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(d.) Notes are either made “ON TIME” or “ON DEMAND.” They are on time when payable at the expiration of a certain time, as 60 days, 3 months, etc. (see Forms 2 and 3), and on demand when payable whenever payment may be demanded by the Promisee or holder of the pote (see Form 1).
(e.) Notes on time are not legally due till three days after the time specified in the note. Thus, a note on 30 days is due in 33 days; a note on 6 months is due in 6 months and 3 days. The days thus added are called DAYS OF GRACE, or GRACE.
(f.) Notes are NEGOTIABLE when so written that they may be transferred or sold by one person to another.
(g.) Negotiable notes are of two kinds, viz. those payable to a person OR ORDER (see Forms 1 and 2), and those payable to a person or BEARER, or to the BEARER (see Form 3).
(h.) Notes of the second class are negotiable merely by delivery (bank bills are of this class); but notes of the first class require a written order of the Promisee, or legal holder of the note, to authorise any one else to collect the money due on them. This order is usually written on the back of the note, and is called an INDORSEMENT. The most common form of indorsement is for the indorser to simply write his name on the back of the note. Such an indorsement is called an INDORSEMENT IN BLANK, and is equivalent to the order, “ Pay the within to the bearer.”
(i.) A note is DISHONORED if the signer neglects or refuses to pay it on the demand of the holder, the demand being made the day the note is due.
(j.) Every indorser of a note renders himself liable to pay it if it is dishonored, provided the holder gives him immediate notice that payment has been demanded and refused.
(k.) A formal notice, made by an officer called a NOTARY PUBLIC, that a note has been dishonored, is called a PROTEST.
(1.) A note for a sum “WITH INTEREST," is on interest from date. If the phrase "with interest” is omitted, the note is not on interest. If, however, a note on demand is not paid when the demand is made, or a note on time is not paid when due, interest may afterwards be demanded, even though no mention is made of it in the note.
(m.) The body of a note may be written by any one, but the SIGNATURE should always be written by the promisor, or by some one specially authorised to sign it for him. When the note is paid, the signature should be erased or torn off.
(n.) If a part only of the money due on a note is paid, the sum paid is indorsed, i. e. receipted on the back of the note.
Note.-A more full discussion of this subject may be found in “Arithmetic and its Applications."
Boston, March 11, 1858. For value received, I promise to pay Hiram A. Pratt, or order, five hundred dollars, on demand, with interest.
New York, July 1, 1858. Sixty days after date, I promise to pay to the order of George A. Walton, nine hundred and sixty-four to dollars. Value received.
N. T. Allen.
Philadelphia, Jan. 17, 1858. Three months after date, I promise to pay D. B. Hagar, or bearer, one thousand dollars. Value received.
Levi T. Dodge.
115. Partial Payments. (a.) The principle adopted by the Supreme Court of the United States, and by that of Massachusetts and most of the other States, as the one to be applied in determining the sum due on a promissory note or bond on which payments have been made, may be thus stated
(b.) As much of the payment as is necessary to pay the interest due at the time the payment is made, should be appropriated for that purpose, and the surplus to the payment of the principal. The balance then due will form a new principal on interest, as was the original principal. If, however, any payment is less than the interest at the time due, the principal remains unaltered, and on interest until some payment is made, which, with the preceding neglected payments, is more than sufficient to pay the interest, when we proceed as if a single payment, equal to the sum of the last payment and the preceding neglected ones, had been made.
NOTE.—The method adopted by the court of Connecticut differs from the above in this respect, that if a payment greater than the interest at the time due be made before the principal has been on interest one year, the person making it is allowed interest on it to the end of the year, i. e. the amount of the payment from the time it was made to the end of the year,
is deducted from the amount of the principal to the same time. If settlement be made before the principal has been on interest one year, interest is allowed on the payments from the time they were made to the time of settlement.
Providence, June 17, 1851. For value received, I promise to pay Arthur Stanhope, or order, twelve hundred dollars, on demand, with interest.
Joseph Andrews. On this note are the following indorsements : Feb. 15, 1852, received one hundred and twenty-five dollars. Nov. 30, 1852, received seventy-five dollars. Sept. 19, 1853, received twenty dollars. Jan. 1, 1854, received forty-five dollars. July 9, 1854, received five hundred dollars. This note was settled Jan. 1, 1855. What was then due ?
EXPLANATION. — It is readily seen that the first payment, $125, is more than the interest at the time due; hence, we compute the amount of the note to Feb. 15, 1852, and deduct from it the payment. The remainder is a new principal. The second payment of $75 is evidently more than the interest of this new principal to the time when the payment was made; hence, we compute the amount to that time, Nov. 30, 1852, and subtract from it the payment. The remainder is a new principal. The third payment, $20, made Sept. 19, 1853, is evidently less than the interest then due. Again, $65, the sum of the third and fourth payments, is less than the interest to Jan. 1, 1854, the time when the fourth payment was made. But as $565, the sum of the third, fourth, and fifth payments, is greater than the interest due July 9, 1854 (the day when the fifth payment was made), we get the amount to that date and subtract from it $565, the sum of the three payments. The remainder is a new principal; and its amount to June 1, 1855, is the sum due at the time of settlement.
The following series of questions may illustrate more clearly the principle involved in the above solution :
What is the face of this note ? When did interest commence? Is the interest of the face of the note to Feb. 15, 1852, greater or less than $125, the first payment? What, then, is the amount of $1200 from June 17, 1851, to Feb. 15, 1852? What is due after deducting the payment? Is the interest of this to Nov. 30, 1852, greater or less than $75, the second payment? What, then, is the amount? What is due after deducting the payment ? Is the interest of this to Sept. 19, 1853, greater or less than $20, the third payment? Is its interest to June 1, 1854, greater or less than $65, the sum of the third and fourth payments ? Is its interest to July 9, 1854, greater or less than $565, the sum of the third, fourth, and fifth payments? What, then, is its amount to that time? What is due after deducting the sum of the payments ? What is the amount of this to Jan. 1, 1855? What, then, was due Jan. 1, 1855?
Boston, Jan. 1, 1853. For value received, I promise to pay George A. Walton, or order, nine hundred dollars, on demand, with interest?
0. F. Bryant. On this note were the following indorsements: Oct. 9, 1853, received one hundred and fifty-six dollars and twenty-eight cents.
June 3, 1854, received ten dollars.
Springfield, Nov. 3, 1855. For value received, I promise to pay S. D. Bowen, or order, fifteen hundred and fifty-nine dollars and forty-seven cents, on demand, with interest.
Freeman Fisher. Indorsements: Dec. 1, 1855, received thirty dollars. July 15, 1856, received twenty-five dollars. Aug. 7, 1857, received fifty dollars. Dec. 1, 1857, received one thousand dollars. What was due Jan. 1, 1858 ?
Salem, July 9, 1850. On demand, I promise to pay Richard Edwards, or bearer, one thousand dollars, with interest, for value received.
J. F. Brown.