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The Columbia University Libraries reserve the right to refuse to accept a copying order if, m its judgement, fulfillment of the order would involve violation of the copyright law. Author: ant, John Collins I III ^# ■ The business man's commercial law and Place: Buffalo Date: 1890 %-'k9.oo^-^ MASTER NEGATIVE # COLUMBIA UNrVERSITY LIBRARrES PRESERVATION DIVISION BIBLIOGRAPHIC MICROFORM TARGET ORIGINAL MATERIAL AS FILMED - EXISTING BIBLIOGRAPHIC RECORD IT*" L- " T t 150 B84 Bryant, John C ollins The business man's commercial law and business forms combined. A vade-mecum for the counting house. By J. C. Bryant ... Ed. bv the Hon. Geo. W. Clinton ... Buffalo, N. Y., J. C. Bryant, V883, 1390 . 206 p.. 1 1., 54 p. incl. front., forms. 2^"'". "Tenth edition. *♦ . 1. Commercial law— U. S. i. Clinton. C.corge William, 1807-1885, ed. 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Arendt Tf^U 1 •»■« «! li I n A ^ / c ^^>^ ■t ( THE BUSINESS MAJSTS •-'•mm THE LATE HON. GEORGE W. CLINTON. COMMERCIAL LAW AND BUSINESS FORMS COMBINED. A VADE^MECUM FOR THE GO UNTIN Q HOUSE, BY J. O. BEYAISTT, M. D. n«81DBNT OF THE BRYANT & BTRATTON BUFFALO BUSINESS COLLEGE, AUTHOR OF BBY ant's new series OP BOOK-KEEPING. EDITED BY THE Hon. GEO. W. CLINTON, LATE CHIEF JUDGE BUPKBIOB COUBT, BUFFALO, H. T. TENTH EDITION. >« • J « ' t « • • RU.P.F-A'LC, N. Y. , PUBLISHED BY J. C. BRYANT. • '1890. • • »• • 9 > 9 /. OlS6 i ^ i 1 Sotered according to Act of Oongress, in the year 1383. bf J. C. BRYANT, M. D^ Ultbe Office of the Librarian of Congress, at WastdngtOn. i; t /jUN 2 5 1946 /. • • • • • • • t » ••».•' . • • •»,■•• • • • ' • ,• *. t I . ,1 » t • I . • • • t • » • • • • * • • PREFATORY. ■* • » The Book. — It is largely the work of a gentleman the greater portion of whose life has been devoted to educating young men for active business, and in aiding commerce, and whose success in these regards has been of great service to our country. To cooperate with him is a pleasure; and this introductory matter is prepared in accordance with his suggestions and at his request. The book embraces, succinctly, the great body of the laws, a knowledge of which is essential to the proper conduct not only of commerce, but of extended business of any and every kind, and embodies the usual and approved forms of the instruments in use for their transac- tion. A knowledge of the law which it embodies will not, of itself, always insure success or prevent disaster ; but ignorance of it brings danger, and a departure from or violation of it, whether ignorant or willful, must certainly result in loss, if not in utter failure and disgrace. To the aspirant for honorable place in the business world it will, I am confident, prove a strong helper : to the merchant, the manufacturer, the large producer, to every one who has the conduct of a large business, it will prove a safe guide and an efficient guard. Production and Commerce. — The results of labor, whether intellectual or material, are productions. The clergyman, the editor, the author, equally with the artist, the artizan, the miner, the manufacturer and the farmer, are producers. The products of their industry, with the spoils wrested from the ocean and great waters of the earth, like the mimimies of the Pharaohs, are subjects of sale ; and Commerce transports and inter- changes them the wide world over. Money and Wealth. — Money is a medium of exchange — a representa- tive of value. Its value or purchasing power fluctuates, and seems dimin- ishing. A dollar in pre-revolutionary times would buy more of the real wealth of the world than it would now. Those products of physical, intellectual and spiritual labor which comfort, strengthen and maintain the ■ 5 I, 6 PREFACE. Vigor of the body, inform the mind, and elevate the soul are wealth. Were our soil to become infertile and our waters barren, our country would be poor indeed; were Homer and the old Classics and Shakespeare to be destroyed, what wealth would perish ; were the Bible withdrawn from this glorious world, the thick and hopeless darkness which enshrouded it before the coming of the Saviour would return, and deepen and blot out hope and joy forever. Labor.— All honor to the toilers, whether on land or water, whether pallid with study or begrimed with sweat. They are the parents and possessors of all true enjoyment, and Commerce is their servant and their friend. All men are, by nature, born free and equal. They are equal in the sight of our law and in the Creator's love; and the man of business, or any man. who forgets this great truth, is false to our Institutions and mindless of Religion. The laborer, equally with the mUlionaire, should enjoy " ease and alternate labor." The drones, if there be any in oar busy country, are few. There can be no high and pure enjoyment in their Uvea Wealth is power. It is. as Bacon said. "Like manure, and must be scat- tered" to be useful. If applied to great, good ends, it brings heavenly satisfaction, and. with God's blessing, promotes happiness. If hoarded, or put to the possessor's personal uses only, it cankers the soul; and Scott's lines apply forcibly to him who so basely neglects duty: " Despite his titles, power and pelf, The wretch concentred all in self Living, shall forfeit all renown, And doubly dying, shall go down To the vile dnst from which he sprung, Unwept, onhonored and unsung." Luxury.— If this be voluptuousness, or a free, extravagant indulgence in the pleasures of the table, in equipage, and furniture, and dress, the higher the tribute it pays to Commerce and the Common Treasury the better. But, if dainties and anything deUghtf ul to the senses be luxuries, the more widely they are dispersed, and the cheaper they are made, the better. They ought to be made free as possible to the poor as well as to the rich. It is pleasant to recall the fact that tea, and sugar, and coffee, and numberless other good things, which are now the comforts of all classes, were once expensive lux- uries. So was education. We may thank Commerce for cheapening and making them attainable by the poorest in our land. Then again, it must I'BEFACE. f be remembered that the extravagance of the rich, which we deplore and in- veigh afrainst as opposed to Spartan simplicity and the grim frugality of Cato, while it neither exalts the rich, nor gives them happiness or political power, is, in truth, a patron of the fine arts, an incentive to invention and industry, and the main support of myriads of hard working people. * Commerce, Trade. In its widest meaning, Commerce includes the deal- ings of one class of a community with another, friendly and familiar inter- change of thoughts, and even the inspirations of heavenly meditation. Thus Milton : " Hail divinest Melancholy I ***** Come pensive Nun, devout and pure. Sober, steadfast and demure, Come, but keep thy wonted state, With even step and musing gait, And looks commercing with the skies, Thy rapt soul sitting in thine eyes." But Commerce, and Trade, are in ordinary use confined to the exchange of merchandise. They differ, apparently, in this, that while Trade may always be used as a substitute for Commerce, Commerce cannot be, m all cases, substituted for Trade. Commerce is always grand ; Trade is often petty. Commerce, it has been said, refers more appropriately to trade carried on by ships. Traffic within States is Trade. Individuals trade with each other. Trade is a single transaction or a series of petty ones. Trade brings wheat and corn to Chicago and Buffalo and gives them the dignity of markets : the sending of their stores to New- York may be termed Trade, or Commerce, indifferently : New- York ships them to the markets of the old world, and that is Commerce. The Origin of Commerce. -Of this we know nothing surely. It has been said thai before the rise of Commerce, the only intercourse that nations held with each other was aggressive. Petty traffic must have existed in families and tribes in the very eariiest times, and no nation can ever have subsisted without internal trade. The lust of glory and the thirst for gold have made nations brutal and piracy an honorable occupation ; but, from very early times, before and long prior to the time of Solomon, Commerce was busy in peaceful intercourse with the most distant nations. The Regulation of Commerce Generally. -The Supreme power of a State regulates and controls its Commerce. Commerce is mutual, and *^ 8 PREFACE. the Commerce of one Country with another includes the interchange — the importation as well as the exportation to and fro. Commerce includes inter- course, and the power of a State to regulate Commerce consequently extends to the regulation of its own vessels, to enactments for the comfort, safety and health of its sailors, for the safety of passengers, and the punishment of crimes on the high seas and its own waters. Every country regulates Com- merce by imposing duties on imports ; and, while it permits importation in the ships of all friendly nations, jealously confines its own coasting and in- ternal trade to its own ships and vessels. The Regulation op our Commerce. — The Constitution of the United States [Art. 1, § 8] provides that the Congress shall have power "To regu- late Commerce with foreign nations, and among the several States, and with the Indian tribes," and that "The judicial power of the United States shall extend " [among other things] "to all cases of admiralty and maritime jurisdiction." [Const., Art. 3, § 1, 2]. There can be no doubt as to the con- struction or meaning of the power to regulate Commerce with foreign nations, and the Indian tribes : but the nature and limits of the power to regulate Commerce between the several States are claimed to be matters of question. In Great Britain, the admiralty jurisdiction is confined to waters navigable from the sea and within the ebb and flow of its tides. The Supreme Court of the United States has decided, and it is now admitted law, that the ad- miralty jurisdiction in our country extends to our great rivers so far as actu- ally navigable from the sea and to our great chain of lakes and their con- necting straits or rivers. Law. — The books vary in their definitions of law. Law, in its most general sense, is a rule of action, and every law, when capable of being violated, has its sanction ; that is to say, its violation brings a prescribed penalty or painful consequence. Divine Laws. — Divine Laws are impressed by God upon matter or pre- scribed for man's affection and conduct. The former were called the laws of Nature : We infer or deduce them from observation and call them science. To deny that the Being who imposed can modify, change and abrogate kiem is a denial of His existence. We believe that they exist only at His pleasure and through His power. TTae laws prescribed for human action, are indicated by the consequences of their violation, and give rise to cau- tion, to prudence, to temperance in all things and the avoidance of excess. PREFACE. 9 The prescriptions of Religion embrace all pure morality, incite to the practice of every virtue, and, under all circumstances, insure tranquillity of soul. Were its reign effectual everywhere, human law would be super- fluous and earth an Eden. Municipal Law. — Municipal Law is a rule of action prescribed by a State. CoUectively, it is the entire body of laws of the State, defining its own pow- ers, providing for their execution and its own continuance, defining the rights and duties of the people within its territory, and denouncing punish- ments for their neglect or violation. It attempts to guard life, liberty and property, but never with full, unvarying success. It recognizes '* duties of imperfect obligation ' ' which it cannot and does not attempt to enforce. It punishes open crimes, but cannot reach the bitter fountams, nor cure the distempered lusts from which they flow. It fines, imprisons, disfranchises, hangs, but murder, and arson, and crimes of every hue, still threaten our liberties and deform the land. Municipal law differs, in various countries, in its origin and in its name. It differs, too, vastly, in substance, in autocratic, kingly and free governments. In the United States, every State govern- ment and its law, as well as that of tlie United States and its law, is but *• the People's collected wilL" Our Municipal LAw.-The laws of the several States, differ as they may in immaterial instances and particulars, are not substantially variant With the exception of Louisiana, which has a Code founded on the CivU or Roman Law, the broad foundation of the law of all the States is the cxmh- mon law of England, The Common Law.-TMs term is sometimes used to distinguish that part of the law of England which has grown up from usage from Acts of P.u4,ameDt It is sometimes called the unwritten law, while the Statutes are called the written law; but, in troth, both are written, and the ancient customs comprised in the common law are supposed to be, in large part old enactments, the records of which have perished. It is said to rest in maxims; but these maxims are simply moral, hare not the force of law and are in practice, often widely departed from. Its great boa^t was thai » was flexible and could be modified and varied and made applicable to the new changes of business and the progress of the race, and so the law It was said, rests in the bosom of the judge. Much better is it that ii should rest in the sense and judgment of the Legislature. Statute law is 10 FKEFACB. more flexible than the common law. and can better provide that certainty of right, of duty, and of decision which is the chief est security of our righu and liberties. This term is sometimes used to express the whole law, statutory and cus- ternary, as administered in the most ancient law Courts of England, in dls- tmction from that administered in the more recent Court of Chancery. In the United States it is used as signifying the whole body of the EngUsh law, at least down to the time of our Revolution, in distinction from the dvil law, and the canon law so far as adopted in England. Equity.