PROMISSORY NOTES.

178. A Promissory Note is a written promise to pay a specified person a specified sum at a specified time.

The Maker of a note is the person who signs it.
The Payee is the person to whom it is payable.
The Holder is the person who owns it.

An Indorser is a person who writes his name on the back of a note to transfer it or to guarantee its payment in case the maker fails to pay it when due.

The Face of a note is the sum named in it.

179. A Negotiable Note is a note that can be transferred. A note is negotiable when it is made payable to the "bearer" or to the "order" of the payee; when it is made payable to the payee only, it is not negotiable.

NOTE.-In Pennsylvania the law requires the words "without defalcation," in addition to "value received," to make a note negotiable; and in New Jersey, "without defalcation or discount."

180. A note Matures, or becomes legally due, at the expiration of the specified time.

NOTE.-In some states Three Days of Grace are allowed, and then a note matures three days after the specified time. In this book days of grace will not be reckoned. Custom also varies when a note falls due on Sunday or a legal holiday-some states making it payable on the next preceding, and others on the next succeeding, business day.

181. A Protest is a written notice sent by a notary public to the indorsers, stating that the maker has failed to pay the note. If the notice is not sent on the last day of grace, the indorsers are not held responsible for its payment.

NOTE.-If the words "with interest" are in the note, it draws interest from date; if these words are omitted, the note will not draw interest until after it becomes due. When no rate is mentioned, the legal rate at the place where the note is made is understood.

WRITTEN EXERCISES.

182. The following are the Principal Forms of notes:

$450.

1.

FORM OF A DEMAND NOTE.

Philadelphia, Pa., Apr. 2, 1895.

On demand, I promise to pay Henry King four hundred and fifty dollars, with interest at 6%, for value received, without defalcation.

Henry F. Bitner.

This note was paid in 24 days; what was the amount due?

2.

FORM OF A TIME NOTE.

$240.

Pittsburg, Pa., May 4, 1895.

Sixty days after date, I promise to pay John W. Lansinger, or order, two hundred and forty dollars, with interest at 5%, for value received, without defalcation.

What is due on this note at maturity?

H. Justin Roddy.

$650.25.

3.

FORM OF A PRINCIPAL-AND-SURETY NOTE.

Albany, N. Y., June 1, 1895.

Ninety days after date, I promise to pay W. Hamner Piper, or order, six hundred and fifty dollars, with interest at 6%, for value received, without defalcation.

Surety, W. F. Beyer.

What is due on this note at maturity?

J. W. Allen.

4.

$850.

FORM OF A JOINT NOTE.

Baltimore, Md., July 2, 1895.

Two months after date, we promise to pay George R. Anderson, or order, eight hundred and fifty dollars, for value received, without defalcation, with interest at 51%.

What is due on this note at maturity?

John Snyder.

Henry Long.

5. A 90-day note for $1000, with interest, was paid at maturity; what was the amount due?

6. A 60-day note for $960, without interest, was paid in 100 days; what was the amount due?

7. A 3-month note for $2040, with interest, was paid in 120 days; what was the amount due?

8. What is the difference between the interest of two notes for $1200 each, given July 5, 1895, one due 3 months after date and the other 90 days after date?

9. Write a demand note for $520.84, bearing interest at 6%, with yourself as payee and John W. Hayes as maker.

10. Write a thirty-day negotiable note for $400, bearing interest at 6%, with William Y. Jones as maker and Thomas Morton payee. Indorse same to the order of J. C. Printz & Co.

11. Write a principal-and-surety note for $80.50, bearing interest at the legal rate and drawn in favor of Henry A. Jones, with Elwood Baker as maker and Robert C. Lane as surety.

12. Write a joint note, negotiable, bearing interest at 6%; face of the note $1200, time 60 days, payee Howard Smith; makers Horace Fritz and James R. Lind.

13. Face of note $650, maker W. H. Holmes, payee Charles Martin, time 90 days; write a non-negotiable note, without interest.

PARTIAL PAYMENTS.

183. Partial Payments are payments in part on notes.

184. An Indorsement is a record of a partial payment, with its date, made on the back of a note,

185. The Merchants' Rule.

When partial payments are made on an interest-bearing note, and settlement is made in a year or less, business men usually employ what is known as

THE MERCHANTS' RULE.

Find the amount of the face of the note from its date to the day of settlement; also, the amount of each payment from its date to the day of settlement.

Subtract the sum of the amounts of the payments from the amount of the face of the note.

WRITTEN EXERCISES.

1. What amount is due Nov. 27, 1894, on a note for $800, dated Jan. 15, 1894, with interest at 6%, on which are the following indorsements: May 3, 1894, $300; July 9, 1894, $400?

The amount of $800 from Jan. 15th to Nov. 27th, or 10 mo. 12 da., is $841.60.

The amount of $300 from May 3d to Nov. 27th, or 6 mo. 24 da., is $310.20.

The amount of $400 from July 9th to Nov. 27th, or 4 mo. 18 da., is $409.20.

The sum of the amounts of the payments is $719.40, which subtracted from the amount of the face of the note leaves $122.20.

2. What is due Dec. 20, 1890, on a note for $1200, dated Feb. 8, 1890, with interest at 5%, on which is the following indorsement: June 5, 1890, $800?

3. What is due Dec. 24, 1888, on a note for $1600, dated Mar. 1, 1888, with interest at 6%, on which are the following indorsements: May 10th, $500; July 15th, $400?

4. What is due Nov. 27, 1891, on a note for $2000, dated Jan. 1, 1891, with interest at 5%, on which are the following indorsements: Mar. 3, 1891, $600; May 7, 1891, $800?

5. What is due Dec. 12, 1892, on a note for $2500, dated Feb. 6, 1892, with interest at 6%, on which are the following indorsements: Apr. 1, 1892, $800; June 4, 1892, $700; Aug. 10, 1892, $500; Sept. 12, 1892, $300?

6. On a note for $1860, dated Dec. 3, 1894, and bearing interest at 5%, the following payments were made: Dec. 20, 1894, $500; Jan. 24, 1895, $600; May 10, 1895, $300; Aug.. 30, 1895, $250. How much is due Dec. 3, 1895?

7. A note for $3200, dated Jan. 8, 1894, has the following indorsements on it: Feb. 20, 1894, $800; Apr. 20, 1894, $600; June 25, 1894, $500; Aug. 16, 1894, $400; Oct. 25, 1894, $300. What is due Jan. 1, 1895, at 5% ?

186. United States Rule.

When partial payments are made on an interest-bearing note, and settlement is not made within a year, the amount due is found by the following rule, adopted by the Supreme Court of the United States and nearly all the States:

THE UNITED STATES RULE.

Find the amount of the principal to a time when a payment, or the sum of the payments, equals or exceeds the interest due, and from this amount subtract the payments or the sum of the payments.

Regard the remainder as a new principal, and proceed as before to the time of settlement.