Business Hints for Men and Women Part 14

But if it pa.s.ses into the hands of a third party, who endorses it, then the maker of the note can be compelled to pay.

A LOST NOTE

A note may be lost or stolen.

The losing of a note does not release the maker from payment of the full amount on the date and at the place named.

The loser should at once notify the maker of his loss.

A man who buys, before its maturity, a lost or stolen note, may collect the full amount from the maker, provided the note is payable to "bearer" and no notice of the loss has been published.

When the maker of a lost note pays the amount to the original owner, he should receive from him what is known as a "bond of indemnity."

This bond is to secure him against paying a second time.

NOTES ABOUT NOTES

There are some things worth remembering about promissory notes.

1. Never give one if you can pay cash.

2. A note made on Sunday is worthless in some states.

3. A note given under compulsion is worthless.

4. Notes made by a drunken person, or obtained by any form of fraud cannot be collected under law.

5. Notes bear interest only when so stated in body of note.

6. The holder of a note has a legal claim against every indorser.

7. Each indorser is responsible to every indorser who follows him.

8. Notes are valid without reference to the kind of paper, or whether they are written with pen or pencil.

9. Losing a note does not release the maker from payment.

10. If no time is set in a note for payment, it becomes due as soon as it is made.

11. Where a note is made in one state and is payable in another, it is governed by the laws of the state in which it is to be paid.

12. Notes payable on demand draw no interest until after they have been presented for payment.

13. If a note reads "with interest" and no rate is specified then it draws the legal interest in the state in which it was made.

14. Demand notes are not ent.i.tled to days of grace.

15. If no place of payment is named in a note, it should be presented to the maker personally in business hours.

16. The misspelling of a word or words in no way invalidates a note.

17. If a person who cannot write makes a note his mark should be properly witnessed.

18. The makers of a joint note must be sued jointly.

19. If the words and the figures in a note disagree, the words take precedence.

20. A note signed by a firm may be collected from either of the partners.

21. When a payment is made on a note secured by a mortgage, the amount is endorsed on the note, never on the mortgage.

22. A note given by a minor is void, unless given for actual necessities, like food and clothing.

23. If a note made by a minor is acknowledged when he comes of age it is binding and collectible.

CHAPTER XI

A DRAFT

A draft is a written order from the first party to the second party to pay to the third party a certain sum of money at a certain time.

The first party is called the "drawer."

The second party is the "drawee."

The third party is the "payee."

There are two kinds of draft.

The first is usually where the cashier of one bank, through his own check, draws on another bank for the cash difference in their accounts with each other.

The second form of draft is the most usual and is the one we shall here consider.

The cashier's draft is always for cash and the demand is always honored. The ordinary business draft may be for cash or for goods.

The business draft is usually honored, but there are circ.u.mstances under which it may be ignored.

TO MAKE A DRAFT

But let us suppose that the draft is all right and that a merchant, let us call him Henry Thomas, and suppose him a resident of Philadelphia, has a bill against James Taylor, of Cleveland, and he wants to collect it, without recourse to law. How will he go about it?

The bill is for $100.

Mr. Thomas writes this draft:

Philadelphia, Pa., Sept. 5, 1910.

At sight pay to the order of Johnson National Bank of Philadelphia One hundred................... dollars.

With exchange and charge same to Henry Thomas.

To James Taylor, Cleveland, Ohio.

Having drawn his draft, Mr. Thomas takes it to the Johnson National Bank for collection. The collection is actually made by some bank in Cleveland to which the Johnson has endorsed it over.

If Mr. Thomas wished he might have sent his draft direct to the Cleveland bank, but he no doubt thought it better to transact such matters through his own bank.

Or if Mr. Thomas lived where he was not in touch with a bank, he might have drawn through any person whom he knew in Cleveland.

On receiving the draft for collection, the Cleveland bank would at once give it to a clerk who would without delay present it to Mr.

Taylor.

Mr. Taylor, having written his acceptance of the draft, is given three days grace in which to make payment.

In states where days of grace are not allowed, he would have to pay at once.

Mr. Taylor writes the word "accepted," with the date and his name across the face of the draft, and if he does not pay cash, he states in the writing where payment will be made.