This certificate, being executed by an official of the state, is evidence that the proper presentment was made, and if any question is raised about the presentment it may be shown to the court, making it unnecessary to produce further witnesses. Notice of Protest Notice of Protest of Nota. State of Illinois, 220. Notice of Dishonor. The holder of dishonored paper, whether he protests the paper or not,* must always send notice of the dishonor to all prior indorsers whom he wishes to hold, the notice being a statement of the fact of dishonor and of an intention to hold liable the party notified. The notice should be presented or mailed within twenty-four hours after the dishonor. This promptness is necessary in order to give the parties secondarily liable sufficient opportunity to protect themselves by appropriate steps against the party primarily liable, who dishonored the instrument, and against other parties secondarily liable. Dated Chicago Jan 30 2916 Jane 30, 1915 Bartlett Endorsed by Samuel H. Phillips harrykins, & M. J. Morris Being this day due and unpaid, and by me PROTESTED for non-payment, I hereby notify you that the payment thereof has been duly demanded, and that the holders look to you for payment. damages, interest and costs. Done at the request of F. Cadwell, the holdes E. J. Hoskins 3. Samuel #Phillips; Ottawa All When a notary is employed to protest a note or draft, he usually also mails notices of dishonor, and his fees, which are specified by law, are added to the amount to be paid by the indorser, drawer, or maker. 221. If Notice be Waived by a party secondarily liable, as described in Sec. 216, neither protest nor notice is required to charge him with liability. *Notice of dishonor is always required, to hold the parties secondarily liable. (Protest is always desirable, but is not required by law in case of inland bills, though it is required in case of foreign bills.) REVIEW QUESTIONS 1. Inspect the following draft: Baston Mass, July. after sight Fundred ސއ 1915, Pay to The Dollars Take reived, and charge the same to account of To Charles Farmworth James Gray No Cambridge, Mass. This draft was presented for payment by Morton to Farnsworth at his home in Cambridge, at nine o'clock in the evening of July 12, and Farnsworth, who had retired for the night, put his head out of an upper story window and told Morton to go home and keep still. Morton immediately sent notice of dishonor to Gray, who claimed to have been discharged because of an improper presentment. Was Gray right? Why? 2. The Victoria Hotel Company was an indorser of a draft which had been dishonored. The holder sent a notice of dishonor to the hotel by a messenger boy, who left the notice at the cashier's window, but failed to call the attention of anyone to it. Was this notice sufficient so that the hotel company could be held liable to pay the instrument as an indorser? Why? 3. A gives his note to B payable in wheat. C innocently purchases the note from B for value before maturity, and in the usual course of business, but at maturity A refuses payment, claiming that the paper was secured without consideration. Can C collect it from A? 4. A secures B's note without consideration and indorses it before maturity and for value to C, who has knowledge of the lack of consideration. Can C collect it from B? 5. In the above case, suppose C purchased the paper innocently before maturity and for value, and then transferred it to D, who had knowledge of the lack of consideration between A and B. Could D collect it from B? 6. What would be your answer to No. 5, provided the sale from C to D was after maturity? 7. A playfully writes his name on a blank paper and hands it to B. B fills out a promissory note above it and at once sells it to C, who knows nothing of the deception practiced by B. Can C collect it from A? 8. A owing B $100 writes and signs a promissory note for that amount, payable to B or bearer, intending to deliver it next day. A locks the paper in his safe, but in the night a burglar breaks open the safe, gets the note and sells it to C, an innocent purchaser, for value and before maturity. C, after maturity, sells it to D. Could any of these parties collect the note from A? If so, which ones? 9. A sells a bill of goods to B for $1,000, for which B indorses to A C's note, payable at the First National Bank of Chicago. At maturity C is insolvent. What steps must A take to hold B? 10. Suppose that A draws a draft on B, in favor of C; but B has no funds in hand belonging to A. What steps must C take to charge A? 11. Suppose a note reads: "I, J. S. Lee, president of the E. & M. Ry. Co., promise to pay, etc.," and is signed J. S. Lee, Pres. E. & M. Ry. Co., whose note is it? 12. Write a negotiable promissory note for $250, at three months, and state the day of the month when the same will mature. Also a draft for same amount and time, and give the technical names of all the parties. 