141. Specified Date of Payment. Like all written contracts, negotiable instruments should be dated, but this is not absolutely necessary. They should, however, state the time when due, or at least give the facts by which this can be determined readily. This is for two reasons: (1) That the holder may know when to demand payment, and (2) that the time may be fixed when the statute of limitations begins to run, which is always the date on which the note became due. The common expressions in this connection are "on demand," "at sight, ...days after sight," and " days from date," and these are sufficiently definite. An instrument may be antedated or postdated, provided this is not done for an illegal purpose, and when the date is given in this manner, even though it is not the actual date on which the instrument was made, it is the one used in determining the date when the instrument will become due, called its date of maturity. If the date is left blank, any holder has the right to insert the true date on which the instrument was made; and should he insert an improper date, the parties will still be bound by the date so inserted when the instrument has, by indorsement or delivery, passed into the hands of a holder in due course. If the date is left blank by all the parties the time will be computed from the date on which the instrument was actually made. 142. Delivery. In addition to the above essentials of the paper, itself, it must be delivered before it has effect. If an otherwise valid instrument gets into circulation without the consent and through no fault of the maker, the maker will not be liable on it. EXAMPLE Ames writes out a note payable to bearer which he intends to deliver to Bates. Call, who is standing near by, seizes the note as Ames writes his name on it, and runs out, transferring it to Smith, an innocent bona fide holder. Smith cannot enforce the note against Ames, because Ames never delivered it. The qualities so far discussed are essential to the validity of all forms of negotiable paper. In the next three chapters the three forms of negotiable instruments commonly used in business, are described and discussed. These, as previously stated, are drafts, checks, and notes. COMPANY REVIEW QUESTIONS 1. Inspect the following promissory note: $11005 Jersey City. N. Three months after date wr_promise to pay to the order of N Swift 60. Dollars at First National Bank of Jersey City, NJ Value received. We 9. Wallis this. No. 269 Due Apr. 20, 1916. George T. Smith Treas When this note was not paid H. Swift and Company brought suit against the Wallis Iron Company. Could they recover the $1100 from the Wallis Iron Company? Could they have recovered this amount from Wallis and Smith personally? Why? 2. Inspect the following promissory note: at when he is 21 years of age, with interest from date. Value received. 4. Inspect the following instrument: RUTLAND AND BURLINGTON RAILROAD COMPANY No. 253 $1000.00 BOSTON, MASS., Apr. 1, 1850. In four years from date, for value received, the Rutland and Burlington Railroad Company promises to pay in Boston, to Messrs. W. S. & D. W. Shuler, or order, $1000, with interest thereon, or at its option to transfer to the said W. S. & D. W. Shuler ten shares of capital stock in this company of the par value of $100 each. RUTLAND AND BURLINGTON RAILROAD COMPANY, Is this a negotiable instrument? Why? 5. Mary Brown contracts to work for Mrs. Smith as a domestic for $5.00 a week. Mrs. Smith sells her right to Mary's services to Mrs. Jones for $20.00. Can Mrs. Jones compel Mary to work for her at the salary agreed upon by Mrs. Smith? Why? 6. Ames and Bates were partners in a hardware business. Ames bought Bates' interest in the business for $5000, Bates agreeing never again to engage in the hardware business. Within a month after the dissolution Bates had again started in the hardware business in the same city. What could Ames do about it? Why? 7. On June 15, 1915, Ames loaned Bates $200.00 in cash in the presence of Call. A month later, Bates and Call were both killed in a train wreck, Ames sued the estate of Bates for $200. Was he allowed to recover? Why? (I. Parties II. Forms CHAPTER XIV DRAFTS a. Drawer (1. Original b. Drawee-Acceptor c. Payee a. Indorser 2. Subsequent b. Transferrer without Indorsement (1. Payable on Demand 2. Payable at Sight 3. Payable after Sight, or Time 143. Introduction. The most common kinds of negotiable instruments are the draft, or bill of exchange, the note, and the check. The oldest of these is the draft, and it was the first one to be recognized by the law courts as negotiable. Drafts were originally called bills of exchange, a name derived from the French billet de change, and were first used to avoid the dangers in sending actual money a long distance. EXAMPLES 1. Suppose A, in Havana, Cuba, owes B, in Chicago, five thousand dollars. C, who is about to go to Havana from Chicago, pays B five thousand dollars, and receives from B a draft which entitles him, on reaching Havana, to receive five thousand dollars from A. All the parties are accommodated by this arrangement, for A does not have to risk his money by sending it to B Chicago, B gets his money without danger of loss, and C travels to Havana without the risk of being robbed en route. 2. Ames, of Chicago, owes Bates, of New York. Bates draws on Ames, naming a New York bank as payee. The New York bank sends the draft to a Chicago bank, which collects from Ames and credits the New York bank, which then pays Bates. Ames Bates Chicago Bank N. Y. Bank 144. A Draft is an unconditional order in writing, signed by the person giving it, directing a second person to pay to a third person, or order, or bearer, a certain sum of money on demand, or at a fixed future time. A draft drawn on a person in another country, or another state in the Union, is called a foreign bill of exchange, while if it is drawn on a person in the same state, it is called an inland bill of exchange. 145. Parties to a Draft. There are three original parties to a draft, and there may be any number of subsequent parties. The person who signs the draft is the drawer; the one to whom it is addressed and who is asked to pay it, is the drawee; and the one to whom it is payable is the payee. If the draft is accepted by the drawee (i.e., he agrees to pay it), he is then called the acceptor. The subsequent parties to a draft are those to whom it is passed either by indorsement and delivery or by delivery without endorsement, after the first delivery. EXAMPLE In the above form, Robbins is the drawer, Young the drawee, and Parker the payee. The substance of it is that Robbins |