
    (Third Circuit-Hancock Co., O. Circuit Court,
    May Term, 1899.)
    Before Price, C. J., Day and Norris, JJ.
    OSCAR V. WOOD v. C. R. ROSENDALE.
    
      Note payable at certain city — Removal of maker to place unknown— Notice to endorser of non-payment
    
    (1) . A negotiable promissory note, made payable generally at a particular city where all the parties thereto reside when it was executed, and from which city the maker, prior to maturity of the note, has removed to another locality not known to the holder, may be presented for payment at the late residence of the maker in such city; and if tbe. presentment is made on the proper day, where there is a system of postal collection and mail delivery by carriers, notice of dishonor to an endorser may be given by mailing the same in a duly stamped envelope properly addressed to such endorser at his place of residence in such city.
    
      Act abolishing days of grace not applicable to notes previously xecuted.
    
    (2) . Wnere such note was executed an delivered on the 7th day ■ of November, 1892 and payable four years after date, the same was entitled to three days of grace, and became due and payable November lOtn, 1896, notwithstanding the amendment of section 3175 of Revised Statutes, passed March 12th, 1896, which abolished days of grace in such instruments. The amendment does not affect the obligation of contracts existing when the same was passed; and presentment of such note for payment and notice of dishonor on the 7th day of November, 1896, were premature, and did not bind the endorser.
    Error ot the Court of Common Pleas of Hancock county. The suit in the lower court was upon a promissory note for $450, executed and delivered by Ollie E. Yager to Oscar V. Wood, on the 7th day of November, 1892, which by its terms, was negotiable and to become due and payable with interest four years from its date. The note was made payable at “Fostoria, Ohio”, where the maker and payee then resided, Before maturity and for valuable consideration, the payee sold and transferred it by blank endorsement to C. R. Rosendale, defendant in error,
    
      On the 7th day of November, 1896, a notary public who had possession of the instrument, took it to the late residence of the maker in Fostoria, for the purpose of demanding payment, but she had removed from the city at some time previous, and the only information he could gain, was that she then resided in Springfield, Ohio, but the information was not of a certain or positive character. Thereupon the notary protested the note for non-payment, and on¡ the same day, enclosed in an envelope, properly stamped, a notice to Wood, the endorser, that the noté had that day been presented for payment, which was refused, and that the holder, Rosendale, would look to him for payment. The stamped envelope containing this notice, was addressed to Wood at his residence, in Fostoria, where there was a system of postal collection and mail delivery by carriers at that time.
    No other demand was made or notice given. The endorser refused to pay, and suit was brought and recovery had in the lower court.
    It is contended for the endorser, that no proper presentment was made, and that the attempt to make demand and the giving of the notice of non-payment were premature, as the note was entitled to days of grace. £
    
    The defendant in error contends that the statute in force when the note was executed, as to days of grace, was remedial in its nature; that they were not part of the contract as to time of payment, and that the amendment of section 3175, passed March 12, 1896, abolishing days of grace, applies to this note although it was not then due.
   Price, C. J.

Two questions arise on the facts stated:

First: Was such presentment of the note made as would bind the endorser ?

Second: Were the presentment and notice of dishonor on the proper day?

We answer the first question in the affirmative.

The parties to the instrument resided in Fostoria at the date of its execution and delivery, and were content to have the place of payment “at Fostoria” without designating any particular place in that city. If the maker resided in the city when the note matured, presentment should have made at such residence, or to the maker personally. Eithe.r would have been due presentment. But where no definite place in the city has been fixed, and the maker has no residence or place of business therein, Chancellor Kent has said, that the instrument may be protested in the city on the proper day without further inquiry.

See Kent’s Commentaries, volume 3, (5th edition) pages 95-97, where the author states:

“If there be no particular and certain place identified and appointed, other than a city at large, and the party has no residence there, the bill may be protested in the city on the day without inquiry, for that would be an idle attempt.
“The general principle is, that due diligence must be used to find out the party and make demand; and the inquiry will always be, whether, under the circumstances of the case, due diligence h'as been used.”

In the case at bar, the payee, who afterwards became the endorser, accepted the note containing a general place of payment, and should be held to have contemplated the probability, that during the four years, the maker might reside elsewhere; and when he endorsed it to Bosendale, he assumed to be governed by the exercise of such diligence in its presentment, as change of residence and circumstances might require.

This view seems to find support in section 234, of Story On Promissory Notes:

“From what has been already said, it may be inferred, and indeed it is a clearly established doctrine, that where a promissory note is made payable at a particular place, as for example, at a bank or bankers, in every such case, it will be sufficient for the holder to present the same for payment at the specified place,, and he is under no obligation whatsoever, in case of dishonor at that place,to present it for payment elsewhere, or personally to the maker, The reason is, that by making it payable at that particular place, the maker impliedly dispenses with the necessity of making any demand upon him, either personally or elsewhere. And this doctrine applies as well to the case of endorsers as to the maker of such promissory note; for the endorsers equally with the maker in such case, impliedly agree, that presentment at the place shall be sufficient to bind all the parties. ”

And we further observe as one of the facts of this case, that when the notary visited the late residence of the maker, it was for the first time ascertained that she had removed from the city, and as the information as to her new place of abode was uncertain, an effort to find her might have been a vain thing.

