In the above bill John Wanamaker & Company are the drawers, The Empire Brass Company is the payee, and William Duval is the drawee. When the bill is presented to William Duval and he signifies his intention to accept by writing across the face of the bill "accepted Oct. 3, 1910, Wm. Duval," the bill becomes an accepted bill and William Duval becomes the acceptor. 3. In the days of sailing vessels much time was lost in sending bills of exchange from country to country and if anything happened to the vessel carrying a bill months might be consumed in verifying the loss of the instrument and in forwarding and receiving a substitute. To avoid this difficulty bills of exchange in sets of three or four were devised. Each bill of the set contains a condition that that particular bill shall be payable if all the others remain unpaid, but not otherwise. 4. Checks are bills of exchange drawn on banks and are payable on demand. Below is a check, drawn by the drawer Stewart A. Norell on the United States Mortgage & Trust Company, to the payee, The Accountancy Publishing Company: No. 780 United States Mortgage & Trust Company, 55 Cedar Street. New York, February 1, 1911. Pay to the order of The Accountancy Publishing Co. ten dollars. $10. STEWART A. NORELL. 5. A certificate of deposit is a written acknowledgment by a bank or banker of the receipt of a sum of money of deposit, which the bank or banker promises to pay to the depositor or his order, or to some person or to his order. 6. A cashier's check or draft is a bill of exchange payable on demand and drawn on one bank by another bank. The importance of these instruments, whereby a country bank is able to furnish city exchange will be evident to those readers who are familiar with Volume IX of MODERN BUSINESS. Some New York banks that are not members of the New York Clearing House furnish cashier's checks upon clearing house banks. 7. When the word "bond" is mentioned people immediately think of the bond given to accompany an ordinary real estate mortgage or they think of the bonds given by large corporations, whether they be railroads, industrial companies or municipalities or other public corporations.1 A bond is a written instrument under seal whereby the person or corporation executing and issuing it is obligated to pay a certain sum of money or do a certain act at a certain time, or on the happening of a certain contingency. Most bonds of corporations and municipalities are partially negotiable, but the negotiable instruments law provides that the holder may make them non-negotiable by indorsing on the instrument a subscribed statement that the bond is his property.2 270. Checks as negotiable instruments.-Checks, as has been said, are bills of exchange drawn on banks and payable on demand. They are, in the main, governed by the same rules that apply to demand bills of exchange. A check must be presented for payment within 1 We do not consider here the subject of indemnity bonds, such as administration bonds and bonds given on appeal or in attachment suits. 2 For a discussion of the various kinds of corporate bonds see CORPORATION FINANCE in the MODERN BUSINESS SERIES, sec. 77. a reasonable time after its issue, or the drawer will be discharged from liability thereon to the extent of the loss caused by the delay. What is meant by a reasonable time in this connection is not to be gathered from rules applicable to the presentment of a bill. The time for presentment of a check is much shorter and is not prolonged by negotiation. If the holder and the bank are in the same place, the check should be presented before the close of banking hours on the next business day following the day of issue. If the holder resides in a different place, the check should be forwarded not later than the day following its receipt to the drawee bank. EXAMPLE 283. A draws a check payable to C who endorses to D 500 miles away. D endorses to X in the same place. All the parties act promptly except X who deposits the check three days after its receipt in a local bank, which forwards it to the drawee bank. The latter in the meantime has failed and afterwards declares dividends amounting to 50 per cent only. X will lose 50 per cent. He cannot collect the remainder from the endorsers because of the rule that a person secondarily liable will be discharged by the discharge of a prior party. 271. Certification of checks.-A check certified by the drawer before delivery to the payee is in all respects similar to an accepted bill of exchange. If the certification is procured by the holder, the drawer and indorsees are discharged from further liability. The bank for its own protection usually charges up the check to the depositor when certified. The drawer cannot subsequently draw against this fund and it would be unjust, therefore, that this fund should be left in the bank at the drawer's risk and the latter remain liable for the bank's promise to pay. 272. Banks' liability on checks.-Banks promise to honor the drafts of their depositors if the latter have sufficient funds on deposit. There is no privity between the bank and its depositors' creditors, and the latter, therefore, have no right of action against the bank unless the check has been certified. In Illinois and Nebraska, however, a check operates as an assignment of the amount expressed in it, and the bank, therefore, is directly liable to the holder if it fails to honor the check of a depositor who has sufficient funds in the bank. In any case, the dishonor of a check damages the credit of the drawer, and if the dishonor be wrongful, that is, if sufficient funds are on deposit to meet it, the depositor has a right of action against the bank for the impairment of his business reputation. XII-15 CHAPTER XVII REQUIREMENTS AS TO FORM 273. Writing signed by drawer or maker.—A negotiable instrument must be in writing, but the writing may be printed or may be in pencil. When there is a conflict between the written and the printed provisions, the former prevail. Only the person who signs is liable. For that reason a forged instrument does not bind the person whose name is signed, although in some jurisdictions the signature may be ratified even orally. An agent may bind his principal, but care is required in the form of the signature to prevent the agent from being personally bound. EXAMPLES 284. "I, J. S., promise to pay A. B. $500 at sight" is good. The signature need not be subscribed. 285. A, who was unable to sign his name, signed a note with the figures, "1, 2, 3." This was held a sufficient signature. 286. At the left side of a note was printed the words "Ridgewood Ice Company." The note was signed as follows: "John Clark, Prest." "E. H. Close, Treas." and Close were liable as individuals. porate signature is as follows. It was held that Clark The correct form of cor. Ridgewood Ice Company, by JOHN CLARK, Prest. Countersigned by E. H. CLOSE, as Treas. |