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5. Who benefits by Notice by Indorser liable on Bill. 6. Who are entitled to receive Notice.-Best course
for holder to take. 7. Time within which Notice must be given, and
reasons for advice given in last section. 8. Banker or Agent is a separate party as regards
time for Notice. 9. Rules as to reasonable time. 10. Mode of sending Notice, and Evidence.-Caution
to prevent failure of proof. 11. Notice personally served in writing. — Verbal
Notice. 12. When it states on whose behalf given. 13. Need not be personal.- Clerk, Wife, &c. 14. Party bankrupt or dead. 15. Party guaranteeing Bill.
Party liable on Bond or Mortgage as well. 16. Notice to one of several who are jointly liable, is
Notice to all. 17. Notice should be posted so as to arrive before writ
is issued. 18. Principle on which Notice is required, and herein
of circumstances that will excuse Notice. 19. Promises, Admissions, and Agreements, which will
dispense with Notice. 20. Holder's ignorance
of a party's residence. 21. Accident, Illness, Lost Bill. 22. Implied consent to dispense with Notice. 23. Statutory rules as to dispensing with Notice and
excusing its delay.
1. When acceptance of a bill is refused on presentment for that purpose, or when payment of a bill or note, on its being presented when due, is refused by the acceptor or maker, the holder cannot sue the drawer and indorsers of the bill or the indorsers of the note, unless they each of them receive within a certain time notice of dishonor, which is a means of communication substituted, in this country, for notarial protest.
[As to notice of dishonor for non-gcceptance, see chap. piii, sec. 1.]
The object of the notice is both to apprise these parties of the fact of dishonor, and to let them know that they will be called upon to pay.
2. It is advisable to give the notice in writing, though it is sufficient if only verbal.
The principal reason why the notice should be in writing, is to make sure of its being distinct, and that it may shew, if produced, that it gives the desired information.
To shew the requisites of a notice of dishonor, the following examples of notices are given, with reasons for their goodness or insufficiency.
To begin with insufficient notices :
“ Your draft upon A. B. lies at my house due and unpaid,” is bad, because it is quite consistent with the notice that the draft may never have been presented for payment, nor even have been accepted.
Your draft upon A. B. accepted by him, lies at my house due and unpaid,” is bad, for it does not state presentment for payment.
But “Your draft upon A. B. accepted by him has been duly presented for payment, and lies at my house due and unpaid," will do, for it gives every essential information.
In the same way, “Your bill (or note) is returned dishonored,” is a perfect notice, for the word dishonor implies both acceptance and presentment.
Again, a statement that a bill or note is unpaid, and that the charges or the noting come to so much, is a good notice by implication ; for these words clearly indicate acceptance (of a bill), presentment, and non-payment, or in the case of a note, presentment and non-payment.
From these examples it will be seen that though no particular form is necessary, yet the choice of words is a matter of great importance.
The following is the form given in Mr. Justice Byles' work, and it will at once be seen to be an amply sufficient notice from the holder to an indorser, and may be altered according to circumstances.
No. 1, Fleet Street, London ;
26th Sept., 1842. SIR,
I hereby give you notice, that the Bill of Exchange, dated the 22d ult., drawn by A. B. of
on C. D. of for £100, payable one month after date to A. B. or his order, and indorsed by you, has been duly presented for payment, but was dishonored and is unpaid. I request you to pay me the amount thereof. I am, Sir, your obedient Servant,
G. H. To Mr. E. F. of Merchant.
If the notice may apply equally to more than one bill, it lies on the defendant to prove this fact. In case of misdescription of an instrument, as by calling a note a bill, or vice versâ, or transposing the names of the drawer or acceptors, &c., it is no objection, unless mistake or inconvenience have arisen, which it lies on the defendant
At the risk of partial repetition, I append the following rules as to the forms of notice of dishonor, in the very words of the 49th section of the B. of Exch. Act:
The notice may be given in writing or by personal communi. cation, and may be given in any terms which sufficiently identify the bill, and intimate that the bill has been dishonored by nonacceptance or non-payment.
The return of a dishonored bill to the drawer or an indorser is, in point of form, deemed a sufficient notice of dishonor.
A written notice need not be signed, and an insufficient written notice
may be supplemented and validated by verbal communi. cation. Å misdescription of the bill shall not vitiate the notice unless the party to whom the notice is given is fact misled thereby.
