creditor's? 82. When is a note payment and when is it not? 83. What can you say of a payment by check? 84. Will a part payment cancel the whole debt by agreement? 85. Give the rule for the application of payments. 86. How may performance be used as a defense? 87. How far is time an essential element? 88. When can a party rescind for lack of promptness in performance? 89. When must he accept performance and then claim a rebate for lack of promptness? 90. What is meant by quantum meruit? 91. In what connection is the phrase used? 92. What is meant by quantum valebat? 93. In what connection is it used? 94. What is meant by forfeiture? 95. What are liquidated damages? 96. When will the law uphold them? 97. What is set-off? 98. How may set-off be used as a defense? 99. What is recoupment? 100. How does set-off differ from recoupment?

LEGAL MAXIMS.

1. Ignorance of the law excuses no one.

2. No one is bound to do what is impossible.

3. No injury is done by things long acquiesced in.

4. An action is not given to one who is not injured.

5. If the plaintiff does not prove his case the defendant is absolved. 6. No one is responsible for inevitable accidents.

7. The proof lies on him who affirms, not on him who denies.

8. It is one thing to possess, it is another to be in possession.

9. A person ought not to be judge in his own cause.

10. One alleging his own infamy is not to be heard.

11. The intention of the parties is the soul of the instrument.

12. Good faith does not allow us to demand twice the payment for the same thing.

13. Let the purchaser beware.

14. That is sufficiently certain which can be made certain.

15. An evidence of debt found in possession of the debtor is presumed to be paid.

16. A condition precedent must be fulfilled before the effect can follow.

17. Where two parties are equally in fault the party in possession has the better cause.

18. Time runs against the slothful and those who neglect their rights.

19. The law does not notice trifling matters

20. A day begun is held as complete.

21. Every man's house is his castle.

22. A gift is not presumed.

23. It is fraud to conceal a fraud.

24. What I cannot do in person I cannot do through the agency of another.

NEGOTIABLE INSTRUMENTS.

CHAPTER XIV.

138. Introduction.-As a general rule a man may sell and transfer anything to which he has a clear title. We have seen that an account may be a valid consideration. This implies that it may be transferred or assigned, yet it is not negotiable. Negotiability is not then transferability. The difference may be shown by the following illustrations: You have an account against A, and you also hold B's negotiable note, either may be transferred, but only the note is negotiable. You transfer both the note and the account, under proper conditions, to C; they each fall due and are unpaid. C then brings an action against A on the account, and against B on the note. In the suit against A, if he had any claim against you which he could urge, for instance as a set-off, he could also urge it in this suit of C's, and thus might entirely, or partially, defeat C's claim. Not so in the case against B on the negotiable note. When it passed into C's hands it was freed from any and all defenses that might have been urged against it in your hands. This is a privilege accorded to no other evidence of indebtedness than negotiable paper. As a result of this privilege a negotiable paper may be transferred and the purchaser take a better title to it than the seller ever had. This is an exception to the general rule that no better title can be given than the seller himself has.

139. A Negotiable Instrument is a written contract possessing certain necessary elements, and which when transferred under certain conditions, passes to the purchaser free and clear of any defenses that might have existed against it in the hands of the original holder.

This definition raises two questions, (1) what are the necessary elements, and (2) what are the certain conditions of transfer. Only the first will we attempt to answer for the present.

140. The Necessary Elements.-While negotiable paper remains in the hands of the original holder, it is merely an ordinary written contract, subject to all the usual rules of interpretation, and must possess all the four essential elements of any contract. It is only when it is about to be, or has been, transferred, that it is necessary to inquire what are the essentials that give to this class of contracts its peculiar privileges.

141. Competent Parties.-These may be divided into (1) original, or those who are named in the instrument, and (2) subsequent, or those into whose hands it may fall later.

The competency of these several parties does not, as a rule, differ from the competency of parties to an ordinary contract. The original parties must in fact be the exact parties mentioned in the paper. Hence when a name is forged to a negotiable paper it creates no liability on the part of the person whose name is forged, not even in the hands of an innocent holder.

The original parties must all be designated with certainty. This is necessary that he who is to pay must know to whom payment should be made, and on the other hand that he who is to receive payment must know from whom to demand it.

When a contract is signed by an agent he should sign the name of his principal, then under it by "A. B." For a contract signed "A. B. agent for C. D." is A. B.'s contract.

