LLOYD LOWNDES, ESQUIRE, GOVERNOR. 227

CHAPTER IX.

DISCHARGE OF NEGOTIABLE INSTRUMENTS.
Index to Chapter IX.

138. How instruments discharged. 139. When person secondarily lia- ble on, discharged. 140. Right of party who discharged instrument. 141. Renunciation by holder.

142. Cancellation ; unintentional ; burden of proof. 143. Alteration of instrument ; ef- fect of. 144. What constitutes a material alteration.

138. A negotiable instrument is discharged :

1. By payment in due course by or on behalf of the princi-
pal debtor;

2. By payment in due course by the party accommodated,
where the instrument is made or accepted for accommodation ;

3. By the intentional cancellation thereof by the holder ;

4. By any other act which will discharge a simple contract
for the payment of money ;

5. When the principal debtor becomes the holder of the in-
strument at or after maturity in his own right.

139. A person secondarily liable on the instrument is dis-
charged :

1. By any act which discharges the instrument;
2. By the intentional cancellation of his signature by the
holder;

3. By the discharge of a prior party;

4. By a valid tender of payment made by a prior party;

5. By a release of the principal debtor, unless the holder's
right of recourse against the party secondarily liable is ex-
pressly reserved ;

6. By any agreement binding upon the holder to extend the
time of payment, or to postpone the holder's right to enforce
the instrument, unless the right of recourse against such party
is expressly reserved.

140. Where the instrument is paid by a party secondarily
liable thereon, it is not discharged ; but the party so paying it
is remitted to his former rights as regards all prior parties, and
he may strike out his own and all subsequent indorsements, and
again negotiate the instrument, except:

1. Where it is payable to the order of a third person, and
has been paid by the drawer; and

2. Where it was made or accepted for accommodation, and
has been paid by the party accommodated.