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6. Transfer. Since forged paper is in reality nothing but a piece of waste paper, one who sells it to another in reality sells nothing except so far as it is genuine, even though both believe it genuine as to the whole.* Therefore one who buys forged paper may recover what he loses by it from the one from whom he buys it, because it is money paid under a mistake. Thus if there are a series of real indorsers upon a piece of commercial paper which afterwards turns out to be forged, they are each responsible to each other in the regular order (p. 132) as if it were not forged, and the one who took it from the forger must bear the loss unless he can recover its amount from the forger. Therefore an indorsement may be said to guarantee the genuineness of the paper.

Even

7. Raising Amount.-Paper is sometimes forged by erasing the amount named in a genuine instrument and putting in a larger amount. It is then perfectly valid as to the original sum, but wholly void as to the excess. though it is accepted or certified after being raised, the acceptance or certification does not make the acceptor or the bank responsible for any more than the original sum. And if the excess should be paid it could be recovered. The practical business suggestion to be gained from all these rules about commercial paper is that in buying it, unless we are absolutely certain that it is genuine and a valid contract in every respect, we should be careful about those from whom we buy it, so as to have some one responsible to fall back upon if it turns out invalid.

Note to Teacher.-In all cases of dishonored or forged commercial paper there is some one who must sustain the loss finally, some one who is himself responsible, but who has no one else to look Have the scholar to from whom he can make a collection, because the one responsible to him has failed, or has escaped.

point out in different cases who must bear the loss.

*On the same principle a payment in counterfeit money is no pay

ment

CHAPTER XXVII.

MONEY.

1. Definition. Money means those articles which are received and pass from hand to hand among all the people as the representative of so much value. In business it is often called cash. All civilized nations have some form of money, and generally it consists either of coin made by the government, or paper money issued or recognized as money by the government. Throughout the United States the money is now substantially uniform, any of it being received as money in every State; but this was not always so.

2. Two Kinds.-The money of the United States is of two kinds, (1) coin, and (2) paper money (often called currency). The coin is chiefly of two kinds, gold and silver. The paper money is chiefly of two kinds, United States Notes* and National Bank Bills. There are besides the small copper and nickel coins.

3. Character.-Coin has a value of its own, an intrinsic value as metal, irrespective of its being stamped as coin. But paper money has practically no value, except for what is written on its face. Thus the United States Notes read as follows: "The United States will pay the bearer ten dollars." A bank bill reads as follows: "The . Bank, of the City of New York, will pay ten dollars to bearer on demand." Each is signed by the Each is signed by the proper officers. Paper money, therefore, is merely a promise, a negotiable demand note. In one case the National Government promises, and in the other the particular bank. It only passes current at the same value as the coin, because all believe they can obtain payment in coin whenever they wish.

* Popularly called greenbacks.-Gold and silver are the safest forms of money. Paper money is convenient, but dangerous, unless its amount is carefully limited.

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The 4. Legal Tender IS THAT KIND OF MONEY WHICH BY LAW CAN BE OFFERED IN PAYMENT OF A DEBT. creditor may if he chooses take in payment not only any kind of money, but also any other article, such as a draft, or goods. Checks are very commonly used for that purpose. But, if it be insisted on, the person bound to pay In this must provide legal tender. It is so called because it is what may be legally tendered (i.e., offered) in payment. 5. What is. Not all money is legal tender. * AND THE UNITED STATES country now THE LEGAL TENDER CONSISTS SUBSTANTIALLY OF THE UNITED STATES COIN NOTES. Thus all our money is legal tender except the bank bills, but that distinction is now of little importance, for the reason that the payment of the National Bank Bills is so well secured that they are as readily accepted by all people as any other money.

4. UNITED STATES NOTES,

Legal Tender.

5. NATIONAL BANK BILLS..

Not Legal Tender.

*Except the trade-dollar, which is not legal tender. The silver coins of less than $1.00 are legal tender up to the amount of $10. The copper and nickel pieces are legal tender up to the amount of 25 cents.

Commercial Paper.

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SUMMARY OF LEADING RULES OF COMMERCIAL PAPER.

I. NOTES.

1. 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.

2. There are TWO KINDS of notes, those payable (1) to order, and (2) to bearer.

3. A note payable at a future time is not DUE until the third day after its specified day of payment.

4. In the hands of the ORIGINAL HOLDER of a note it is a binding contract provided it has all the requisites of a binding contract, but not otherwise.

5. NEGOTIABILITY in commercial paper is the quality of being enforceable by one receiving it, though not enforceable by the one from whom it is received.

6. THE CIRCUMSTANCES which, though rendering negotiable paper void in the hands of one party, yet do not affect the rights of others receiving it through him are in general those which do not appear on the instrument itself.

7. The FIVE THINGS necessary in the FORM of commercial paper to make it negotiable are, (1) that the date of payment be certain to come, (2) that it have one of the two words order or bearer, (3) that the amount be specified and certain, (4) that it be payable in money only, and (5) that it be an unconditional promise.

8. Paper payable to BEARER may be transferred by delivery alone.

9. Paper payable to ORDER must be indorsed to be trans

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10. Negotiable paper loses its negotiability at MATURITY. 11. One who receives commercial paper GIVING NO MONEY or property in exchange for it, gets no better right to enforce it than the one from whom he receives it had.

12. One who receives commercial paper KNOWING at the time of any invalidating defect gets no better right to enforce it than the one from whom he receives it had (except accommodation paper).

II. DRAFTS AND BILLS OF EXCHANGE.

1. A DRAFT IS a written order, signed by one person, ordering another person, to whom it is directed, to pay a certain sum of money, at a certain time, to a third person (named), or to his order, or to the bearer.

2. A draft payable at a future time is not DUE until the third day after its specified day of payment.

3. The DRAWER'S AGREEMENT is to pay the draft if the person upon whom it is drawn does not.

4. The person drawn upon is under no obligation to the holder of a draft UNLESS HE ACCEPTS it.

5. AFTER ACCEPTANCE the person drawn upon, i.e., the acceptor, is the principal debtor, and responsible to all parties.

6. Drafts are NEGOTIABLE both before and after acceptance.

7. ALL THE PRINCIPLES of negotiability apply to drafts, as to notes.

8. A contract is governed by the LAW OF THE STATE in which it is made.