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If a bill be regularly accepted, then the acceptor is bound as an original promisor, in much the same manner as the maker of a promissory note; and the other parties are regarded in the light of sureties, and are therefore liable only if the acceptor does not pay. They certainly are not sureties in the strict senso of this word, which bears a precise legal meaning of its own. But they are as sureties, in that they pay only if he who is as the principal debtor does not. The right and the duty of the holder of an accepted bill, or of a negotiable promissory note, are substantially the same. This right is to demand payment of all who are responsible on the paper. This duty and obligation are to give every one thus responsible all the opportunity to indemnify himself to which he is entitled by law. No one could hold another as a surety or guarantor in any form, if he brings the necessity of payment on the guarantor by his own wrongful neg. ligence, or if by such negligence he makes such payment the ultimate loss of the guarantor, by depriving him of the means of indemnity to which he was entitled.

These universal principles of guaranty are applied to negotiable paper in a strict and peculiar way.

If we remember the especial purpose and use of negotiable bills and notes, and remember also that from this purpose and use springs all that system of law which belongs to them peculiarly, we shall understand the obligations of the holder of such paper, and see that they are as the conditions on which his rights rest.

The drawer of a bill is as a surety for the acceptor, and the


indorser is as a surety for the drawer (or for the maker of a note) and for every previous indorser. The design and the effect of this are to accumulate upon the bill the credit of as many persons as choose to lend their credit to it; for with every new element of security the adequacy of the paper to represent money, and take its place and do its work in business transactions, is increased.

But merchants who thus enable the holder to coin their credit are entitled to a certain protection ; and the measure of this must be, that they are entitled to all the protection, meaning thereby all the efforts of the holder to save them harmless, and all the opportunities to save themselves, which are consistent with the free use of the instrument as money. Nor is this right of the parties founded merely on the justice due to them. It rests also upon the fact, that the safer indorsers are, the more readily will men of substance indorse, and therefore the more certain it will be that the paper will be paid on the day when, by its terms, this representative of money is to become money by payment.

It is for these reasons that the holder is bound, in the first place, to demand the payment of the paper, at its maturity, of the person who as the principal debtor is primarily bound to pay it. And then, if the amount due is not paid by this debtor, to demand it at once of each person who is as a surety for the original debtor, while some one else is as a surety for him; and this demand must be made successively through all the parties to the paper. By this means, every party to the paper as a surety is sure that he shall not be held as a surety by reason of any delay or insufficiency in demanding the money from him who is to the surety as a principal debtor.

The rules of law in respect to presentment, demand, notice of dishonor, and liability on negotiable notes and bills, stand forth from the main body of the common law as very distinct and peculiar. And yet they are nothing more, in substance, than a very rigorous and precise application of the general rules in respect to guaranty, and these rules flow from the most obvious principles of common justice. A guarantor in general is one who is bound to pay the debt of another if that other does not pay it. He is therefore a promisor on a condition. The condition is, that the principal debtor does not pay ; and this means, that he does not pay when the debt is payable and is demanded ; and therefore an unsuccessful demand on the principal debtor is the proper evidence of his failure to pay the debt, and of the consequent liability of the guarantor. And if the guarantor can show that he has sustained a loss by the unreasonable neglect of the creditor in making this demand of the principal debtor, this should constitute a sufficient defence, because it would show that the plaintiff had failed in the discharge of an important duty, and that the defendant had been injured by this failure.

It must also be remembered, that parties who put their names on negotiable paper in such a way as to make them stand as sureties of other parties, are as sureties, not only on condition, but on two distinct conditions, and one of them on three. The drawer is bound only if due presentment for acceptance is made to the drawee, and then (the bill being accepted) if due demand be made on the acceptor for payment. And every indorser is bound only if due demand be made on the several parties before him for whom he stands as surety.

But further than this neither drawer nor indorser is bound, unless, in the first place, the requisite demand is duly made, and, in the next place, due notice is given that the demand is ineffectual.

These two duties, or necessities, are entirely independent, and the reasons for them rest upon distinct, although connected grounds. Every one who in any way guarantees a debt has a right to ask that this debt shall be collected of the principal debtor if it can be by reasonable endeavors; and such payment of it is of course a discharge of all claim on the guarantor; and the indorsers of negotiable paper are, as we have seen, as guarantors.

