b. Deliver the note to number 2.

c. Number 2 transfer the note to number 3, indorsing it in full. d. Number 3 transfer the note to the teacher, indorsing it so that the teacher may transfer it again without indorsing it.

e. To whom may the teacher look for payment of the note? f. Number 1 is which party? Number 2? Number 3? The teacher?

2. a. Each of the number 3's write a note payable to number 2 or bearer.

b. Deliver the note to number 2.

c. Number 2 transfer the note to number 1.

d. Number 1 transfer the note to the teacher.

e. How many indorsements are necessary in making these transfers?

f. To whom may the teacher look for payment?

g. Both number 1 and number 2 might have indorsed the note. Would their indorsement in blank have affected the value of the note? If so, how and why?

3. a. Number 2 write a note payable to number 1 or order. b. Deliver it to number 1.

c. Number 1 transfer it to number 3, indorsing it in full. d. Number 3 transfer it to the teacher, indorsing it without

recourse.

e. To whom can the teacher look for payment?

4. a. Every pupil write a non-negotiable demand note bearing interest at the legal rate where made, making the teacher the payee.

b. Deliver the note.

c. Who can collect the note?

d. Who must pay the note?

e. How could a third party become liable for the payment of the note?

COMPUTING INTEREST ON NOTES

341. An interest-bearing note bears interest from the day of date to the day of payment.

A non-interest-bearing note, if not paid at maturity, bears interest from the day of maturity until paid, at the legal rate where made.

If no rate of interest is mentioned in an interest-bearing note, interest must be computed at the legal rate in the state in which the note is made.

342. The face of a note is the principal.

343. The sum of the principal and interest is the amount of the note.

344. When the time mentioned in a note is expressed in months, calendar months are always understood. Thus, a note for three months given July 15 is due Oct. 15, or, where grace is allowed, Oct. 18. A 90-day note given July 15 is due 90 days after July 15, or Oct. 13.

1. Find the amount of note 2, page 183.

2. Find the amount of note 1, page 182, the legal rate of interest in Massachusetts being 6%.

3. Find the amount of note 3, page 183, if paid on the third day of January, 1909, the legal rate of interest in Pennsylvania being 6%.

4. Find the amount of note 4, page 184, if not paid until Aug. 11, 1908, the legal rate of interest in Ohio being 6%.

5. How much can Mr. Walden collect on note 5, page 185, if it is paid Aug. 20, 1908, the legal rate of interest in New York being 6%?

6. A demand note for $711 with interest was dated at Ogden, Utah, July 7, 1905, and paid Sept. 30, 1905. How much was paid, the legal rate of interest in Utah being 8% ? 7. A 90-day note for $960, with interest at 7%, was made July 1, 1906, at Lincoln, Neb., where grace is allowed.

a. On what day did the note mature?

b. How much was due at maturity?

8. A 60-day note for $1200 without interest, dated at Cairo, Ill., Jan. 1, 1904, was not paid until May 15, 1904. What sum was then due, the legal rate of interest in Illinois being 5%?

9. Find the amount at maturity of a 30-day interest-bearing note for $700 in the state where you live.

10. What must be the face of a 90-day note that will amount to $263.90, computing interest at 6%, without grace?

11. Find the amount at maturity of the following note, the rate of interest in Louisiana being 5 % and grace being allowed: $600100 NEW ORLEANS, Sept. 1, 1908.

On the 15th day of December, 1908, I promise to pay to the order of Henry P. Emerson, six hundred dollars, with interest. Value received. JOHN H. GARDNER.

12. Write a note for $1000 that will give James Thorne the right to collect $1020 from you 90 days from the date of the note.

13. Find the amount due June 15 on an unpaid non-interestbearing 30-day note for $250, dated March 3, in a state where the legal rate of interest is 6%.

14. Write a negotiable note dated at your city or town, Jan. 15, due May 7 of the present year, and find the amount due at maturity.

PARTIAL PAYMENTS

346. When payments are made in sums less than the entire amount of a note, the holder indorses them on the back of the note, and they are known as indorsements, or partial payments.

The rule given below is the one adopted by the Supreme Court of the United States for determining the amount due on a debt on which partial payments have been made. It is the legal rule in most of the states of the Union. Classes in any state having a different rule should follow the legal rule of their own state, in solving the partial payment problems given in this book.

United States Rule for Partial Payments

347. Find the amount of the debt to the time when a payment, or the sum of the payments, equals or exceeds the interest due, and from that amount subtract such payment or sum of payments. With this remainder for a new principal, proceed as before to the time of settlement.

This rule means that neither the whole interest nor any part of it shall be used to increase the principal on which interest is paid; but whenever more than enough to cover the interest has been paid, the excess shall be used to diminish the principal. 348.

$1820m

Watertown, N.Y., Jan. 1, 1906

On demand, for value received, promise to pay

to the order of

A. D. Parsons..

~~One thousand eight hundred twenty dollars

with interest.

Robert J. White

Received on the within note:

NOTE.

- The legal rate of interest in New York State is 6 per cent.

Subtracting each date from the one above to find interest periods:

6 da., or 96 da., 4th Int. per. 2 mo. 12 da., or 72 da., 3d Int. per. 0 da., or 240 da., 2d Int. per. 4 mo. 24 da., or 144 da., 1st Int. per.

8 mo.

2 6 12 2 yr. 6 mo. 12 da., Proof of int. periods Subtracting f from a, we obtain 2 yr. 6 mo. 12 da., which is the same as the sum of the remainders. This proves that the interest periods are correct.