A formal declaration that negotiable paper has been dishonoured.
It is customary to send to "protest " a note, draft, or check, which is not paid upon proper presentation, unless instructions to the contrary are understood by the bank. That is, it is customary whether the paper is " foreign " (see " Foreign Bill") or "domestic." It should, however, always be done in the former case. This means that the paper is formally again presented to the one responsible for its payment by a notary public, who, on the same day, makes a note on the paper itself to the effect that it is dishonoured.
He then makes out a certificate of "protest;" attaches the dishonoured paper, or copy thereof, sets forth the time of and place where presented, the fact that he has presented it, and the reasons for protesting. Then he affixes his signature and seal.
Some of the larger banking institutions employ clerks who are notaries, and presentation by such takes the place of the employment of an outside notary.
If, upon presentation by the notary, payment is then refused, written "notice of protest," as it is called, should be promptly delivered or mailed not only to the last indorser upon the paper, but preferably also to all preceding indorsers. To hold preceding indorsers it is desirable that each subsequent indorser should send them like notice, unless this was done by the one who "protested " it. In practice, it is not supposed that the holder at the time of " protest " has the post-office addresses of all preceding indorsers, so it is customary for him to make out the notice of protest to each of the indorsers and mail them ail to the last indorser, letting the latter mail them all, with the exception of his own, to the next preceding indorser, and so on down the line.
1 A legislative act, which failed of passage, described a " prospectus " as being any announcement, circular, advertisement, or notice of every kind on behalf of any corporation, organized or to be organized, or in behalf • of any person interested in the formation of such corporation, with a view of obtaining subscriptions to, or the purchase of, the securities of such corporation.
The State of New York has passed an Act, popularly known as the "False Prospectus Act," which prohibits the making or publishing of false or exaggerated statements of publications of or concerning the affairs, pecuniary condition, or property of any corporation, joint-stock association, copartnership, or individual, with the idea of giving misleading information as to the apparent value of the security or property.
A sight draft, upon which "grace" is allowed, will not be "protested" until the expiration of the same. A draft reading, for instance, "10 days "sight" will be presented for "acceptance" (see "Draft"), and if it is a "foreign bill," and acceptance is refused, will then be presented by a notary, and if still refused, protested for non-acceptance.
A note must be presented upon the date due in order to hold the indorsers. When the depositor of a bank includes in his deposit a check or draft bearing only his indorsement upon which payment is refused it is not customary to "protest" it, as it is sufficient to return the instrument to the depositor, and charge the amount to his account, thus saving "protest" expenses.
Should a person primarily liable on an instrument be dead when the proper time for presentment falls due, and no place of payment is specified, the paper should be presented to the deceased's personal representative, if there be such, and if with the exercise of reasonable diligence he can be found.
The fees charged by the notary for " protest " must be paid either by the indorser or maker of the paper. The holder of the note is charged with the fees in case of total inability to make collection. On some paper, where there are no indorsements, it may not be desirable to allow the same to go to "protest," and the words "waive protest," or similar ones of same intent, may accompany the instrument on a separate slip of paper which is detached before presentation.
Or an indorser may write above his signature "protest waived," in which event it would be unnecessary to "protest " in order to hold him.
The law generally considers that a notice of "protest" mailed at the proper time at the general post-office is sufficient notice to the indorsers or makers.
The reason for protesting is that in order to hold parties to an instrument it must be presented for payment upon the proper date and at the proper place, and law demands the certificate of a notary public to that effect as evidence.
This is true, however, only of what are known as " foreign bills; "that is, a check, draft, or note, drawn outside the State from that in which it is presented for payment. Customarily, however, most instruments of this kind, whether " foreign bills" or not are "protested," as it is good evidence in case of legal action.
Naturally, the laws of the different States are somewhat at variance regarding the necessity for "protesting" different classes of paper. Some States may hold that it is not necessary to "protest" a note to hold either indorsers or maker; that it is merely good evidence that the same has been presented to do so. But, in any event, information given above would be likely to err on the safe side.
Protested for Non-acceptance. See " Protest."