1. The Days of Grace were originally three days allowed by the drawer to the drawee of the draft, more than the time stated in the draft. This was done as a favor and no interest charge was made for them. Finally days of grace were recognized by the courts as a right belonging to the debtor, but that he may be required to pay interest for them. In states where days of grace are allowed, banking houses charge interest for them. As has been seen above, many of the states have abolished days of grace by statute; and it is probable that before many years they will be abolished by statute in all of the states.

2. The "Negotiable Instrument Law" which has been ratified by many states abolishes grace and provides that when the day of maturity of an instrument falls on Sunday or a holiday the paper is due on the succeeding business day.

621. The Maturity of Commercial Paper is the day on which it becomes legally due for payment. It includes the days of grace, where allowed, unless the paper contain the words "without grace.'

1. If the last day of grace falls on Sunday or a legal holiday, in nearly all of the States, except New York and Pennsylvania, the paper must be paid on the business day next preceding.

2. When the time of a note is expressed in months, calendar months are used to determine the day of maturity; when the time is expressed in days the exact number of days is considered. Thus, a note dated July 25, and payable two months after date would be nominally due September 25, and legally due September 28 (if grace is allowed); but if payable 60 days after date, it would be nominally due September 23, and legally due September 26. The date of maturity, where grace is allowed, is commonly indicated thus: Sept. 23/26.

3. A note dated Dec. 28, 29, 30 or 31, and payable two months after date, would be nominally due Feb. 28, and legally due Mar. 3 (with grace).

622. A Protest is a formal statement made by a Notary Public, over his official seal, at the request of the holder, that a note, check or draft has been properly presented for payment, and has been refused.

1. If the maker of a note refuses to pay it when due, each indorser can be held liable after a formal protest has been made, and proper notice given to him. In some States a written notice of demand and non-payment by the payee is sufficient, while in other States this notice must be written by a notary public.

2. Demand for the payment of a note should be made on the date of maturity, during business hours, at the place where payable. If no place of payment is specified in the note, it should be presented for payment at the residence or place of business of the maker, during reasonable hours. Upon the refusal of the maker to pay the note, it should be at once protested and notice sent to the indorsers on the day of maturity, or not later than the next day; otherwise they cannot be held responsible.

623. 1.

$475.

FORMS OF NOTES AND DRAFTS.

Demand Note.

ALBANY, N. Y., Jan. 13, 1899.

On demand I promise to pay II. C. Donat
Four Hundred Seventy-five Doliars. Value received.

or bearer,

J. T. HYATT.

This note is due and payable on demand to any lawful holder. It is negotiable without indorsement. If "or bearer " were omitted, it would be a non-negotiable note, since it would then be payable to H. C. Donat only. Although no interest is mentioned it draws interest from date at the legal rate of the State wherein it is made in accordance with the principle that all debts draw interest after maturity.

What will be the amount due on the above note if presented for payment April 1, 1902, finding time by compound subtraction?

2.

$950.

Time Note (with interest).

ORRSTOWN, PA., July 6, 1900.

Sixty days after date I promise to pay R. B. Dunmire or order, Nine Hundred Fifty.

with interest, for value received, without defalcation.

Dollars,

JACOB MINICK.

How much was due on the above note at maturity?

3.

$1000.

Time Note (without interest).

LEWISBURG, PA., June 24, 1891.

Ninety days after date, for value received, I promise to pay to the order of Margaret O. Evans

One Thousand

without defalcation.

$1000

Dollars,

PAUL TUSTIN.

This note could draw no interest except from date of maturity when, if not paid, the legal rate of the State could be collected.

What was due on the above note if paid on Dec. 30, 1893?

4.

Time Note.

75

$260,7%.

CHICAGO, ILL., Sept. 5, 1898.

Three months after date I promise to pay to the order of A. L.

75

Moore Two Hundred Sixty and 1 Dollars, with interest at 7%. Value received.

CHARLES CAMPBELL.

Notes 2, 3, and 4 are negotiable with indorsement.

What was the date of maturity of the above note, and how much was then due?

5.

$135,5%.

6

Principal and Surety Note.

COLUMBUS, O., Oct. 1, 1899.

Six months after date, for value received, I promise to pay to the order of C. G. Langford_

100

-$135-65 One Hundred Thirty-five and 15 Dollars, at the First National Bank. A. O. STEVENS, Principal. H. W. D. KIRKENDALL, Surety.

This is a note in which another person becomes security for the payment of the note by the maker. Another form is to make the note payable to the order of the surety who indorses it on the back to the order of the creditor. It is claimed that the latter form is more binding on the surety.

What is the date of maturity of the above note? Where is it payable?

6.

$6750.

Joint and Several Note.

NEW YORK, N. Y., May 23, 1900.

Four months after date we jointly and severally promise to pay G. E. Fisher

or order,

Six Thousand Seven Hundred Fifty Dollars, with interest. Value received.

F. H. STARKEY.
R. C. H. CATTERALL

แ

66

If this note were written we promise," or we jointly promise," etc., it would be called a joint note because it is signed by two persons who are jointly responsible for its payment; that is, each maker is individually liable for the payment of only one-half of the amount of the note. This is according to the Common Law. In New York both makers of a joint note are liable for the full amount. In a joint and several note either maker is individually liable for the payment of the full amount of the note if the other defaults. The makers of a joint note must be sued jointly, while those of a joint and several note may be sued separately, since either is responsible for the full amount.

How much was due on the above note at maturity?

7.

$180.

Sight Draft.

OMAHA, NEB., Apr. 1, 1899.

At sight pay to the order of G. E. King, One Hundred Eighty Dollars, value received, and charge to account of

At thirty days sight pay to the order of Bartow & Rockwood, Three Thousand Dollars, value received, and charge to the account of

TO HARRIS, PERRINE & Co.,

New York.

GROFF & OWENS.

1. A draft written a certain number of days after sight, means after acceptance, but the acceptor should in accepting the draft write the date when it was first seen after the word " Accepted," which date as before stated, should be followed by the name of the acceptor. Drafts are sometimes drawn a certain number of "days after date." In such cases they mature the same as ordinary notes, hence the date of acceptance need not be inserted. The acceptor of any time draft may state in the acceptance where he wishes to make it payable.

PARTIAL PAYMENTS.

624. A Partial Payment is a payment in part of a note, mortgage, or other obligation.

625. An Indorsement, as here used, is an acknowledgment of a partial payment written upon the back of a note, mortgage or other written obligation, stating the date and the amount of the payment.

626. The Supreme Court of the United States and nearly all the States have adopted the following rule for partial payments called

THE UNITED STATES RULE.

Find the amount of the given principal to the time when the payment or the sum of the payments equals or exceeds the interest due. Subtract from this amount the payment or the sum of the payments. Treat the remainder as a new principal and proceed as before to the time of settlement.

1. This rule is based upon the principle that neither interest nor payment shall draw interest.

2. In applying the United States Rule to partial payments, find the time by compound subtraction.

627. 1.

$400.

Promissory Note.

POUGHKEEPSIE, N. Y., June 24, 1897.

Three years after date, I promise to pay