Story Case

In part payment for a moving picture theatre, the purchaser, Wallace Manchester, gave his note for $1,000, payable March 27. This note was indorsed by the payee, Henry Dillon, to the Midland Film Exchange, in settlement of an account he owed them. On March 27, at about nine-thirty in the evening, the note was presented at the theatre by a representative of the Midland Film Exchange, with a demand for payment. He refused to pay the note, and notice was given to Dillon. Dillon also defaulted, and suit was brought against him by the Midland Film Exchange. His defense consisted in the fact that there had been no valid presentment, because the note had been presented in the evening instead of during the business hours of the day. The plaintiff, the Midland Film Exchange, replied that during the day the theatre was closed and it might be difficult to locate Manchester, while in the evening he was regularly at the theatre, conducting the business, so that in these circumstances the evening would be the regular business hours.

The court will be compelled to decide whether the note has been duly presented on the day of its maturity, or whether it should have been presented during the day time, regardless of the special circumstances. Who is entitled to the decision?

Ruling Court Case. Parker Vs. Gordon, Volume 7 East Reports, Page 385

Gordon drew a bill of exchange upon a certain person. The bill was taken to, and accepted by, the drawee. It was made payable at Davidson & Company, the bankers of the drawee. It was negotiated and came into the hands of Parker, as indorsee. On the day of payment, it was sent to Davidson & Company for payment. It was after six o'clock in the evening before the agent of Parker reached the bank with it; this was after the usual banking hours. At this time the bank was closed, and all the clerks had gone for the day. Thereupon, Parker sent a notice of dishonor to Gordon, the drawer; but he refused to pay the bill and Parker sues upon it. Parker contended that Gordon was liable because the drawee or acceptor had refused to pay it.

Gordon, however, insists that he was relieved of liability, because Parker had not exercised due diligence in presentment to the drawee for payment. He maintained that a presentment to a bank at six p. m. was not a reasonable one.

Decision: In order to charge the drawer of a bill, a holder must exercise due diligence in presentment for payment to the party primarily liable - the drawee or acceptor in this case. As regards presentment, due diligence means presentment at a reasonable hour. In this case presentment after banking hours is not due diligence and is not a good presentment.

Mr. Justice Lawrence said: "When a bill is accepted in this manner, it must be understood by all parties concerned that it is to be presented for payment at the bank within the usual hours of business; and not having been so presented in this case, there was no evidence of the dishonor of it, in order to charge the drawer." Judgment was given for Gordon.

Ruling Law. Story Case Answer

In ascertaining the proper date for presentment, the day of the date is excluded; thus, where the paper is payable one year from date, it will mature on the first anniversary of that date. Where an instrument is payable a certain number of days after sight, or after date, the day of sight, or the day of date, is excluded, and the day of payment included in the computation. Presentment cannot be made on a Sunday or a legal holiday; accordingly, if the instrument matures on such a date, presentment must be made on the next business day, because the person liable cannot be compelled to pay sooner. At Common Law, the party liable was entitled to three days of grace, after the time fixed, within which to pay the instrument. By the Negotiable Instruments Law this has been changed. It is therein provided that "Every negotiable instrument is payable at the time fixed therein without days of grace."

It is a well settled rule that a presentment must be made during the regular business hours. Ordinarily, this would mean between ten and three for banks, or between eight and six for other businesses. But this is only a corollary to the general principle of due diligence and can be adapted to the particular situation. If the holder is sufficiently fortunate to find a man in his place of business, regularly open, although after the customary hours, a presentment then made is valid to hold the indorsers. If, in the Ruling Court Case, Parker's agent had reached the bank after it had closed, but had found a proper clerk who was still in his place who was still conducting his day's business, a demand of him would have saved the recourse against Gordon. The Story Case is even stronger, because a presentment during the day would probably have been only futile. For Manchester, the business day included only the evening hours. Diligence in presenting to him would clearly suggest that he be sought in the evening. This is a reasonable hour, in view of the circumstances, and is not open to any objection by the secondary parties. Therefore, the court should rule that a reasonable business hour means one which is reasonable in the particular circumstances, that this presentment was made at a reasonable hour, and that the plaintiff is entitled to recover. Judgment should be given against the defendant, Dillon.