— This is natural justice as between man and man. It is declared and defined by every system of law, but no human power has ever enacted, and no human power can enforce, it. The Institutes of Justinian declare: "The precepts of th3 Law are to Uve honestly, to hurt no one. to give to every one his due.'' This last is a maxim of the common law No law except the Divine one commands it. Equity is also used as mean ing the body of the English Law as administered by its Court of Chancery. That court sprang from the necessity of affording relief which was not Utainable in the Law Courts, and attaining justice where the Law Courts Were poweriess. It recognized the equity of redemption in mortgages, re- lieved against fraud, mistake and accident, decreed the cancellation and amendment of instruments, rescinded or decreed the specific performance of contracts, took exclusive jurisdiction of trusts and charities. Its juris- diction was very wide. One of its most fruitful maxims was that he who came into equity for relief, must do equity as a condition of obtaining it. Its procedure and process were different from those of the Law Courts, and its remedies were peculiar. In the State of New- York, and nearly every State hi the Union, and in the United States, Law and Equity jurisdictions are happily blended, and the same Courts administer both law and equity. The Civil Law.— This is the positive municipal Law of the Roman Em- pire as collected by the Emperor Justinian, and published by his authority. The Codes of France, of Louisiana, and of several European nations, are adaptations of it to their countries. The Canon Law.— This is the public and general Code of Laws of the Roman Catholic Church. Commercial Law— sometimes called Mercantile Law and the Law of Merchants.— This is said to be "the system of law which the Courts of PBEFACK. 11 England and the United States apply to mercantile contracts. It is a branch of the common law, inferior in importance to no other, and, in many respects, quite distinct from any other. The principal objects embraced within it are the law of shipping, including that of marine insurance, the law of negotiable bills of exchange, and promissory notes, and the law of sales. " This book aims to comprise a summary of this law, and of other titles of the law, of equal importance to large producers and mercantile men. International Law. — Commerce is largely affected by it. It rests mainly in the expositions of treaties and the treatises of learned jurists. It prescribes laws touching peace and war, intercommunication, the rights of neutrals on the high seas, the conditions of an effectual blockade, etc. , etc. It is a great pity that it has no sanctions— no tribunal to enforce it as between nations. The last argument of nations is War. Courts op Admiralty.— Their jurisdiction embraces much maritime law — such as the enforcement of liens of seamen for their wages, and of material, men, etc., upon ships and vessels, salvage, etc., etc. Business Success— How to be sought.— A thorough knowledge of the contents of this book is far from being the only knowledge — extremely eflacient as it must be — needed for success. Success in business does not mean merely the acquisition of competence or wealth, unless they be dignified by a peaceful conscience, the love of friends and the respect of community. The knowledge of and obedience to every human law will not insure these better blessings. And then, again, a man whose conduct in business is kept strictly within and measured by the law, however able he may be, is in great danger of business failure. A reputation for honesty beyond law, and for strict integrity, is imperishable capital — it will add to and extend his business — it will sustain him in the fluctuations of trade, and make his fortunes superior to accidental reverses. In the eye of Honor, a just debt is not cancelled by the Statute of Limitations, and a release by composition of one's creditors leaves the balances to be paid on the return of prosperity. Accounts, Order.— The business success of any one who is destitute of order and ignorant of accounts is improbable in the extreme, and its occur- rence must be regarded as a freak of Fortune, akin to a miracle. A great business requires a great intellect for its due conduct. The truly mercar 12 PREFACE. tile mind demands order, and, on his premises, insists upon the orderly- transaction of business, and the preservation and arrangement of all corre- spondence papers and instruments, so that any one of them, however an- cient, may be found in an instant; and such a keeping of the accounts of stock, of sales, of cash, that he may have, whenever he requires it, a perfect balance sheet, or a particular account of any transaction in his business. Without order, there must be ignorance and confusion, than which nothing can be more embarrassing, more injurious to reputation, or more fatal to success. Conclusion.— To the proprietor of this worthy book I wish the joy he will tind in knowing that it has answered the honorable ends it is designed for. I hope that every honest student of it may, in the near future, look upon it as a chief contributor to his acquirement of honor and wealth in the business of the world. G. W. CLINTON. Albany, Sept. 1, 1882. TABLE OF GENERAL SUBJECTS. Agency, Agreements for Personal Services, Bailments, . Contracts, . Common Carrier. Copyright, Fire Insurance, . • Guaranty, . . , Legal Decisions, Lien, .... Negotiable Paper, Partnership, . , Prefatory, . Sale of Personal Property, Shipping, . Stoppage in Transitu, Warranty, . Reflections and Suggestions, PAOB. 152 181 189 17 136 185 198 124 95 132 86 167 5 105 143 149 121 203 13 ODEX OF BUSINESS FORMS. •»•»- Agreement for Sale of Personal Property, Acceptance of Draft, Acceptance Supra Protest, Agreement to Sell Manufactory, Articles of Copartnership, Bank Check, Bank Draft, Bill of Lading, Bill of Exchange, Bill of Parcels, Bill of Sale, Bill of Sale with Warranty, Contract of Building, Contract for Land, Contract with Clerk or Workman, Contract for Sale of Fann, Certified Check, Certificate of Deposit, Certificate of Bank Stock, Conditional Indorsement, Chattel Mortgage, Chattel Mortgage Renewal, Chattel Mortgage Sale, Charter Party, . Contract of Hiring, Due Bill for Money, Due Bi 1 for Goods, Draft, Draft, Acceptance Refused, Deposit Ticket, . 15 PAGE. 35 47 52 166 178 56 72 91 92 115 116 117 32 33 34 35 57 59 60 73 118 120 120 148 184 43 43 45 49 5^. 16 INDEX OF BUSINESS FOBMS. I I Foreign Letter of Credit, Forms of Guaranty, . Individual Note, Individual Negotiable Note, Inland Letter of Credit, Indorsement in Blank, Indorsement in Full, Indorsement, General, Indorsement, Qualified, Indorsement, Conditional, Indorsement, Restrictive, Joint Note, Joint and Several Note, Note Negotiable, Note not Negotiable, Notice of Protest, Negotiable Draft, Negotiable Note. Note with Indorsements, National Currency, . Power of Attorney to Transfer Stock Protest of Note, Power of Attorney, . Protest for Non-acceptance Receipt in Payment, . Receipt on Account, . Railroad Receipt, Set of Foreign Exchange,' Treasury Note, . Voting by Proxy -appointment TAGS 88 125 65 69 89 70 70 71 71 78 73 65 66 42 42 61 71 79 79 86 61 80 165 49 83 84 139 62 87 61 CONTRACTS. ■*♦♦■ 1. Contract. — A contract is a deliberate agreement between competent persons upon a legal consideration to do, or to abstain from doing, a particular thing. 2. Primary Elements. — The primary elements of a con- tract are : 1st, the agreement; 2d, the consideration; 3d, the thing or things to be done or omitted. 3. Secondary Elements. — The agreement is a compound, and is divided into three simple elements : 1st, the persons; 2d, the legal ability; 3d, the assent. Every contract, therefore, contains five essential elements, as follows: Primary Elements. 1st. Agreement. Secondary Elements. ( 1st. The persons. } 2d. The legal ability ( 3d. Their assent. Contract. < 2d. Consideration. 3d. The thing or things to be done or omitted. 4. The Persons. — There must be two or more persons to every contract. 5. Their Ability. — It is not only essential that there shall be two or more persons to every contract, but it is also necessary that these persons shall have the legal ability to make a con- tract. Persons are natural or artificial. Corporations and States are artificial persons. Corporations can make only such contracts as they are empowered to by their charters. States can make such contracts only as their constitutions warrant, and their agents cannot bind them beyond their authority. Persons who are not of legal age cannot, in general, make contracts. But when U 1^' 1 1 III ill 11. Propositions by Letter.— ^V]len persons are distant from each otlier it is customary to make propositions by letter, and when so made the offer may be accepted any time before notice of withdrawal if within a reasonable time, provided the offer is not limited. The person making the offer can retract if his letter withdrawing the offer reaches the other person before he has mailed a letter of acceptance, or telegraphed an accept- ance. But, if a letter of acceptance is dropped in the Post-office, and one retracting the offer is immediately after received, the contract is binding between the parties. So, also, where mer- chandise is ordered by letter, if the order is filled and the goods are placed in the hands of a carrier before notice of retraction, the contract is completed and binding between both parties. And if the person of whom the goods were ordered, not having them, should order them from a third person, the first person would be liable to him for any responsibility he assumed which was incident to the filling of the order. 12. The Acceptance.— It is not only necessary that there should be an acceptance, but it must be according to the terms of the proposition; any other would be more of the nature of a nevv^ proposition than an acceptance. When an acceptance id sent by letter it takes effect from the time it is mailed and not from the time it is receiveil. An acceptance cannot be revoked, because as soon as the pro]»osition is accepted, if then open, the agreement is completed and the contract is then binding. Ac- ceptance of a proposition ni i y be e'ahev express or implied. 13. Express Assent.— When the proposition is accepted, either verbally or in writing, in a formal manner, it is an express assent, and is binding between the parties. Express assent is not affected by custom or usage of trade. 14. Implied Assent.— The law does not require express assent, but it will raise an implied assent when justice and reason seem to demand it. And custom and usage will have much to do with implied assent, as where they indicate intention upon the part of the person who makes the offer to give a reasonable time the offer may be accepted within a reasonable time. So ELEMENTS OF CONTRACTS. 21 where a draft is drawn upon A. payable thirty days after sight, and A. having refused acceptance, it is accepted for the honor of the drawer by B., there is an implied assent on the part of the drawer to indemnify B., if he has to pay the draft. And where a judgment is secured against A., B. and C. as co-sureties, and A. is made to pay the whole sum, he can recover a proportional share from B. and C, upon their implied promise to re-imburse for their shares. 15. Mistake of Law.— It is well established, both at law and in equity, that a contract made under a mere mistake of law is not thereby vitiated. Every man is presumed to know the law, and ignorance of it is, therefore, in general no excuse. This principle, however, has application only to contracts per- mitted by law and untainted by fraud. 1 6. Refusal of tlie Proposition.— Refusal of the proposi- tion annuls the offer, and relieves the party making it from all liability concerning it, and places both parties in the same posi- tion as they were before the proposition was made, so that the party to whom the offer was made cannot afterwards withdraw his refusal, and then make an acceptance. Nor has any other person a right to accept an offer but the person to whom it is made. An offer to buy certain goods of A., at a given price, is not binding if accepted by B. 1 7. The Parties Bound.— The parties bound by a contract are only those who are parties to it, or have privity of interest in it sufficient to create reciprocal obligations, relating to the same transactions. But the original parties, or some of them, may sometimes be substituted by others who take their places. This is done by the assignment of a contract; or by indorsement^ in the case of negotiable paper. 18. Mistake of Fact.- When a contract is made under an injurious mistake of fact it is voidable. Mr. Justice Story says: "As every man is presumed to know the law, and to act upon the rights which it confers, when he knows the facts, it is a culpable negligence in him to do an act, or make a contract, and then set up his ignoran^^e as a defense. But no person can be no COMMERCIAL LAW AND BUSINESS FORMS. 1 I * ♦ |i presumed to be acquainted with all matters of fact, nor is it possible by any degree of diligence to acquire that knowledge, and, therefore, ignorance of facts does not import culpable nogligence." A palpable and plain mistake of fact entitles the mistaken person to avoid the contract. As where the indorser of a note which did not specify any place of payment, received a notice of protest of the note, and paid the note, supposing he was liable, but afterwards found that the note was presented at maturity, at the former place of husuiess of the maker o?j/y, which was held to be not a good presentment, and, therefore, he was not liable, and the payment was made under a mistake of fact, which entitled him to recover back the amount he liad paid. 19. The Consideration. — The consideration is that which induces the parties to bind themselves by the contract, and is either a benefit to the promisor, or an inconvenience or injury to the other party. Tt may be either valuable or c/ood It is not necessary that it should always be expressed; it may sometimes be implied. 20. Taluable Consideration. — A valuable consideration may consist of money, or other property to be paid, or of some- thing to be done, or of some injury or inconvenience to be endured. A promise to marry is a valuable consideration. The parties to the contract may use their own discretion in regard to the adequacy of the consideration. 21. Good Consideration. — This may be either blood re- lationship, or natural love or affection, which will support the contract as between the parties when executed, but will not be sufficient to support an action to enforce an executory contract. 22. Sufficiency of Consideration. — The sufficiency of the consideration is generally found in its b?ing a benefit to the promisor, or a loss or detriment to the promisee. It is not neces- sary that the promise and consideration should be equivalent in value. If the consideration has a legal value it does not signify how insignificant it may seem to be. It is not absolutely neces- sary that the promisor should receive any benefit in order to ilfl= ELEMENTS OF CONTRACTS. 