If the principal of such a note get it back from the bank and sell it, such use by him of the note without the assent of the surety, will not bind the latter. The purchaser taking it with the evidence on its face that it was intended to be used at the bank, and receiving it without any endorsement from the bank, or any reason to suppose that they had put it in circulation, his case will not be helped by an endorsement after the note is dishonoured-made by the president of the bank to this effect: "Without recourse. J. A. K., Prs." Prescott v. Brinsley &c. 6 Cush. 232.

8. What is a negotiable instrument in Pennsylvania. Effect there of the words "without set off," or "without defal

cation."

The decisions as to what is a good promissory note within the statute of Ann, not only apply in the states in which that statute has been adopted; but often, in other states, illustrate the construction of their statutes as to unsealed instruments.

When in 1789 the supreme court of Pennsylvania had to decide whether the endorsee of a promissory note takes it subject to all equitable considerations to which it was subject in the hands of the payee, it considered the action of such endorsee against the maker, grounded upon no other basis than the Pennsylvania act of May 28, 1715. That act making no difference between the assignees of bonds and the endorsees of notes, the court held that the endorsee of a note, like the assignee of a bond, took it subject to such equitable considerations. McCullough v. Houston, 1 Dall. 440. The authority of this case was submitted to with great reluctance. Tilghman, C. J., expressed the opinion that had the point been first discussed ten years later, it would have received a different decision. 9 S. & R. 196; 12 S. & R. 265. The decision gave rise to the act of February 27, 1797, which enacted as follows:

That all notes in writing commonly called promissory notes, bearing date in the city or county of Philadelphia, whereby any person or persons, bodies politic or corporate, or copartnership in trade, shall promise to pay or cause to be paid to any other person or persons, bodies politic or corporate, or copartnership in trade, and to the order of the payee, for value in account, or for value received, and in the body of which the words "without defalcation" or "without set-off" shall be inserted, shall be held by the endorsees discharged from any claim of defalcation or set-off by the drawer or endorsers thereof; and the endorsees shall be entitled to recover against the drawer and endorsers, such sums as on the face of the said notes or by endorsements

thereon shall appear to be due; provided, always, that in every action brought by the holder of any such note, whether against the drawer or endorsers, the defendant may set-off and defalk so far as the plaintiff shall be justly indebted to him in account by bond, specialty or otherwise.

Notes or bills discounted at the Bank of Pennsylvania had been placed on the footing of foreign bills of exchange, (except as to damages) by an act of the 30th March 1793. State Laws, vol. 3, p. 329. And when 40 banks were incorporated by an act of March 21, 1813, notes or bills discounted by any of those banks or deposited for collection or falling due thereat were placed on the same footing.

Still there arose cases out of the purview of any of those acts-cases of notes neither dated in the city or county of Philadelphia nor discounted in any of the banks before mentioned or deposited therein for collection. Then the question arose whether there was any law forbidding the maker of a note to agree that he would pay it "without defalcation." Those words having been introduced into promissory notes to take them out of the principle established in McCullough v. Houston-to make them subject to the rules of the general mercantile law but not to carry them beyond that law-it was, in the supreme court of Pennsylvania, held that between the original parties (the maker and the payee) the consideration might be enquired into, notwithstanding those words; and that the case was different when the note came into the hands of a third person for valuable consideration in the course of business. Cromwell &c. v. Arrott, 1 S. & R. 181; Lewis &c. v. Reeder, 9 Id. 195. Thus it was that in Pennsylvania notes promising to pay money "without defalcation" or "without set off," although not embraced by the statutes of the state were, by the decisions of the courts, placed on the same footing as negotiable paper in England and in most of the states of the Union. Lighty v. Brenner &c. 14 S. & R. 132.

In Pennsylvania, as elsewhere, the instrument, though framed in other respects as a promissory note, will, if it be under seal, be a specialty. If it be endorsed, the endorser cannot be sued on it as upon a negotiable instrument. Frevall v. Fitch, 5 Whart. 331. And if the suit be against the maker, the consideration-it being a specialty—will be as much open to enquiry in the hands of the endorsee as it would be if held by the original payee. Hopkins v. Railroad Co. 3 W. & S. 410.

9. What instruments besides foreign bills of exchange are negotiable in Virginia.

The statute of 3 & 4 Ann, c. 9, not having been adopted in Virginia, many instruments which would be negotiable under that statute, are not negotiable in this state. To shew what are negotiable here, a brief history of the legislation on the subject will be necessary.

Virginia followed, to some extent, the example of Pennsylvania. When the act of Jan. 30, 1804 was passed, for incorporating the Bank of Virginia, there was inserted in it a clause placing on the same footing as foreign bills of exchange, all notes or bills discounted by the said corporation, so that the like remedy may be had for the recovery thereof against the drawers or endorsers, and with the like effect except so far as relates to damages. 2 R. C. 1819, p. 74, c. 193, § 8, cl. 13. The act of Feb. 13, 1812, placed on that footing all notes or bills negotiable at the Farmers Bank of Virginia or any of its offices of discount and deposit. Id. p. 90, § 15, cl. 13. The act of Jan. 24, 1814, extending the charter of the Bank of Virginia, placed on the same footing all notes or bills negotiable or negotiated at the said bank or any of its offices, so that the like remedy might be had against the makers, drawers, acceptors or endorsers, except as to damages. Id. p. 78, c. 194, § 10. And when the act of Feb. 5, 1817, was passed to establish two new banks, that also had a provision on the subject. Id., p. 101, c. 201, § 13, cl. 13. The cases of McNeil &c. v. Baird, 6 Munf. 316, and Hays v. North Western Bank, 9 Grat. 127, were decided on some of these provisions.

