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paper itself.211

This is important chiefly in case of part payment, since the instrument is generally canceled or given up on payment in full. Part payment, made on a negotiable instrument, should be noted on the

And where the instrument comes into the hands of a bona fide holder for value before maturity, with no memorandum or other notice of part payment, it cannot be set up as a defense against him,212 even though the prior holder promised, when he received the part payment, that he would indorse it.213

Surrender of Instrument on Payment.

§ 1415. When a bill or note is paid in full, the party who pays it may, and for his own protection should, require that it be surrendered to him.214 And a tender of payment of commercial paper will not be rendered invalid by a demand for its surrender.215 But an offer to pay upon surrender of the bill is not itself equivalent to payment, 218 and a valid tender cannot be conditioned on cancellation of a collateral mortgage, as well as a surrender of the note secured.217

If the maker of a note pays it without taking a receipt or obtaining the surrender of the instrument, he cannot afterwards insist on its surrender or cancellation in an action brought against himself and the

211 Chit. Bills, 477; 2 Edw. Bills & X. $ 783; Cooper v. Davies, 1 Esp. 463; Kernohan v. Durham, 48 Ohio.St. 1, 26 N. E. 982.

212 Ward v. IIoward, 88 X. Y. 74; Emerson v. Cutts, 12 Mass. 78. So, of payment in full before maturity. Best v. Crall, 23 Kan. 482. And see $ 1418, infra.

213 And the indorsee need not prove that the note was transferred to him before maturity. Wilbour v. Turner, 5 Pick. (Mass.) 5:26.

21 4 Byles, Bills, 228; Chit. Bills, 480; 2 Daniel, Neg. Inst. 255; 2 Pars. Notes & B. 215; Story, Bills, § 448; Buzzard v. Flecknoe, 1 Starkie, 333; Hansard v. Robinson, 7 Barn. & C. 90, 9 Dowl. & R. 860; Davis v. Dodd, 4 Taunt. 602; McClelland v. Bartlett, 3 Ill. App. 481. And see $ 1131, supra. And all parts that have been accepted or protested should be surrendered. $ 241, supra. And a bill cannot be held for contingent costs in a pending bankruptcy proceeding, if the amount due, with costs of suit, is tendered. Cornes v. Taylor, 10 Exch. 441.

215 Wilder v. Seelye, 8 Barb. (X. Y.) 408. And when paid must be surrendered, although it may not have matured yet. Union Sav. Ass'n v. Clayton, 6 Mo. App. 587.

210 Williams v. Gottschalk, 6 Mo. App. 397. 217 Storey v. Krewson, 55 Ind. 397.


indorser jointly, although he is entitled to a nonsuit in such case. But he may bring an action of trover against the holder, on his refusal to surrender it after it is paid.219 If a bill is not surrendered, the presumption is that it is not paid.220 And if a holder by delivery from the payee dies, and the bill is found in his possession, and put into suit by his administrator in the name of the payee, the plaintiff will not be liable for costs, although the bill was in fact paid.221 So, if a note is renewed, the original note will be presumed to have been surrendered, and need not be produced in an action upon the renewal; ??? and it will not be a defense to the renewal that the plaintiff agreed to surrender the original note, and has failed to do so.223 But it has been held in such case that judgment may be stayed until it is produced and given up.224 And where the bill is a foreign bill in several parts, an agreement for its surrender is not satisfied by the surrender of one part.225

Lost Instruments.

§ 1416. If the bill or note is proved to have been lost, its surrender cannot, of course, be required.226 It was formerly held that an acceptor could not be compelled, at law, to pay a lost bill, even on an offer of indemnity.227 But if due indemnity is offered to the maker, he may be required to pay a note on proof of its loss; 228 especially where it was not indorsed, and public notice was given of the robbery in which it was lost many years before.2 29 Where a note has been

218 Mercantile Bank v. Pettigrew, 74 N. C. 326. 219 Otisfield v. Mayberry, 63 Me. 197. 220 Chit. Bills, 446; Buzzard v. Flecknoe, 1 Starkie, 333; Brembridge v. Osborne, Id. 374. But its not being surrendered is immaterial as evidence of fraud in a conveyance based on it and other valuable consideration. Howard v. Rynearson, 50 Mich. 307, 15 N. W. 486.

