II. BILLS AND NOTES

AMSINCK v. ROGERS.

(Court of Appeals of New York, 1907. 189 N. Y. 252, 82 N. E. 134, 12 L. R. A. [N. S.] 875, 121 Am. St. Rep. 858, 12 Ann. Cas. 450.)

[This action was brought against the drawers of the following in

strument:

["Exchange for £2,058.6/8.

["New York, Jan. 8, 1901.

["On demand of this original cheque (duplicate unpaid) pay to the order of Rogers, Brown & Company twenty-two hundred and fiftyeight pounds 6/8, payable at rate for bankers' cheques on London, value received, and charge the same to account of pig iron per S. S. Quarnero.

[Rogers, Brown & Co.

["To Mess. A. Herm. Fraenckl Soehne, Ruepgasse, Vienna, Austria. "No. 75."

[The instrument was drawn, indorsed, and transferred to plaintiffs in New York. It was not paid by the drawees, and Rogers, Brown & Co. refused to pay upon the ground that there was not a proper protest and notice of protest. A judgment for defendants was affirmed by the Appellate Division (93 N. Y. Supp. 87, 103 App. Div. 428), and plaintiffs appeal.]

HISCOCK, J.68 * It is practically conceded by the learned counsel for the appellants that, if the latter's obligation to cause protest and notice of protest of this bill is to be measured by the laws of New York where it was drawn and transferred by respondents, there has been a failure of necessary steps which prevents a recovery. Recognizing this, he sought, as already suggested, to introduce evidence establishing a different and less rigorous obligation upon the part of the appellants. This evidence was to the general effect that in Austria, where the same was payable, the instrument involved was not a bill of exchange nor a check, but a "commercial order" for the payment of money which was negotiable, and which might be presented as often as occasion arose; each presentment being legally good as any other, and no protest or notice of dishonor to the drawer being required. In connection with the rejection of this testimony, which presents the only questions upon this appeal, appellants' counsel has

(D. 1896, 1, 341). Germany-RG, March 11, 1882 (6 RG, 125); Sept. 29, 1919 (96 RG, 270); Dec. 7, 1921 (30 Niemeyer, 253). Italy.-Milan, May 1, 1894 (Monitore 1894, p. 530). Brazil.-Fed. Sup. Court, May 22, 1918 (48 Clunet, 993). Agreements that payment be made in gold may not be enforceable on grounds of policy, in a country having a forced currency. France.-Cass. June 7, 1920 (17 Darras, 452), and note by E. Cuq.

68 Part of the opinion is omitted.

seemed to argue the proposition, broader than the evidence offered, that the rights of the drawer of a bill of exchange to protest and notice are governed by the laws of the place where the bill is payable, upon the assumption that in this case such view would excuse the omissions complained of by respondents. We shall first discuss this general proposition so urged, and, as we believe, shall demonstrate that the weight of authority is that the rights and obligations of the drawer of a bill of exchange are determined and fixed by the law of the place where he draws it, and, as in this case, transfers it, and that he is discharged by failure to protest the same in accordance with the laws of that place; such failure being due to different laws or customs prevailing in the country where the bill is payable.

It is familiar law that the contracts of the different parties to a bill of exchange are independent and carry different obligations. The drawer of such a bill does not contract to pay the money in the foreign place on which it is drawn, but only guarantees its acceptance and payment in that place by the drawee, and agrees, in default of such payment, upon due notice, to reimburse the holder in principal and damages at the place where he entered into the contract. His contract is regarded as made at the place where the bill is drawn, and as to its form and nature and the obligation and effect thereof is governed by the law of that place in regard to the payee and any subsequent holder. Story on Bills of Exchange, §§ 131, 154. While as to certain details, such as the days of grace, the manner of making the protest, and the person by whom protest shall be made, the law or custom of the place where it is payable will govern, the necessity of making a demand and protest and the circumstances under which the same may be required or dispensed with are incidents of the original contract which are governed by the law of the place where the bill is drawn, rather than of the place where it is payable. They constitute implied conditions upon which the liability of the drawer is to attach according to the lex loci contractus. Id. §§ 155, 175. These principles have been affirmed and enunciated by so many decisions that it would be out of place to attempt a general review of the latter, and citation may be made simply of the following cases outside of this state: Powers v. Lynch, 3 Mass. 77, 80; Potter v. Brown, 5 East, 124; Price v. Page, 24 Mo. 65; Hunt v. Standart, 15 Ind. 33, 38, 77 Am. Dec. 79; Raymond v. Holmes, 11 Tex. 54, 59; Allen v. Kemble, 6 Moore's Privy Council Cases, 6.

