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When Notice of Dishonor Is Unnecessary


WHEN NOTICE OF DISHONOR IS UNNECESSARY. "Notice of dishonor is dis pensed with: "1. When the drawer or indorser sought to be charged is, as between the parties to the bill, the principal debtor, and has no reason to expect that it will be honored on presentment." As where a person draws a bill on one who is under no obliga tion to accept or pay it and has not agreed that he will do so. The drawer is not entitled to notice of dishonor. (Welch v. B. & C. Mfg. Co., 82 Ill., 579.) "2. As regards the drawer, when drawer and drawee are the same person, or identical in inter est." For example where a bill is drawn by one firm on another, and the two have a common partner.

"3. When the drawer or indorser sought to be charged is the person to whom the bill is presented for payment." "4. When the drawee is a fictitious person, or (perhaps) a person not having capacity to contract, and the drawer or indorser sought to be charged was aware of the fact at the time he drew or indorsed the bill." "5. When the drawer or indorser sought to be charged has received an assignment of all the prop erty of the acceptor as security against his liability." And by some authorities whenever the secondary obligor has collateral security sufficient to satisfy the debt, whether all or only a part of the property of the acceptor, since, in such case, the secondary obligor could suffer no damage from want of pre sentment and notice. Tiedeman asserts the better rule to be, that the indorser or drawer in taking the collateral security should obligate himself to sec the payment of the paper, in order that the taking shall relieve the holder of the duty of giving notice. (Corn Pap., Sec. 362.) "6. When, after the exercise of reasonable dili gence, notice of dishonor cannot be given to or does not reach the party sought to be discharged." As where the notice is duly posted but lost in the mail, or where the notice is duly served at the party's place of business or residence but the party is not there or any one to receive notice. (Bank of Utica v. Bender, 21 Wend., 643; Mackay v. Judkins, 1 F. & F., 208.) But the mere fact that the drawer or indorser has reason to believe that the bill will be dishonored on presentment, will not dispense with notice of dishonor. Bankruptcy or death will not dispense with the necessity of notice being attempted to be given to the party or his represent atives. (Smalley v. Wright, 40 N. J. L., 471.) "7. By Waiver express or implied. Notice of dishonor may be waived before the time for giving notice has arrived, or after the omission to give notice." A waiver of notice in favor of the holder enures for the benefit of parties prior to such hold ers as well as subsequent holders. But waiver of notice of dishonor by an indorser does not affect prior parties. When there is an acknowledgment of liability after failure to give notice, it must be made with full knowledge of the facts to be valid. And a verbal waiver of notice may be revoked if the time for giving notice has not expired. (Benj.'s Chal mers, B. N. & C., Art. 200.)

drawer, indorser, bill, person and sought