221 Horton v. Blair, 2 Bailey (S. C.) 545. 222 Lyman v. Bank, 12 How. 244. 223 It appearing that he was ready to surrender it, and had never refused to do so. Fleiss v. Hellery, 4 Mo. App. 596. 224 Raisin v. Thomas, 88 N. C. 148. 225 Kearney y. West Granada Mining Co., 1 Hurl. & N. 412. 226 Wain v. Bailey, 2 Perry & D. 507. 227 Story, Bills, $ 448. 22% Bridgeford v. Manufacturing Co., 34 Conn. 516. 229 Lewis v. Petayvin, 14 Mart. (La.; N. S.) 4.

removed with other assets of a bank, by military orders, on account of the war, the maker will still remain liable for interest, unless he can prove an actual tender. 230

But if a tender is not accepted because the note is mislaid, the liability for interest will end with the tender. 23 1

A certificate of deposit payable in "current funds” is a nonnegotiable note, and, after its loss, recovery may be had against the maker with out the necessity for a bond indemnity.232 So, if a bank note is cut in two for the purpose of safe transmission by mail, neither half is any longer negotiable; and, in case of the loss of one half, recovery may be had on the other on proof of the holder's title.?

2 33

Nonnegotiable Instruments-Surrender by Mistake--Fraud

§ 1417. In general, if a bill is not negotiable, it may be safely paid without being actually surrendered by the holder.234

And payment of a nonnegotiable note to the payee will be good, if the maker has no notice of its transfer, although it is not produced at the time it is


Sometimes a pote is surrendered by mistake; e. g. where the holder thinks it has been paid. In such case the maker will remain liable for the balance, notwithstanding the surrender of the note.238 But where a pledgee of the note has surrendered it to his pledgor (the payee) on receiving his check for it, and he surrenders it to the maker, the pledgee cannot afterwards, on the dishonor of the check, recover the note from the maker. 237 And if the payee pretends to surrender the note on its payment to him, and fraudulently substitutes another paper, and assigns the note before maturity (but without indorsement)

230 Gates v. Bank, 12 Heisk. (Tenn.) 325. 231 Dent v. Dunn, 3 Camp. 296. 232 National State Bank v. Ringel, 51 Ind. 393. 233 Hinsdale v. Bank, 6 Wend. (N. Y.) 378; notwithstanding publication of notice by the bank that it would not pay, Bank of the United States v. Sill. 5 Conn. 106. But in Virginia the holder must offer indemnity as well as prove his title, and can recover no interest or costs until he does so. Farmers Bank v. Reynolds, 4 Rand. (Va.) 186.

2 3 4 Byles, Bills, 233; Chit. Bills, 446; 2 Edw. Bills & N. & 787; Wain r. Bailey, 10 Adol. & El. 616, 2 Perry & D. 507.

235 Ilart v. Freeman, 42 Ala. 507.
288 Banks v. Marshall, 23 Cal. 223.
237 Citizens' Nat. Bank v. Hooper, 47 Md. 88.

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to a bona fide purchaser, the payment will be good as against such purchaser, unless he can prove that the fraudulent substitution was due to the maker's own negligence.238

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Surrender on Payment before Maturity.

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§ 1418. Where a negotiable bill or note is paid before maturity, it is especially important that it should be surrendered to the payor, and further negotiation thereby prevented. And if payment is made to the payee, and the note is not surrendered, but is afterwards transferred before maturity to a bona fide holder, the holder may recover against the payee in an action for money had and received to his use. 23 9 Possession of such a note indorsed by the payee in blank is presumptive, -vidence that the holder is a bona fide purchaser, and payment to the prayee is no defense without further proof.240 And an accommodation acceptor cannot set up a payment of the bill by the drawer to the payee as a defense, even against one who afterwards took it from the payee as collateral, without notice and after maturity.241 But if the pledgee has taken the note before maturity, with knowledge that the maker tad already paid it to the payee upon his receipt, he will take it subject to the defense of such payment.?


