Bell v. First Nat Bank of Chicago/Opinion of the Court

It is contended for the plaintiffs in error that the bills were prematurely protested, and the drawers were thereby discharged, because it does not appear that three days of grace were allowed, and that the court erred in ruling otherwise. It was said by Chief Justice MARSHALL in delivering the opinion of this court in 1828, in Bank of Washington v. Triplett, 1 Pet. 25, 31: 'The allowance of days of grace is a usage which pervades the whole commercial world. It is now universally 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 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 or charge the drawer of the bill. This is universally admitted if the bill has been accepted.'

The days mentioned in the acceptances in this case as those on which the bills would become due, are the twenty-first and thirty-first of May, respectively, and there is nothing to indicate that those days are the last days of three days of grace, computing 63 days from the several days of the writing of the acceptances. We are of opinion that it must appear affirmatively, in the case of bills and acceptances like those in question, that the acceptor, in designating the day of payment by the word 'due,' included the days of grace, or the day so designated cannot be regarded as the peremptory time for presentment, without any additional allowance. Blackstone says (2 Comm. 469) that where an accepted bill is not paid 'within three days after it becomes due, (which three days are called days of grace,)' it may be protested for non-payment. In Chit. Bills, 374, it is said that where a bill is payable at a certain time after sight, it is not payable at the precise time mentioned in the bill, but days of grace are allowed; and (page 376) that they are always to be computed according to the law of the place where the bill is due, which, in England, (page 375,) gives three days. Chancellor Kent says (3 Comm. 100, 101) that 'three days of grace apply equally, according to the custom of merchants, to foreign and inland bills and promissory notes;' and that 'the acceptor or maker has within a reasonable time of the end of business or bank hours of the third day of grace, (being the third day after the paper falls due,) to pay.' Baron PARKE in Oridge v. Sherborne, 11 Mees & W. 374, 378, states the rule very tersely in saying that days of grace are to be allowed in all cases where a sum of money is by a negotiable instrument made payable at a fixed day.

Acceptances like those in question, made upon bills payable so many days after sight, are of rare occurrence. But no reported case has been found in England or in this country where such an acceptance has been held to have included, by mere force of its words, ex vi termini, the days of grace. Some cases may here be referred to which go to support the conclusion at which we have arrived. In Griffin v. Goff, 12 Johns. 423, in 1815, a promissory note, dated August 12th, was made payable on the first of December then next, and it was held that the indorser was discharged because payment was demanded of the maker on the first of December, and not on the fourth. In Kenner v. Creditors, 7 Mart. (N.S.) 540, in 1829, a bill drawn at 60 days' sight was accepted by an acceptance which was dated September 12th, and made payable on November 14th, and was protested on the latter day. It was alleged that the holders had lost recourse on the drawers, (1) because the acceptance was made for payment on the sixty-third day after sight instead of the sixtieth; and (2) because it was protested on the day of payment instead of the last of the days of grace. But the court held that the fourteenth of November was the peremptory day of payment, and not the day from which the days of grace were to be reckoned, because it appeared from the face of the bill that the days of grace were included between the twelfth of September and the fourteenth of November; that the acceptance was according to the tenor of the bill; and that the protest was timely. The view taken was that a dated acceptance is not vitiated by the express designation of a day of payment, when that day is designated according to the tenor of the bill; and that, when it appears, from a comparison of the tenor of the bill, the date of the acceptance, and the day designated for payment, that the latter is the third after the expiration of the days after sight, the day thus designated is the peremptory day of payment, the acceptance is according to the tenor of the bill, and the protest on the day expressly designated is timely. In Kenner v. Creditors, 8 Mart. (N. S.) 36, another case, decided a week after the former one, the acceptances, which were of bills drawn at 60 days' sight, were not dated, but were made payable on a day named. Proof as to the day of acceptance was admitted, and, that being proved, it was held that the case fell under the rule in the case in 7 Mart., supra, because it clearly appeared that both the days of sight and those of grace had been computed and included between the date of acceptance and that designated as the day of payment. These views were affirmed in another case, in 1830. Kenner v. Creditors, 1 La. 120. In McDonald v. Lee's Adm'r, 12 La. 435, in 1838, a note dated May 5, 1835, payable on the fifth of November, 1837, 'without defalcation', was held to be payable on the eight of November, 1837, and not before. In Perkins v. Franklin Bank, 21 Pick. 483, in 1839, a bank post-note, dated December 7, 1836, was made payable in seven months, with interest 'until due, and no interest after.' On the margin were written these words: 'Due July 7, 7, 1837.' It was held that the bank was entitled to grace on the note, and that the memorandum on the margin was not an express stipulation in the note that it should be payable without grace, within a statute allowing grace in the absence of such a stipulation. In delivering the opinion of the court, Chief Justice SHAW said: 'Grace is an allowance of three days to the debtor to make payment, beyond the time at which, by the terms of the note, it becomes due and payable.' In regard to the memorandum, 'Due July 7, 1837,' he said: 'It shows when the note is to become due, and in this respect corresponds with the stipulation in the body of the note. The time it becomes due being fixed, the statute gives three days from that time for payment, under the term 'grace,' unless the contrary be expressly stipulated.' A like decision was made in Mechanics' Bank v. Merchants' Bank, 6 Metc. 13, in 1843. In Bowen v. Newell, 8 N. Y. 190, in 1853, it was held that a negotiable draft on the cashier of a bank, dated October 5th, directing him to pay a specified sum on October 12th, could not be presented for payment, so as to hold the drawer and indorser, until October 15th. In Cook v. Renick, 19 Ill. 598, 602, in 1858, it was said that by the common law, as adopted by the legislature of Illinois, 'a bill of exchange payable on a given day does not mature till three days after the day appointed on its face for its payment.' In Coffin v. Loring, 5 Allen, 153, in 1862, it was held that the maker of a note which is payable by installments, at future times certain, with interest, is entitled to grace on both the principal and the interest; and that the condition of a mortgage given to secure the payment of the same sums and interest, at the same times, is not broken until the expiration of the grace which is allowed upon the note. On the same principle it was decided in Oridge v Sherborne, ubi supra, that the maker of a promissory note payable by in stallments on days named in the note was entitled to days of grace on the falling due of each installment. The case of Ivory v. State Bank, 36 Mo. 475, in 1865, was like that of Bowen v. Newell, ubi supra. A negotiable draft on a bank, dated October 12th, directing it to pay a specified sum on October 22d, was held to be payable on October 25th, and not before.

The principle deducible from all the authorities is that, as to every bill not payable on demand, the day on which payment is to be made to prevent dishonor, is to be determined by adding three days of grace, where the bill itself does not otherwise provide, to the time of payment as fixed by the bill. This principle is formulated into a statutory provision in England, in the bills of exchange act, 1882, 45 & 46 Vict. c. 61, § 14.

In the present case, the time named in the acceptance after the word 'due' can be regarded only as the time of payment fixed by the bill, to which days of grace are to be added, and not as a date which includes days of grace. This view goes to the foundation of the action, and makes it unnecessary to examine any other question, and leads to the conclusion that the judgment must be reversed, and the case be remanded to the circuit court, with a direction to award a new trial; and it is so ordered.