23 make ii a sufficient consideration to support a promise. Anv person may make himself liable by endorsing negotiable paper, although he receives no benefit himself. So, also, in the case of a guarantor ; if the promise is made at the time the debt is con- tracted he will be liable for the payment. But if a person promise to do something himself for which he is not to receive any consideration, and he fail to dc it, there is no cause of action against him. 23. Forbearance.— Forbearance may be a sufficient consid- eration to support a promise. As where one agrees to wait a certain or reasonable length of time before commencing a suit for the collection of a well-founded claim, it is sufficient to support a promise made by the debtor. So, if a third person agree to pay the debt of another, if the creditor will give iiim a reasonable amount of time, it is a sufficient consideration to support the promise. When forbearance operates as a benefit to the one party, or an injury to the other, it is sufficient to support a promise. 24.^ Mutual Promises.— Mutual promises will support each other if they are made simultaneously. If made at different times, they are not a good consideration for each other. The liability arises from mutuality of obligation; one cannot be bound unless the other is. Reciprocal promises, as of marriage, are binding, for the reason that one promise forms the considera- tion for the other. 25. Moral Obligation.— A pre-existing moral obligation is a sufficient consideration to support an express promise. As where a legal debt which once existed has become outlawed by the statute of limitations, an express promise to pay it will restore the liability of the debtor. So, also, the promises of an adult person to pay debts which he contracted before he became of age. And an express promise made by the drawer or indorser of a draft to pay, although he be not liable, for want of notice, will renew his liability. 26. Statute of Frauds.-The English Statute of Frauds, which has been adopted in most of the States, enacts that : -No 24 COMMERCIAL LAW AND BUSINESS FORMS. !! jij II jf Hli action shall be brought whereby to charge the defemlaiit upon any special promise to answer for the debt, default or miscar- riage of another person, unless the agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged there- with, or some other person thereunto by him lawfully author- ized." This is held not to apply to origimd promises, but only to collateral engagements, or cases where a debt already exists on the part of a third person. As in the case of a note already given to A. by B. ; a promise from C. to pay must be in writing, to be binding. If A. tells B. to deliver goods to C, saying: " I will pay, if he does not," or "I will see you are paid," it is a mere offer of suretyship or guaranty, and is a collateral under- taking, which comes within the statute; but it is otherwise if he says: "Charge them to me," or "I will pay." The latter is an original promise, and need not be in writing. No consideration is necessary, so far as the person who guarantees is concerned, if it is a benefit to the person in whose favor the promise is made. This statute does not apply in cases where an original promise is made at the time the debt is created. The statute of frauds also provides that no sale shall be binding unless the buyer shall first accept part of the goods so sold, and actually receive them; or, 2d, give something in earnest, to bind the bargain, or in part payment; or, 3d, that some note or memoran- dum, in writing, of the said bargain, be made and signed by the parties, or their agents. The writing must state the promise, and also the consideration. Where goods exist in the condition in which they are to be delivered, and the delivery is to take place in liie future, a sale of such goods comes within the statute. 37. Things to be Done or Omitted.— The thing to be done must be legal, that is, it must not violate either the common law or the statute law. Contracts may be void on account of fraud, or on account of immorality, or when in violation of positive law, or public policy. 38. Yoid on Account of Fraud. — Fraud has been defined to be "every kind of artifice employed by one person for the ELEMENTS OF CONTRACTS. 25 I purpose of wilfully deceiving another to his injury." Every contract which is tainted by fraud is vitiated both in law and in equity. And all such contracts are voidable by the person whom it was intended to perpetrate the fraud upon. If he choose to avoid the contract he must do so at once, after having knowledge of the fraud; for if he goes on with the contract after having knowledge of the fraud, he cannot afterwards avoid it. The party who perpetrates the fraud cannot avoid the contract on that ground. 39. Contracts in Restraint of Trade.— A contract in general restraint of trade is void, as being against the public good. The reason is, " that the tendency of such agreements would be to promote monopolies, to check competition, enter- prise and industry, and to deprive the public of beneficial services and labors." It would also tend to promote pauperism. "A. gave a bond, by which he bound himself never afterwards, in his own name, or in the name of another, to conduct, carry on, use, or employ, the art, trade or occupation of an iron-founder or caster, or to be concerned, interested, or employed, directly or indirectly, in any manner, whatsoever, or under any pretense, whatsoever, in the business of founding or casting in iron." It was held to be void, as being against public policy. But an agreement for partial restraint of trade for a valuable considera- tion, if reasonable, is valid. 30. Contracts Toid for Other Causes.— Contracts may be rendered void for being in opposition to public policy, or for impeding the course of public justice, restraint of marriage, or for bringing about marriage, or for being contrary to the insol- vent acts, or for immorality. 31. Construction of Contracts.— Contracts derive their force from the mutual r.i^sent of the parties to the terms of the contract. It therefore becomes necessary to get at the intention of the ]>arties at the time they entered into the agreement. This is done by a fair construction of the language used in the con- t raot. A liberal construction is given to all commercial contracts, and especially to negotiable paper. If the terms of a contract 26 COMMERCIAL LAW ANH HUSINKSS FORMS. H !l a are iinil.iguous, the law will supply what seems to be necessary to get at the intention of the parties. Usage or custom, when general, and not in violation of the principles of law, will often aid in explaining the intention of the parties to a contract. 3*2. Defenses. — Any violation of the essential requisites of a contract, or any omission of a necessary element, will render the contract void, and is a defense to any claim that may be set up. There are also other defenses besides these to actions upon a contract. These defenses are generally enumerated as follows: 1st, Performance; 2d, Pai/tnent; 3d, lieceipfs; 4th, Accord and Satisfaction; 5th, Arbitrament and Aicard; 6th, Pendency of Another Action; 7th, Release; 8th, Ihider; 9th, Statute of limitation; 10th, Set-off; 11th, Pecouprnent. 33. Perforiuaiice.— The person to perform is he who is 6ound by the contract, and who can discharge his legal liabilitv by the performance of some act. If, for instance, a party is bound to pay a certain sum of money, it is not sufficient that he is ready to pay, he must either pay or tender payment to the party who is entitled to receive it. But if suit be commenced to enforce the payment, the money must be paid into court to be an effectual defense on the plea of tender. Whatever the legal obligation may be, either to pay a certain sum of money, or do a l>articular thing, it must be done according to the legal construc- tion of the contract. When all has been done that can legally be required the contract is discharged. 34. Manner of Performance. — Every contract is to be performed accordmg to the terms of the agreement, as it was understood and assented to at the time it was made. The understanding of the agreement by the parties, and their assent thereto, are to be inferred from the terms of the contract, and the circumstances under which the agreement was consummatut, if the paper is taken as payment, and is then dishonored, the original debt will have been discharged. 40. Note or Bill of a Tliird Person.— If the creditor receive the note or bill of a third person from the debtor of his own choice, there being no necessity, it will be considered as payment of the debt, and he can have no recourse against the debtor unless he required him to indorse the paper, and then his claim would be against him as indorser, and not on the original debt. But, if the creditor can show that he received the paper as security only, and it afterwards turns out to be worthless, the debtor must bear the loss. 41. Receipts. — A receipt is 7iot absolute proof of payment. It may be set aside on the ground of mistake of facts, falsity, or fraud, and is open to rebuttal by parol evidence. In this respect an exception is made to the general rule that written evidence cannot be varied by ]>arol. It is now well establislied that such evidence is here admissible. 1*2. Accord and Satisfaction.— Accord is an agreement that the payment of a certain sum, or the doino- of a certain act / DEFENSES OF CONTRACTS. I by one party, should be accepted by the other in full satisfaction I of his claim or demand. J But accord without satisfaction is no defense. The parties I may compare their accounts and agree as to the exact amount / due from one to the other, and the debtor may promise to pay at I a certain time, but, until payment is actually made, it will not \operate as a defense. 43. Arbitrament and Award. — This is commonly called arbitration, and signifies an investigation and determination of a matter in controversy by persons chosen by the contending parties. The parties may submit the matters in dispute to arl>i- tration, either by a written or verbal agreement. Where an award has been made that a certain sum of money shall be paid as damages at some specified time in the future, it can be pleaded as a defense any time before the expiration of the time agreed upon for such payment. 44. Pendency of another Action.— If a suit has been com- menced against a person in one Court, another suit cannot be brought against him by the same person for the same cause in tlie same or another Court until the first is withdrawn. So, also, a Judgment is a good defense to a suit brought by a party for the same cause, even if the two actions are different in form. 45. Release. — A release is a relinquishment of some right or claim by some person in favor of another. No particular form of words is necessary to constitute a release. It may be made by an express agreement between the parties, or it may result from the operation of law. Verbal contracts may be released by parol. Written contracts require a written release, and contracts under seal require the release to be under seal. A release may be for a part of a debt or for the whole. When the principal of a debt is released, the interest will generally be released also, unless there be a separate contract for the interest. A release given by one of several joint creditors will discharge the debtor from all. So, also, a release given to one of several joint debtors will dis- charge all. A release may result from operation of law; Ist, by assuming relations between the parties inconsistent with the ^ relation of debtor and creditor either by marriage, oi by death, V I 11 (I 30 COMMEKllAL LAW AND BUSINESS FORMS. tJI I ■ H ill or by appointment ; 2d, by taking a higher security, as where a note is given in phice of a book account. This is a merger ^ and the book account is said to be merged in the note ; 3d, a mate- rial alteration of the contract by one party without the consent of the other. 46. Tender. — A tender is an offer of a sum of money in satisfaction of a debt or cLaim, by producing the exact amount and offering to pay it to the creditor or person claiming it. When a legal tender is made before a suit is commenced, it operates as a good defense against the costs of the suit, damages, and interest on the debt after the tender is made, but is not a defense as to the debt. But to have this effect, the tender must be pleaded and the money tendered must be paid into Court. The tender may be made by the debtor or by his agent, either to the creditor himself or to his authorized agent. The tender must be of the whole amount and not of a part. It must be absolute and not coupled with any conditions. Tender to be legal must be made in gold or silver, or in United States Treasury Notes. Bank bills are not a legal tender if the creditor object to them on that ground. But National Bank Currency is legal tender for some purposes, as in payment of all ta^es and excises and all other dues to the United States except duties on imjyorts^ and, also, for all salaries and other debts and demands owing by the United States to individuals, corporations and associations within the United States, except interest on the />i/W/c debt. 47. Statute of Limitations. — The legislature of any State has the right to change the comnjon law, and within the limits of the constitution of the Stale, and of the United States, to legislate upon any matter not embraced in the com- mon law. The laws enacted by the legislatures of the States are called Statutes, and, inasmuch as they are made by different bodies, they frequently differ in respect to the same subject in different States. The statute of limitations enacts that, after the lapse of a certain period of time, no action can be sustained at law for the enforcement of a claim, but the party entitled to its benefit may waive by omitting to plead it. ^f not waivei to pay," it was held that the word not should be rejected, and 71, Form No. 6. (Negotiable.) that the note was good. ^0^^ $2fi00'\ Buffalo, X. Y,, Su^e -/, 18S2. ^&€^M^ of^t or order ^*^ Vi^<2 0'/i.„,■* » Value received. f No. 33. ^ <^. j^uMu^. 72. Form No. 7. (Not negotiable.) $1,000'\ Buffalo, X. i:, ^^u^^ ^^4 1882. (yA^te€. ^yyui^n^^ after date Cj promise to pay #'C ^ J^Z..^^ : ^<^ S4it^ud€i^€/. DOLLARS at Bank of Buffalo. Value received. ^o. 48. (^, J2/. OOu^i/. The two notes here given illustrate common forms of promis- sory notes. No. 6 is made payable to C. L. Brown, or order, and is therefore negotiable. No. 7 is payable to W. H. Glenny, and is without the word order or bearer, and therefore is not negotiable, and can only be collected by Mr. Glenny or his agent. 