In the absence of laches, howver, a certificate of deposit, “payable on the return of this certificate properly indorsed," may be recovered against the maker by a bona fide holder, notwithstanding a previous payment to the original depos

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itor 212

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If payment of a bill or note is made to the payee, but the paper is



238 Miller v. Tharel, 75 N. C. 148.
239 Connecticut & P. R. R. Co. v. Newell, 31 Vt. 364; Best v. Crall, 23 Kan.
342. But the maker could not recover from the payee a payment voluntarily
made upon the payee's guaranty against damage from loss of the bill. Alex-
ander v. Strong, 9 Mees. & W. 733.
240 Paris v. Moe, 60 Ga. 90.
241 Bosanquet v. Dudman, 1 Starkie, 1.

242 White v. Kibling, 11 Johns. (N. Y.) 128. So, if purchased long after ma-
turity, without notice (a receipt acknowledging payment, and promising to
"give up the note when called for,” being no authority to the payee to reissue
it). American Bank v. Jenness, 2 Metc. (Mass.) 288.

242 National Bank of Ft. Edward v. Washington Co. Nat. Bank, 5 Hun N, Y.) 605. In this case seven years had elapsed since the date of the cer

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not produced or surrendered by the payee, and has been previously transferred, the purchaser will not be affected by such payment.244 But a part payment to the payee will be good in such case, if the purchaser holds the note as collateral for a debt that is fully covered by the balance still left unpaid.245 And, conversely, payment to a pledgee whose claim was paid, and who did not then surrender the note, but has since returned it to the payee, will not be binding upon the payee.246

Statutes Requiring Surrender on Payment.

§ 1419. By the California Code, one who pays a negotiable instru. ment may demand its surrender, or, if the party receiving payment has a right to retain the paper, he may demand a receipt or release on the instrument itself, or a bond of indemnity, if it is lost.247 In Vermont, a release must be given if the instrument is destroyed; and, where payment is made in other cases by an indorser or surety, he may recover the amount paid and be discharged from his liability, if the holder fails to surrender the bill on such payment.248

In other countries, surrender of the bill is necessary to a complete discharge. 249 And in case of partial payment the receipt must be indorsed on the instrument.2 And some statutes require the surrender of any part that has been accepted, 251 or indemnity, in default of such surrender,252 in order to effect a complete discharge as against


244 Gosling v. Griffin, 13 Alb. Law J. 173; Mayo v. Moore, 28 Ill. 428. So, if it has been transferred or pledged as collateral, Griswold v. Davis, 31 Vt. 390; the pledge having been made before the note became due, Best v. Crall, 23 Kan. 342.

245 Grant v. Kidwell, 30 Mo. 455.
246 Wheeler v. Guild, 20 Pick. (Mass.) 515.

247 CALIFORNIA (Civ. Code, $ 3137); NORTH DAKOTA (Rev. Codes, & 4894); UTAH (Rev. St. $ 1592); WYOMING (Laws 1888, c. 70, $ 42).

248 VERMONT (V. S. $ 2309).

249 AUSTRIA (Exch. Law, art. 39); GERMANY (Exch. Law, art. 39); LOWER CANADA (Civ. Code, art. 2315).

250 GERMANY (Exch. Law, art. 39); AUSTRIA (Exch. Law, art. 39). 251 SWEDEN (Exch. Law, $ 40).

252 CHILI (Code Com. art. 718); COLOMBIA (Code Com. art. 458); COSTA RICA (Code Com. art. 451); ECUADOR (Code Com., as in "Spain"); MEXICO (Code Com. art. 396); PERU (Code Com. art. 459); SALVADOR (Code Com. art. 457); SPAIN (Code Com. art. 504).

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