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4.

JOINT AND SEVERAL NOTE. $250.25.

PHILADELPHIA, APRIL 9, 1874. Six months after date, we jointly and severally promise to pay Margaret Wilson, or order, Two Hundred and Fifty

Dollars with interest, at 7%, for value received, without defalcation.

SARAH E. HUDSON.

ANNA E. HARTMAN. What will be due at maturity ?

Ans. $259.30.

5. COMPANY NOTE PAYABLE AT A BANK. $575.

PHILADELPHIA, JUNE 11, 1874. Ninety days after date, we promise to pay to J. B. Lippincott & Co., or order, at the Philadelphia National Bank, Five Hundred and Seventy-five Dollars, for value received, without defalcalion.

SOWER, POTTS & Co. What is this note worth, Nov. 1, 1874? Ans. $579.79.

6. A 60-day note for $350, without interest, was paid in 90 days; what was the amount due? Ans. $351.571.

7. A 30-day note for $525, with interest from date, was paid in 80 days; what was the amount due? Ans. $532.

8. What is the difference in interest between a note for $500, given Jan. 1, 1875, due 2 months after date, and one given at the same date for the same amount, due 60 days after date?

Ans. $0.083 ANNUAL INTEREST. 640. Annual Interest is the simple interest of the principal and of each year's interest from the time of its accruing until settlement.

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

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.

Annual Interest differs from Compound Interest, since in Compound Interest each year's interest is added to the principal, and the sum forms a new principal for the succeeding year.

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.

OPERATION.

on

1. What is the amount due on a note of $500, at 6%, for 3 yr. 6 mo., interest payable annually?

SOLUTION.—The interest on $500 for one year is $30, and

$500X.06=$30, int. for 1 yr. for 3 yr. 6 mo. is $105; the first year's interest is on interest

$30 X 3 - $105, int. for 31 yr. 2 yr. 6 mo. giving an interest

$30 X.15= 4.50, int. on 1st int. of $4.50; the second year's

$30X.09 2.70, int. on 2d int. interest draws interest for 1 yr.

$30X.03 .90, int. on 3d int. 6 mo. amounting to $2.70; the

500.00, principal. third year's interest is

$613.10 interest 6 mo., drawing $0.90; adding the interest on the principal, the interest on each year's interest, and the principal, we have $613.10 as the amount due. Hence the

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 thix, added to the principal, will be the amount due.

NOTE.—The work may be shortened by calculating the interest for the sum of the times during which the different interests remain unpaid.

2. What is the interest due on a note for $750, dated Sept. 3, 1870, interest payable annually, if no payments are made until March 1, 1874 ?

Ans. $169.50. 3. How much is due Sept. 1, 1874, on a note for $720 dated May 13, 1870, interest payable annually at 7%, if the yearly interest has been regularly paid ? Ans. $735.54. 4. $875.00.

NEW YORK, MAY 9, 1870. For value received, I promise to pay R. T. Cornwell, Esq., or order, on demand, Eight Hundred and Seventy-five Dollars, interest payable annually.

J. WILLIS WESTLAKE. What was the amount of the note, Jan. 18, 1874, no payments having been made ?

Ans. $1123.90. 5. $1000.

TRENTON, Jan. 11, 1869. For value received, I promise to pay to the order of Charles Parker, on demand, without defalcation or discount, One Thousand Dollars, with interest annually.

SAMUEL DECOU. What was due on this note, March 17, 1873, if the interest was paid up for the first two years ? Ans. $1159.31.

PARTIAL PAYMENTS. 642. Partial Payments are payments in part of notes or other obligations bearing interest.

643. An Indorsement is an acknowledgment of a payment, written on the back of the obligation, stating the time and amount of the payment.

The term Indorsement is used in different business papers, in each case meaning a writing on the back, from the Latin dorsum, the back.

1. The writing of the name on the back of a check, draft, note, etc., is called a General Indorsement, or an indorsement in blank.

2. A Special Indorsement directs the obligation to be paid to some particular person or to his order.

3. An acknowledgment of the payments on a note, written on the back of it, is also an indorsement. The person holding the obligation signs his name to this statement as a receipt.

644. The Supreme Court of the United States, and nearly all the States, adopt the following rule for partial payments, called

THE UNITED STATES RULE. I. Find the amount of the principal to the time of the first payment; if the payment equals or exceeds the interest, subtract the payment from the amount and treat the remainder as a new principal.

II. If the payment is less than the interest, find the amount of the same principal to the time when the sum of the payments shall equal or exceed the interest due, and subtract the sum of the payments from the amount.

III. Proceed in the same manner with the remaining payments until the time of settlement.

Notes.-1. This rule is founded upon the decision of Chancellor Kent. The principle is, that neither interest por payment shall draw interest. It has been adopted by nearly all the States-New Hampshire, Vermont, and Connecticut being the principal exceptions.

