## Facts

- Theta Electronic Laboratories, Inc. executed a promissory note dated August 10, 1964 for $15,377.07 plus 6% interest, payable in monthly installments beginning January 10, 1965, with an acceleration clause after 30 days of nonpayment.
- Gerald M. Exten and his wife, among others, indorsed the note.
- The original payees assigned the note “without recourse” to John B. Hane on November 26, 1965.
- Theta defaulted on the installment payments.
- On June 7, 1967, Hane obtained confessed judgments against Theta and the indorsers, including the Extens, in the Circuit Court for Montgomery County.
- The confessed judgment against the Extens was vacated, and the case proceeded to a bench trial as to them.
- The Extens asserted they had not received notice of default or dishonor before suit.
- The trial court entered judgment for the Extens, concluding Hane had not shown the U.C.C.-required steps to charge indorsers.

## Issues

1. Whether, absent waiver or statutory excuse, a holder must prove presentment and timely notice of dishonor to hold indorsers liable on a promissory note under U.C.C. Article 3.
2. Whether failure to prove timely notice of dishonor (including unreasonable delay) discharges indorsers.

## Decision

- The Court of Appeals of Maryland affirmed the judgment for the Extens.
- The court held that presentment and notice of dishonor are required to charge indorsers unless waived or excused under the U.C.C.
- Because Hane did not prove timely notice of dishonor (and no waiver or excuse was shown), the Extens were discharged from indorser liability.

## Legal Principles

- An indorser’s obligation is conditional: the indorser agrees to pay only upon dishonor and after any required notice of dishonor.
- Presentment for payment is generally necessary to charge an indorser, subject to U.C.C. exceptions.
- Notice of dishonor is generally necessary to charge an indorser; failure to give timely notice, unless waived or excused, discharges the indorser.
- The holder bears the burden to prove compliance with presentment and notice requirements or facts establishing waiver or excuse.

## Conclusion

The court enforced U.C.C. Article 3 conditions for indorser liability and discharged the Extens because the holder failed to prove timely notice of dishonor and did not establish waiver or excuse.


Hane v. Exten, 255 Md. 668, 259 A.2d 290 (Md. 1969)