QUESTIONS AND ANSWERS

ON

FOREIGN AND INLAND BILLS,

WHAT is a Bill of Exchange?

It is a written or printed order from one party, requesting another party to pay to the bearer, or another, a specified sum of money at a time therein mentioned.

Into how many classes are Bills of Exchange divided?

Two :-Inland and Foreign Bills.

What is meant by an Inland Bill?

A bill which is made payable in the same state where it is drawn or negotiated. Bills drawn in Massachusetts, and made payable in the same state, are Inland Bills.

What is meant by a Foreign Bill?

A bill drawn in one state or country, and payable in another state or country.

If a bill is

drawn in New-York, and payable in London, it is a Foreign Bill of Exchange, and if drawn in New-York and payable in Connecticut, or under any other jurisdiction, it is now considered by good authority a foreign bill. Such bills are the channel through which most merchants realize moneys due them at any considerable distances.

How many persons are commonly concerned in a Bill of Exchange?

Two, and sometimes more.

1st. What is meant by the Drawer or maker of the Bill?

The party who makes the original bill.

2nd. Who is meant by the Drawee?

The party on whom the bill is drawn, and who are requested to pay the sum therein specified to the holder.

3rd. Who is meant by the Taker?

The party who buys the bill of the maker, or of any one to whom the maker has passed it.

Who is meant by the Acceptor?.

The drawee becomes the acceptor after he has promised to pay the bill.

Who is meant by the Payee?

The party to whom the bill is made payable.

When the payee passes a bill to another party, what is important?

He must write his name across the body of the bill, which is called indorsing it; by this token he relinquishes all further claim to the same.

Who must be the first indorser ?

The Payee; afterward each party who receives it indorses in his turn.

Who of the indorsers is liable to pay the bill, if the acceptor refuses, or neglects to pay it when due?

Each, or all of the indorsers may be held responsible for the face of the bill and damages, if duly notified. It is usually customary, however, to take the first indorser, and if he fails to pay it, take the next, and so on, until satisfaction is obtained.

What are the requisites for a regular bill?

1st. The sum, place, and date;

2nd. The time of payment;

3rd. The person to whose order it is payable;

4th. The address and superscription.

What is meant by a general indorsement?

A general indorsement consists in the holder writing his name on the body of the bill, relinquishing his right to the same.

What is a special indorsement?

A special indorsement consists in the holder, or indorser, naming the party to whose order he indorses the bill. In point of security, the special indorsement is preferable.

When is a special indorsement restrictive?

An indorsement is said to be restrictive, when made in words like the following: "Pay to I. Brown, for my partner," or "to I. Brown only," which prevents any subsequent indorser from demanding payment.

Is a promise to indorse a bill, binding on the promiser?

A promise to indorse a bill can in no case be considered tantamount to an actual indorsement. Suppose a bill be made payable to the bearer?

Such bill is transferred by simple delivery, without indorsement. A bill which has a blank or general indorsement, is virtually payable to the bearer, and may be passed accordingly.

Suppose an individual give his name on a piece of blank paper, for the purpose of having a promissory note written above or on the other side of it, and the note be written for a larger amount than he designed it to be?

He is liable, as indorser, to a bona fide holder for the amount of it.

Suppose an agent indorse a note, without using words to prevent his liability?

He is bound to pay the same individually, if required.

When is a person said to accept a bill.

An individual is said to accept a bill, when, on presentment he writes across the body of the bill, "accepted," together with his signature.

What is meant by conditional acceptance?

Conditional acceptance is one made to pay after certain stipulations are fulfilled by the drawer; as, when certain goods are sold, &c.

Does the acceptance of one of the partners, or of the clerk, bind the company to pay the amount of the bill?

Such acceptance binds the partners in the former case, and in the latter it is valid, if the clerk is in the practice of doing such business for his employer, or employers.

Suppose a bill be drawn on a person who had promised to accept it, but refused when presented? A written unconditional promise is considered to all intents and purposes an acceptance, and the drawee is responsible for the same, if the holder has received the bill on the strength of such promise. The bill must be presented within a reasonable time, however, after such promise is

made.

Can acceptance be made after the time appointed for payment?

Such acceptance may be made, in which case the bill becomes payable on demand.

Is the acceptor holden, if it was not presented for payment when due?

The acceptor is holden to pay though it be presented years after the time specified for payment. The length of time which renders such paper void, varies in the different States, from six to twenty years.