73. The Payee. — The payee is the person to whom the note is made pavable. In the first note, C. L. Brown is the payee. In the second, W. II. Glenny is the payee. The payee or any other owner of a note is also called the holder. The name of a payee is not always expressed in the face of the note, and when not expressed, and the note is payable to hearer simply, then any person who is the rightful holder is the payee. NEGOTIABLE PAPER. 43 74. The Maker. — The maker of a note is the person who signs it, and becomes responsible for the payment. The maker of the first note is S. S. Guthrie, and S. G. Burt is the maker of the second. The maker binds himsdf to pay the amount specified in the note to the person who is entitled to receive it on the day pf maturity. He is under no obligation to pay it before maturity; but if he should pay it before it became due, and omit to take it up, any person who should take it for value before maturity, not knowing it had been paid, could hold the maker responsible for its payment. And if the previous holder had given the maker a receipt acknowledging the payment before maturity, it would not invalidate the claim of the subsequent holder. 75. A Due Bill. — A due bill is a written acknowledgment and evidence of a debt. It may be payable in money or in goods, or in any kind of personal property. It may be payable at sight, or on demand, or at a specified time in the future. When payable in money it is much of the nature of a note. It is one of the simplest forms of negotiable paper. The following are common forms: 76. Form No. 8. (For money.) SI $40(/'\ Xew-Yor'k,Sc^A^ -/d^ 1882. Due t^e^yi^^ ^t^-T^c.-a^yi^ or order, for value received, )i4/>^^€l. ^^^. 84. The Parties. — The parties to negotiable paper are of two kinds, original and subsequent. The original parties to a note are two in number, viz. : the maker and the payee. The original parties to a draft are three in number, viz.: the drawer, the payee, and the drawee. In the foregoing draft John R. Penn is the drawer, S. S. Rogers is the payee, and J. P. Dudley is the drawee. These are the original parties to the draft. Those who receive it afterwards by indorsement are the subsequent parties. 85. The Number.— The number of a note, or draft, repre- sented in the foregoing draft by "No." in the lower left hand corner, is inserted by the person who writes it up ; that is, the maker of the note, or the drawer of the draft. Every merchant keeps a blank note-book, and draft-book, and, when he fills up a note, or a draft, for issue, he numbers it, and the stub, from which it is taken, alike, and also notes on the stub the substance of the note, or draft, as the case may be. The numbers of the notes or drafts issued, and of the stubs from which they were taken, are, of course, consecutive, and corre- spond with each other. 86. Theory of Draft.— When a draft is drawn the suppo- sition is that the drawee, or person upon whom it is drawn, has funds in his hands belonging to the drawer, or is indebted to him, and will accept the draft, or pay it, as the case may be. M »i 3 '; 1 1 H f! 46 COMMERCIAL LAW AND BUSINESS FORMS. DI I ■iJ I Sometimes, however, drafts are drawn by agreement between the drawer and drawee where there is no indebtedness on the part of the drawee. Drafts are sometimes drawn upon the supposition that the drawer will have funds in the hands of the drawee before the draft will be presented to him. 87. Liability of Parties.— A person* may be absolutely liable, or conditionally liable, on negotiable paper. He is abso- lutely liable when he delivers to the payee his positive promise to pay as the maker of a note or the acceptor of a draft. He is conditionally liable when he gives to the payee his order upon some one else to pay, or endorses a promise or request to pay. The maker of a note is absolutely liable, the drawer of a draft is only conditionally liable; that is, he is liable, provided the person drawn upon — the drawee — refuses to pay. The drawee is not liable at all until he has accepted the draft. 88. An Acceptance.— When a draft is written up and put into the hands of the payee, it is a request or order to pay, directed to a third person. If it is payable at sight, no accept- ance is necessary, except in those States which allow davs of grace on sight drafts. The laws of the different States are not uniform in this respect. In New-York days of grace are not allowed on sight drafts. In Massachusetts they are allowed. But, if a draft is made payable a certain number of days after sight, it must be presented by the holder, or his agent, to the drawee for acceptance, because the day upon which it is accepted is the period from which the time is to be reckoned instead of the date. The drawee signifies his willingness to pay the draft at maturity by writing across its /ace, "accepted," with the date and his signature. This is generally written w^ith red ink, probably to attract attention ; but the legal effect is the same with any kind of ink. This writing across the face is called "an acceptaiice^'' and is an absolute promise to pay at maturity ; and, therefore, the draw^ee is absolutely liable, as soon as he accepts and delivers the draft. If the draft is payable a certain number of days or months after date, it will fall due without acceptance, and it is not obligatory to present NEGOTIABLE TAPER. 47 it, but, as there is no principal debtor until accepted, it is better even then to have it accepted. If the drawee wants a rea- sonable time to determine whether or not he will accept, the bill may be left with him until the next day, and, if he should refuse to deliver the bill when called for, he can be held as an acceptor. When a bill is drawn on tioo persons who are not partners it should be presented for acceptance to both. An acceptance in a legal sense is a promise to pay. 89. Form of Acceptance. — The form of acceptance de- pends upon the law of the place where it is made. No particu- lar form of words is necessary, but it must import acceptance, and comply with any statute requirements of the place. The Statute of New-York requires that the acceptance shall be in writing, and be signed by the acceptor or his agent. The ac- ceptance may be absolute or conditional. As the drawee is only liable in accordance with the acceptance which he makes, it follows that the bill is affected, in the hands of any person w^ho may hold it, by the conditions of the acceptance. Therefore, if a bill of exchange is accepted on condition that the drawee receive money from the drawer before maturity to pay it, the holder cannot enforce collection without first proving that the money was received. The following form will illustrate the arrangement and wording of an acceptance which in business is written across the face of the draft. 90. Form No. 11. (Acceptance.) I iiHl $50(r. \ >• -Ce^^ €t-a-^^ \ ^^^i*^^ New 'York, C^'d^^ /. 18S2. ^^^^^^ i>«y to the order of -7-— T^ ^^^ fWV^^ - - D OLLARS yalue^^ive^^^ith current rate of exchange. To ^ ^' ^^t^^-^^e^j No. 133. A^f.{/^''-'^-'^^'^"^- 48 COMMERCIAL LAW AND BUSINESS FORMS. I If i' hi m 91. Presentment for Acceptance.— When the payee receives a draft payable a certain number of days after sight, it is his duty to present it for acceptance within a reasonable time. It must be presented by the holder or'his agent. It is to be pre- sented to the drawee or his authorized agent. If the draft is drawn on a partnership it may be presented to any one of the partners. If drawn on two or more persons who are not part- ners, it should be presented for acceptance to each person. A draft may be presented any time during the business hours of the day, but no presentment can be made on a Sunday or a legal holiday. The place for presentment is at the residence of the drawee, or at his place of business, generally at the latter. The holder is under no obligation to receive a conditional acceptance, and can demand an unconditional and absolute one, according to the tenor of the bill. 93. Non- Acceptance.— Non-acceptance is a refusal by the drawee to accept the draft when presented, and the draft is then called dishonored. Immediately upon the dishonor of the bill it becomes the duty of the holder, if it is a foreign bill, to have it protested, and send notice of the protest to all the parties who are conditionally liable. This protest should be made by a notary public, and he should present the bill and make the de- mand himself. If, however, no notary public can be found, it may be presented and protested by any respectable citizen in the presence of witnesses. It is customary with banks and business men generally to have all paper that is dishonored, either by non-acceptance or non-payment, protested, and to notify all parties whom it is intended to hold responsible for the payment of the paper. The protest must be made out on the same day the paper is dishonored, and the notices must be sent as soon as the day following. If there is any neglect in having* the bill protested, or in sending the notices, all who are not properly notified w^ill be discharged, and the holder must submit to his loss. i IM 93. A Protest. — A protest is a formal declaration made by a notary public against any loss that may be sustained in consequence of the non-acceptance of the draft. The protest NEGOTIABLE PAPER. 49 must be made out in accordance with the law of the place where it is done. In cities and villages a notary public is generally employed to do the business. Let us suppose that the holder of the following draft (Form No. 12) presented it to the drawee on the third day of June, 1882, and demanded acceptance, and that acceptance was refused by the drawee. 94. Form No. 12. $1,000'\ Chicago, III, ^^^^ 'f protested. Such an acceptance may be made either for the drawer of the bill, or for one of the indorsers. To illustrate an acceptance 5wjt>m-/)ro^^, let us suppose that the following form is the identical one of "Form No. 12," then the acceptance would be written across its face in red ink, as follows: 52 com.mekcial law and business forms. 90. Form No. 15. $1,000"", V \ ft ys^kftersigS^ay Chicago, III, /^'^^ ^<^4 1SS2. U-i**^ or order, DOLLARS Mrg^ a^mi^ of (!y. d^^. C/^^^-t'C't^s This acceptance of the draft is held to be a conditional promise to pay on the part of Mr. Miller. The holder keeps the draft until maturity, the same as if the drawee had accepted, and then presents it to the drawee for payment. If he refuses to pay, the draft must be protested for non-payment, the same as if he had accepted and then refused to pay. The same general form of protest is used for non-payment* as for non-acceptance. The holder of a draft is not obliged to accept the offer of any person to make an acceptance for honor. If the drawee refuses to accept he can commence proceedings asrainst the drawer at once. If the original drawee does not pay the draft at maturity, the person who accepted supra-protest must be notified within the le^al time — twenty-four hours — or he cannot be held liable. 100. Bank Depositors.— In the larger cities when a person wishes to deposit money with a bank he is required to furnish references as to his character and integrity. If these are satis- factory he will be requested to write his name in a signature book, giving his name in the same hand and style that he will sign his checks. This is to enable the teller of the bank to judge cor- rectly of the signatures of any checks that may be presented at the bank for payment which are signed in the depositor's name. And especially that the teller may compare any doubtful signature with the genuine one in the signature book. This is an essential precaution, inasmuch as the bank is responsible for the genuine- ness of the signatures to all checks which are paid. When an account is opened in a bank with a partnership, the firm-name is NEGOTIABLE PAPER. 53 written in the signature book by each member of the firm who is allowed to sign partnership checks, and his individual name is written in connection therewith. 101. Methods of Depositing.— There are several different methods of depositing money in a bank, each of which has its advantages and disadvantages. When money is deposited in a bank some voucher should be taken from the bank by the de- positor as a receipt for the money. The voucher is sometimes a hank-hook, and at other times a certificate, or simply a receipt, occasionally a teller's check is taken. lOa. Bank Book.— When a person deposits money with the intention of drawing checks as a means of payment, instead of using currency, he usually takes a bank-book as a voucher. This is a little book, convenient to carry in one's pocket, which is commonly furnished by the bank, and in which the teller of the bank enters all sums of money left by the depositor. This little bank-book generally has printed across the top of the double page something like the following, viz.: (( Dr. BANK OF BUFFALO, in account with Cr. >? In the blank space is written the depositor's name, and each sum deposited, with the date, is placed on the left hand page of the book. This entry indicates that the hank is debtor to the depositor for the amount so entered. Nothing is written in this book except by the teller of the bank. The convenience of taking a bank-book IS, that money can be drawn out by check at any time without presenting the book. As each successive sum of money is depos- ited the depositor fills out a deposit-ticket showing the amount of the deposit, and hands the ticket v^ith. the money and hook to the teller, who enters the date and amount in the bank-book If a note is left for collection, it is usually entered by the collection clerk m the back part of the bank-book, giving date, maker's name, maturity, place of payment, and amount. When it is collected, the amount, less the charges for collection, is placed in the book as a regular deposit. It may be here stated that most business men do not consider it necessary to keep an i'llr lA I rH\\ -i 54 COMMEliClAL LAW AND BUSINESS FORMS. ■li I • ■ ni I account with a bank in their general account books. The bank- book and the records of deposits and checks which are usually kept on the back of the stubs in the check-book, being quite sufficient for all necessary information, and as vouchers. 