RESPECTING PROMISSORY NOTES.

A Promissory Note is an engagement in writing to pay a certain sum of money, mentioned in it, to a person named, or to his order, or to such person or bearer.

A Note, in its original form of a promise from one person to pay a sum of money to another, bears no particular resemblance to a bill of exchange; but when it is endorsed, there is a very great resemblance, for then it is an order by the endorser to the maker of the note, to pay the money to the endorsee. The endorser of the note corresponds to the drawer of the note; the maker to the drawee or acceptor, and the endorsee to the payee. The rights and obligations of these corresponding parties, are nearly or quite the same. It will not be necessary, therefore, to repeat all the rules that are applicable to, and govern the parties to a promissory note; we will, however, state the principal ones, and first, of the requisites of Promissory Notes.

No precise form of words is necessary to constitute a valid promissory note. A promise to account for a certain sum, or an acknowledgment of indebtedness for value recived, is sufficient.

Like bills of exchange, they must be for the payment of money only, and not for the performance of some other act; and the amount to be paid must be fixed, and not variable, and must not depend upon contingency, but must be payable absolutely and

at all events.

There should be no uncertainty as to the person by whom or to whom it is payable. For example, a note payable to H. Jones, or to Lewis Davis, is not a valid promissory note.

A note payable to bearer generally, or to the payee or bearer, is transferable by mere delivery; and possession of such a note is prima facie proof of title. But if a note is drawn payable to the order of the payee, the title will pass only by the endorsement of the payee; and if the endorsement be in full, the title passes to the person named therein; but if it be in blank, it passes to the holder by delivery merely.

To make a note payable at a particular place, it is not sufficient that there be a memorandum of the place at the bottom or margin thereof but it must be expressed in the body of the note itself, and form a part thereof.

The words "value received" are not essential to the validity of a promissory note, although they should be inserted.

A note may be made by two or more persons; and in that case may be joint or joint and several, according to its form. The makers of a joint and several note, may be sued upon it either jointly or separately; and if sued separately, a recovery of Judgment (without satisfaction) against one, will not be a bar to a recovery against another maker. But the makers of a joint note, should be sued jointly; for if they are sued separately, the

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action

action can be defeated by a plea in abatement of the non-joinder of the other maker, or makers.

A note signed by two or more persons, written thus ;"We promise to pay," &c., is a joint note only; otherwise, if the words "jointly and severally" be added. A note written, “I promise to pay," &c., signed by two or more persons, is a joint and several note.

All who have signed or endorsed a note, are jointly and severally liable to the holder.

Consideration.

note.

A valuable consideration is necessary to support a promissory A consideration founded in mere love or affection is not sufficient. Thus, a note drawn as a gift to a son or other relative, or to a friend, cannot be enforced as between the original parties. A mere moral obligation, though coupled with an express promise, is not sufficient considration to support a note. A consideration which the law esteems valuable must exist, in order to furnish a just foundation for an action.

A note will be void, as between the original parties, if founded upon fraud, or where undue advantage was taken to obtain it of the maker; as, for instance, getting the maker intoxicated, for the purpose of obtaining his note.

Illegal consideration also will render a note void; as, when a note is given for the prepetration or concealment of a crime, or for a wager, or whenever the consideration is founded upon a transaction against sound morals, public rights, or public interests. There is but one case in which a note is void in the hands of an innocent endorser for a valuable consideration; and this is when the consideration in the note is money won at a play.

NOTE.-Usurious interest according to our statutes for 1853 do not render a note of hand void, but in case it comes to suit the principal and six per cent, is allowed according to law.

Of Presentment for Payment.

The contract of the maker being to pay the note upon due presentment at maturity, in order to charge the endorsers, it is the duty of the holder to demand payment of the maker on the very day on which, by law, the note becomes due; and unless the demand be made the holder loses his remedy against the endorsers, although the maker would still be liable. The rules that were given to determine when bills of exchange become due apply as well to notes. Three days grace are allowed on all notes except those payable on demand, and those in which no time of payment is expressed; on such no days of grace are allowed.

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When

When a note is made payable at any particular place, as, for instance, at a certain bank, due presentment must be made at that place in order to render the endorsers liable in case of nonpayment. Notes payable at a particular bank, should be left with that bank for payment.