Is the holder entitled to any damages or interest on such bill?

If it is not the fault of the acceptor that it is not paid, the holder can claim only the amount of the bill when it was due.

In case of non-acceptance, what is considered a legal notice on the part of the holder to the maker and indorsers?

If the holder live in the city or town with the maker and indorser, he must give notice to the same within 24 hours at the extent, after refusal. If the drawer and indorsers live distant, the holder must send notice by the first post. Such notice is legal, though there is no proof that it reached the said party or parties. Due diligence is in all cases required.

Suppose a bill be drawn for $500, payable in 60 days; can the drawee accept it for a less sum, or for a longer or shorter time than therein specified?

The holder may consider the bill refused acceptance, if the drawee does not accept it as first drawn.

If the drawer's signature to a bill be forged, and the drawee accepts such bill, is the latter holden to pay the same.

Such acceptance obliges the acceptor to pay the bill, according to the tenor of the same, to an innocent holder, that is, to one who has paid an equivalent on the credit of such acceptance.

EXAMPLE.

HARTFORD, Jan. 1st., 1838.

$400. Sixty days from date, pay to the order of Samuel Brown, Four Hundred Dollars, value received, and place the same to the debit of

WM. ANDRUS.

If the foregoing bill should be accepted by Shepherd, and then sold to D. Burt, who should give for it an equivalent, and he knew not that it was forged, Shepherd would be holden in the specified sum to Burt, though Andrus knew not of its existence. Shepherd could recover nothing of Andrus, it being Shepherd's business to know whether the signature was genuine.

If a bank has received a forged check, what remedy has it?

If such check be received from a bona fide holder and the bank has accepted it, or passed so much to his credit, the bank has no remedy against such innocent holder. And when a bank receive notes as its own, and passes them to the credit of a bona fide holder, the bank cannot be permitted, in an action, to prove that they were forged. (Bailey on Bills, pages 326, 327.)

When should payment on a bill be made?

In countries where "days of grace" are allowed, payment should be made on the last day of grace, during the ordinary business hours.

If it becomes payable on Sunday, or any holiday, when may payment be demanded?

On the preceding day, and if not paid on that day, the bill may be then treated as if it had lain over one day after maturity. Notes are usually made payable at a bank, which bank sends notice to the acceptor or giver, that the bill becomes due on such a day-in this case payment must be made during banking hours.

If a bill be payable at no particular place, where must it be presented for payment?

Presentment must be made at the drawee's residence, or his place of business, during the hours he spends at one place or the other, and this will be sufficient, though there be no one to meet its payment, to charge the indorsers.

What is the consequence if the holder allow the acceptor more than the time specified in the bill, to pay it?

By such an act, the holder would lose the indorsers.

Suppose a bill be made payable at either of two places?

The person to whom it is made payable may demand it at either place, to suit his own convenience.

In what kind of currency should a bill be paid?

Payment should be made in the kind of currency specified in the bill. The only legal tender in this country is silver and gold; consequently, checks, and bank notes can be rejected in payment, by the payee.

Should the payment of a bill be made in any case before maturity? If payment be thus made, it is done at the risk of the payer. Such payment cannot be demanded by the payee; nor can the payer oblige the payee to receive payment before the bill is When payment, or payment in part is made before maturity, and there be no indorsement made on the bill, and such bill, before maturity come into the hands of a bona fide holder, the whole amount can be demanded of the acceptor.

mature.

What is meant by protesting a bill?

When a bill is presented for acceptance, or payment, and either be refused, it is necessary to leave the bill with a notary public, who shall call upon the drawee or acceptor, and demand acceptance or payment, as the case may be. If dishonored the notary will draw an instrument called a Protest, the form of which may be similar to the following.

On this 12th., day of September, A. D. 1838, at the request of James B. Shultas, of the city of Hartford, bearer of the original bill of exchange, (or draft,) whereof a true copy is on the other side written, I, Lemuel King, of Liverpool, Notary Public, duly admitted and sworn, went to the store of B. Smith, on whom the said bill is drawn, and demanded acceptance or payment thereof, to which he answered, "That for reasons best known to himself, he should not accept a bill of that tenor." Whereof I, said Notary Public, at the request of the aforesaid, have protested, and do by these presents solemnly protest, as well against the drawee, acceptor, and indorsers of the said bill of exchange, as against all others whom it may concern, for exchange, re-exchange and all costs, charges, damages, and interest suffered and to be suffered for want of payment of said original bill of exchange.