103. Checks Paid. — When the depositor's checks are paid by the bank they are not at that time entered in the depositor's bank-book, but are filed away, and all entered on the right hand page of his book at the end of one, two, or three months, according to custom. At intervals of customary time the depositor leaves his bank-book with the bank, when all the checks which have been paid are entered, and the book is balanced by entering — usually in red ink — the difference be- tween the amount of the deposits, and the checks, Under the paid checks on the right hand side. The bank-book is then ruled up, and the balance in bank is brought forward on the left hand side of the book similar to the first entry. When the bank-book is again called for by the depositor, all the cancelled checks are returned with the book. 104. Deposit Ticket.— A deposit ticket is a printed mem- orandum with blank spaces for inserting name of depositor, date, and amount of funds deposited. It generally has printed upon it a description list of the kinds of funds deposited as per form following. These deposit tickets are furnished by the bank for the use of the depositors, and should be filled up by the deposi- tor, according to the printed divisions on the ticket and the amount extended. The deposit ticket is a great convenience to the bank teller. He compares the amount, as counted by him- self, with the amount on the ticket, and, if any question arises as to the accuracy of th3 figures in the depositor's bank-book, he has the deposit ticket as a voucher. The deposit-ticket often proves as useful to the depositor as it is to the teller. He may at some time, for instance, discover that there is a mistake in his cash account, and may hastily come to the conclusion that there must have been a mistake in entering his deposit in the bank-book. In such case nothing could be more convincing than to see his deposit-ticket which was filled out by himself. NEGOTIABLE PAPER. 55 ^y- 105. Form No. l5^ DEPOSITED IN BANK OF BUFFALO. Buffalo, 188 . Currency^ . Checksy DrafUy Amount, 106. Checks.— A check is a written order upon a bank, di- recting that a certain amount of money be paid to a person men- tioned therein, or to his order, or to bearer. A check is one of the simplest forms of negotiable paper. It may, or may not, be negotiable. There is no uniform rule for the wording of checks, either when printed or written. Sometimes the words "or order " are used after the payee's name, sometimes " or bearer," ajid sometimes they are made payable to Nearer, without men- tioning any payee by name. If both order and hearer are omitted, the check is not negotiable. Checks are always drawn on banks or bankers, and are always payable at sight, and, therefore, never need acceptance. It is customary with business men to have their checks made up in book-form, and generally they are printed payable to the order of the person to whom they are made payable. But the loose checks, which aie kept by the i % i I MM ' w 56 COMMERCIAL LAW AND BUSINESS FOKMS. bank for the use of their customers, are generally printed pay- able to bearer. When a check is payable to bearer the bank does not take upon itself any responsibility as to the identity of the holder. Prudent business men keep most of their money deposited in bank, reserving only a sufficient amount to meet small expenses. All payments of any considerable amount are made with cheeks. A record of each check should be kept on the stub from which it is taken in the check-book; this history should befall and explicit. The following is a common form of check* 107. Form No. 16. No. 55. Buffalo, N. Y.y J^u^e /, 1882. FIRST NATIONAL BANK, Pny d at. $2,000'\ (yfl^tz^/Aeti^d, or order, DOLLARS 108. Checks as Receipts.— When a check is made payable to the payee, or order, it must be indorsed by the payee before payment; that is, the person to whom it is payable must write his name across the hack of the check. Banks generally require all checks to be indorsed whether they are payable to order or bearer. When a check is paid by a bank, it is cancelled with a stamp, but not destroyed. The cancelled checks are returned to the depositor when his bank-book is balanced up, and they answer as vouchers to the drawer, especially when they were made pay- able to the payee or order, and come back from the bank with his endorsement on the back. The indorsement is evidence of payment to the indorser, and the check therefor is a receipt. 109. Certified Checks. — The presumption is that when a check is drawn upon a bank there is enough money in the bank to the credit of the drawer to meet it. This is not always true. Sometimes business men draw checks when they know they have not a balance to their credit in the bank large enough to pay M 1 .t!',' 1^ NEGOTIABLE PAPER. 57 them, but they expect they will be able to deposit enough before their checks are presented for payment. Unscrupulous persons frequently draw checks and attempt to pass them, knowing that they have no money in bank to meet them, and never intending to deposit funds to meet them. Business men are not safe, therefore, in taking checks from strangers unless the checks are "certified." To get a check "certified" it should be presented to an officer of the bank; generally the cashier certifies. If the balance to the credit of the drawer of the check is large enough to meet it, he will write across the face of the check the word " certified," and sign his name below it as cashier. More com- monly, perhaps, the certification of the check is made by writing across its face, as follows, viz.: "Good when properly indorsed," and signed by the cashier. This makes the bank responsible for the payment of the check, even if the drawer contrives to get his money out by drawing other checks before the certified check is presented for payment. If a bank certifies a fraudulent check it will be liable for it. The certification of a check is much of the same nature of an acceptance of a draft, the holder looks to the bamk for security instead of the drawer, and generally the bank charges up the check to the drawer when it is certified. The following form will illustrate the manner of certifying a check: no. Form No. 17. $^00^-^. ^ I Buffalo, N. Y., <&'^/t/. .r, 1882. Is |A|Nit)F COMMERCE. ^ s| ^ Pay to cMe^^Me^^. 3^ •>'-V.>4 '•"N ^ ^■^4.^, ^M^^^^ or order, ^%\DOLLARS 111. Cash Checks. — Business men generally treat checks the same as bank currency, counting them as cash, and deposit- ing them with the currency as cash. When a check is received on account of a debt the obligation of the debtor is not dis- I li ■'<. 58 COMMERCIAL LAW AND BUSINESS FORMS. ■ ■11 charged if the check is not paid, unless there was an agreement to that effect between the parties. The check is regarded as a means of getting the money, but not as payment until the money is received, provided the holder of the check is guilty of no neglect. When a check comes back from the bank into the hands of the debtor, with the creditor's name indorsed on the back, it is evidence of payment. 11^. Forged Checks. — It has already been stated that banks require their depositors to write their names in the signa- ture book, so that they may have a criterion by which to judge of the correctness of the signature. The responsibility is en- tirely with the bank, and the teller must be able to identify each signature. If the signature to a check is forged no one has any claim upon the person whose name was forged, and if a bank pays such a check the loss will be its own. A forged signature cannot be ratified by the person whose name was forged, because the act is criminal, and the ratification of it would be opposed to public policy. 113. Raised Checks. — Checks are sometimes written so carelessly that they afford every opportunity for inserting a word and a figure, by which to make it express a larger sum of money. This is sometimes done, and the check is then said to be raised. If a check has been raised above the amount for which it is drawn, and is paid by a bank, the drawer of the check will be liable for the whole amount paid, if he contributed to the al- teration by carelessly leaving space for inserting a word and figures to increase the amount ; but if properly written, only the original amount of the check can be charged to the drawer. 114. When Payable.— Generally, no time of payment is specified in a check, and it is held to be payable immediately upon presentation. When received in the same place where it is payable it should be presented for payment as soon as the following day; if held longer, it will be at the risk of the holder. If a check is not presented for payment within a reasonable time, and the bank fails, the holder must bear the loss if there was money in the bank to meet it. Checks should be dated the day upon which they are drawn, and if made payable some time NEGOTIABLE PAPER. 59 in the future, the time should be stated in the body of the check. If a check is dated ahead, it is worthless until the arrival of the date, but it may be good when that time arrives. 1 lo. Certificate of Deposit.— A certificate of deposit is a receipt given by a bank certifying that the depositor has left with the bank a specified amount of money to be paid to him or to his order, on the return of the certificate properly indorsed. Checks cannot be drawn against certificates of deposit, as in case of a bank-book, nor can less than the full amount be drawn con- veniently, but they are convenient for deposits which are made for safe keeping for a specified time, and they may be used for* making remittances, but are not generally as convenient for that purpose as drafts. The following will illustrate a common form of certificate of deposit: 116. Form No. 18. No. 135. BANK OF BUFFALO. Buffalo, X. i:, Su-^e u'se ^ojL>^ify j^-^^i^^ C^€/€i'i^nd or order y^M ^^^ cT/<>i^€i^t€/Us:^^^J}^^j^^^r^ MK ^^ a « d Qj''j€l^l- 4 <^44 <^ ^j.r:..c..:-. KS Value Received. 110. Form No. 27. 'SNQ© gJLl <^^^^"- Q li ^^Uz.^C'^ Buffalo, X. Y., O^t^ao/4 ^^^-' r,i^ after date Cy^ promise to pay to \^the order «-*^«-^<:«, C/c)-e4j^jL€i^^ C^. ^l^. a/l^ Jl due received. ^Ar/m«ry effect is to transfer the title to the paper from the mdorser to the indorsee. The next or secondary effect is to make the indorser condkionally liable for the payment of the paper. The indorsement is a contract by which the indorser makes himself liable to the indorsee and every subsequent holder. 145. Liability of Indorser .-There is an implied guar- antee on the part of every indorser, in favor of, and with the indorsee and every subsequent holder. First, that the paper Itself and all the names thereto, are good and genuine; second, that, he himself has a good title to it; third, that he is legallv competent to bind himself by indorsement; fourth, that the 5J, » t ;»& I f^ V. 68 COMMERCIAL LAW AND BUSINESS FORMS. maker of the paper is competent to bind himself to the pay- ment of the bill, and will pay it on presentment at maturity; //?A, that if it is not paid by the maker or acceptor when duly presented at maturity, the indorser, if duly notified of the dis- honor, will pay the same to the indorsee, or to any subsequent holder. But if a note or bill is indorsed by a person under legal age, he cannot be held liable for the payment. 146. Forms of Iiidorsciiieiit.— Mr. Chitty, in his work on *' Bills of Exchange," gives six different kinds of indorsement, which he names as follows: Blank, Full, General, Qualijied, Conditional, and Restrictive. The first three are very commonly used; the la^t three are seldom used in business. Each has its peculiar advantages and disadvantages. 147. Blank Iiulorsemeilt.— When the payee indorses a note, or other negotiable paper by simply writing his name across the back of it, it is called a Blank Indorsement. When a blank indorsement is made, the name should be written far enoucrh below the end of the bill to leave a blank space above it lart^e enouo-h for the insertion of the name of the indorsee. The fact of its having been so written is probably what gave it its name. So long as this indorsement continues blank, the note, or bill, can be transferred by mere delivery, the same as if it were payable to hearer. The disadvantages of a blank indorsement are, that, if the paper should be stolen, or lost, or fraudulently negotiated by an agent, and get into the hands of an innocent holder for value, the holder of it wouhi be entitled to recover the amount due upon it, in opposition to the claims of the per- son who was the owner when it was lost. But the holder of paper, which has been indorsed in blank, may protect himself from such danger of loss by filling up the blank above the indorser's name, and making it payable to himself or order. 'The holder is at liberty to write anything above the indorser's name which shall protect his own interest without interfering in any way with the liability of the in- dorser. When a note is indorsed on the back, it is customary to turn the left end uppermost. The reason of this is, that it is I NEGOTIABLE PAPER. 69 natural for right-handed persons to do so, and it, therefore, looks awkward in the opposite position. 148. Full Indorsement.— When the holder writes upon the back of a note, or bill, the name of the person to whom it is to be paid, above his own, and makes it payable to his order It IS called a full indorsement. This indorsement prevents its bemg again negotiated, unless it is indorsed by the first indorsee. It IS, perhaps, the most common and the most satisfactory of all the indorsements. If stolen, or lost, or misappropriated, it can- not be negotiated, unless the bill is again indorsed by the rightful holder. Indorsements should alwavs be made on the back of a note or bill, because it is the custom of business men- but the legal effect would be the same if thev were made on the face. 149. Note and Indorsements.— The followino- forms will illustrate a note, with the blank and full indorsements made on lUback. This note is turned over with the left end uppermost ano $1200'\ Buffalo, N. Y., di<^€. ^o, 1882. CJe^ ^izyd 'cU^e^ ^t'^-d/ pay to the order of ■J g^o @^ ©f'^^.^^l., £..A....j:.±zCUl/::.±l.t£.. Q 0W0 qHq ^-^^^-2^ ^i^^-cA^i/.. DOLLARS at ^-(.'^^ SS-ui^A^ and charge to account of To ^. Cy^j^A^ S^ No. 753. J^e. Indorsement Revoeable.— The mere indorsement of a bill does not transfer the title. It must also be delivered to the mdorsee, or his agent, before the title i)asses to him An ' indorsement may therefore be withdrawn or revoked any time before delivery. 106. Indorsements Admissible.