CHAPTER XCXIX. NOTICE OF DISHONOR. 1. NOTICE must be given by the holder or his agent, duly authorized, or by some person who is a party to the note or bill, and liable to pay the same. If the notice be given by a mere stranger, not authorized, it is void. Knowledge of the dishonor is not notice to the indorser that the holder intends to look to him for the payment of the same. A notice from a party to the note or bill will enure to the benefit of every other party who stands between the party giving the notice and the primary debtor. A notice from the holder to the first indorser will operate as a notice from each of the intermediate indorsers, and will render the first indorser liable to each. 2. If the holder give no notice, except to his immediate indorser on the note or bill, and that indorser give notice, without delay, to the prior parties, the holder may avail himself of such notice, and sue all prior parties. The notice comes from one who is liable to pay the note, and is entitled to reimbursement from such prior parties. The first indorser would be ultimately bound to pay the note, and he may be made directly liable to pay it to a remote indorsee, since he would be circuitously bound to pay it. 3. If two persons, not partners, be holders, notice by one will be presumed to be for both. If the holder be an 1. By whom must the notice of dishonor be given? If the notice be given by a mere stranger? Is knowledge of the dishonor notice? To whose benefit will notice by one party to the bill enure? What will be the effect of a notice by the holder to the first indorser? 2. If the holder give notice to his immediate indorser only, and that indorser, without delay, give notice to prior indorsers? From whom does the notice come? To whom would the first indorser be bound to pay the note? 3. If two persons, not partners, be holders? If the holder be an in infant, notice may be given by the infant himself, or by his guardian. Notice must be given to each of joint indorsers, who are not partners. When the party entitled to notice and the holder reside in the same town or city, notice was required to be served either personally or by leaving the same at his domicile or place of business. This is now the law in many of the States of the Union. In New York, by an act in relation to commercial paper, passed April 17, 1857, it is provided, "that when the indorser or drawer resides in the same city or town where the note, check, or bill of exchange is payable, or legally presented for payment or acceptance, all notices of nonpayment or non-acceptance may be served by depositing them, with the postage thereon prepaid, in the post-office of the city or town where the same was made payable, or legally presented for payment or acceptance, directed to the indorser or drawer at such city or town." 4. If the indorser has his domicile in one town or city, and his place of business in another, notice may be sent. to him at either place. If the parties entitled to notice are partners, notice may be sent to the place of residence or place of business of either of the parties. If the indorser or drawer has changed his place of business and domicile, notice should be sent to his new place of business or domicile. The indorser may assign any particular place where the notice may be sent. The notice may be verbal or in writing. When the domicile or place of business is not known, due diligence and inquiry should be fant? If the joint indorsers are not partners? When the holder and the indorser resided in the same town or city, what was the former mode of serving notice? Where is this now required? What was the title of the act passed in New York in 1857? What is the provision of that law in reference to the service of notice when the holder, and indorsers, and drawer reside in the same town? 4. If the drawer or indorser have his domicile in one town or city, and his place of business in another? If the parties entitled to notice are partners? If he has changed his domicile or place of business? If the indorser assign a particular place for service? May the notice be verbal? When the domicile or place of business is not known? If he has removed from the State? made to ascertain it. If he has removed from the State, due diligence should be exercised to ascertain his new residence, and notice should be sent to him at that place. 5. Notice should be served as soon as the next day after the dishonor. It may be served on the same day, but must be served after the dishonor. If the mail does not run every day, it will be sufficient to deposit the notice in the post-office in season for the next regular mail. The holder must give notice to all the indorsers on the same day, if he intends to bind them to him as indorsers. If there be five indorsers, and the holder give notice to the fifth only, the fifth may, on the next day after receiving notice, give notice to the fourth; and the fourth may, on the next day after receiving notice, give notice to the third; and so on to the first. Each indorser is entitled to one day after receiving notice to give notice to the previous indorser. Notice having been given in this form would bind all the indorsers to the holder. 6. Notice should be directed to the town where the indorser is accustomed to receive his letters. If there is no post-office in that town, it may be directed to him at the post-office in the town nearest his residence. If, on diligent inquiry, the residence of the indorser cannot be found, notice may be sent to the place where the note or bill bears date, or where the indorser resided at the time. of making the indorsement, if known. If it be misdirected, from erroneous information, after reasonable inquiry, the misdirection will be excused. 7. Sometimes a note which has been indorsed, in the course of business, comes back into the possession of a 5. How soon should notice be served? If served on the same day? If the mail does not run every day? To whom must the holder give notice? If there be five indorsers, and the holder give notice to the fifth only? To what time is each indorser entitled? What would be the effect of notice given in this form? 6. Where should the notice be directed? If there is no post-office in that town? If, on diligent inquiry, the residence of the indorser cannot be found? If it be misdirected, from erroneous information? 7. If a note which has been indorsed comes back, in the course of business, into the hands of a prior indorser? If, in the form given, the note prior indorser. In such case, all indorsers who indorsed after the indorser who has a second time become the holder will be discharged from all liability thereon, unless such prior indorser indorsed the same "without recourse." In the following form there are five indorsers: JOHN B. ASTOR. RICHARD ROE. If Richard Roe indorse the above note, and deliver it to John Foster, the last three indorsers are discharged from all responsibility. If John Foster qualify his indorsement as in the following form, Richard Roe may indorse the note, and deliver it to John Foster, and none of the other indorsers would be re leased from their responsibility. The indorsers are bound in the order of their indorsements, and no indorser can look to those below him upon the bill or note for payment. Each must look to the primary debtor, and the indorsers between himself and the primary debtor. It was formerly held that the payee could not maintain an action against an indorser on a note or bill. 8. In the case of Moore against Cross, reported in vol. xxiii. of Barbour's Reports, it was held that the payee may maintain an action against an indorser on promissory note payable to payee's order. When the note is made by the maker, and indorsed by the indorser, and delivered to the payee for value, on the credit of such indorsement, and the indorser indorsed the same for the purpose of procuring for the maker a credit with the payee, the payée can maintain an action against the indorser. The plaintiff, in such case, must make a special allegation of the facts relative to the transaction, that may operate to charge the indorser in the payee's favor. The payee may indorse the note "without recourse," and sue as a subsequent holder. If a note is drawn payable to payee, or bearer, and is passed without the indorsement of the payee, and is subsequently indorsed, and it again come into the possession of the payee, the payee may maintain an action thereon against the indorsers. 9. The facts constituting the cause of action by payee be indorsed by Richard Roe, and delivered to John Foster, what will be the effect? If John Foster's indorsement were qualified, as in the second form, what would be the effect? In what order are the indorsers bound? Can an indorser look for indemnity to the indorsers below him on the note or bill? To whom must each look for indemnity? What was formerly held as to the payee's maintaining an action against an indorser? 8. What was held by the New York Court of Appeals in the case of Moore against Cross? When can the payee maintain an action against the indorser? What special allegation must the plaintiff make in such case? How may the payee indorse the note? If the note is drawn payable to payee, or bearer, and is passed without the indorsement of the payee, and is subsequently indorsed, and it again come into the possession of the payee? 9. How are the facts constituting a cause of action by payee against maker and indorsers set forth in the complaint? |