This done and protested in Liverpool,

LEMUEL KING, Notary.

In the presence

J. DOWD.
P. COLTON.

How long is it customary for the holder to wait upon the drawee, for acceptance of a bill before having it protested?

Not over 24 hours; in which time the drawee may learn how his account stands with the drawer.

Is it necessary for the holder, in demanding acceptance or payment of a bill, to leave the same with the drawee?

The holder must have the bill with him, or it will not be considered a sufficient presentment. For what may a bill be protested?

1st. For non-acceptance. As the possessor of the bill is to lose no time in demanding acceptance of the person drawn upon; so in case of refusal, he must have the same protested.

2nd. For better security. When the acceptor's credit begins to fail, and there is reason to think he may become bankrupt before the term of payment, the holder may demand better security, upon refusal of which, the bill may be protested. This practice is now nearly out of date, and seems to have been instituted, in the first place, that some one should step forward and honor the bill. Such protest holds the indorsers, in the event, as if protested for non-payment. 3rd. A bill may be protested for non-payment. If the bill be presented at maturity, and payment be refused or unprovided, it must be protested, whereby the holder may have recourse against the indorsers.

What is the number of Days Grace allowed in different countries?

At Amsterdam, there are 6 days allowed; at Hamburgh, 12, at Paris, 10; at Madrid, 14; at Leghorn, 0; at Naples, 3; at Genoa, 30; at Venice, 6; at Lisbon, 6; at London, 3; in the United States, 3; Dublin, 3; Gibraltar, 14; Vienna, 3; Copenhagen, 8; Dantzick, 10; Trieste, 3; Cadiz, 6; Petersburg, 10; Rotterdam, 6; Edinburgh, 3; Geneva, 5; Bremen, 8; Antwerp, 6.

What is meant by accepting and paying supra protest?

A supra protest, or acceptance upon honor, is a collateral acceptance, by first allowing a bill to be protested, and then for the honor of the drawer, or indorsers, immediately accept it, by which means, should not the acceptor afterward be put in funds, he will secure his right of recourse. Supra protest is made for the benefit of commerce and credit of the trader."

How is supra protest taken?

The acceptor supra protest, writes on the bill to this effect; "accepted supra protest, in honor of A. B. the drawer." After which, he should send the protest and information of acceptance to the party for whose honor it was accepted. Acceptance in honor of the drawer binds the drawer or indorsers to pay the principal sum, charges and commission.

Is it necessary that an inland bill be protested for non-acceptance?

There is not the same importance attached to protesting an inland as a foreign bill. An inland bill may be noted merely, and lie till due; when, if not paid, it is protested for non-payment. It is necessary to protest an inland bill for non-payment in order to hold the indorsers.

What is the method of noting a bill?

It consists in writing on the bill the initials of the notary, the month, year, and reasons, if any are given, for non-acceptance or non-payment.

Suppose the drawee has no funds, belonging to the drawer, nor has promised to accept his draft?

The drawee is under no obligation to accept such draft, nor is the holder obliged to notify the maker of non-acceptance.

In case of protest, is it important to send the bill with the notice?

If the drawee and indorsers are notified of the fact it is sufficient, with, or without sending the bill.

If the holder of a bill lose the same, what redress has he?

The drawer must give such holder another good bill, provided the latter give the former satisfactory security against any injury from the lost bill.

When should notice be given of non-payment to the drawee and indorsers?

By the first regular conveyance, unless sent by private conveyance.

What is the duty of a loser of a bill?

He must immediately advise the payer of the loss, and if the latter pay such bill after advice, to any but a bona fide holder, he is still holden in the sum of the whole bill to the loser.

How are foreign bills, which are protested for non-payment, usually disposed of?

A new bill is drawn on the maker, or indorsers, for the amount of the original bill and damages, according to the course of exchange between the two places, and sold, or sent to a correspondent for payment.

Who is liable for the bill after protest for non-payment?

T..e drawer, acceptor, and each indorser, all or each of whom may be sued, until satisfaction is made. When any one of the indorsers is discharged, all the subsequent, though not the prior ones, are discharged.

What rate interest is to be computed on protested foreign bills?

The rate of interest is to be the same as at the place, where the bill is payable.