-We have already seen aiat when a bill is payable to the order of the pavee it canno^ be negotiated without an indorsement. But when a bill is pay- able to bearer it may be transferred by delivery alone. It 'is admissible, however, to indorse a note or bill which is payable to bearer, or which is indorsed in blank, and in case such bill is in- dorsed, the indorser becomes liable for the payment, provided it is not paid at maturity. The same bill may be indorsed any number of times unless it contains a restrictive indorsement A bill which has been indorsed by a person, may, in the course of business, come back to him again by indorsement, in which case he will acquire the same rights he had in the bill before. If the first indorsement remains blank, subsequent* indorse- ments will not affect it, and any holder has a right to fill up the blank indorsement and make it payable to his^own order, and pass over all the subsequent indorsements, ler. Necessity of Protesting.-Everv indorser whose name appears on the back of a note or bill is liable to the holder for payment, if it is dishonored; provided it is duly pro- tested, and proper notice given to each of them. If the holder neglects to have it protested, all the indorsers will be dis- charged. And it is as essential that a bill be protested for J^^- NEGOTIABLE PAPER. 75 non-acceptance as it is for non-payment. Each indorser is liable to every subsequent indorsee, and may look to every antecedent indorser for indemnity. But the security of the holder depends entirely upon havhig the protest made immediately upon the dishonor. An important distinction is made, however, between foreign and inland bills. The English law requires Wi^l foreign bills shall be protested for non-acceptance, while inland bills need not be, and this law will generally prevail unless there is some statute law which interferes with it. But it is customary to have all bills protested when dishonored, and it is obviously the safer way. 168. Written or Verbal Notice.— As soon as a note or bill is protested notice must be sent to all the parties whom the holder intends to look to for payment. He may select one or more whom he considers responsible, and notify him only, or he may notify all. Each indorser should, in like manner, upon receiving notice from the holder, notify those to whom he in- tends to look for indemnity, and each has until the next day, after receiving notice, to send. If, however, the indorser knows that the holder sent notice to all the parties to whom he would be entitled to look for indemnity, he may avail himself of such notice, and need not himself notify. It is optional with the per- son who sends the notice whether it be written or verbal. 169. Kind of Notice.— The notice must be sent by the bolder, or by an agent of his— a notary public would be his agent— and not by a stranger, who has no interest in the matter. No particular form of notice is necessary; it is a sufiicient notice to say that the bill, or note, has been dishonored. The notice should describe the paper accurately enough so that there can be no mistake about it. It should also state that the person a.l.lressed will be looked to for payment. A person, who is not the holder at the time, may give notice if he expects the paper to come into his possession, as where he has given it as collateral security for a loan. As soon as the proper notice is given to the parties who were conditionally liable, they become absolutely hable. AVhen notice is sent by mail, it must be put in the post- office as soon as the day following the protest, and, in case there i*f *4l -m 76 COMMERCIAL LAW AND BUSINESS FORMS. 1 il I is delay in delivering, the sender should be able to prove that it was deposited in the office in time. 170. Liable Without Notice.— When the drawer of a bill unites with an indorser in deceiving a holder, by represent- ing that the bill will be accepted when they know it will not be, they are not entitled to any notice. And when an indorser transfers a bill upon which he knows there is nothing due, he need not be notified. When a person draws a check knowing that he has no money in bank to meet it, and does not expect to deposit any in time to meet it, he is liable without notice. And when a person has made an agreement to waive notice, it is not necessary. 171. Days of Grace. — The days of grace constitute an important consideration in the computation of time in negotiable paper. They were at first allowed as an indulgence to the maker of the note, or acceptor of the bill, to enable him to get together the necessary money for payment. In time it became an estab- lished custom with merchants to allow a certain number of days for this purpose, and eventually the custom became law. Days of grace are not uniform in number in different countries. The rule of law is that they are governed by the law of the place where the paper is payable. In this country the days of grace are three^ which are added to the time at which the paper would otherwise become due. If a note, for instance, without allowint^* "days of grace," should become due on the first of June, it would not be payable in consequence of days of grace until the fourth day of June. If the third day of grace should chance to fall upon Sunday, then the paper is due one day earlier, and would be payable on Saturday. And, if it should so happen that this Saturday should be a legal holiday, as Christmas or the Fourth of July, then the paper would be due and payable still one day earlier, or on the first day of grace, which, in that case, would be Friday. The statute of New-York makes Monday a lejral holiday when such holiday falls on Sunday. These three days are to be counted consecutively ; that is, if the first day of grace comes on Saturday, the Oiird will come on Monday, no allowance bein^r made for Sunday. Days of grace are added in R^ NEGOTIABLE PAPER. 77 all cases where negotiable paper has any time to run. They are also allowable in ^o;^.6 States where paper is payable at sight, but in other States they are not allowed on sight paper. They are not allowed on paper payable at sight in the State of New- York, nor on time drafts drawn upon banks and bankincr associations. In Canada days of grace are allowed on paper payable at sight, but not on paper payable on demand. And if the last day of grace fall on Sunday, or a legal holiday, the paper is payable the day after instead of the preceding day. Days of grace have been abolished altogether in California They are not allowed in Kentucky, Georgia, and Alabama on promissory notes, unless they are pavable at a bank, or are dis- counted or left for collection at a bank or private banker's. Thus It becomes necessary for one doing business with a person living in another State, to ascertain what the statute laws are in such State in regard to any contract which he may make. im. Maturity of Negotiable Paper.— By maturity is meant the day upon which it falls due, and upon which demand of payment should be made. This depends upon the method of computing time, and the consideration of days of grace. The day upon which a note is made or a draft is accepted, is ex- cluded, and the time counted /mm that day. If, for example, a note 18 dated on th^ first day of any month, and is made payable one month after date, it would fall due on the first day of the following month, without days of grace, instead of the last day of the month in which it was given; but with the days of grace It does not fall due until the fourth day of the following month. The days of grace are considered a part of the original time, and when a note is made payable one month after date it means a month and three days. So, when the time expressed is thirty days. It means thirty-three. It must be remembered also that thirty days and a month are 7iot equivalent terms. In the com- putation of time in negotiable paper a month means a calendar putation of time in negotiable paper a month means a calendar month and not a lunar month. So when a note is dated on the last day of any month, and is made payable one month after date, it will be due on the last day of the next month if there are no days of grace, even if the next month does not contain as many days as the month in which the note is dated. To i 78 COMMERCIAL LAW AND BUSINESS FORMS. H' it t' illustrate: siip})Osc four notes are given in the month of Janu- ary — except a leap year — each note made payable one tnoydJi after date— the. A>a'^ being dated 28th; second^ 29th; third, 30th; and fourth, on the 31st of January — each of these four notes will fall due on the third day of March. 173. rresentatiou for Payineiit.— This is one of the most important duties of the holder. The note or bill should be presented on the exact day of maturity, and demand made for payment. If the holder neglects to demand payment on the very day it falls due, he will lose his right of recovery against all the parties to the paper who are conditionally liable, and can only look to those who were absolutely liable The maker of the note, or the acceptor of the draft, will still be liable after such neglect, but the indorsers and the drawer will be discharged. It is of no account to present the paper for payment any day before maturity, or any day after, so far as the indorsers are concerned; they are al^solutely free from liability, unless it is presented on the exact day of maturity. The law enforces promptness, fidelity and exactness in the presentation and demand of payment of negotiable paper. Negligence is never tolerated, 174. Place of Presentment. — When paper is made paya- ble at a bank, or at any other particular })lace, it must be pre- sented at that place. Wlieii payable at a bank, it is a sufficient presentation to leave it with the bank, so that it will be ready for payment and delivery; no formal demand is necessary in such case. If it is made payable generally, that is, without specifying any particular place, then it is necessary to j>resent it either at the place of business or residence of the maker or ac- ceptor. If the maker or acceptor has changed his residence, diligent inquiry should l)e made, and if his present residence can be ascertained, presentment should be made there. If he has absconded, no demand is necessary. Where after diliirent in- quiry the residence cannot be ascertained, presentment should be made at his former residence, as arrangements may have been made for paying it there. NEGOTIABLE PAPER.. 79 i7»l. Protest for Non-Payment. — If a note or draft, when properly presented for payment, is dishonored, it should be immediately protested, and notice should be sent in due time to all the indorsers, and to the drawer, if a draft. The following note, made in Chicago, and payable at Phoenix National Bank, Hartford, Conn., had been transferred by indorsement, as ap- pears on the back. It was protested for non-payment, as illus- trated on the following page. 176, Form No. 37. (Negotiable Note.) $2000'\ Chicago, III, Qc/. ^d^ 1881. On theji^i^^^ day of ^c/ti^ei-^ A. D. 1882, without iV ' y*"^^^ f^^ value received Cy promise to pay to the order 'Jr/SSS^ of ^■a.^'t^yie^. C/lQrotest of said ^4 addressed as follows f viz. : ^ESS FuKA-S. NKGOTIABLK PAPKR. 95 ! ' w m ^14. Parol. — This is a term used to distinguish aarty to be given in evidence against himself. It is often useful as a voucher in the settlement of private accounts. It is pr una facie evidence, but not absolute. A receipt "in full" of a specified debt is con- sidered of a higher and more conclusive character than a simple receipt. If a receipt embodies a contract it is not open to the explanation permitted in a simple receipt. No one has a right (unless it be made by contract, or by statute, a condition prece- dent) to demand a receipt as a condition of payment. J^16. Seals. — The common definition of a seal is an im- pression on wax, wafer, or some other tenacious substance capa- ble of being impressed, or a plate of metal, with a flat surface, on which something is engraved, and with which an impression is made on wax, or some other substance, on paper or parch- ment, in order to authenticate them; the impression thus made is called a seal. When a seal is aflixed to an instrument, as a deed, mortgage, or protest, it makes it a specialty. In some of the States a scroll is equally effective. The seal of a notary public is taken judicial notice of the world over. What is a sufficient seal is determined by local law. 217. Specialty.— A specialty is a writing sealed and de- livered, containing some agreement, or a writing sealed and delivered, which is given as a security for the payment of a debt, in which such debt is particularly specified. If in the body of the writing it is not said that t^ie parties have set their hands and seals, yet if the document be really sealed, it is a specialty, and if it be not sealed it is not a specialty. LEGAL DECISIONS IN MISCELLANEOUS CASES. 21 8. Impersonal Payee.— The following check was drawn and presented for payment, which was refused: "St. Paul, Minn., Jan. 22, 1879. "Messrs. Dawson & Co., Bankers: — Pay to the order of, on sight, two hundred dollars, in current funds. "JONES & PECK." The court held that this is not a check. It must have a name or indicate a payee. Checks made payable to " cash " or order, or to some character, or number, or order, are held to be payable to bearer, by reason of the use of " or order," which words indi- cate intention to mjtke it negotiable, and, when an impersonal payee is mentioned, which cannot indorse, it is presumed to be payable to the bearer. In this case there is no impersonal payee mentioned, nor any blank space left for the payee's name. 219. Promise to Accept Draft. — A non-resident dealer wrote to a broker in Alabama, asking the prices of cotton, and added: "If I see a "margin will authorize you to draw for cost." Upon being advised of cost, he telegraphed: "Will advance cost if you buy strict, good ordinary at sixteen." Held that the two together constituted an unconditional promise to accept, and, under the statute of Alabama, constitute an acceptance. 220. Check Post-Dated.— A. and B., residents of New- York, exchanged their checks with each other, and each agreed with the other to keep his account good at the bank, to meet his check at maturity, both checks being post-dated. It was held that because one party failed to keep his account good was no defense for the other when sued by a bona fide holder of his check. 221 . Procuring Signature by Fraud.