ISSUE
WON PASSAIC, its cashier, and PATERSON are liable as agents because they did not give sufficient notice
HELD: NO
Ratio The holder of a note taking it to a bank for collection is familiar with the financial responsibility of the maker and indorsers, and can easily disclose the addresses of those to be charged and request that they be notified in event of default. In the absence of specific instructions, the bank need do no more than promptly report the fact to its principal, and the principal may then notify those to be charged.
PASSAIC as a mere agent of PATERSON for effecting collection (sub-agent)
1. bound to make legal demand on promisor of payment
2. and upon non-payment, to give due notice of the dishonor to PATERSON
>>to hold PASSAIC to a greater duty would be most unreasonable because it had not discounted the paper and presumable knew nothing of the indorsers or their residences. If Ruth Simon desired PASSAIC to notify the indorsers, she could have given SPECIFIC INSTRUCTIONS (Phipps v Milbury Bank) PATERSON as mere AGENT for Ruth Simon for
collection
>>knew nothing of their indorsers or their residences
>>duty as agent fully performed when it gave TIMELY NOTICE if the dishonor of the note so she could notify the prior parties. It does not matter that a notice placed in the mail is not received
-Section 94 NIL: Where the instrument has been dishonored in the hands of an agent, he may either himself give notice to the parties liable thereon, or he may give notice to his principal; if he gives notice to his principal, he must do so within the same time as if he were the holder, and the principal upon receipt of such notice has himself the same time for giving the notice as if the agent has been an independent holder.
-Mailing of notices to the principal is sufficient to relieve the agent. Any other rule would cast too great an obligation upon banks.
Disposition Judgment is reversed.
PEOPLE’S NATL BANK OF YPSILANTI V DICKS 258 Mich. 441; 242 NW 825 (1932)
~maia~
FACTS
SUBJECT: promissory note MAKER: Ives
HOLDER: People’s National Bank (substituted by Deake et al. as plaintiffs)
INDORSER: Dicks
-People’s National Bank sued Dicks and Ives for the promissory note. The note was signed on its face by Ives and Dicks. Opposite the signatures and directly opposite Dicks’ name was stamped the word
“indorsed.”
-Above the signatures of the parties, there was no guaranty of payment, no waiver of demand or notice of non-payment or protest, and no waiver of extension. Such waiver was on the face of another part of the note (the back of the instrument).
-there was no presentment of the note for payment to Ives, no demand of payment made to him, no dishonor by Ives, no notice of dishonor to Dicks, no protest on the note. Thus, if Dicks was a joint maker of the note he is liable. If he is an indorser and is bound by the waiver printed on the note, he is likewise liable. If he is a mere indorser, not bound by the warranty or guaranty printed on the note, he is not liable.
ISSUE
WON Dicks was liable HELD: NO
-when the waiver is embodied in the instrument itself it is binding upon all parties; but when it is written
above the signature of an indorser, it binds him only. “Embodied in the instrument” means embodied in the original contract, not in detached words on the back of the instrument.
-in the construction of negotiable instruments, the NIL provides that where the signature is so placed upon the instrument that it is not clear in what capacity the person making it intended to sign, he is deemed an indorser.
-further, Sec. 109 provides that notice of dishonor may be waived, either before the time of giving notice has arrived, or after the omission to give notice, and the waiver may be express or implied.
-the NIL has intended to make a distinction between waivers appearing on the body of the instrument itself, and those appearing at the back thereof above the signature of the indorser. An indorser is not bound in all events by a waiver that is not embodied in the body of the instrument, but placed at the back thereof.
-prior to NIL, there was no such distinction. The effect of a waiver appearing at the back of an instrument has the same effect as that of one appearing at the back thereof, i.e. binds all indorsers. Now, there is a distinction.
-here, Dicks was an indorser, thus he is not bound by the printed guaranty of payment or waiver of the note. Nothing indicates that Dicks signed, accepted, or approved of the printing upon the instrument. No presentment, demand, or notice of dishonor was given defendant, thus he is not bound by the same.
STATE INVESTMENT HOUSE V CA G.R. No. 101163; Bellosillo: Jan 11, 1993
~da~ commission, two (2) post-dated Equitable Banking Corporation checks in the amount of Fifty Thousand Pesos (P50,000.00) each who thereafter negotiated the checks to State Investment House. Inc. (STATE).MOULIC failed to sell the pieces of jewelry, so she returned them to Victoriano before maturity of the checks. The checks could no longer be retrieved since they had already been negotiated. Before their maturity dates, MOULIC withdrew her funds from the drawee bank.
-The checks were dishonored for insufficiency of funds. On 20 December 1979, STATE allegedly notified MOULIC of the dishonor of the checks and requested that it be paid in cash instead, although MOULIC avers that no such notice was given her.
