the money due him, is $70; how much more has he due than he owes?

10. The interest on the money A paid for a farm, house, and store, for 8 years, at 5 per cent., equals $18000; what was the cost of each, provided the farm cost 3 times as much as the house, and the house twice as much as the store?

11 A man wishes to place such a sum of money on interest at 6 per cent., that it will give an annual interest of $360 for a poor sister; required the amount invested.

12. Two-thirds of A's fortune, plus of B's, being on interest for 6 years, at 5 per cent, amounts to $7800; what is the fortune of each, supposing of A's equals of B's?

INTEREST ON PROMISSORY NOTES.

479. A Promissory Note is a written agreement to pay some person a certain sum of money on demand, or at a specified time.

480. The Face of a note is the sum whose payment is promised. It is written in words in the body of the note, and in figures at the top.

The number of cents is usually expressed in figures as hundredths of a dollar, as is seen in the note below.

481. The Maker of a note is the party who signs it. The Payee is the party to whom it is made payable. The Holder is the one who owns it.

In the following promissory note, let the pupil point out the maker, the payee, the face, the date, etc.:

$350.25. Philadelphia, May 12, 1888. Thirty days after date, I promise to pay Henry Martin, or order, Two Hundred and Fifty Dollars, for value received, without defalcation, CHARLES MILLER.

If a note reads "with interest," it draws interest from date; otherwise it draws interest from the time of maturity until paid. A note may draw interest from a particular time after date, if so specified in the note. When no rate is mentioned, the legal rate of the State is understood.

A note should contain the words, "value received," otherwise the holder may be required to prove that value was received. In business language a note is said to be "made in favor of" the payee.

INTEREST ON PROMISSORY NOTES.

283

482. A Negotiable Note is a note that can be transferred from one party to another. A note is negotiable when it is made payable to the "bearer," or to the "order" of the payee.

A note payable "to order" becomes negotiable by the payee writing his name on the back of it, which is called indorsing the note. A note payable "to bearer" is negotiable without indorsement. A note payable to a particular person only, is not negotiable.

The words "without defalcation" are required in Pennsylvania to make a note negotiable; in New Jersey, "without defalcation or discount." 483. The Indorser of a note is the party who puts his name on the back as security for its payment.

It is customary in raising money on notes, to have one or more responsible persons write their names on the back of the note as security for its payment. In case of the refusal of the maker to pay the note when due, each indorser is liable for the whole amount of the note in the order of signing, unless he writes above his name the words "without recourse,' or unless there is an agreement between two or more indorsers to share the loss between them.

When the maker fails to pay a note, it is usual for the holder to make his demand on the last liable indorser, who pays the note and then gets the amount from the preceding indorser, and so on, up to the first indorser. The holder, however, has the option of collecting the amount from any liable indorser, and when so collected, all subsequent indorsers are released, the indorser who pays becomes the holder, and may col lect from any prior liable indorser, and so on up to the first.

484. The Maturity of a note is its becoming legally due at the expiration of the time. In most of the States a note matures three days after the time specified, unless the words "without grace" are inserted.

485. Days of Grace are the three days usually allowed by law for the payment of a note after the expiration of the time specified in the note.

When grace is allowed the note matures on the last day of grace. When no grace is allowed, it matures at the expiration of the time spec ified. If a note is payable on demand, it is legally due when presented. If a note becomes legally due on Sunday or a legal holiday, it must be paid in most States on the day preceding. In Connecticut, three days' grace is allowed on notes for $35 or more, but not on notes for a less amount; if the last day is a legal holiday falling on Sunday, the note is due on Monday. In Maine and Nebraska, if the third day is a legal holiday falling on Monday, the note is payable on Tuesday; and in New York a note maturing on a legal holiday, or Monday observed as such holiday, is payable the following day. The following notation indicates when a note is nominally and legally due: July 47, 1876.

I

When the time of a note is stated in months, calendar months are meant. A note for 4 months, dated Oct. 15, would mature Feb. 15|18; but if dated Oct. 29th, 30th, or 31st, it would expire on the last day of February, and be legally due on the 3d of March.

486. A Protest is a written declaration made by a notary public, that the maker of a note has failed to pay it.

A protest must be made out on the day the note matures, and sent to the indorser immediately, to hold him responsible. The neglect to protes: a note on maturity releases an indorser from all obligation to pay it, un less the words "waiving demand and notice" appear above the indorser': signature.

