LAUGHLIN, J.:

The verdict was directed for the amount of the bills of exchange and interest, and not for the amount which the plaintiffs paid to the defendant, evidenced by the checks, which was $219.81 less; but the record does not show on which theory the court deemed the plaintiffs entitled to recover. The principal contention of the respondents is, however, that the judgment can be sustained on the theory that the recovery was for a loan of money; and their counsel argues that this is shown by the fact that the checks were delivered to the defendant and paid some days before the date of the bills of exchange and by the memoranda on the stubs of the checks, which he claims shows that the moneys were advanced to the defendant and it was charged therewith by the plaintiffs, and that by accepting the voucher checks it recognized and admitted that such was the transaction between the parties. It will be observed, however, that the check of the earlier date and for the principal amount shows by the memorandum on the stub that it related to a merchandise transaction involving a draft, and the number written thereon is the number which is on all of the drafts, as shown by the plaintiffs' letter to the defendant, with the letters following the number omitted. In view of the fact that the action is predicated on the drafts as well as the loan and not for a recovery on both, but for a recovery on either the drafts or on the loans, and the amount of the checks is less than the drafts by what might be expected to be the approximate amount to be deducted on discounting the drafts, and there being no other evidence, I am of opinion that the reasonable inference is that the checks, although apparently given a few days in advance of the delivery of the bills of exchange, represent the proceeds of the discount of the drafts by the plaintiffs, and that the plaintiffs must be deemed to have purchased the drafts. If this is the proper inference to be drawn from the evidence, it is unnecessary to discuss the point made by the respondents to the effect that they took the bills of exchange merely as security for the moneys loaned, and, therefore, are at liberty to abandon the bills of exchange and recover on the obligation to repay the money loaned. The authorities relied on by the respondents in support of that contention are confined to instances in which there was an original indebtedness remaining unpaid, for the payment of which a note or other obligation was given, and in those cases, as between the original parties, the action, at the election of the creditor, may be either on the instrument evidencing the indebtedness or on the original account or transaction giving rise thereto. (See Greenwich Insurance Co. v. Oregon Improvement Co., 76 Hun, 194; Hill v. Beebe, 13 N.Y. 556; Bradford v. Fox, 38 id. 289; Jagger Iron Co. v. Walker, 76 id. 521; Bank of Hamilton v. Mudgett, 34 Hun, 100.) If, however, as I think is the case, the bills of exchange were not taken as security for the money loaned, but constituted the consideration for which the money was paid by the plaintiffs, then manifestly the rule to which reference has been made could have no application. Moreover, the statute prescribes the rights, duties and obligations of the parties to a bill of exchange. The instruments set forth in the complaint are commonly known as time drafts, but they are bills of exchange as defined in section 210 of the Negotiable Instruments Law. Section 111 of the Negotiable Instruments Law defines the liability of the drawer of a draft or bill of exchange as follows: "The drawer by drawing the instrument admits the existence of the payee and his then capacity to indorse; and engages that on due presentment the instrument will be accepted and paid, or both, according to its tenor, and that if it be dishonored, and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to pay it. But the drawer may insert in the instrument an express stipulation negativing or limiting his own liability to the holder." It is contended in behalf of the respondents that these are inland bills of exchange, and that, therefore, by virtue of section 189 of the Negotiable Instruments Law, it was not necessary to protest them for non-acceptance. These, however, are plainly foreign bills of exchange, because they are drawn in New York for acceptance and payment in Kobe, Japan. This sufficiently appears on the face of the instruments, and is further shown by the note at the foot thereof, which indicates that interest in advance of the time of payment to cover approximately the further period required for transmission to New York was to be collected, and by the plaintiffs' letter of October 7, 1920, to the defendant, showing that they had been informed by their correspondent abroad that the bills of exchange had not been paid. Section 213 of the Negotiable Instruments Law defines foreign and inland bills of exchange as follows: "An inland bill of exchange is a bill which is, or on its face purports to be, both drawn and payable within this State. Any other bill is a foreign bill. Unless the contrary appears on the face of the bill, the holder may treat it as an inland bill."

Here it appears on the face of the bills that they were foreign bills of exchange, and, therefore, the plaintiffs were not at liberty to regard them as inland bills. Section 260 of the Negotiable Instruments Law provides, among other things, that, if a bill of exchange appearing on its face to be a foreign bill is dishonored by non-acceptance, "it must be duly protested for non-acceptance," and further provides as follows: "If it is not so protested, the drawer and indorsers are discharged." In the case at bar there is no evidence even of presentment of these bills of exchange for acceptance, and the failure to protest them for non-acceptance discharged the defendant from liability thereon.

The learned counsel for the respondents further contends that the defendant was primarily liable on these bills of exchange, and that, therefore, they were relieved under section 130 of the Negotiable Instruments Law from presenting the bills of exchange for payment as a condition precedent to holding the defendant liable thereon. That section provides as follows:

"§ 130. Effect of want of demand on principal debtor. Presentment for payment is not necessary in order to charge the person primarily liable on the instrument; but if the instrument is, by its terms, payable at a special place, and he is able and willing to pay it there at maturity and has funds there available for that purpose, such ability and willingness are equivalent to a tender of payment upon his part. But except as herein otherwise provided, presentment for payment is necessary in order to charge the drawer and indorsers."

I am of opinion that the provisions of that section are not in point here, for this was not a case of failure to present a negotiable instrument to one primarily liable thereon for payment, but of failure to present these foreign bills of exchange for acceptance; and the drawer of such bills of exchange is not primarily liable thereon and is only liable according to the statute upon failure of the drawee on due presentment to accept or on due demand to pay, and on due protest for non-acceptance or non-payment.

It follows that the judgment should be reversed, with costs, and the complaint dismissed, with costs.

DOWLING, SMITH, MERRELL and GREENBAUM, JJ., concur.

Judgment reversed, with costs, and complaint dismissed, with costs.