142. Made in Writing. By this is meant either writing or printing, or both. In fact a large proportion of the negotiable paper of business is made on printed blanks, only those portions wherein one may differ from another being inserted in writing. The writing should, for obvious reasons, be in ink, but a negotiable instrument written with a pencil is valid.

The instrument should, of course, be signed by the maker or drawer, but as this is a unilateral contract it need not be signed by

the other party. His acceptance of the paper is a sufficient indication of his assent.

By the Negotiable Instrument law a paper does not lose its negotiable character by being under seal.

143. Payable in Money.-A negotiable instrument must be payable in money, and not in goods and chattels. If payable in specific articles it becomes a special contract, and loses its special character as a negotiable instrument. It may in all other respects be in correct form, and while it may be transferred by delivery, yet it is not negotiable. The amount must also be stated with certainty, or the means given by which it can be ascertained easily. It is not negotiable if it be for a certain amount, "and all other sums which may be due." If there be added to the amount "with current exchange," the paper is negotiable, because the amount can be easily ascertained. The amount is usually expressed in both figures and words. In case these differ, the written amount prevails, unless there is evidence that the figures are correct.

By the statutes of some States,1 a note or other instrument payable in specific chattels is negotiable, and in some States it has been enacted that even negotiable words are not necessary.

144. Payable Absolutely.-There can be no condition or contingency attached to the payment. A negotiable paper, it has been said, "is a courier without luggage. It must contain certain direction or order or a certain promise to pay. A mere acknowledgment of a certain indebtedness, such as I. O. U. $100, will not usually be sufficient. While the promise to pay may be implied, yet it is not expressed. If there be any conditions attached to the payment, such as, provided a certain ship arrives, or when A shall marry, it destroys its negotiability. So also if it be payable out of a certain fund, for the fund may not be sufficient.

If a note is made payable by installments, with a condition that if default be made in the payment of any installment, the whole shall be immediately payable, this form is not so uncertain as to render the note a mere contract.

It will be remembered that the object of negotiable paper is to serve. as a substitute for money in facilitating exchanges, hence it must be so written that it can be taken without hesitation, and its value easily determined.

1 Alabama, Illinois, Indiana, Iowa, Kentucky, Minnesota, Montana, Virginia.

145. Negotiable in Form.-This means that it must contain negotiable words. The instrument must show on its face that it was intended to pass from hand to hand, and not to remain in the hands of the original holder. The words usually employed to show this are "bearer," "or bearer," "or order," "or assigns.

N. I.-A paper is payable to bearer when it is payable to "A or bearer.” (See sec. 148.)

146. Time Specified.-Like all written contracts, negotiable paper should be dated, but this is not absolutely necessary. It should, however, state the time when due, or at least give the facts. by which this can readily be determined. 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. "On demand," "at sight," "at days' sight," "-days from date," are common expressions in this connection, and are sufficiently definite.

An instrument may be antedated or postdated, provided it is not done for an illegal purpose, and when the date is given, though it be not the correct one, it is the one that will be used in fixing the date of maturity. If the date be left blank, any holder has the right to insert the true date; and should he insert an improper date, the parties will still be bound to an innocent bona fide holder.

147. Delivery. In addition to the above essentials which go to the make up 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 he is not liable for it.

148. The law in reference to negotiable instruments arose through the custom of merchants and in many respects it differs from the rules applicable to other forms of contracts. These customs were gradually recognized by the courts and became a part of the unwritten law as might any custom equally general. The different states modified this law some in one particular and some in another. Though these changes were not usually material nevertheless they caused some confusion and an effort is now being made to put the law into statutory form and have all the states ratify it. This has already been done in sixteen states,1 and is being considered in a number of others. This statute is called the "Negotiable Instrument Law." References will be made to this law from time to time and they will be designated by "N. I." In this manner changes in the law will be shown.

149. N. I.-Negotiable instruments given for patent rights must contain the words, "given for a patent right" and are subject to the same defenses as in the hands of the original holder.

1 The following states have adopted the Negotiable Instruments Law: Colorado, Connecticut, District of Columbia, Florida, Maryland, Massachusetts, North Carolina, North Dakota, New York, Oregon, Rhode Island, Tennessee, Utah, Virginia, Washington and Wisconsin.