If the note is payable generally, without any specification of place, the holder may present it for payment to the maker wherever he may be found; but it is not absolutely necessary that a personal demand be made; a demand at the maker's place of abode or business, is a good demand in some cases. The holder must use reasonable diligence in finding the maker, or his place of abode or place of business, in order to charge the endorsers. But the maker is liable without such demand,

Proceeding on Non-payment,

No protest is required to be made upon the dishonour of a note; although it is common to protest them for non-payment, especially in commercial towns. But in every case of the dishonour of a note, it is the duty of the holder to give due notice thereof to all the prior parties on the note to whom he means to look for payment; for the holder cannot recover against a party to whom he has failed to give due notice of the dishonour.

Of payment.

If the maker makes due payment of a note to a bona fide holder, it will amount to a complete discharge of all other parties thereto.

But when payment is duly made by an endorser to the holder, such endorser, as a general rule, will retain his right to recover over against all the antecedent parties to the note, until he has received a full indemnity; such payment, however, will discharge all the endorsers, subsequent to himself.

Interest.

Interest is recoverable on a promissory note, in which there is no special agreement to pay interest, from the time when the principal becomes due, or ought to have been paid. A note payable on demand carries no interest till a demand is made, either by suit or otherwise, unless there is an agreement to pay interest. A note not on demand, in which no time of payment is mentioned, draws interest from date.

Whenever there is a special agreement to pay interest, that is, when the words " with use," or "with interest," &c., are contained in the note, it draws interest, of course, according to such agreement or contract.

In Canada West a note is outlawed in six years, from the time it becomes due. The statutes require that all claims founded upon any instrument or contract not under seal, actions for the same must be commenced within six years, next after the cause of action accrued, and not after.

And in Canada East a note is outlawed in five years, from the time it becomes due. (See Section 31 of 12 Vict., cap. 22, on page 293, in this work.)

Of Notice to an Endorser.

In giving notice to an endorser, it is not necessary that any particular form should be observed, provided that you describe the note for which he is bound, in such terms as can leave no room for him or others to misconstrue your meaning. If you state in your notice the date of the note, the amount, the time on which it became due, together with the maker's name, it is presumed that would be quite sufficient. It may be well to present a short and convenient form as follows:

Mr. Joseph Draper,

Form of Notice.

Sir, The note for two hundred and ten pounds, currency, dated September the twentieth, eighteen hundred and fifty-three, that I hold against Jacob Rich, as maker, and which became due January the twentieth and twenty-third, and on which you are endorser, remains unpaid; therefore I shall look to you for the payment thereof.

Toronto, January 23rd, 1854.

SAMUEL HALL.

RESPECTING CHATTEL NOTES.

We have seen that in order to constitute a promissory note, it must be for the payment of money only; if then a note be payable otherwise than in money, it is called a chattel note. Chattel notes are not negotiable, and, cannot be sued except in the name of the payee. No days of grace are allowed upon them.

It is the duty of the maker of a chattel note, payable in specific articles, at a place mentioned in the note, to tender the articles, at that place, and at the time the note becomes due. If the maker neglects to make such tender, he will be liable to the payee to pay him the amount of the note in cash. But if, on the other hand, the maker tender the articles mentioned in the

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note,

note, at the proper time and place, according to the contract, and the creditor neglects or refuses to receive them, the debt is thereby discharged; but the right of property in the articles tendered passes to the creditor. The debtor may abandon the goods tendered; but if he still elects to retain possession of them, he will be considered as bailee of the creditor, at his (the creditor's) risk and expense. The relation of debtor and creditor would in such case be changed to that of bailor and bailee.

There is a difference as to tender between portable and cumbrous articles. With respect to the former, a tender as above must be made; as to the latter, it will be sufficient if the debtor offer to deliver as the creditor shall direct.

CHATTEL NOTES.

No. Due 17th Dec. 1853.

Three months after date, I promise to pay Charles Dill, or order, one hunrdred and fifty bushels of good merchantable wheat, at the going price, to be delivered at the residence of, (or store of,) said Charles Dill, the same to be placed to my credit.

Toronto, Sept. 17th, 1853

£15 7s. Od., Cy.

W. H. RICHMOND.

Payable in Stock, with Interest.

Montreal, Nov. 5th, 1853.

Three days after date, I promise to pay Charles Dill, or order, fifteen pounds seven shillings, currency, in stock such as he may choose, at the valuation of three disinterested persons, judges of the value of such stock, delivered at my residence, with interest, for value received.

No. Due 18th Nov., 1853.

SAMUEL F. HILL

On Demand.

£27 10s. Od., Cy.

Toronto, Jany. 18th, 1854.

On demand, I promise to pay to the order of W. H. Richmond, at my place of residence, in this city, twenty-seven pounds ten shillings, currency, worth of superfine flour.

CHARLES DILL SMITH.