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§ 7. If a man takes an article to do work upon, in what case is he liable for damage?

§ 8. For what are inn keepers liable?

§ 9. For what are common carriers responsible? Who are common carriers?

CHAPTER XXXVII.

Of Promissory Notes; Bills of Exchange; Interest.

§ 1. A PROMISSORY note is a writing by which a person promises to another a certain sum of money, for some value received by the promisor. The following is a form:

"ALBANY, January 1, 1848. "Three months after date, I promise to pay to John Jones, or bearer, twenty dollars, for value received.

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'SAMUEL SMITH."

§ 2. Notes thus written may be bought and sold as other property. But if the words or bearer were omitted, it would not so pass; or as men would say, it is not negotiable, being payable to John Jones only. The holder might sell it; but the buyer, if obliged to sue, must sue in the name of Jones, in which case Smith may offset against the note any demand which he may have against Jones. The words " or bearer" should therefore be inserted, that the holder, whoever he may be, may collect it in his own name.

§ 3. Another way of making notes negotiable, though less practised, is to insert the words, or order, in the place of "or bearer;" but in this case, the promisee must indorse it by writing his name on the back of it. Such indorsement is in law considered as his order to the maker to pay it to another person, and renders it transferable.

§ 4. It is usual to insert the words value received, as evidence that the note was given for some valuable consideration; for it will be recollected that contracts are not valid without some consideration. But these words are not necessary to make the note good; for if the maker of the note can prove that no value was received, he can avoid the payment, even if these words are in the note.

§ 5. A note, after it has become due, is not negotiable as before due. It may be transferred, but the promisor may offsett demands which he had against the promisee, the original holder, before he parted with it.

§ 6. Notes are sometimes made payable on demand. They are due immediately; and payment need not be demanded and refused before the holder can sue. Also, if no time of payment is mentioned in a note, it is due when given, and no demand of payment is necessary. But a note payable at sight, or at a specified time after sight, must be presented for payment before it can be sued.

§ 7. After a note has become due, the maker is allowed three days to pay, which are called days of grace. But if no time of payment is mentioned in the note, or if it is payable on demand, no grace is given. To bind the indorser of a note payable to order, (see §.3,) payment must be demanded of the maker on the last day of grace, and refused, and the indorser notified the same day by the holder, or by a person sent for that purpose, that the note is not paid. If the parties do not reside in the same town, notice may be sent by the first mail after the last day of grace.

§ 8. Sometimes the seller of a note warrants it. If in his indorsement he guaranties "the payment of the note," he becomes liable as an original promisor, without notice of its non-payment when it falls due. If he warrants it "good,” or "collectable," the holder must promptly endeavor to enforce the collection of the note in order to make the guarantor liable, unless he can show that it could not have been collected of the maker when it became due.

§ 9. Sometimes notes, so called, are made payable in grain, lumber, or some other property instead of money. But these are not considered in law as notes, and are not negotiable, though written payable to bearer. Such obligations, however. are often sold and transferred; but if sued, it must be done in the name of the payee, in which case the promisor may offsett demands, if he has any, against the payee. If such obligations are not paid when they become due, they are then payable in money.

§ 10. A bill of exchange is an order drawn by one person

on another, requesting him to pay money to a third person. The following is a form:

"BOSTON, August 5, 1848. "Ten days after sight, pay James Johnson or order, five "hundred dollars, value received. PETER PRICE.

"TO THOMAS THOMPSON,

Merchant, New-York."

§ 11. It will be seen that this is, in effect, the same as an order used in common business. But when drawn by merchants in commercial cities on persons in distant places, orders of this kind are called bills of exchange. They are often very convenient to persons in mercantile business.

§ 12. The nature and operation of a bill of exchange are thus illustrated: A, in New York, has $500 due him from B, in Cincinnati. A draws an order on B for that sum, and C, who is going to Cincinnati, pays A the money, takes the order, and receives his money again of B. If B has not the money when the bill is presented; or if it is made payable at some future day, and he agrees to pay it, he is said to accept the bill; and as evidence of the fact, he writes his acceptance upon it.

