; 22 Am. St. Rep. 363; Rugland v. Thompson, 48 Minn. 539; 51 N. W. 604; White v. Benjamin, 138 N. Y. 623; 33 N. E. 1037.
10 Sutphen v. Cushman, 35 111. 186; Wade v. Curtis, 96 Me. 309; 52 Atl. 762; Leas v. James, 10 S. & R. (Pa.) 307.
11 Darby v. Miller, 116 Ga. 952; 43 S. E. 374; Proctor v. Mather, 3 B. Mon. (Ky.) 353; Bond v. Mc-Mahon, 94 Mich. 557; 54 N. W. 281; Colby v. Maw, 1 Neb. (Unofficial) 478; 95 N. W. 677; Chicago, etc., Ry. v. Burns, 61 Neb. 793; 86 N. W. 483; J. Weller Co. v. Washington, 24 Ohio C. C. 407; Estey v. Birn-baum, 9 S. D. 174; 68 N. W. 290; Cliver v. Heil, 95 Wis. 364: 70 N. W. 346.
1 Atlas Steamship Co. v. Land Co., debtor,2 or by a third person,3 as the executor of the debtor,4 Las been held not to be absolute payment prima facie of an antecedent debt. Thus where A was indebted to B on a contract for plastering and paid four hundred twenty-five dollars in cash and gave two notes executed by C, and B gave to A his receipt for fourteen hundred five dollars " on account contract for plastering," it was held that the notes were prima facie conditional payment only, and the verdict of the jury
102 Fed. 358; 42 C. C. A. 398; Bank v. Parratt, 125 Cal. 472; 73 Am. St. Rep. 64; 58 Pac. 164; Jansen v. Grimshaw, 125 111. 468; 17 N. E. 850; Stone v. Church, 92 111. App. 77; Dean v. Ridgeway, 82 la. 757; 48 N. W. 923; Kibbey v. Jones, 7 Bush. (Ky.) 243; Valade v. Masson, - Mich. - ; 97 N. W. 59; Germain v. Lumber Co., 116 Mich. 245; 74 N. W. 644; H. F. Cady Lumber Co. v. Exposition Co. (Neb.), 93 N. W. 961; Lokken v. Miller, 9 N. D. 512; 84 N. W. 368; Sutliff v. Atwood, 15 O. S. 186; Price v. Coblitz, 21 Ohio C. C. 732; Berlin Iron Bridge Co. v. Bonta, 180 Pa. St. 448; 36 Atl. 867; Grissel v. Bank, 12 S. D. 93; 80 N. W. 161; Baker v. Baker, 2 S. D. 261; 39 Am. St. Rep. 776; 49 N. W. 1064; Cushvva v. Building Association, 45 W. Va. 490; 32 S. E. 259; Nash v. Meggett, 89 Wis. 486; 61 N. W. 283. "A promissory note does not discharge the debt for which it is given unless such be the express agreement of the parties; it only operates to extend until its maturity the period for the payment of the debt. The creditor may return the note when dishonored and proceed upon the original debt. The acceptance of the note is considered as accompanied with the condition of its payment." The Kimball. 3 Wall. (U. S.) 37. 45; quoted in Segrist v. Crabtree, 131 U. S. 287. 290.