Recent Cases: Bills and Notes — Intentional Destruction of Negotiable Instrument by Holder as Cancellation of Debt

The holder of overdue bonds, upon advice from her financial adviser, destroyed the bonds under the belief that they were valueless. Ten years later the bonds were included in a reorganization plan and became valuable. The holder sued to recover the value of the bonds. Held: voluntary destruction of the bonds canceled and discharged the bonds under the Negotiable Instruments Law and also the obligation thereon; thus, recovery denied.

An analysis of this case requires that it be determined whether voluntary destruction of an instrument constitutes a mode of cancellation under sections 119 and 123 of the N.I.L., so as to discharge the obligation.