They were followed by the act of March 22, 1837, (Sess. Acts 1836, 7, p. 66, c. 82, § 6, 9,) establishing general regulations for the incorporation of banks, and the act of 1845, 6, p. 117, c. 156, as to the Portsmouth Saving Fund Society. In place of these, it is now provided, by the Code of 1849, p. 581, c. 144, § 7, that every promissory note, or check, for money, payable in this state at a particular bank or at a particular office thereof for discount and deposit, or at the place of business of a savings institution or savings bank, and every inland bill of exchange payable in this state, shall be deemed negotiable.

It follows that an instrument, which would be a good promissory note under the statute of Ann, will, if it be for money payable in Virginia at such bank, office or place as is men

tioned in the Code, be negotiable though there be not used in it the word "negotiable" or the words "without offset." These words are usually inserted in notes negotiable at our banks. They were taken probably from the forms used in Pennsylvania-forms introduced there for a reason which does not apply in Virginia to notes payable at such bank, office or place as is before mentioned. In this state, a note to this effect: Sixty days after date I promise to pay at the Bank of Virginia to CD or order $100," is a negotiable instru

ment.

CHAPTER XXI.

WHERE AND WHEN A BILL OR NOTE MUST BE PRESENTED FOR PAYMENT; WHEN THERE MUST BE A PROTEST.

1. Demand necessary to charge drawer or endorser of bill or endorser of note.

By the custom of merchants, the holder of a bill of exchange or negotiable note should present the instrument at its maturity and demand payment of the acceptor or maker. Without such demand or due diligence to make a demand on the acceptor, the drawer and endorsers of the bill will not be liable; but no demand on the drawer of the bill is necessary to charge the endorser. Lambert v. Oakes, 1 Ld. Raym. 443; Bromley v. Frazier, Str. 441; Heylin &c. v. Adamson, 2 Burr. 676.

In an action by the endorsee of a negotiable note against the endorser, he must shew a demand, or due diligence to make it, on the maker of the note, just as in an action against the drawer or endorser of a bill of exchange, there must be shewn a demand, or due diligence to make it, on the acceptor. Collins v. Butler, 2 Str. 1087; Lambert v. Oakes, 1 Ld. Raym. 443. The mistakes in the report of this case in 1 Salk. 127, pl. 9, and 12 Mod. 244, are remarked on and explained by Lord Mansfield in Heylyn &c. v. Adamson, 2 Burr. 678.

A check, also, should like a bill be presented for payment, Cruger v. Armstrong &c. 3 Johns. Cas. 5. On non-payment of it the holder thereof for value can sue the drawer. Parke, B. in Bellamy v. Marjoribanks, 7 W. H. & G. 404.

2. How and by whom demand is made.

In some cases it may not be necessary, at the time of the demand, to exhibit the bill or note. Whitwell &c. v. Johnson, 17 Metcalf 452; Gilbert v. Dennis, 3 Metcalf 497. But generally the person making the demand should have the instrument with him and deliver it up on receiving payment. Freeman &c. v. Boynton, 7 Mass. 486; Hansard v. Robinson, 7 Barn. & Cress. 90.

The demand may be as well made by an agent as the principal, and there is no need of a power of attorney or any written instrument to constitute an agent for this purpose. Shed v. Butt, 1 Pick. 404. The notary public is usually the agent.

3. At what time demand is made.

The demand must be within

reasonable time after the bill or note is payable. 2 Burr. 674. If it be payable on demand, the demand must be within a reasonable time. Field v. Nickerson, 13 Mass. 131; Martin v. Winslow, 2 Mason 241; Sice v. Cunningham, 1 Cow. 408; McKinney v. Crawford, 8 S. & R. 351; Taylor v. Young, 3 Watts 343.

The allowance of days of grace is understood to enter into every bill or note of a mercantile character, and to form so completely a part of the contract that the bill or note does not become due, in fact or in law, on the day mentioned on its face but on the last day of grace. A demand of payment, previous to that day, will not authorize a protest. Marshall, C. J. in Bank of Washington v. Triplett &c. 1 Peters 31.

By the general law merchant, which is part of the common law prevailing in England and the United States, in the absence of all proof of particular contract or custom, three days of grace are allowed for payment of foreign bills, Tassell &c. v. Lewis, 1 Ld. Raym. 743; and inland bills, 4 T. R. 151, 2.

And in Kentucky it has been decided that a common order, which is substantially an inland bill, must be treated in the same manner. Strader &c. v. Batchelor, 8 B. Monroe 170.

Negotiable notes are on a like footing. Notwithstanding the case of May v. Cooper, Fort. 376, and the opinion of Denison, J. in Dexlaux v. Hood, Bul. N. P. 204, it is settled that three days of grace are allowed on negotiable notes as well as on bills of exchange. Tindal v. Brown, 1 T. R. 167; Brown v. Harraden, 4 Id. 153. They are allowed though the note be payable to the payee, without adding to his order or to bearer. Smith v. Kendall, 6 Id. 123.