PROMISSORY NOTES

315. A promissory note is a written promise made by a party called the maker, to pay to a certain party, called the payee, or to his order, or to bearer, a specified sum of money at a certain time.

316. The face of a promissory note is the amount named in the note.

In the above note G. F. Wise is the maker, R. E. Curtin is the payee, and $50.25 is the face.

317. If the maker of a promissory note is unable to write, he may sign it by making his mark and having it witnessed, after his name has been written. Thus, if G. F. Wise cannot write his own name, he may become the maker by having the note executed thus:

318. An individual note is a note signed by one person. 319. A joint and several note is a note signed by two or more persons, each making himself responsible for the payment thereof.

If a joint and several note is written "I promise to pay," or "We or either of us promise to pay," and signed by two or more persons, each is responsible for the payment thereof; but if it. is written "We jointly promise to pay," or "We promise to pay," and signed by two or more persons, they are jointly responsible for the payment thereof. This form of note is commonly used at public sales, where goods are sold on credit and settled for by notes payable at a bank at the end of the credit period. Satisfactory security is usually demanded of the purchaser, which is obtained by requiring the security to join with the purchaser in making the note. The security may write after his name "surety." The note is then a principal and surety note. This form of note may also be used by joint partners in a transaction when no security is required.

320. A collateral note is used when a person borrows money and deposits as security with the holder some valuable collateral, as government bonds, certificates of stock, or bonds of some reliable corporation. The holder is authorized to sell the collateral in case the maker fails to pay the note when it becomes due.

321. An accommodation note is chiefly used in borrowing money from a bank.

322. Banks generally require from a borrower, besides his own name as the maker of a note, the name of some responsible party as security. This is usually obtained by making the note payable to the security and having him indorse it. The phrase "Credit the Drawer," subscribed to by the security, is not essential to the legality of an accommodation note, but it shows definitely the relation of the maker to the security.

Thus, if G. L. Smith desires to borrow one hundred dollars from the Farmers' National Bank and have R. P. Miller for his security, they may write the note as shown in Section 321, and R. P. Miller will indorse it. G. L. Smith may then present the note at bank and, after indorsing it, receive the face less the interest charged by the bank.

Important Facts concerning Promissory Notes

323. A note should be dated; that is, it should state the place where, and the time when, given.

324. A note may be made payable on demand, a certain number of days after date, a certain number of months after date, or upon a certain date.

1. The day on which a note becomes due is called the day of maturity.

2. A note payable on demand is due whenever the holder demands payment.

3. A note payable a certain number of days after date is due at the expiration of that number of days, not counting the date.

Thus, a note dated March 1 payable in 60 days is due April 30. 4. A note payable a certain number of months after date is due so many calendar months after date.

Thus, a note dated April 30 payable in 6 months is due October 30; a note dated July 31 payable in 3 months is due October 31.

5. In some states 3 days, called days of grace, are allowed for the payment of a note after the expiration of the time specified in the

note.

325. A note may be made payable at a certain place.

1. If a note is made payable at a particular place, as at a certain bank, it should be presented at that place for payment, when due, during business hours.

2. When no place of payment is designated in a note, it should be presented for payment at the maker's place of business during business hours or at his residence.

326. A promissory note may be made payable to the order of the payee, to the payee or bearer, or to the payee only. It is indorsed or otherwise transferred in the same manner as is a check.

327. A note may be written so as to include the payment of interest.

1. When no rate is mentioned in an interest-bearing note, it bears interest at the legal rate of the state in which it is payable.

2. When a non-interest-bearing note is not paid when due, it will bear interest at the legal rate from the day it is due to the day it is

3. Some interest-bearing notes have a condition stated in them that, if not paid when due, they will thereafter bear a higher rate of interest than the one named in the main note; when no such condition is stated, they will continue to bear interest at the original rate until paid.

Exercise 84

1. When is the note, page 240, due? Who pays this note when it is due? Where will the note be paid? Who holds the note after it has been paid?

2. Name the maker and the payee of the note, page 242. How long does this note run before it is due? Who is expected to pay the note when it is due ? Who holds the note after it has been paid?

3. When is a note due that is dated December 31, 1914, payable in 90 days?

4. When is a note due that is dated December 31, 1913, payable in 2 months?

5. Write a promissory note for $20 with yourself as maker and George B. Smith as the payee. Date the note September 30 of the current year, make it payable in 60 days, and find when it is due.

6. If R. E. Curtin wishes to transfer the note on page 240 to W. J. Davis, in what ways may he write the indorsement?

7. Suppose you buy a horse from A. S. Harkness for $150 payable in 9 months. Write the joint and several note that you could give him in payment if B. J. French