-The fact that STATE failed to give Notice of Dishonor to MOULIC is of no moment. The need for such notice is not absolute; there are exceptions under -Sec. 114 of NIL: When notice need not be given to drawer. Notice of dishonor is not required to be given to the drawer in the following cases:
(a) Where the drawer and the drawee are the same person;
(b) When the drawee is a fictitious person or a person not having capacity to contract;
(c) When the drawer is the person to whom the instrument is presented for payment:
(d) Where the drawer has no right to expect or require that the drawee or acceptor will honor the instrument;
(e) Where the drawer had countermanded payment.
-Indeed, MOULIC'S actuations leave much to be desired. She did not retrieve the checks when she returned the jewelry. She simply withdrew her funds from her drawee bank and transferred them to another to protect herself. After to the knowledge of the drawer or indorser of the instrument, either verbally or by writing, the fact that a specified instrument, upon proper proceedings taken, has not been accepted or has not been paid, and that the party notified is
-Ellenbogen sued to recover $1650 on a draft drawn by defendant to the order of her agent for the bank with which to pay the check.
-The trial court dismissed the complaint because it was not pleaded that the draft was protested citing section 260 of the Negotiable Instruments Law, which provides that a foreign bill of exchange, appearing on its face to be such, which is dishonored for nonpayment, must be duly protested for nonpayment, and that if it is not
so protested the drawers and indorsers are discharged.
ISSUE
WON the lower court erred in holding that protest is a condition precedent to recovery against the drawer
HELD: NO.
-Section 185 of the NIL provides that notice of dishonor is not required to be given to the drawer, if the drawer has no right to expect or require that the drawee or acceptor will honor the instrument and under Section 267 (which is only required in the case of foreign bills of exchange) is dispensed with by any circumstances which would dispense with the notice of dishonor.
Further, under Section 139, presentment for payment is not required, in order to charge the drawer, where he has no right to expect or
require that the drawee or acceptor will pay the instrument.
-It follows that neither presentment nor dishonor was necessary in light of the facts pleaded by the plaintiff and therefore, protest was not required.
TAN LEONCO V GO INQUI Johnson; 8 Phil. 531 (Sept 13, 1907)
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FACTS
SUBJECT: bill of exchange worth P800
DRAWER: Go Inqui, as representative of the plaintiff’s mercantile co, "J.C.," which he caused to be stored, by direction of the defendants, in a warehouse in Buhang, and after storing the draft or check in question, handing it to the plaintiff, who in the mean time had returned from China. The plaintiff then, desiring to leave again for China, presented the draft for payment in Manila, but as the defendants had suspended the payment of the same, the plaintiff was unable to collect the amount thereof. When the said abaca was stored by Tan Tonguan in Buhang it became the property of the defendants (although it did not go through their hands), and on the face of the draft they acknowledge having received the amount of said draft. Therefore, it is evident that the defendants can not alleged now that they had not received the amount of the said draft.
-In the years 1896 and 1897 the plaintiff entered into an agreement with the then head of the firm, of J.C., wherein it was agreed that the plaintiff could transfer the shop at San Isidro to the Chinaman Tan Tonguan, and the shop of Buhang tot he Chinaman Lim Joco and Tim Bico; and by reason by such transfers it was agreed between them that the said Chinamen to whom the two should had been transferred would become liable for the debt of the plaintiff directly in connection with the said two shops, one being for the sum of about 600 pesos and the under these conditions, the plaintiff can not now be held to the liable for the 2,390 odd pesos claimed by the defendants in their counterclaim; they must look for payment of this sum to the Chinamen in whose favor the two shops were transferred.
-When the draft in question was presented by the plaintiff in Manila for payment, having failed to collect the amount,. he did not cause the protest to be drawn up in the manner provided by the Code of Commerce. Whether this draft or check is considered as a bill of exchange, it is my opinion that said draft or check should the plaintiff
should therefore be relieved from the formalities of the protest for want of payment of the same, as provided for with regard to bills of exchange.
The lower court indicated a sentence in the cause against the defendant and in favor of the plaintiff for the sum of 800 pesos, Mexican currency, or its value in the Conant, at the rate of P1.30, with interest 6 per cent from 3d day of march, 1901, and costs, including the fees of the arbitrators appointed at its request of the respective the counterclaim presented by the defendant.
ISSUE
1. WON defendant received the hemp so as to constitute consideration for the bill of exchange.
2. WON the plaintiff has a right to recover upon said bill of exchange without the same having been defendant. The hemp became the property of the defendant upon the delivery thereof in the made to the defendant and constituted a valuable consideration for the said bill of exchange or check.
2. YES
-It was alleged that he said bill of exchange, after being presented to the drawee in Manila, was not protested and that there is some question of the right of the p[plaintiff to recover upon said bill of defendant had himself ordered the drawee not to pay the said bill of exchange, that protest and notice of nonpayment under these conditions was unnecessary in order to render the drawer, or defendant in this case, liable.
Disposition: The judgment of the lower court is affirmed
BISHOP V DEXTER