But if the creditor cannot collect the debt himself, it is always possible that the guarantor may, or may indemnify himself for his payment by something which he may do himself, or may compel the principal debtor to do. He is therefore always entitled to an opportunity to procure for himself this indemnity; and for this purpose he must have immediate notice of that necessity for it which is created by the non-payment of the debt he guarantees. These two rights on the part of the guarantor are therefore distinct, and the two correlative duties or obligations of the creditor are also distinct; and hence a full discharge of the one duty by the creditor is no excuse whatever for the non-discharge of the other. That is to say, notice without demand leaves it uncertain whether a demand would not have been effectual. And demand without notice gives to the indorser no such opportunity of indemnifying himself as the very fact of an ineffectual demand on the principal makes it proper that he should have.

We have said that each indorser is entitled to have due demand made against all parties prior to himself, and to notice of non-payment. But in practice (a practice sanctioned by law to a great extent), demand against all parties but the principal payer is accompanied with notice of the default of that payer. Thus, if A be the maker of a note, B the payee, and C, D, E, and F indorsers, G, the last indorsee, makes his demand on A; and, if the note is not paid, gives to all the indorsers severally notice that the note is not paid, and at the same time makes a demand on them, stating that they, having indorsed the note, are looked to for payment.

These rules are, as will be seen, substantially the same with those which the law applies to all cases of guaranty. But, in relation to negotiable paper, the law merchant makes these rules far more precise and stringent than they are in relation to other contracts. Thus, it defines what is unreasonable delay, both as to demand and as to notice, by determining with great precision the very time within which both of these duties must be discharged. And it defines also the manner, means, place, and circumstances of the demand and of the notice, so as to leave as little as possible open for question. And the law merchant does this for the purpose of enabling mercantile men, or those who deal with mercantile paper, to know at once and precisely what their duties are, and what their rights are. And it dispenses with any proof of actual loss by the indorser, if the duties in his behalf are certainly neglected, by assuming peremptorily that one bound upon negotiable paper is injured if any delay occurs in a discharge by the holder of his duties in relation to it.

Such are the principles and reasons of the rules of the law merchant in regard to the demand of payment of negotiable paper, and notice of non-payment. And these rules will now be considered in reference to the questions, by whom, of whom, in what manner, when, and where the demand for payment should be made. And we will then consider the excuses which may be made for the omission or irregularity of demand of payment.



The general rule must obviously be, that a demand of payment should always be made by the owner of the paper, either personally or by his duly authorized agent. For, as payment of a note can only be good when made to a party who has a right to receive the amount due thereon, and to give a valid discharge to the maker for the same, it would seem that payment can only be demanded by one who has the power to pass a valid title to the note, and to release the maker from all liability incurred by reason of the instrument. Where a demand is necessary before the promisor can be charged, it is clear that it must be a legal demand; that is, such as he is bound to comply with ; and we can see no reason why there should be any difference in this respect between such a demand and one necessary in order to bind an indorser. We should say that the proper test, in any case, to determine whether the demand was made by the right person is this: Would the maker, by payment of the note to the party demanding payment, thereby buying up bis own note, be placed in the same position as an ordinary bona fide holder of any other note. If he would, there can be no objection to the demand as regards the person making it. If he would not, it is believed that the demand would be insufficient, because not made by the right party.(d)

(d) In Robarts o. Tucker, 16 Q. B. 560, a bill was accepted payable at a banker's, and the banker paid it with a forged indorsement thereon. The acceptor, having been obliged to pay the bill to the owner, sued the banker and recovered. Parke, B. said : If this were the ordinary case of an acceptance made payable at a banker's, there can be no question that making the acceptance payable there is tantamount to an order, on the part of the acceptor, to the banker to pay the bill to the person who is, according to the law merchant, capable of giving a good discharge for the bill. Therefore, if the bill is payable to order, it is an authority to pay the bill to any person who becomes holder hy a genuine indorsement. And if the bill is originally payable to bearer, or if there is afterwards a genuine indorsement in blank, it is an authority to pay the bill to the person who seems to be the holder.” In Sussex Bank v. Baldwin, 2 Harrison, 487, Dayton, J. said: “Any person may present, at its maturity, a promissory note of which he is put in possession, and if paid in the ordinary course of business, and taken up, the payment is good, and if not paid, the demand is good as a groundwork for notice to the indorsers.” In Bachellor o. Priest, 12 Pick. 399, Wilde, J. said.

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