payment of the note; 91 especially if the subsequent discount was for the express purpose of taking up such paper.492

Payment by Check of Another.

494

§ 1557. The check of another party, received by the creditor with the debtor's indorsement, will be a payment, 493 unless it was drawn without funds. And, in general, such check is only a conditional payment, and the debtor will not be discharged unless he is damaged, although the holder surrenders it for the drawer's draft, giving his debtor notice of that fact.495 So, if the creditor accepts the check of a third person (already twice presented and dishonored) on the debtor's representation that he knew nothing wrong about it, and agrees to try and collect it, and to return it in two or three months if he does not succeed, he may offer to return it sooner, and may recover the amount of his debt.*9

Check Lost-Certified.

496

§ 1558. If a check is taken and lost, and immediate notice is given to the drawer, who requires indemnity, and the bank drawn upon fails during the delay, with funds of the drawer in its hands, the check will be a payment of the debt, and a bar to further action upon it.497 The mere loss of a check will not, however, make it an absolute payment.498 So, if it is lost, and afterwards paid by the bank to a wrongful holder under a forged indorsement.499

If a check is presented by the payee for certification, and is certi

491 In re Phillips, 132 Mass. 233. And see Gen. St. c. 118, § 87.

492 National Bank of Gloversville v. Wells, 79 N. Y. 498; although the check was made payable to "notes, &c., or order."

493 Sellars v. Johnson, 65 N. C. 104; Underwriters' Wrecking Co. v. Board of Underwriters, 35 La. Ann. 803.

494 Fleig v. Sleet, 43 Ohio St. 53, 1 N. E. 24.

495 Hunter v. Moul, 98 Pa. St. 13; Williams v. Costello, 95 Ala. 592, 11 South. 9; Holmes v. Briggs, 131 Pa. St. 233, 18 Atl. 928 (although the holder received dividends on it from the drawer's estate).

496 Martin v. Pennock, 2 Pa. St. 376.

497 Bevan v. Hill, 2 Camp. 381.

498 Kermeyer v. Newby, 14 Kan. 164.

499 Thomson v. Bank, 82 N. Y. 1.

fied by the bank, it will be an absolute payment, although the bank fails before paying it, since the creditor voluntarily accepts the liability of the bank, instead of payment at the time of presentment.500 The certification of a check constitutes a new contract between the holder and the bank.501 Giving a certified check is not an absolute payment, however, but simply gives the creditor the additional liability of the drawee. 502

Check Taken as Cash-Paid to Holder.

503

§ 1559. If the maker of a note or the acceptor of a bill offers a check in payment, the holder need not surrender the bill or note on such offer; but even if the original note is surrendered, and a check taken for a part payment, and not paid, the note will not be paid." And the fact that a check is a conditional payment excludes any set-off which the bank might have against the person presenting the check for payment.50 But payment by check to an authorized agent So, if stock is sold and a check

will be regarded as so much cash.505

taken in payment, it is a "cash sale." 506

But, if the drawer stops a check at the principal bank on account of an attachment issued after it was drawn, he may still be liable in the attachment suit for the original debt, although the check was afterwards paid in good faith by a branch bank. 507 But, in general, if a check is paid on its presentment, the debt is paid.508

500 First Nat. Bank of Jersey City v. Leach, 52 N. Y. 350. 501 National Commercial Bank v. Miller, 77 Ala. 168.

102 Bickford v. Bank, 42 Ill. 238; Born v. Bank, 123 Ind. 78, 24 N. E. 173. 503 Olcott v. Rathbone, 5 Wend. (N. Y.) 490. So, a check given by an accommodation indorser of the note. Heartt v. Rhodes, 66 Ill. 351.

504 Brown v. Leckie, 43 Ill. 498.

505 Byles, Bills, 389; Sykes v. Giles, 5 Mees. & W. 645; Williams v. Evans, L. R. 1 Q. B. 352. And where a bank as collecting agent receives the drawee's check, which was not then good, but became so by subsequent deposits, and the check is charged, and the bill marked "Paid," and subsequent overdrafts are paid by the bank, the payment is complete, and the collecting bank is liable to its principal for so much money collected. Commercial Bank v. Union Bank, 11 N. Y. 203.

506 Gould v. Town of Oneonta, 71 N. Y. 307.

507 Cohen v. Hale, 3 Q. B. Div. 371.

Les Barnet v. Smith, 30 N. H. 256.