— Suit was brought in Indiana against the maker of a note by an indorsee who received it for value before maturity. The defense was: that ill 1- '■ n I t 06 COMMKKCIAL LAW AM) BUSINESS FORMS. said note was so artfully constructed that its terms, when read properly, contained the contract for a patent right and the ter- ritory thereof; but affiant believes it contained a promissory note secretly and artfully concealed therein, which note couM only be constructed by mutilating, cutting?, and trimmin- and severing said note out of said contract; that, when said con- tract was entire, it was ex^ecuted by thi.s defendant; but after it was so executed, and delivered in such form, it was mutilated changed, altered, severed, and otherwise trimmed into the note sued upon, all of which mutilation was done without the knowledge, consent, connivance, or instance, and request of this defendant; wherefore, defendant says that such pretended note is not his act and note, and was never executed by him as such m manner and form sued upon." Held, that the maker is liable to an innocent indorsee who received it before maturity for value, to the amount of such note. S5J-2. Wrongful Conversion of Note.-A promissory note after maturity was placed in the hands of an a-ont for collec- tion, and was converted by him to his own use,\nd was after- wards sold under an execution against him. It was held that the purchaser did not acquire any interest in the note, and could not maintain an action against the maker. ^23. Deceased Maker of Xote.-If the principal maker of a note dies, the holder is not bound to notify a surety that the note is not paid, before the settlement of the maker's estate neither is he obliged to prove the note against the estate. 2^4. Non-Xegotiable \ote.— Where a note was made payable for a certain sum named, - with per cent in attorney's commission, if collected by legal process," it was held that such a note is not negotiable. •2-J5. Immaterial Alteration of \ote.-A promissory note was made payable " on demand, with interest," and was signed by R. S. D. and P. Q. D. After the note was signed K. S. D. wrote below the names, without the knowledcre or con- sent of R Q. D., "Interest on the above note to be^nine per % NEGOTIABLE TAPEK. 97 cent. R. S. D." It was held that this was not a material alter- ation of the note, so far as P. Q. D. was concerned. !!J586. Accommodation Paper. — If a person makes his note payable to a bank for the accommodation of a friend, to enable such friend to raise money thereon, without restriction or limita- tion as to its use, he is liable to the bank on its advancins: the money and the appropriation to the purpose for which the note was given. ^^7. Official Signature. — A promissory note was signed by several officers of a church, and after each signature was added the words, " Vestryman, Trinity Church." It was held that it was not a note of the church or corporation, but of the individuals who signed it. 328. Gift of Notes. — A short time before his death C. in- dorsed each of two notes, of which he was the holder, as follows: "I transfer the within note as a gift to Miss Agnes Morrison; " they were then delivered to his nephew, with direction to take care of them, and give them to Miss Morrison after his death. C. wrote Miss Morrison stating that he had given her the notes. It was held that the title to the notes passed to the assignee as soon as they were assigned and delivered to the nephew. "2*29, Rate of Interest After Maturity.— A note was made payable " one day after date with interest from date at the rate of twelve per cent, per annum, interest to be paid an- nually." It was held that the note would draw the same rate of interest after maturity until paid. ^30. Consideration.— The mere fact that a negotiable note is purchased for about one-half of its face value, there beino- no evidence showing it to be worth more than the amount paid, and the evidence tending to show that the purchaser did not reo-ard the note as easily collectable, it was held is not sufficient to j^ut the purchaser on inquiry as to the consideration of the note. ^31. Conditional Draft. — The following order was drawn upon John II. Erck, and accepted by him. He was not owing 08 COMMKKCIAL LAW AND BUSINESS FORMS. NEGOTIABLE PAPEU. 99 Randall anything when it was drawn, and soon after the ao ceptance the contract was abandoned by Randall, and nothing ever became due on the contract: "John H. Erck, Esq. Omaha, Neb., Feb. 9, 1877. ".Se>,— Please pay George H. Hoagland, or order, six hundred and thirty-five dollars out of amount due me on contract for erection of your store building, when due. " J. B. RANDALL, "Contractor." It was held that this order was not absolute, but was to be paid only when the amount was due on the contract. •^U'J. Note at Variaiuo willi Statute.— The revised statutes of Indiana provide that "Notes payable to order or bearer in a bank in this State, shall be negotiable as inland bills of exchange, and the payers and indorsers thereof may recover as in case of such bills." The holders of the following promis- sory note, who had received it before maturity by indorsement, brought an action to recover, but were defeated on the ground that it did not come within the statutes: "Hope, Ind., March 20, 1877. " Four months after date we promise to pay James B. Drake or order, four hundred dollars, and five per cent, thereon for attorney's fees, value redeived, without any relief whatever from valuation or appraisement laws, negotiable and payable at the Indiana Banking Company of Indianapolis, Indiana, with ten per cent, interest until paid. "HENRY F. ROMINGER, "MARY E. ROMINGER." The foregoing note was not made payable at an office or hanki7ig-ho%Lse of the company, and, therefore, held that the place was not specified, as the statute requires. ;d33. Note with Illegal Consideration. — Criminal pro- ceedings were commenced against a man for obtaining goods under false pretenses, and his wife gave the parties from whom the goods were obtained a note, signed by herself and husband, for the amount of the goods and costs made, and secured the note by mortgage on her real estate, the consideration for which was, that they should procure an abandonment of the prosecu- tion and release of the husband. It was held that a court of equity would not enforce such a contract. 934. Diligence in Giving Notice. — Proceedings were commenced against an indorser of a promissory note in Balti- more, where the note was made and dated^ and wliere the in- dorser lived and continued to reside for some time afterward. His sign was retained at his place of business, and his name was still in the city directory. In the certificate of protest made out by the notary public, he inserted the words, " after diligent search and inquiry to ascertain his whereabouts." It was held that these words contained in a notarial certificate of protest are not admissible as evidence of such inquiry and diligent search having been made, and that the notary should have treated the indorser as presumably being still a resident of the city. 9:i5. 0])taining Note by Fraud.— Suit was brought in Pennsylvania on a note of five hundred dollars. Evidence was offered to show that the maker of the note went to a bank to receive payment on a certificate of deposit for five hundred dollars, and that, when the money was paid to him, he was requested to sign, and did sign, a paper which was represented by the bank officers to be a receipt for five hundred dollars, but it turned out to be a note for that amount. The court rejected the evidence. The court of appeals held that the evidence should have been admitted. 936, Joint and Several Note.— An action was brought on a note containing the vvords, "/promise to pay," and signed by two persons as makers. It was held that the note was both joint and several. 937. Statute of Ohio.— The Statute of Ohio provides that, when a note or other negotiable paper is given, the consideration .i'l 100 COMMER( lAL LWV AND BUSINESS FURMS. C !l for which consists in wliole or in part of the right to make, use, or vend, any patent invention, or inventions claimed to be pa- tented, the words, " given for a patent right^'' shall be promi- nently and legibly written or printed on the face of such note or instrument above the signature thereto ; and such note or in- strument in the hands of any purchaser or holder shall be subject to the same defenses as in the hands of the original owner or holder. Pennsylvania has a similar statute. !!2«t8. Illdorseineut. — A note was written as follows: "I promise to pay to the order of myself," and was signed by two persons, "A. B." and " C. D.," and was then placed by C. D. in the hands of A. B., to be put into circulation by him for his own benefit. This note was indorsed by " A. B." and negotiated before maturity, and the title of the holder was held to be good without the indorsement of " C. D." :2«i9. Where Bills of Exchange are Payable. — An action was brought against the drawers of the following bill : ^166^. Charlotte, X. C, Oct. 30, 1871. Thirty days after date pay to the order of Wittkowski tfc Rintel one hundred and sixty-six and -^^ dollars, value received, and charge to account of GENTRY & SMITH. To S. L. Billings. This draft was accepted the same day it was drawn. It was then discounted by a bank, and not being paid at maturity was protested, and notices were sent by mail addressed to the draw- ers at Gap Civil, in Alleghany County, and to the acceptor at Sparta, in the same county, in N. C. It was from information received from the plaintiff that the notices were so sent. It was proved that Billings lived in Grayson County, Va. Held that the presentation at the place of date is a sufficient demand to hold the parties after notice of protest, where no place of pay- ment is stated in the draft, and no proof is made that any par- ticular place was agreed upon. ij % NEGOTIABLE PAPER. 101 340. Payment.— Payment is the fulfillment of a promise, or the performance of an agreement. It is the discharge in money of a sum due. When payment is pleaded as a defense, the defendant must prove the payment of money or something accepted in its stead, made to the plaintiff or some person authorized in his behalf to receive it. Payment is doing precise- ly what the payer agreed to do. That the payment may extinguish the debt, it must be made by a person who has a right to make it, to a person who is entitled to receive it, in something proper to be received, both as to kind and quality, and at the appointed place and time. 241. Evidence of Payment.— Evidence that anything has been done and accepted, as payment is evidence of payment. A receipt is prima facie evidence of payment. So is the possession by the debtor of a security after the day of payment, which security is usually given up on payment of the debt. A.'s note payable to the order of B., indorsed by him and cancelled, or in the hands of A., in prima facie evidence of a payment by him to B. of the sum mentioned in the note. 24a. Filing of Papers.— There can be nothing of greater importance to a business house than the careful filing and preser- vation of all papers which may be of any use in the transac- tions of the business. Many times they are of the utmost importance, and they should be so arranged and placed that they may be found and referred to at once. One has no right to waste his customer's time, or his own, in a fruitless search for papers which were not properly filed. 243. Copying Letters.— Every business letter that is re- ceived should be carefully filed and preserved for future refer- ence ; and every letter of any importance which is written should be copied before it leaves the office of the writer. Copv- ing presses and other conveniences for copying letters can easily be obtained from nearly any book or stationery seller. *4i , i 102 COMMERCIAL LAW AND BUSINESS J- ORMS. KECAPITULATIOK 1. Negotiable paper is that which may be transferred by indorsement and delivery. 2. The words used to make paper negotiable are order or bearer. 3. A promissory' note, is a written promise to pay a certain amount of mon^y. 4. The maker of a note is the original debtor, and is liable to any person who becomes the owner. 5. The party to whom paper is payable is the payee and he may transfer it to another, and thus become the inrUfrser. tified the same as an indorser. A husband who has acquired a right to negotiable paper which was given to his wife, either before or after marriage, may indorse it. If the payee of a note die, his executor or administrator may in- dorse it. The maker of a note may make it payable to his own order, and when indorsed it is good in the hands of the indorsee. The finder of negotiable paper does not get any title to it and cannot give any. An indorser can escape lia])ility by using " without recourse." Indorsements should be written across the back, but may be written on the face of a bill or note. When a bill or note is received as security for a debt, and it is dis- honored, the debt revives. When two or more persons, who are partners are jointly liable on a note, notice to one is sufficient, but notice to both is better. If a note or bill is lost, it is no excuse for not giving notice of protest. Notice of protest must be sent not later than the day after the bill is protested, and may be sent to all indorsers or to any one who is perfectly responsible. An indorser who receives notice of protest should notify all those who preceded him. Checks should be presented for payment the same day, or the day after they are received, and should be presented during business hours. A check when endorsed by the payee, and returned to the drawer by the bank, is evidence of payment. ^1 104 COMMERCIAL LAW AND BUSINESS FORMS. 47. The holder of a draft must use due diligence to find the drawee o» his residence. 48. The indorser of a check has a right to insist that the indorsee present it the same or the next day. 49. The statute of limitation does not run while the debtor is out of the State. After a debt is due the time for suing is limited to six years in New York. The statute does not cancel the debt. 50. Negotiable paper is not due until the third day of grace, unless it comes on Sunday or a holiday. 51. Ignorance of law does not excuse any person. 52. A signature written with a pencil is good at law. 53. A receipt is only prima facie evidence, not conclusive. It is written evidence, but not a contract. 54. No contract is good unless there be a consideration. No considera- tion is good that is illegal. 55. Part payment by the debtor upon a debt which is outlawed revives the balance. 56. An "acceptance" is a promise to pay, and is only applicable to drafts. 57. Sealed instruments run longer than parol ones, under the statute of limitations. 58. A debtor has no right (unless it be made by contract, or by statute, a condition precedent) to demand a receipt as a condition of payment. 