§ 13. When a person accepts a bill, he becomes the debtor, but the drawer remains liable if the acceptor fails to pay. But payment must be demanded of the acceptor on the last day of grace, and notice given to the drawer, as in the case of an indorsed note.

§ 14. Interest is an allowance for the use of money, or for the forbearance of a debt. Thus, a person lends to another $100 for one year, and receives for the use of it $6, which is called the interest. Promissory notes are usually made payable with interest.

§ 15. The rate of interest is fixed by a law of the state, but is not the same in all the states. It is six per cent. in all the states except the following: New York, South Carolina, Michigan, Iowa, and Wisconsin, in which it is seven per cent.; Georgia, Alabama and Florida, in which it is eight per cent.; Louisiana, five per cent.; bank interest six per cent.; Mississippi, eight per cent. on loaned money; six on contracts. In the following states, higher rates may be taken by special

agreement: Missouri, ten per cent.; Wisconsin, twelve; Ohio, twenty; Louisiana, twenty-eight.

§ 16. A higher rate of interest than that fixed by law, is called usury. Not only can no more be collected on any contract or obligation than the lawful rate, but in most of the states there is some forfeiture for taking usurious interest. In some states, the whole debt is forfeited; in others, twice or thrice the excess above the lawful interest; and in some, only the excess taken can be recovered.

EXERCISES.

§ 1. What is a promissory note? of a note.

State the usual form

§ 2. What is meant by a note's being negotiable? What would be the effect of omitting the words, or bearer ?

§ 3. What effect has the word order instead of bearer? § 4. Are the words value received necessary to bind the maker of a note?

§ 5. Is a note negotiable after it has become due?

6. What is the difference between making a note payable on demand, and at sight?

§ 7. What are days of grace? How is an endorser of a note made and held responsible?

§ 8. What is the difference between guarantying the payment of a note and warranting it good, or collectable?

§ 9. What is the nature of obligations for property instead of money ?

§ 10. What is a bill of exchange? State the form of one. 11. For whose convenience, chiefly, are bills of exchange designed ?

12. Illustrate their use by an example. How is a bill accepted?

§ 13. When must the payment of a bill be demanded to keep the drawer liable?

§ 14. What is interest?

15. What are the rates of interest in the several states? § 16. What is usury? How do the laws of the states provide against usury?

CHAPTER XXXVIII.

Moneyed Corporations.-Banks; Insurance Companies.

§1. WE are informed that the first institution of banks was in Italy, where certain Jews kept benches in the market places for the exchange of money and bills; and banco being the Italian name for bench, banks took their title from this word. The first banks are supposed to have been only places where money was laid up or deposited for safe keeping. But banks at the present day are not used for depositing alone. No banks in this country can be established, but by authority of law.

§ 2. If the inhabitants of a place want a bank, they petition the legislature to incorporate a banking association. The act of incorporation prescribes the manner in which the company shall be formed, how its business shall be done, and the amount of capital or stock to be employed. The capital is raised in this way: the sum intended to constitute the capital of the bank, is divided into shares of $100 each: so that if the whole stock is to be $100,000, there are 1000 shares. These shares are sold, to one person ten, to another twenty, and to another, perhaps fifty, and so on till all are sold, and the whole capital is paid in.

§ 3. Now a person buying any number of shares, takes a certificate, stating that he is the owner of such number of shares; and such certificate may be sold to another person.

§ 4. The stockholders choose of their number, usually, thirteen directors, who choose one of themselves to be president: hence the name of a banking association generally is, "The President, Directors, and Company of the Bank of The president and directors choose a cashier

and clerks.

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§ 5. A part of the business of banks is still that for which they were originally intended, viz., depositing money. Merchants and other business men near a bank, deposit their money, and then draw it out as they have use for it, by sending their orders to the cashier. This order is called a check.

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