And part payment made in advance by a check that is afterwards paid will take a parol contract out of the statute of frauds.509 So, if payment is made to an agent by check, and the check is crossed by him to his own banker, and paid, it will be a payment of the debt, although crossed and diverted by the agent in fraud of his principal.510 So, if a check is indorsed by the payee's agent without authority, and misappropriated, it will be a sufficient payment, and the drawer of the check will not be further liable to the payee either for the check or for the goods for which it was given.51

509 Hunter v. Wetsell, 17 Hun (N. Y.) 135.

510 Bridges v. Garrett, L. R. 5 C. P. 451.

511 Charles v. Blackwell, 2 C. P. Div. 151; the payment by the bank being protected by 16 & 17 Vict. c. 59, § 19.

(2232)

§ 1560. Where the creditor receives a bill or draft, and uses due diligence in presenting it and giving notice of dishonor, it will not be a payment of the debt.512 But, if the debtor is discharged as drawer by the laches of the creditor, it will in general discharge the debt,513 whether the bill was originally taken in full satisfac

512 Ward v. Evans, 2 Ld. Raym. 928.

513 Chamberlyn v. Delarive, 2 Wils. 353; Darnall v. Morehouse, 45 N. Y. 64; Adams v. Darby, 28 Mo. 162; Phoenix Ins. Co. v. Allen, 11 Mich. 501; Brown v. Cronise, 21 Cal. 387; Allan v. Eldred, 50 Wis. 132, 6 N. W. 565; Stam v. Kerr, 31 Miss. 199; Minehart v. Handlin, 37 Ark. 276. And the dishonor of a draft taken as consideration for a contract is no defense to an action for the specific performance of the contract, if the holder has been guilty of laches in presenting it for payment. Woodcock v. Bennet, 1 Cow. (N. Y.) 733.

514

tion, or merely as collateral.515 But where, on the protest of a draft, a second draft is given (which is not protested at maturity), it has been held not to discharge the original draft without proof that it was given as payment of it.516 If an acceptor draws and indorses a new bill, and no notice is given of its dishonor, it will discharge the original acceptance.517 The creditor's laches in relation to the bill will, in general, discharge the debt, whether the bill was given for an existing debt,518 or in payment for goods purchased at the time,519 and although the bill is duly accepted.520 The burden of proving such laches is upon the debtor, if he gives his check on a bank, and it is not paid.521 But it has been held that a creditor who takes a draft from his debtor must make proof of his own diligence. 522 In England, and in some of the United States, it is expressly provided by statute that a bill of exchange received from a debtor in payment shall be an absolute payment, if the receiver does not "take his due course to obtain payment of it by endeavoring to get the same accepted and paid"; 523 or if he fails to make due presentment for acceptance and payment, and to protest, where necessary, 524

§ 1561.

But, if an order drawn by the debtor is received in absolute payment of an existing debt, the creditor need not prove notice of nonpayment to the drawer in an action brought upon the original debt; 25 especially where protest is waived by the conduct

514 Dayton v. Trull, 23 Wend. (N. Y.) 345. 515 And drawn on a particular fund.

berlands, 16 W. Va. 555.

516 Starr v. Sanford, 45 Pa. St. 193.

First Nat. Bank of Wellsburg v. Kim

517 Bridges v. Berry, 3 Taunt. 130; although the renewal recites that it is not taken in satisfaction of the original bill, Reid v. Coats, 6 Brown, P. C. 264.

518 Dayton v. Trull, 23 Wend. (N. Y.) 345; Mehlberg v. Tisher, 24 Wis. 607. 519 Jones v. Savage, 6 Wend. (N. Y.) 658.

820 Blanchard v. Boom Co., 40 Mich. 566; Grube v. Stille, 61 Mo. 473.

621 Bradford v. Fox, 38 N. Y. 289, 39 Barb. (N. Y.) 203.

622 Phoenix Ins. Co. v. Allen, 11 Mich. 501.

523 3 & 4 Anne, c. 9, § 7. MISSISSIPPI (Ann. Code, § 3513, as to inland bills).

524 NEW JERSEY (2 Gen. St. p. 2604, § 5); SOUTH CAROLINA (1 Rev. St. § 1397).

525 Farwell v. Salpaugh, 32 Iowa, 582.