LAWS OF NEW YORK AN ACT in relation to Negotiable Instruments. [In effect February 17, 1909.] Article I. Short title; definitions (§§ 1, 2). II. General provisions (§§ 3-7). III. Form and interpretation (§§ 20-42). V. Negotiation (§§ 60-80). VI. Rights of holder (§§ 90-98). VII. Liabilities of parties (§§ 110–119). VIII. Presentment for payment (§§ 130-148). IX. Notice of dishonor (§§ 160-189). X. Discharge (§§ 200-206). XI. Bills of exchange; form and interpretation (§§ 210–215). XII. Acceptance (§§ 220-230). XIII. Presentment for acceptance (§§ 240-248). XIV. Protest (§§ 260-268). XV. Acceptance for honor (§§ 280–289). XVI. Payment for honor (§§ 300–306). XVII. Bills in sets (§§ 310-315). XVIII. Promissory notes and checks (§§ 320–326). XIX. Notes given for patent rights and for a speculative consideration (§§ 330–332). XX. Laws repealed; when to take effect (§§ 340-341). ARTICLE I SHORT TITLE; DEFINITIONS § 1. Short title. This chapter shall be known as the "Negotiable Instruments Law." § 2. Definitions and meaning of terms. - In this chapter, unless the context otherwise requires : "Acceptance" means an acceptance completed by delivery or notification. "Action" includes counter-claim and set-off. "Bank" includes any person or association of persons carrying on the business of banking, whether incorporated or not. "Bearer" means the person in possession of a bill or note which is payable to bearer. "Bill" means bill of exchange, and "note" means negotiable promissory note. "Delivery" means transfer of possession, actual or constructive, from one person to another. "Holder" means the payee or indorsee of a bill or note, who is in possession of it, or the bearer thereof. "Indorsement" means an indorsement completed by delivery. "Instrument" means negotiable instrument. "Issue" means the first delivery of the instrument, complete in form, to a person who takes it as a holder. "Person" includes a body of persons, whether incorporated or not. "Value" means valuable consideration. "Written" includes printed, and "writing" includes print. ARTICLE II GENERAL PROVISIONS § 3. Person primarily liable on instrument. The person "primarily" liable on an instrument is the person who by the terms of the instrument is absolutely required to pay the same. All other parties are "secondarily" liable. A negotiable instrument is sometimes indorsed without consideration as a friendly act, or an "accommodation" to the maker. Sometimes the friend has accommodated by becoming the maker of the instrument, and turning it over to the real borrower on the instrument (or similar user of it) who indorses it and thus becomes formally identified with it. In the case of an" accommodation "maker, it is held that the addition of the word surety does not relieve him from primary liability to holders in due course. § 4. Reasonable time, what constitutes. In determining what is a "reasonable time" or an “unreasonable time,” regard is to be had to the nature of the instrument, the usage of trade or business (if any) with respect to such instruments, and the facts of the particular case. § 5. Time, how computed; when last day falls on holiday. Where the day, or the last day, for doing any act herein required or permitted to be done falls on Sunday or on a holiday, the act may be done on the next succeeding secular or business day. § 6. Application of chapter. The provisions of this act do not apply to negotiable instruments made and delivered prior to the passage hereof. 87. Law merchant; when governs. the rules of the law merchant shall govern. In any case not provided for in this act It is not entirely clear what Section 7 means. Apparently it means that the law previously in force with relation to negotiable instruments shall govern rather than the law applied to contracts in general. ARTICLE XI BILLS OF EXCHANGE; FORM AND INTERPRETATION 210. Bill of exchange defined. A bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer. § 211. Bill not an assignment of funds in hands of drawee. A bill of itself does not operate as an assignment of the funds in the hands of the drawee available for the payment thereof and the drawee is not liable on the bill unless and until he accepts the same. § 212. Bill addressed to more than one drawee. A bill may be addressed to two or more drawees jointly, whether they are partners or not; but not to two or more drawees in the alternative or in succession. § 213. Inland and foreign bills of exchange. An inland bill of exchange is a bill which is, or on its face purports to be, both drawn and payable within the State. Any other bill is a foreign bill. Unless the contrary appears on the face of the bill, the holder may treat it as an inland bill. § 214. When bill may be treated as promissory note. Where in a bill the drawer and drawee are the same person, or where the drawee is a fictitious person, or a person not having capacity to contract, the holder may treat the instrument, at his option, either as a bill of exchange or a promissory note. § 215. Referee in case of need. The drawer of a bill and any indorser may insert thereon the name of a person to whom the holder may resort in case of need, that is to say, in case the bill is dishonored by non-acceptance or non-payment. Such person is called the referee in case of need. It is in the option of the holder to resort to the referee in case of need or not, as he may see fit. ARTICLE XVIII PROMISSORY NOTES AND CHECKS § 320. Promissory note defined. A negotiable promissory note within the meaning of this act is an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer. Where a note is drawn to the maker's own order, it is not complete until indorsed by him. § 321. Check defined. · A check is a bill of exchange drawn on a bank, payable on demand. Except as herein otherwise provided, the provisions of this act applicable to a bill of exchange payable on demand apply to a check. While checks are in many ways bills of exchange they have come to have characters and features of their own. A check is always drawn upon a bank, and drawn against funds actually in the bank. A check is sometimes paid when the account is overdrawn, but this is irregular, and is seldom countenanced, although sometimes