allowed to lie still or circulate as money beyond the reasonable expectation of the drawer. When the holder of a check gets it certified as good by a bank on which it is drawn, the drawer is released though the bank fail to pay. As between the maker and payee of a note the maker is allowed any defense that would be allowed in any other debt between the two. But as between the maker and indorsee, or other holder, no defense can be set up, except it be shown that the holder had knowledge, at the time of the note's coming into his possession, of a just ground of defense between the maker and payee. If, however, the note came into the possession of the holder, after it became due, the claim of the holder would be subject to all the equities in favor of the maker that existed at maturity, or that had arisen after maturity. On a promissory note the maker is principal, and is directly responsible to any bona fide holder. The indorsers are responsible in the order of their indorsements, that is, each one to all those who follow, on condition of their being duly notified of non-payment, as explained hereafter. The liability of those who indorse as guarantors is not so easily discharged by a failure to give prompt notice of non-payment. A bill of exchange involves no direct liability until presented for acceptance. If acceptance be refused by the drawee, the drawer immediately becomes principal, and is bound to redeem the draft from the holder without delay, though it be a time draft, and the time not yet expired. If the bill be accepted, the acceptor becomes principal, the same as the maker of a promissory note, in which case the drawer sustains practically the position of first indorser, in case of non-payment on the part of the acceptor. The liability of indorsers on bills is the same as of those on promissory notes. That liability, however, may be avoided in both cases by their writing over their indorsements "without recourse," or other words of equivalent signification, except so far as to warrant that the bill or note is genuine, that is, not forged or fictitious, a liability which attaches not only to all indorsers, but to all who negotiate the paper by delivery, as owners, or even as agents, unless that agency, with the name of the principal, be distinctly stated at the time of the transfer. Indorsers are also released from liability, if they are not duly notified of non-acceptance or non-payment, the paper having been duly presented. If a man lends his name and credit by making a note or accepting a bill of exchange for the accommodation of another party, it is called an accommodation paper. He thereby becomes liable to any bona fide holder, to the same extent as if he had received a full consideration, except to the person for whose accommodation the credit was given. But for his indemnity for payment he has a valid claim on the party accommodated. PRESENTMENT, PROTEST, AND NOTICE. ART. 130. The limits of this work will not allow the detail of all the particulars necessary to be observed by the holder of a bill or note, in making a proper demand for payment, and, in case of non-payment, in properly notifying the indorsers, so that they may not be released from liability. The importance of the subject demands the careful study of those who deal in negotiable paper, or who undertake the collection of it for others. Business men, unless thoroughly posted, had better intrust their collections with some responsible banker. A few brief rules only will be given. There should be no unnecessary delay in presenting for payment any paper payable on presentation, and for acceptance all time drafts (unless drawn "acceptance waived"), especially if the time of maturity is to be determined by the time of sight or presentment. When the time is definitely fixed by the date of the instrument or of the acceptance, it must be presented for payment on the exact day of maturity, as regulated by the law of the State where it is made payable. A protest on any other day would be of no avail. The paper itself must be presented by the holder personally to the acceptor or maker, or their authorized agent, at the place where it is made payable, during reasonable business hours. If no such person or agent is found with funds to meet it, the paper may be treated as dishonored. In case of nonacceptance or non-payment the paper should be protested, and the drawer and indorsers notified. "A protest is a solemn declaration on behalf of the holder, drawn up by an official person, against any loss to be sustained. by the non-acceptance or non-payment of a bill." This protest should be made by a notary public, who should also personally make due presentment or demand, and should on the same day, or, at furthest, the next day, send written notices of protest to the parties to be notified. If the residence of all the indorsers be not known, and all the notices be sent under one cover to the last indorser, he is allowed only one day to forward the notices to antecedent indorsers. So also for each of the others. Sundays and legally recognized holidays are excepted. Notices to parties residing in the same town must be delivered in person or by a messenger. Notices to all others must be sent by mail. If an indorser writes over his name "waiving demand and notice," a protest is not necessary to retain his liability. DAYS OF GRACE AND TIME OF MATURITY. ART. 131. It may be observed here that each of the United States makes its own laws in regard to negotiable paper, and probably the laws of no two States agree in all respects. The laws of that State are applied in which the paper is made payable, though it be drawn in another. For a valuable compend upon this whole subject the student is referred to a "Manual for Notaries Public," published by J. Smith Homans, New York. As a general law in the United States the day of maturity for all negotiable time-paper does not come till three days after the expiration of the time mentioned in the instrument, except when the time is limited by the expression "without grace." These days are called days of grace, but they give the maker no special advantage, for interest is allowed on those. days the same as others, and no presentment need be made till the last day of grace. If the last day of grace falls on Sunday, or any legally recognized holiday, the paper is payable on the preceding day. Bills drawn at sight are sometimes allowed grace and sometimes not. The statutes of different States, so far as they exist, do not agree, and in the absence of special statutes the custom is not uniform. In New York, commercial bills, drawn at sight, are payable without grace, and all paper in which either the maker, drawer, or drawee is a bank or banker, is also payable without grace. If the time be expressed in months, calendar months are always to be understood. For example, three months from January 31, without grace, would be April 30; including grace, May 3. If the time be expressed in days, the time of maturity may be found by taking the remaining number of days in the month of the date, and as many days of the following months separately as will equal the given number of days plus three. The number of days in the last month will be the date of the month on which the paper matures. For example, a note dated August 20, 1858, payable ninety days from date, would mature November 21, 1858. Solution.-11+30+31+21=93. Or, to the day of the date add the time of the note plus three, from which subtract consecutively the number of days of each following month, beginning with the month of the date, until the remainder be smaller than the number of days in the next month. The remainder will be the date of maturity. Solution.-20+93=113, and 113-31-30-31=21. Or, if the time be 30, 60, or 90 days, call each 30 days a calendar month, and correct by subtracting 1 for each month passed over containing 31 days, and adding 1 or 2, according as it is a leap year or not, if the last day of February be included. Thus, 90 days from January 10, 1856, would be, counting three calendar months, April 13, including grace. Now, from 13 subtract 1 for January and 1 for March, and add 1 for February, and we have April 12, for the result. The last rule is convenient for bank paper, which usually runs 30, 60, or 90 days. It is evident from the above rules that the day of the date should be excluded from the calculation. The following fact may be worth remembering by those who get "accommodations" at bank. A paper having 60 days to run will mature on the same day of the week as that on which it was made. Having 30 days to run, it = PROOF. 5-2 33 7 x 937 x 13+ 2 will mature 2 days earlier in the week, and having 90 days to run will mature 2 days later in the week. DISCOUNTING NOTES. ART. 132. In negotiating promissory notes and time-bills of exchange their estimated value depends upon three considerations, viz. 1st. The responsibility and promptness of the maker. 2d. The relative value of the currency, used in the purchase, compared with that of the payment of the obligation at maturity. 3d. The market rate of interest. The range of the first consideration is from A No. 1 to worthless. The range of the second, in the United States, is generally within 2%. |