3. The person by or on behalf of whom notice of the dishonor of a bill or note is given must be either the actual holder or an indorser capable of being held liable on the instrument and of having recourse to the party to whom notice is given.
For example, A. B., having drawn a bill payable to his order upon the acceptor x, indorses it to C, who indorses it to D. The latter, baving presented the bill to X, who dishonors it, gives notice a day too late to C. C being discharged by D's neglect, cannot give a valid notice to A. B.
But a creditor with whom a bill is pledged as collateral security is an agent who, though not liable on the instrument, is not only entitled but bound to present for payment and give notice of dishonor, and is responsible for any neglect to do so.
4. Notice given by or on bebalf of the holder operates for the benefit of all subsequent holders and of all prior indorsers who have a right of recourse against the party to whom it is given.-B of Exch. Act, s. 40.
5. Notice given by or on behalf of an indorser who is himself liable on the bill, operates for the benefit of the holder and all indorsers subsequent to the party to whom notice is given. (See Ibid.)
6. As to the persons to whom notice is to be given. All parties to a dishonored bill or note who are to be held liable thereon are entitled to receive notice of disbonor, except the drawer of the bill and the maker of the note, who are themselves the authors of the dishonor.
As a general rule a man who has transferred by delivery, without indorsement, a bill payable to bearer is not liable either on the instrument or on the consideration for which it is given and, where this is the case, he is not entitled to notice of dishonor. But there are cases where the law will presume the contract to have been that the bill should not operate as payment if dishonored, where the bill was given for an antecedent debt. Here the man who has transferred the bill must have notice of dishonor or the debt will be wiped out. And there
an express agreement that the bill shall not amount to payment if dishonored, and then the transferor, though no party to the bill, will be entitled to notice.
“It is conceived,” says Mr. Justice Byles, 12th ed., p. 294, " that in all cases where, in consequence of the dishonor of bills or notes made or become payable to bearer, a remedy arises on the consideration, the transferor is entitled to notice of dishonor."
A man who guarantees a bill without being a party to it is said not to be discharged by the neglect of the holder to give him notice of dishonor unless he has been prejudiced by such neglect. But a man who has in. dorsed a bill and has given a bond or covenant to secure its payment is said to be liable on the bond or covenant though he have received no notice of dishonor. (See Ibid.)
A verbal notice given to the wife of the drawer, at his house, was held sufficient because a man who is liable on a bill must leave someone to answer applications about it wben due. A notice left at the man's
counting house or with his general agent in business is enough, but if left with the man's solicitor it is not enough unless the solicitor be also the general agent.
The following rules are from sec. 49 of the new Act:
When notice of dishonor is required to be given to any person, it may be given either to the party himself, or to his agent in that behalf.
Where the drawer or indorser is dead, and the party giving notice knows it, the notice must be given to a personal representative if such there be, and with the exercise of reasonable diligence he cau be found.
Where the drawer or indorser is bankrupt, notice may be given either to the party himself or to the trustee.
Where there are two or more drawers or indorsers who are not partners, notice must be given to each of them, unless one of them has authority to receive such notice for the others.
All parties, except the acceptor or maker, who are to be held liable on a bill or note, being entitled to notice of dishonor, the above rules are founded on the supposition that every holder knows the person from whom he took the instrument, or the last indorser, and where he lives, though not necessarily the prior parties. Each, therefore, has a certain time (see further on) in which to give notice to the party above him, and thus the holder's remedy may be much restricted by the neglect of the person to whom he gives notice.
The best thing, therefore, for the holder of a dishonored bill or note to do, is at once to give notice to all the indorsers whose addresses he knows, and, in the case of a bill, to the drawer also.
7. This brings us to the time allowed for giving notice. The rules for this are as follows:
Where the person giving the notice and the person to whom it is sent both live in the same place, the notice must be given so as to be received the next day after dishonor, or after receipt of notice of dishonor.
Where they both live in different places, the notice must arrive as early as a letter would arrive, if posted on the next day after dishonor, or after receipt of notice of dishonor.
The course above recommended is the best course for the holder to adopt, for it makes sure that each of the parties receives notice in due time. This time is reckoned on the supposition that each party, from the holder