2. Although the whole aim of legislative enactments and judicial decisions on the subject of interest, has been to disallow compound interest, yet this very rule really maintains the principle of compound interest in a most objectionable shape, for it makes interest due (not every year, as compound interest generally does) as often as a payment is made; by which it happens that the more prompt the debtor is in paying installments, the greater his loss. Thus, supposing the note to be for $5000 at 6 per cent., and that the debtor pays $25 every month, at the end of the year he still owes $5000. If he had invested the $25 every month, he would have had at the end of the year $308.25 towards the payment, while the interest on the debt would only be $300, leaving the debt $1991.75, instead of $5000.

1. $1000.

HARRISBURG, JAN. 1, 1870. Three years after date I promise to pay Joseph Hughes, or order, for value received, One Thousand Dollars, with interest from date, without defalcation.

WILLIAM WILSON. Indorsements: July 8, 1870, $200. Oct. 1, 1870, $10. Sept. 25, 1871,

$100. March 18, 1872, $400. What was due Jan. 1, 1873?

OPERATION.

Principal, or face of note,

$1000 00 Interest to 1st payment, 6 mo. 7 da.,

31 17 Amount due July 8, 1870,

1031 17 Amount to be deducted,

200 00 Balance due after 1st payment,

831 17 Interest on balance to second payment, $11.50. The payment being less, is not deducted. Interest from 1st payment to 3d payment,

60 54 Amount due Sept. 25, 1871,

891 71 Sum of second and third payments to be deducted,

110 00 Balance due after third payment,

781 71 Interest on balance to fourth payment,

22 54 Amount due March 18, 1872,

804 25 Amount to be deducted,

400 00 Balance due after fourth payment,

404 25 Interest from March 18, 1872, to Jan. 1, 1873,

19 07 Balance due on settlement, Jan. 1, 1873,

423 32 2. $5600.

PHILADELPHIA, JAN. 11, 1870. For value received, on demand, I promise to pay James Jones, or order, Fire Thousand Six Hundred Dollars, with interest, without defalcation.

JOHN SMITH. Indorsements : May 19, 1871, $500; Sept. 5, 1871, $200; Jan. 1,

1872, $300; April 17, 1872, $150. What is due Jan. 11, 1873 ?

Ans. $5060.54. 3. $2000.

NEW YORK, AUG. 9, 1872. For value received, sixty days after date, I promise to pay William B. Dana & Co., Two Thousand Dollars.

PHILIP BUTLER. Indorsements : Dec. 7, 1872, $50; March 11, 1873, $35; July 25, 1873,

$150 ; Oct. 12, 1873, $200; Jan. 1, 1874, $500. What is due March 25, 1874 ?

Ans. $1248.47. 4. $3870.

PHILADELPHIA, OCT. 9, 1873. Thirty days after date, for value received, I promise to

pay F. Ibach, or order, without defalcation, Three Thousand Eight Hundred and Seventy Dollars, with interest at 5%.

S. C. DELAP. Indorsements : Jan. 1, 1874, $500; June 11, 1874, $750; Oct. 9, 1874,

$1000; Jan. 1, 1875, $250; April 10, 1875, $25; June

9, 1875, $250. What is the amount due Dec. 9, 1875? Ans. $1347.13. 5. $ 4000.

MILLERSVILLE, PA., JULY 11, 1870. Three months after date, I promise to pay Annie Lyle, or order, for value received, Four Thousand Dollars, with. out defalcation.

JANE E. LEONARD, Indorsements: Dec. 1, 1870; $25; March 10, 1871, $50; July 14, 1871,

$180; Jan. 1, 1872, $200; April 25, 1872, $450; Sept.

9, 1872, $75; Jan. 1, 1873, $300. The note was paid Sept. 9, 1873; what was then due?

Ans. $3357.09.

MERCHANTS RULE. 645. Business men generally settle notes and interest accounts, payable within a year, by the following

Rule.-I. Find the amount of the principal till the time of settlement, and also the amount of each payment till the time of settlement.

II. Subtract the amount of the payments from the amount of the principal; the remainder will be the balance due.

NOTES.–1. In some States merchants apply this rule to notes for longer periods by reckoning the interest for 1 year, and subtracting from the amount the amounts of the payments made during the year, and taking this balance for a new principal.

2. As the periods in these notes are all short, the interest should be calculated for the number of days.

1. A note was given for $5760, Sept. 20, 1869. Indorsements: Nov. 30, $200 ; Feb. 2, 1870, $600; April 9, 1870, $350. What was due Sept. 20,1870 ?

Ans. $4913.23. 2. A note was given for $2500, April 1, 1873. Indorsements: June 11, $200; July 5, $100; Sept. 9, $450.

What is due 6 mo. from date, at 7%? Ans. $1830.96.

3. A note was given for $1750, May 11, 1870. Indorsements: July 1, $100: Aug. 12, $45 ; Sept. 30, $60; Jan. 19,

1871, $250; March 10, $150. What was due April 1, 1871, at 8% ? Ans. $1255.83.

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