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required and the debtor agrees to give it, in all cases it ought to be obtained at or before the sale, loan, or other transaction, or where the security is intended to cover a series of credits, then before the first sale is consummated by delivery of the goods, or the first loan by handing over the money. Securities covering the series of credits should be obtained at or prior to the time of the first transaction, for where payments are made, or securities given without passing consideration, there will exist a taint of bankruptcy ́if it should afterward appear that the party making such payment, or giving the securities, was insolvent at the time he did so. Hence where it is suspected that a person offering to purchase and desiring credit is either insolvent, or that he may become so before the maturity of the credit, it is only by obtaining prior security, or security at the time of the delivery of the goods or advances, that the creditor can, in case the debtor should afterward fail in business, secure the debtor from the imputation of having committed a fraudulent act subjecting him to all the penalties of the bankrupt law. A trader ought to be continually on the alert in dealing with those of whose solvency he is not fully satisfied, so that he may obtain an equivalent in money, or property, or good security, at the time of the delivery of the commodity which he is selling."

CHAPTER XXII.

OF PAYING DEBTS.

"A good rule for any one who has money is, to keep away from all entanglements with others. Never sign a paper, or your name to anything that you do not fully understand, and never to a contract of any magnitude, without consulting a lawyer. The trifle you would pay him for advice may save you much in comfort and money."-DAVIES.

T is a proverb in commercial circles that "short settlements make long friends." It would greatly increase the profits and reduce the risks of business if settlements every thirty days were the rule generally adopted and not departed from, except in rare instances and for special reasons. It is also a wise saying that the best investment any one can make of his surplus money is, to pay his debts with it, or buy up his paper not yet due. We have elsewhere remarked that payment, like charity, is twice blessed; it blesses him that pays and him that receives. With a transaction so agreeable to the persons interested, and so indicative of a disposition to deal fairly and to do justice, the law is rarely called upon to interfere, and consequently the law-books have but little to say in respect to the subject of paying debts.

313. What is a payment that is good under any and all circumstances?

A payment in cash of the amount due at the exact time it is due and to the person entitled to receive it. Payment

in good and current bank-bills is sufficient, unless expressly objected to because they are not a legal tender. Payment to the creditor himself is of course good, so also to an authorized agent and attorney until his authority is revoked. A payment is also good if made to a person sitting in the counting-room of the creditor with account books near him, and apparently intrusted with the conduct of the business, but not if made to an apprentice, or not in the usual course of business. Payment is also good, if made to one of several partners, trustees, or executors; and if the debtor has made himself absolutely liable to a third person by the acceptance of the creditor's order drawn on him, this, as against the creditor, is a good payment of his claim to that amount, even though the creditor has subsequently countermanded the order.

314. Suppose that payment is made in genuine notes of a bank which has failed, or does fail before the receiver has reasonable time to present them for redemption, will such payment bar a recovery on the original debt?

It is well settled that a payment in bank-notes after the bank issuing them has stopped payment, if the fact was known or suspected by the payer, is no payment, for it would amount to a fraud. But where both parties are innocent, there is some conflict in the authorities as to whether the payer or receiver must bear the loss. In Pennsylvania and Massachusetts, it has been decided, that payment in bank-bills, after the bank has failed, but the fact is unknown to both parties, is good, and the loss is to be borne by the receiver; but the weight of authorities seems to be in favor of giving the creditor a reasonable time to present the bills to the bank for redemption.

[STORY, C. J., in his work on Promissory Notes (§ 501–2),

has reviewed the authorities, and says: "In respect to persons who receive the same (bank notes) in the course of circulation, either in payment of prior debts, or of debts then contracted, the general rule is that the creditor takes them at his own risk if the bank is then in good credit, and he does not present the same for payment within a reasonable time, that is to say, as early as he may after the day on which he has received the same. If the bank has actually failed, or should fail before the notes can, within such reasonable time, be presented for payment, then the holder, upon giving due notice of the dishonor, may recover the amount or consideration from the person from whom he received the same. But it has been thought that even the failure of the bank will not dispense with a due presentment for payment at the banking-house; and at all events, it will be necessary to give due notice to the person from whom the notes were received of the failure of the bank, accompanied with an offer to return the notes in order to bind him. We have already had occasion to state that there is some conflict in the American authorities upon the point, whether bank-notes are to be deemed an absolute payment, and taken at the risk of the creditor who receives the same, or not. What has been stated in the preceding part of this section is the doctrine asserted in the English authorities, and it seems supported by what may well be deemed the preponderance of authority, as well as of reasoning, in America."]

315. Is the debt discharged by payment in the debtor's own check on a bank which refuses to honor it?

"The general rule of our law," says Greenleaf, in his work on Evidence, "is, that if the creditor receives the debtor's check for the amount, it is payment, if expressly

accepted as such, unless it was drawn colorably, or fraudulently, and knowingly without effects. But in the absence of any evidence of an agreement to receive a check or draft as payment, it is regarded only as the means whereby the creditor may obtain payment, or as payment provisionally until it has been presented and refused; if it is dishonored, it is no payment of the debt for which it was drawn." But it is also a rule of law that the receiver or holder, in order to charge the drawer, must show that he has used due diligence to obtain the money, and that it cannot be obtained; and if a loss accrue through his negligence, it must be borne by himself.

316. Suppose that before the check is presented for payment, the bank fails with sufficient funds of the drawer in its possession to meet the check, who must bear the loss?

The holder of a check is allowed a reasonable time within which to present it for payment, but if he do not use due diligence to obtain the money, the delay is at his own peril.

[What is a reasonable time, says Story, C. J., " will depend upon circumstances, and will in many cases depend upon the time, the mode, and the place of receiving the check, and upon the relations of the parties between whom the question arises. If the payee or other holder of the check receives it immediately from the drawer in the same town or city where it is payable, he is bound to present it for payment to the bank, or bankers, at furthest, on the next succeeding secular day after it is received, before the close of the usual banking hours. Where he receives the check from the drawer in a place distant from the place of payment, it will be sufficient for him to forward it by the post to some person at the latter place, on the next secular day after it is received; and the person to whom it is thus forwarded

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