13. A makes his note to B's order, and before delivery C signs his name on the back. B indorses it over to D. What is C's liability to B? to D? 14. A forges the name of B as drawer of a draft payable to himself, at ten days' sight. The drawee accepts and the bill passes by indorsement to C, an innocent holder, for value, and before maturity. What are the rights if any, of each holder against the acceptor? What rights has the acceptor against B? 15. A note payable "to order" was indorsed by A to B, "without recourse." B indorses in full to C. The note proved to be a forgery, and the maker refused payment. Can C collect from B? If so what steps must he take? Can he collect from A? Why? 16. A gives his negotiable note to B for $475. B alters the amount so that it calls for $575, and indorses the paper in full to C for value, before maturity, C knowing nothing of the alteration. Can C collect the $475 from A? What is the liability of A? Are there any circumstances under which C could collect the $575? If so, what are they? 17. A gives B his note payable "to order," and B indorses it "Pay C only." C indorses the paper to D in payment of a personal debt. What are D's rights? 18. Give the facts of a case in which A, in his own name, would have the right to sue B, though they never had any dealings with each other, and B does nor even know of the existence of A. 19. A gives B his non-negotiable note, which B transfers to C by an indorsement in full. What is the liability of A to C? 20. On the 18th of August A gave B his check in payment of a debt. B presented the check at the bank on the 25th, but the bank had failed, closing its doors at the close of business hours on the 19th. On whom will the loss fall, and why? 21. In the above case, suppose that on the 19th B indorsed the check to C, who goes on the 20th to present it, but finds the doors closed, as did B. On whom will the loss fall? 22. A drew his check in favor of B for $100. B indorsed it over to C, who raised it to $190. On presentation at the bank it was paid. Can the bank recover from C, and if so, how much? Are there any circumstances under which A or B would be liable? 23. A gave his note to B at 60 days. After the note was given B was adjudged a lunatic, and a conservator appointed for him. B, however, still retained the note and sold it to C for value. C indorsed it without recourse to D, who held it at maturity. What is C's liability? 24. A engaged B to make a large purchase of corn for him, and left with him for that purpose a blank promissory note signed. B did not make the purchase, but filled out the note for a large amount and indorsed it over to C for value before maturity, C knowing nothing of B's bad faith. C indorsed it for value to D, who knew of the origin of the paper. Can D collect it? 25. B sent his collector to A for a settlement of his account. A gave him his check payable to B or bearer, but on his return the collector lost the check. C found the check and sold it to D. Can B stop payment of the check by notifying the bank? 26. Inspect the following instruments: In each of the above instruments, who are the parties primarily liable? Who secondarily liable? To whom should presentment for payment be made and where? To whom should notice of dishonor be sent, if the draft is not paid? CHAPTER XXI INTEREST 222. Interest is the use of money. For this use the user pays the owner a consideration, usually stated as a given per cent of the principal sum for each year of use. In popular language the money paid for interest in itself called the "interest,” though this is not strictly correct. 223. Simple Interest is interest computed solely upon the principal sum, as distinguished from compound interest. 224. Compound Interest is interest computed upon the principal sum and also upon unpaid sums due for interest. Compound interest is of two kinds: (a) Simple interest upon unpaid interest due upon principal, often called annual interest; (b) interest upon interest upon interest ad infinitum. The general rule is that in the absence of contract therefor, express or implied,* or of some statute requiring it, † compound interest is not allowed to be computed upon a debt. This rule includes both classes of compound interest. Even when there is a contract therefor, the right to collect compound interest is denied in some states, unless such contract is independent of the principal contract and be made after the simple interest is due. Leonard vs. Villars, Admr., 23 Ill. 377; First National Bank of Galesburg vs. Davis, 108 Ill. 633; Harris vs. Bressler, 19 Ill. 467. Compound Interest ad infinitum is legal only in California, Montana, Iowa, Tennessee, Missouri, Nebraska, and Texas. In Missouri interest may not be compounded oftener than once * Compound interest has been implied in specific cases, because of a generally prevailing usage in a given line of business or because peculiar circumstances have required it, in California, Dakota, Iowa, Tennessee, Kentucky, Massachusetts, Michigan, New Hampshire, New Jersey, New York, and Vermont. † Compound interest is usually allowed by statute in the calculation of refunds in case of misappropriation of trust funds by executors and administrators. In this case it is in the nature of a penalty. |