Since, however, it is contended by the learned counsel for the appellants that the views expressed by Story are in direct opposition to the decisions in this state a somewhat more extended reference will be made to the latter, and with the result, we apprehend, of quite conclusively demonstrating that the current of their authority has been misjudged.

LOB.C.L. (2D ED.)-25

[The learned justice here commented upon Aymar v. Sheldon, 12 Wend. 439, 27 Am. Dec. 137, Allen v. Merchants' Bank of New York, 22 Wend. 215, 34 Am. Dec. 289, Carroll v. Upton, 2 Sandf. 171, Artisans' Bank v. Park Bank, 41 Barb. 599, and Susquehanna Valley Bank v. Loomis, 85 N. Y. 207, 39 Am. Rep. 652, and continued as follows:]

Counsel for appellants especially relies upon two cases to sustain his proposition that the rules laid down by Story have not been adopted in this state. The first of these cases is that of Everett v. Vendryes, 19 N. Y. 436. This was an action by the indorsee against the drawer of a bill of exchange drawn in New Granada upon a corporation having its office in this state. It was payable to the order of one Jimines, indorsed by him at Cartagena, and was protested for nonacceptance. The answer denied the indorsement of Jimines in general terms. The plaintiffs claimed to be the indorsees according to the legal effect of the bill. The indorsement was not good and sufficient according to the laws of New Granada, but was so according to those of New York. The question therefore was whether for the purpose of bringing an action against the drawer of the bill upon nonacceptance by the drawee in New York state the indorsement was to be tested by the laws of New Granada, where it was made, or by the laws of New York, where the bill was payable. It was held that the laws of New York should govern, and Judge Denio, in writing for the court, said: "I have not been able to find any authority for such a case, but I am of opinion that upon the reason of the thing the laws of this state should be held to control. These laws are to be resorted to in determining the legal meaning and effect and the obligation of the contract. All the cases agree in this. In this case the point to be determined was whether the plaintiffs were indorsees and entitled to receive the amount of the bill of the drawees. This was to be determined, in the first instance, when the bill was presented for acceptance and payment in New York. The plaintiff's title was written on the bill. The question was whether it made them indorsees according to the effect of the words of negotiability contained in the bill itself. Those words and the actual indorsement were to be compared, and the legal rules to be employed in making that comparison were found in the law merchant of the state of New York, and by those rules the indorsement was precisely such a one as the bill contemplated. Besides, it is reasonable to suppose that, in addressing this bill to the drawees in New York, the defendant contemplated that they would understand the words of negotiability according to the law of their own country. * *** When, therefore, he directed the drawees to pay to the order of the payee, he must be intended to contemplate that whatever would be understood in New York to be the payee's order was the thing which he intended by that expression in the bill." In other words, it was held that the indorsement was made for the purpose of enabling the indorsee to present and collect the note in New York, and that an indorsement which was effective for that purpose under the laws of the state where

performance would be sought was sufficient. It does not seem to us that this decision in any way conflicts with those to which we have already referred. It is true that the learned judge commences his opinion with some general observations as to the principles conceived to be applicable in ascertaining the nature and interpretation of a bill of exchange. Such observations, however, constituted nothing more than a dictum, and were not sufficient in our opinion to outweigh the authorities to which we have already referred.