There are two methods of estimating the time between different dates. The first is by compound subtraction, which is still generally used in partial payments. The second is by determining the number of entire years, if any, and then reckoning the number of days left, either by adding the number in the different months between the dates, or from the table, Art. 296. This latter method is now generally adopted by merchants in finding interest on items in an account, and for calculations for short periods, and will be used in the following examples.

487. The Principal Kinds of notes will now be given, and the calculation of the interest upon them required.

A Time Note is one made payable at a specified time; when no time of payment is specified, the note is due on demand. A Joint Note is a note signed by two or more persons who are jointly liable for its payment. A Joint and Several Note is a note signed by several persons who are both jointly and singly liable for its payment.

A Principal and Surety Note is one in which another person becomes security for the payment of the note by the maker. A surety note should be made payable to the order of the surety, who should indorse it on the back to the order of the creditor. It is held that a note made in favor of the creditor and indorsed by the surety, does not bind the latter to the payment of the debt. In reckoning the interest on notes, 3 days of grace are to be allowed.

WRITTEN EXERCISES.

1. $225.

TIME NOTE.

INDIANA, PA., Oct. 15, 1886

Two months after date, I promise to pay John H, Landis, or order, Two Hundred and Twenty-five Dollars, with interest, for value received, without defalcation.

What will be due on this note at maturity?

EXACT TIME.

Oct. 16 da.

R. W. FAIR.

OPERATION.

$225 Int. for 60 da.

$779.25

INTEREST ON PROMISSORY NOTES.

PRINCIPAL AND SURETY NOTE.

285

TRENTON, N. J., Nov. 15, 1876.

Two months after date, I promise to pay Philip Dunn, or order, Seven Hundred and Seventy-nine 25 Dollars, with interest, for value received, without defalcation or discount. HENRY WOOD.

Surety, PHILIP DUNN.

What will be due on this note at maturity?

Ans. $787.56.

3.
$650

JOINT NOTE.

JEFFERSON CITY, Mo., Aug. 21, 1876.

On demand, for value received, we promise to pay James Mackay, or order, Six Hundred and Fifty Dollars, with interest, negotiable and payable without defalcation or disJOHN TOMLINSON, CHARLES LEROY.

count.

4.

What will be due on this note, Jan. 1, 1877 ?

$727.75

to

JOINT AND SEVERAL NOTE.

Ans. $664.41.

NEW YORK, Sept. 25, 1876.

Six months after date, we jointly and severally promise pay Matthew Wilcox, or order, Seven Hundred and Twenty-seven 15 Dollars with interest, value received. SAMUEL MORGAN,

What will be due on this note at maturity?

5.
$480

Ans. $750.07.

COMPANY NOTE PAYABLE AT A BANK.

PHILADELPHIA, April 1, 1876. Ninety days after date we promise to pay Claxton & Co., or order, at the National Bank of Northern Liberties, Four Hundred and Eighty Dollars, for value received, without defalcation. WILLIAMS, FRENCH & Co. What was the value of this note, August 12, 1876?

Ans. $483.20.

6.

$600.

READING, PA., Dec. 14, 1887.

Three months after date, I promise to pay Mary Smith, or or der, at the First National Bank, Six Hundred Dollars, with interest, for value received, without defalcation.

JOHN SMITH.

What was the value of this note at maturity? Ans. $609.40

ANNUAL INTEREST.

488. Annual Interest is the simple interest of the principal, and of each year's interest from the time of its accruing until settlement.

489. Annual Interest is sanctioned by some States when the note is written "with interest payable annually."

1. Simple Interest is not due, and cannot be collected until the principal is due, unless the note reads, "with interest payable annually." Annual Interest allows interest on the unpaid interest of a debt as well as upon the debt itself.

2. In Compound Interest, each year's interest is added to the principal, and the sum forms a new principal for the succeeding year.

3. The neglect to collect the annual interest on a note drawn "with interest payable annually," is in some States, regarded as a waiving of the contract requiring it.

1. What is the amount due on a note of $300, at 6% for 3 yr. 3 mo., interest payable annually?

SOLUTION.-The interest on $300 for one year is $18, and for 3 yr. 3 mo. is $58.50; the first year's interest is on interest 2 yr. 3 mo., giving $2.43 interest; the second year's is on interest for 1 yr. 3 mo., amounting to $1.35; the third year's interest is on interest 3 mo., amounting to $.27; adding the

interest on the principal, the interest on each year's interest, and the principal, we have $362.55 as the amount due.

Rule.-I. Find the interest on the principal for the given time and rate: also find the interest on each year's interest for the time it has remained unpaid.

II. The sum of these interests will be the annual interest, and this, added to the principal, will be the amount due.