Besides all this, the informatijn came too late to make demand at her then residence on that day.

Hence, we hold that if the attempt to make demand was on the proper day, due-diligence was used for that purpose,

Second: Were presentment made and notice of dishonor given on the proper day ?

We anwser this question in the negative.

If the instrument in controversy was entitled to days of grace, it is quite clear, that the presentment and notice were premature. It was executed November 7th, 1892, and payable four years from date, and including three days of grace, became due and payable November 10th, 1896. The notice of dishonor was given November 7th, 1896, and at no other time.

It is beyond reasonable controversy, and we need not cite authorities to show it, that as the law stood when this note was executed and indorsed, it was entitled to three days of grace, The legislature of Ohio, at an early day, adopted many features of the law-merchant as to commercial paper, and which find expression in sections 3171 to 3175, inclusive, of Revised Statutes, and prior to the amendment of section 3175, passed March 12, 1896:

“All bonds, notes, bills and checks payable at a day certain after date, or after sight, shall be entitled to three days of grace in time of paymenl * *

This was the law in force when the note in suit was executed, and if the days of grace became part of the contract, the general assembly could not withdraw them from it by a subsequent change of the statute.

We hold that days of grace became an important element of the note, inserted by existing law, as part of the agreement of the parties, and consequently it did not become payable until the third day of grace, on November 10th, 1896.

In Story on Promissory Notes, section 215, the author says:

“* * * These days of grace, which take their name from being days of indulgence or respite, granted the maker for the payment of the note, seem to have had their origin at a every early period in the history of negotiable paper. They were probably, originally introduced by the usage of merchants, in the first place to enable the acceptor of a bill, to more easily make payment of his acceptances as they became due; * * * and in the next place, to point out to the holders, what time he might reasonably grant to the acceptor for such payment without being guilty of laches, or endangering his right of recourse against the other parties thereto. In both views, the usage was at first probably discretionary and voluntary on the part of the holder, and gradually, from its general convenience and utility, it ripened into a positive right, as it certainly now is, and was also applied to promissory notes.”

In his work on Negotiable Instruments, section 614, Daniels states the history and effect of days of grace as follows:

“They were originally days allowed by wav of favor to the drawer of a foreign bill, to enable him to provide funds for its payment without inconvenience, and were called ‘days of grace’, because they were gratuitous, and dependent upon the holder’s pleasure * *■ *. By custom, however, they became universally recognized, and although still termed ‘days of grace’, they are now considered, wherever the law-merchant prevails, as entering into the constitution of every bill of exchange and negotiable instrument, both in England and the United States, and form so completely a part of it, that the instrument is not due in factor in law, until the third day of grace.”

In Ogden v. Sanders, 12 Wheaton, 213-342, Chief Justice Marshall used this language in part:

“The usage of banks by which days of grace are allowed on notes* payable and negotiable in bank, is of the same character * * *. Usage has extended the time of grace, generally to three days. This usage is made a part of the contract, not by the interference of the legislature, but by the act of the parties * * *. In all such cases, the bank receives and the maker of the note pays interest for the days of grace. This would be illegal and usurious, if the money was not lent for those additional days * * * Since by the contract, the maker is not liable for his note until the days of grace are expired, he has not broken his contract until they expire. The duty of giving notice to the endorser of his failure, does not arise until the failure has taken place.”

It seems to us unprofitable to quote further authorities on so plain a proposition; but we have two Ohio cases which contain the same doctrine, but in a different form.

In McMurchy v. Robinson, 10 Ohio Reports, 496, our supreme court decided that a demand on the second day of grace is not good.

In Lewis v. Moon, 1 Circuit Court, 211, the circuit court of Fayette county, held that a judgment rendered on the third day of grace, was without jurisdiction. In that case, judgment was confessed by warrant of attorney on the third day of grace, and it was decided that the judgment was not only erroneous, but without authority and invalid. The holding of the circuit court was afterwards affirmed by the supreme court without report, as seen in 23 Law Bulletin, page 319. The reason why the demand on the second day of grace was not good in McMurchy v. Robinson, supra, evidently was, that the note was not then due. And in Lewis v. Moon, the judgment was invalid, because taken before the note was due. The maker had the whole of the third day of grace to make payment, and an action brought •on such note on the third day of grace, could not be ma'intained, Therefore, the note here involved was entitled to-•days uf grace, although it did not mature for several months after the passage of the amendment of section 3175, Revised Statutes, March 12, 1896. (92 Ohio Laws, page 61).

John Poe, for Plaintiff in Error.

Ross & Kinder, for Defendant in Error.

By that amendment, days of grace were abolished, but not as to pre-existing contracts. Its provisions could only apply to and govern subsequently executed instruments. It •was not competent for the legislature to impair the obligation of existing contracts, and an attempt to do so would be ••unconstitutional,

The foregoing principles establish that the grace allowed by the law when the note in suit was executed, was a contract right and did not pertain merely to the remedy to enforce it, and such right could not be taken away by a subsequent amendment of the statute.

The presentment and notice on November 7th, were premature and did not bind the endorsers,

The lower court erred in rendering judgment' for the bolder of the note, Rosendale, for which error its judgment is reversed.'

And this court making the proper finding on the undisputed facts, finds for the plaintiff in error, and enters judgment accordingly.  