31 Minn. 33 | Minn. | 1883
At Kasson, Minnesota, on the 15th of October, 1881, the defendant drew its draft or bill of exchange for $500 on the Ninth National Bank of New York, payable on demand, to the order of plaintiff, and, for value, delivered the same to the payee, who, on the same day, indorsed it to one Edison, who held it until the 8th of March, 1882, without presentation for payment, and, on the day last named, indorsed it to one Jordan, who, on the 11th of the same month, indorsed it to the Exchange Bank of Louisiana, Missouri, which caused it to be presented for payment on the 15th of the month, when- payment was refused, and the draft protested. On the 4th of April, the Exchange Bank transferred it to plaintiff.. No explanation is given why Edison held the draft so long without presenting it for payment, nor does it appear that, either Jordan or any
According to the commercial law in England, and in probably all those states where a different rule has not been fixed by statute, an indorsee of an overdue bill or negotiable note takes it subject only to such equities or defences as attached to the bill or note itself, and not to claims arising out of collateral matters or independent transactions, whether they arose against the payee or an intermediate holder; the idea being that such commercial paper, although overdue, did not lose its negotiability. Our state, following the example of many others, has by statute entirely changed this rule. Gen. St. 1878, c. 66, § 27, provide: “In the case of. an assignment of a thing in action, the action by the assignee is without prejudice to any set-off or other defence existing at the time of, or before notice of, the assignment ; but this section does not apply to a negotiable promissory note or bill of exchange, transferred in good faith and upon good consideration before due.” The effect of this statute, clearly, is to place an overdue bill or note upon the same footing as any other chose in ac
Such a rule may render precarious the business of dealing in overdue paper, especially when it has passed after maturity through the hands of several holders. The policy of such a law is exclusively for the legislature, but we may suggest that we see no reason why overdue commercial paper should not be placed on the same footing as any other chose in action. Notes and bills of exchange are only treated as business paper when negotiated before maturity. When overdue they are dishonored. In the principal commercial states of the Union, such as New York, this same rule has long been established by statute. Hence, our state cannot be charged with having adopted a rule in opposition to the judgment or usages of the business world.
In the case of a bill, note, or check, payable on demand, no exact day of payment is fixed in the instrument. The general rule is that it must be presented for payment within a reasonable time, having in view ordinary business usages, and the purposes which paper of that class is intended to subserve.
The term “overdue,” as applied to a demand bill of exchange, is used in different connections, in each of which- it has a different meaning; and the failure to keep these distinctions in mind has perhaps led to some misapprehension regarding the present case. Sometimes it is used in reference to a right of action against a drawer or indorser. In that connection a bill is not overdue until presented to the drawee for payment, and payment refused. Sometimes the term is used in considering whether an indorser has been released by a failure of the holder to present the bill for payment, and to give the indorser notice of its dishonor within a reasonable time. Again, the term is applied to a bill which has come into the hands of an indorser so long after its issue as to charge him with notice of its dishonor, and thus subject it in his hands to the defences which the drawer had against it in the hands of the assignor. It is in this last connection that the term “overdue” is considered in the present case. That in this case a bill may be said to be overdue, although it has never been in fact presented to the drawee for payment, is recognized everywhere throughout the books, and will be apparent, we think, on a moment’s reflection. Su23pose a draft has been held by the payee five years, without ever having been presented to the drawee for payment, and is then indorsed to another party. It would not be due so as to give a right of action against the drawer, because his contract is only to pay in case it is not'paid by the drawee on presentation. But there would be no doubt that it would be overdue or dishonored, so as to charge it in the hands of the indorsee with any defences which the drawer had against it in the hands of the payee, although, when he took it, it had never been presented for payment. The retention of
The cases are almost innumerable in which it has been held that paper payable on demand had been outstanding so long when transferred, as to be deemed overdue and dishonored, so as to subject it, in the hands of the purchaser, to any defences which the maker or drawer had against it in the hands of the payee; and in none of these cases is the question whether or not the paper had been, before the transfer, presented for payment to the maker or drawee, referred to as at all material. Down v. Halling, 4 B. & C. 330; First Nat. Bank v. Needham, 29 Iowa, 249; Cowing v. Altman, 71 N. Y. 435; Sylvester v. Crapo, 15 Pick. 92; Ranger v. Carey, 1 Met. 369; Herrick v. Wolverton, 41 N. Y. 581; Story on Prom. Notes, § 207 and note; Thompson v. Hale, 6 Pick. 258; American Bank v. Jenness, 2 Met. 288; Carlton v. Bailey, 27 N. H. 230; Parker v. Tuttle, 44 Me. 459; Nevins v. Towsend, 6 Conn. 5; Camp v. Scott, 14 Vt. 387; Morey v. Wakefield, 41 Vt. 24.
That in determining whether an indorsee took a demand note or bill as dishonored and overdue paper, subject to all equities or defences, the test is the length of time it has been outstanding, and not whether it has in fact been presented for payment, may be illustrated in another way. Suppose a draft had .in fact been presented for payment, and payment refused, on the very day it was issued, it would then be overdue as to the drawer, so that an action would then lie against him. But suppose, immediately after such presentation, and on the same day, the holder should indorse the draft to another, who took it in good faith, for value, without notice of this actual dishonor; clearly such indorsee would not take it as overdue paper, subject to the equities or defences against it in the hands of the former holder, because, a reasonable time for its presentation not having expired, there was nothing to put him upon inquiry, or to charge him with notice of such equities. Himmelman v. Hotaling, 40 Cal. 111. In fact, in de
Order affirmed.