104 13. What is delivery in law? Is there any obligation upon a mer chant to send goods to the buyer when he does not agree to ? 14. Describe the right of stoppage. 15. What is warranty of ownership? When does it exist? 16. What is warranty of quality? When does it exist? 17. What is the implied warranty in a sale by sample? 18. What is a commission merchant? Who is his principal? Who owns the goods, the commission merchant or the principal? 19. State the general duties of a commission merchant to his prin cipal. 20. What powers, in general, has he? 21. Where the custom of the trade and his special instructions differ, which must he follow? 22. When is a commission merchant personally responsible to his principal for what the goods are sold for? 23. How is a commission merchant paid for his services? If he has sold the goods, but the buyer fails to pay, is he entitled to his commission? 24. What are "advances," made by a commission merchant? 25. When may a commission merchant keep the goods from one who has bought them of him? May he ever keep them from his principal if the latter demands them? lien"? To what property of the principal's does 26. What is his it extend? What does it secure? 27. What is the position of a commission merchant who does not reveal his principal? 28. Define broker. Name the different kinds. What is the differ ence between a commission merchant and a merchandise broker? DIVISION II. COMMERCIAL PAPER. CHAPTER XXII. NOTES. a.-Description of Notes. 1. Commercial Paper consists chiefly of three kinds, notes, drafts and checks. It is so called because it is so extensively used for the purposes of business; commerce meaning in one sense all kinds of traffic, on land as well as by sea. Many of the rules stated in this chapter, especially those which relate to negotiability (sec. 8 to 27) are common to all kinds of commercial paper. 2. A Note IS A WRITTEN PROMISE, SIGNED BY THE PERSON PROMISING, TO PAY A CERTAIN SUM OF MONEY, AT A CERTAIN TIME, TO A PERSON NAMED, OR TO HIS ORDer, or TO THE BEARER. It is thus a written contract. The following is a common form: * $200. New York, Sept. 2, 1881. Two months after date we promise to pay to the order of James S. Gay Two Hundred Dollars. Value received. Archibald Brothers. *The word note, as we use it in this book, means the same as promissory note. 106 The person promising is called the maker, and the person named in the body of the note is called the payee. Thus in the above, the firm of Archibald Brothers are the makers, and Fay is the payee. The words value received are not generally necessary. 3. Use. Notes are of very common use, and of great utility in business. Their use is, as clear and certain evidence of debt. In modern times a large part of trade is carried on on credit, i.e., a tradesman, instead of paying for his stock when he buys, promises to pay at a certain future time. Now that debt, that promise, whether oral or written, is itself property, and may be transferred from one to another, but in order for that, there must be distinct and unmistakable evidence of its existence, such as any one could rely upon. A note, being the written and unconditional admission of the debtor himself, is such evidence. Thus notes facilitate the use of credit, which has been a mighty factor in the extension of commerce. 4. Two Kinds.-At pp. 275-277 will be found the most common forms of notes. The most important particular in which they differ in kind is with regard to the payee named, and in this respect there are four kinds: those payable, (a) to a particular person or his order, (b) to the maker himself or his order,* (c) to a particular person or bearer, and (d) to the bearer. (a) and (b) are substantially the same, for when the maker makes a note in the form of (b) he at the same time indorses it and thus makes it payable either to a particular person or to the bearer as he chooses (sec. 23). (c) and (d) are also the same, for in each case the promise is to pay any one who may "bear," i.e., "To the order of A" means exactly the same as "to A or order," and both mean that the maker will pay it to whomsoever A orders him to pay it. own or hold the The name of the note when it is presented for payment. person in (c) has no effect whatever. Therefore, THERE ARE TWO KINDS OF NOTES, THOSE PAYABLE (1) TO ORDER, AND (2) TO BEARER. So also, there are the same two kinds of drafts or checks. 5. When Due.—The day of payment is often called the day of maturity. A NOTE PAYABLE AT A FUTURE TIME IS NOT DUE UNTIL THE THIRD DAY AFTER ITS SPECIFIED DAY OF PAYMENT. That is, an old and universal custom extends the time three days. These are called days of grace. If payable a number of months from date it becomes due the third day after the corresponding day in the proper month. Thus a note, dated Jan. 1 and payable ten days from date, is due Jan. 14; the note in sec. 2 (p. 105) is due Nov. 5. Whenever the last day of grace falls upon a Sunday or a legal holiday,* the note is due the day before. A note payable on demand is due immediately and has no days of grace. One specifying no time of payment is due on demand.† Note to Teacher.-It is important to know the exact day a note is due. Draw up different forms, and ask the scholar when they become due. b.-Negotiability. 6. Maker's Responsibility.-Notes are very frequently transferred by the payees to others. Many are made to be transferred. There are therefore two classes of persons to whom a maker may become responsible, (1) the person originally receiving the note, and (2) the persons to whom * The legal holidays are in general Jan. 1, Feb. 22, July 4, Dec. 25, and Thanksgiving Day, with some others in different States. + But parties may exclude days of grace by adding to the note the words "without grace." See p. 110, sec. 11. 108 it is subsequently transferred. These often stand in different positions with regard to the note, and therefore the maker may sometimes be responsible to one party when he would not be to another. When it is transferred, those transferring it themselves also often assume responsibility to pay it. The contracts of subsequent parties will be treated in a later chapter (Chap. XXV.). This chapter relates simply to the maker's contract. 7. Not Transferred.-If a note remains the property of the payee, or in a bearer note of the person to whom it is originally given, until it becomes due, those two, the maker and himself, are the only ones concerned in the whole transaction, and each has full knowledge of it. Therefore there is no reason why the contract should not follow the rules of other contracts, and it does. IN THE HANDS OF THE ORIGINAL HOLDER OF A NOTE IT IS A BINDING CONTRACT is but a memorandum or evidence of the debt. 8. But when Transferred to a third party, this person may not know all the details of the original transaction. He sees only the note, but does not know whether it represents a legal, real, and honest debt or not. It may be paid for aught he knows. Therefore the law, in order to protect him, and thus allow notes to be readily transferred, changes its character in his hands, as it were, by giving him the It becomes in his hands right to enforce it in any event. more than evidence; it becomes property. And it keeps this character in the hands of all to whom it is successively |