winked at. The death of the drawer of a check revokes it as soon as the bank has notice, although the check in this case is probably good against the estate as evidence of debt. A check which is not honored does not pay a debt; the creditor can sue on the debt. The order in a check need not be unconditional. A condition sometimes is attached, as "payable only through the clearing house" which makes it not payable over the counter of the bank on which it is issued. The deposit of a check puts the money to the credit of the depositor at once, unless taken for collection, and the bank may (but seldom does) refuse to accept checks deposited, except for collection. The ordinary custom is that the depositor may check out at once against the deposit, the credit to be canceled in case of dishonor. A bank may, however, refuse to pay a check where the deposit is insufficient without certain checks placed on deposit; the credit of the depositor may enter into such action. A depositor may stop payment on a check by proper notice to the bank. By doing so he may be liable in a suit to the payee or holder of the check; but the bank may properly refuse to pay the check. If stopped because a check has been lost, payment should not be made by a check for the same amount on the same bank without proper notice to the bank. A check on another bank, a New York draft, or a certified check are suitable methods of payment in such cases. A new check, marked "duplicate," is often used but is less desirable. Entering a check in a customer's bank book and crediting to his account does not make the bank a "holder for value," but if the bank has paid to the depositor money available only from such deposit, the bank is then a holder for value to the extent of such payment. § 322. Within what time a check must be presented. A check must be presented for payment within a reasonable time after its issue or the drawer will be discharged from liability thereon to the extent of the loss caused by the delay. When a payee neglects to present his check promptly in the regular course of business, and the bank fails, the loss is on the payee and not on the drawer of the check. Delay in presentment of the check does not discharge the drawer unless he can show damage; this he can do in case of the failure of the bank. § 323. Certification of check; effect of. — Where a check is certified by the bank on which it is drawn the certification is equivalent to an acceptance. § 324. Effect where the holder of check procures it to be certified. — Where the holder of a check procures it to be accepted or certified the drawer and all endorsers are discharged from liability thereon. § 325. When check operates as an assignment. — A check of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank, and the bank is not liable to the holder, unless and until it accepts or certifies the check. § 326. Recovery of forged check. — No bank shall be liable to a depositor for the payment by it of a forged or raised check, unless within one year after the return to the depositor of the voucher of such payment, such depositor shall notify the bank that the check so paid was forged or raised. (This section added by Laws of 1904, chap. 287.) In certain formal matters of payment, the payee demands something more than the credit of the drawer as expressed by his personal check. If the check is certified, the credit of the bank is substituted. The proper officer of the bank attaches his signature to the certification; the president, cashier, or paying teller has an accepted right to certify. Certification is in effect acceptance by the bank, and discharges the drawer and indorsers. Its effect is to guarantee the drawer's signature and sufficiency of funds, and the amount of the check is at once withdrawn from the deposit and reserved for payment of the check. Certification does not guarantee any matter of good faith or consideration between the parties. The drawer cannot stop payment on a certified check. A check presented for certification may be retained for a time, even 24 hours, for examination. The presentation for certification is made sometimes by the payee or other holder, sometimes by the drawer before delivery to payee. Attachment of a deposit will preserve for the creditors so much as the attachment specifies, and no check will afterward be honored, if its payment will reduce the account below the specified amount. The bank is protected in refusing to pay. ARTICLE III FORM AND INTERPRETATION § 20. Form of negotiable instrument. conform to the following requirements: An instrument to be negotiable must 1. It must be in writing and signed by the maker or drawer. The signature, however, may be by initials, or any signature the maker may adopt as his own; it may be printed, or made by a stamp; it may be a "mark" properly attested. The instrument, of course, must be certain as to the person signing. There may readily be a question as to the business wisdom of signing by a print or stamp. 2. Must contain an unconditional promise or order to pay a sum certain in money. A bill of exchange must contain an order, while a note must contain a promise. An order is necessary; a request is not sufficient. Payment must be made in money only, and this means legal tender, although other kinds of currency are in general use, and are commonly accepted in payment, and are legal if so accepted. 3. Must be payable on demand, or at a fixed or determinable future time. 4. Must be payable to order or to bearer; and 5. Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty. What is known as a "crossed check" is little used in this country. It has lines drawn across it, and requires presentation through some other bank, to whom it is supposed the payee is known. Sometimes the other bank is specified; sometimes it is "payable only through the clearing house." § 21. Certainty as to sum; what constitutes. The sum payable is a sum certain within the meaning of this act, although it is to be paid: 1. With interest; or Discount is in its nature similar to interest. A note for $100 payable six months after date may be taken to a bank, or sold to some individual, and "discounted." If the interest rate is 6 per cent, the discount for 6 |