The case of Hibernia Nat. Bank v. Lacombe, 84 N. Y. 367, 38 Am. Rep. 518, involved consideration of a draft drawn in New Orleans upon New York bankers. The case was disposed of upon the theory that the instrument was a check, which, of course, was the fact, and the obligations of the drawer of a check, as stated in the opinion, are entirely different from those of the drawer of a bill of exchange. The former undertakes that the drawee will be found at the place where he is described to be, and that the sum specified will be paid to the holder when the check is presented, and if not so paid, and he is notified, he becomes absolutely bound to pay the amount at the place named. In other words, the drawer of a check contracts to pay at the place where the check is payable, instead of, as the drawer of a bill of exchange does, at the place where the instrument is drawn. It is not therefore in conflict with our views to hold that the rights of the parties in the case of such a check should be determined by the law of the place of payment; in other words, the place of performance by the drawer. Our attention is also called to the case of Union Nat. Bank of Chicago v. Chapman, 169 N. Y. 538, 62 N. E. 672, 57 L. R. A. 513, 88 Am. St. Rep. 614, but we do not think that what is there said conflicts with the views we have expressed. In speaking of the general rules governing the construction of a contract, it is said: "All matters con nected with its performance including presentation, notice, demand, etc., are regulated by the law of the place where the contract by its terms is to be performed."

In the first place, if we have correctly measured the weight of authority, it establishes the proposition that respondents' contract as drawers was to be performed in New York, where the bill was drawn, and therefore the rule quoted, if applicable, would lead to the conclusion that demand and protest so far as they were concerned would be governed by the laws of New York. In the second place, the question involved in the Chapman Case was not at all akin to that presented here, and we do not believe that the judge there writing intended to approve the rule that as against drawers in New York of a bill of exchange entire omission of protest might be justified by local customs and usages in a foreign country. We think that he had in mind certain comparatively inconsequential details of the manner and method of making demand and protest, and which, as we have already seen, may be affected by local custom and usage, rather than the entire omi sion of these important acts. This estimate of what was intended is confirmed

*

*

by the case of Scudder v. Union Nat. Bank, 91 U. S. 406, 412, 23 L. Ed. 245, which is especially cited as an authority for what was being said. In the latter case it is written: "The rule is often laid down that the law of the place of performance governs the contract. For the purposes of payment and the incidents of payment this is a sound proposition. Thus, the bill in question is * in law a sight draft. Whether a sight draft is payable immediately upon presentation, or whether days of grace are allowed, and to what extent, is differently held in different states. The law of Missouri, where this draft is payable, determines that question in the present instance. The time, manner, and circumstances of presentation for acceptance or protest, the rate of interest when this is not specified in the bill (citations), are points connected with the payment of the bill, and are also instances to illustrate the meaning of the rule, that the place of performance governs the bill."

Thus far we have assumed that the instrument in suit was a bill of exchange, but we have also considered whether the drawer's rights to protest and notice were governed by the laws of Austria as though the adoption of the view that they were so governed would excuse omission of those steps. As a matter of fact, however, the appellants would not be benefited if we should hold, in this connection, that the laws of Austria did control, for no evidence was received or offered that the drawers of a bill of exchange would not be entitled to the same protest and notice under the laws of that country as under those of New York. Appellants' only excuse for the omission of these steps rests upon the final proposition that this is not a bill of exchange at all, nor even a check, but is what is known in Austria as a "commercial order" for the payment of money of which no protest need be made. Support for this proposition, it is said, would have been found in the rejected evidence which would have established as the Austrian law that a bill of exchange must be so designated in the body ot the instrument itself, and that such designation by mere superscription as was found upon the instrument in suit is not sufficient. Therefore, on a close and final analysis of appellants' argument, it is indispensable that they should convince us that their rejected evidence would have established that this was not to be regarded as a bill of exchange, but as a commercial order. We shall assume that under the Austrian law it was a commercial order. On the other hand, there is no doubt, and in fact it is not denied by the learned counsel for the appellants, that it was a bill of exchange under the laws of the state of New York.

The negotiable instruments law (Laws 1897, p. 745, c. 612, as amended) provides as follows:

"Sec. 210. Bill of Exchange Defined.-A bill of exchange is an unconditional order in writing addressed by one person to another signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed determinable future time a sum certain in money to order or to bearer."