59. The sufficiency of a "seal" is determined by the local law of the place. In some States a scrawl answers the purpose, in some an impression of a seal on the paper, but generally on wax or wafer 60. A contract for the conveyance of land in fee or for life must be under seal. 61. There are several ways of depositing money; savings banks, and most other banks use pocket bank-books. lu all a voucher ot some kind is given. 62. Usually a firm-name may be signed by any one of the partners. 63. At present (1882) the law requires a two-cent stamp upon every check, the fine for omitting which \s fifty doUars. 04. A ape^iuUy in law means a written agreement or contract under seal, such as a deed, mortgage or protest. 65. A bill of lading is negotiable, and when indorsed as collateral security, it transfers the property to the party to whom it is given as security. 66. A deht&r should go to the creditor, or party to whom the debt is due. and pay, but in case of negotiable paper with indorsements, it will not be safe for the holder to wait. 67. A legal tender is such a tender as the law requires, and the debtor may make in payment of the debt : gold, silver or treasury notes. 4 SALE OF PERSONAL PROPERTY. 'fr -»♦»■ 214. Contract of Sale. — The contract of sale of personal property is governed by the same principles of law as other con- tracts, and any person who can make other legal contracts may make a contract of sale and perfect it by delivery. Barter is supposed to be much older than sale, and consists in the ex- change of one commodity for another. It, also, is governed by the same general principles. 94*S. Sale. — A sale is the transfer of the title in the thing sold from the vendor to the vendee in consideration of a certain money price. We use the word sale here as including only an absolute immediate transfer. Contracts to sell are not sales, and may be conditional. There may be a transfer of title with- out a sale, and this may occur by operation of law. When goods have been wrongfully converted by another, the owner may, as the lawyers say, loaive the tarty and sue him for their value as though there had been a sale without payment. The owner may sue, also, for the wrongful conversion, and recover judg- ment for the value of the goods, in which case, upon payment of the judgment, the title vests in the wrong doer. To consti- tute a sale the absolute title must be transferred, otherwise it would be a bailment or a mortgage. The elements that are essential to a valid sale are: First, the thing or subject-matter of the sale; Second, the/:>r/cey Third, the mutual co7isent of parties who have the ability to contract. 246. The Subject-Matter.— The thing which is to be sold must either have an actual or potential existence. It must also be capable of delivery. If goods were sold which were sup- posed to be in existence at the time of the sale, but which were, in fact, destroyed before the time of the sale, the contract would be void. But the goods need not be in possession to make a valid sale. If they have been consigned to the vendor, and are on the way in the course of conveyance, the sale will 105 106 COMMERCIAL LAW AND BUSINESS FORMS. li^' i- be valid. And it is not necessary that the thing should be in existence at the time of sale, if it is to come into existence as the product of something the vendor now owns, or has an inter- est in, it will be sufficient. The fruits, or other crops to be grown from a farm, or goods to be manufactured, or the fish to be caught by the casting of a net, are all subjects of sale. ^47. A Mere Possibility.— A mere possibility not con- nected with a present interest in any property which the vendor owns, is a bare contingency wliich cannot be the subject of a present sale, but may be the basis of an agreement to sell in the future. For instance, a person cannot sell all the corn that he may hereafter buy. He has no present right in any corn, and, therefore, cannot sell any. He may, however, contract to sell goods or specified articles, or all the corn he shall buy in market during a certain time, and to deliver them for certain prices. But such contracts are not in strictness sales, as we before ob- served, although by lawyers, as well as by men of business, they are spoken of as sales. 248. Legal Subject-Matter.— No sale will be valid unless the subject is legal. If, therefore, the sale of any property is prohibited by statute, a contract for the sale of such property cannot be enforced. 5J49. The Price. — The price is the consideration which is given by the purchaser, in exchange for the property, and which induces the seller to part with the ownership. Without price there can be no sale; it would be merely a gift. To constitute a sale the price must be in money, or in some representative of money, as bills of exchange, checks, or notes, which are converti- ble into money. It must also be a definite and certain sum, or susceptible of being ascertained by some means by the terms of, or implied by, the contract. The price need not be fixed by the parties; the contract may provide some way of getting at the price. It may be the market price, or the price some other person paid, or it may be left to some third person to fix a price. But, if anything happens to prevent the price being ascertained, there is no contract. The general rule is, that the parties can :^ SALE OF PERSONAL PROPERTY. 10' agree upon any price they choose, and mere inadequacy of price does not make the contract void unless it is so grossly inade- quate as to afford presumption of fraud. SoO. The Consent of the Parties.— Without a mutual consent of both parties to the terms of the contract, as to any other contracts, there can be no sale. If there is any mistake about the identity of the goods or thing sold, or in regard to the price offered or demanded, it will destroy the sale, unless it be where the purchaser supposes the price is larger than the seller agreed to take. Sales may be negotiated by letter, and, if a letter of acceptance of the proposition is dropped into the post before notice of withdrawal is received, the contract is complete. But the vendor has a right to withdraw his propo- sition any time before it is accepted. 251. The Mode of Making the Contract.— At common law no form of words, no writing, no solemnity is necessary to a sale, nor to a contract for a sale whatever the price or value of the goods may be. The seller and the buyer agree upon the price, the buyer pays the price, and the seller delivers the goods to him, and there is the end of it. It is a fullv executed contract of sale. So a binding contract to sell for, and to pay, a certain price, however large, was good at common law, and remains good now, in all cases where the price is not large enough to bring the contract within the statute of frauds. *252. Statute of Frauds Generally.— The British statute of frauds, so called, was passed in the year 1677, and was in- tended to prevent frauds and perjuries. It requires certain contracts and conveyances to be in writing, or in the case of sale of goods, and for a certain price or more, to be accompanied, if not in writing, by a delivery of the goods, in whole or in part, or by a payment of part of the price; and the agreement in writing, or the proof of the oral agreement, and of the one or other of the acts required by the statute, are the only proofs of the contract of which courts can take notice. This statute has been re-enacted, with modifications, in almost every State of the Union. Its provisions, and the language in which they are ii:l 108 COMMERCIAL LAW AND BUSINESS FORMS. clothed, may vary, but, in substance, it is almost identical, in all of them, in respect of sales, agreements to sell, anrice to complete the contract. And all contracts which are executory, where at the time of the sale the thing exists in the same condition in which it is to be delivered. But it does not embrace executory contracts for the delivery of articles which have to be manufactured or materially changed by work expended upon them before they can be delivered. If a farmer offers to sell a merchant a thousand bushels of wheat, which is threshed and ready for delivery, at one dollar per bushel, and the merchant accepts the offer and j)romises to ^all ii.t 8ALK OF PERSONAL PROPERTY. 109 for it the next day, it is within the statute, and the farmer neeo not deliver, unless the contract be in writing. So, also, if one promises to make and indorse a note with others to raise money to i)ay a debt for a third party, it comes within the statute, and is not binding unless the statute be complied with. 2.15. Application to Contracts not to be Performed Avithin a Year.— The statute requires, as essential to the validity of such a contract, that the contract shall be in writ- ing, signed by the party to be charged, or his agent authorized thereto, or a memorandum, or note, of it, so signed, shall be made. This clause applies to a great variety of contracts as well as to sales. A parol contract, to come within the statute, must be incapable of being performed within a year. Where a <5ontract cannot be performed within the year, a partial per- formance does not, but a full performance may take it out of the statute. For example: A. agreed, bv parol, to serve B. for two years, for $1,000, and served the whole time; or, not having served the whole time, he is discharged. In the first case, he can recover only on the contract, and, of course, only the con- tract price; in the second case, he cannot recover, proportion- ally, on the oral contract, because that is void by the statute, and has not been ratified, but he is entitled to the worth of his services rendered. 256. Application to Promises to Answer for the Debt of Another.— The provision of the statute, in this re- gard, usually is, in substance, that no action shall lie to charge the person with the debt, default, or miscarriage of another person, unless he has agreed in writing to be so chargeable, and the writing be signed by himself or some person duly author- ized to sign it for him. The writing may be either a full and formal agreement, or a note, or memorandum, clearly exi)ressing his obligation. The statute applies to all collateral promises but not to original promises. One^s promise to pay one's own debt is an original promise; but a promise to pay the debt of another is a collateral promise. Thus it was early decided in an English court that, "if two came to a shop, and one buys, and the other, to gain him credit, promises the seller, «If he'does HBtf I no COMMERCIAL LAW AND BUSINESS FORMS. 4 I not pay you I will,' " this is a collateral promise, and void, unless it is put in writing. But, if he says : " Let hira have tlie goods, I will be your paymaster," this is an undertaking for himself, and he shall be intended to be the very buyer, and tlie other to act as his servant. It is not always easy to determine whether a promise is original or collateral. But to whomsoever the credit was given, he is the oriyinal debtor. The credit L: not always given to the party who receives the goods. But the party who did not receive the goods always has the right to prove, if he be able, that the other party was the purchaser, and that his own promise was only collateral, and, consequently, not binding, unless in writing. If, however, a contract can be proven to be an original promise, it cannot come within the statute, and need not be in writing to be binding. ^••7. The Transit of Goods. — When the purchaser lives far from the seller the goods should be sent by such conveyance as the buyer shall indicate or direct. When no directions are given, the seller may send them by the customary manner of sending such goods. If ordinary care is taken in sending the goods the buyer will be responsible for any loss that is sustained in the transit. The goods are generally at the risk of the seller only unti? they are delivered to the purchaser, or to a common carrier for conveyance. And when they are delivered to any common carrier by direction of the purchaser, the responsibility of the seller terminates. If, when goods are sold they are put up sep- arately in a box or parcel ready for delivery, and the purchaser then requests the seller to hold the goods for him for a time, and the goods are so retained, the seller then becomes the bailee of the purchaser, and any loss which is not caused by neglect of the bailee must be sustained by the purchaser. 258. Continued Possession by Vendor. — The possession of goods is presumptive evidence of ownership, and any person having goods in possession is presumed to have the right to sell them; where, therefore, a person sells goods, but does not de- liver them, still keeping them in his own possession, it is an indication that the sale is not genuine, and, if a third person SALE OF PERSONAL PROPERTY. Ill buy the goods without knowing that they had been sold, and the goods are delivered to him, his title is good. And so, if goods are sold and remain in the possession of the seller a considera- ble time without any adequate explanation of the neglect of transfer, the transaction will be considered void as far as it con- cerns a third person who buys innocently, or one who attaches the property to secure the payment of a debt. 259. Entire or Severable Contract. — It makes a material difference in regard to the rights and remedies of the parties, in many cases, whether the contract is an entire one or severable. If a farmer offer to sell his farm, and his live stock, and his farm- ing implements, and his growing crops, all for one price, as eight thousand dollars, it is an entire contract; and if the title is imperfect to any one of them the purchaser need not take any part. But if the offer be to sell the farm for six thousand dollars, the live stock for one thousand, the farming implements for five hundred, and the growing crops for five hundred dollars, and the offer is accepted, the contract is a severable one, and, if no title to the farm can be given, the seller can insist upon the purchaser taking the other property. A contract which was originally entire may be rendered severable by the parties doing something in connection with it which is inconsistent with its entirety. 260. Conditional Sales. — A sale may be on condition that the vendee pay for the goods within a specified time, and, in the meantime, he may have possession of the goods and have the right to use them until the time expires. But, if he fail to pay at the specified time, the contract is void. Such a purchaser has no right to sell the goods, nor can they be attached to pay his creditors until the sale is completed. So, also, property may be sold with the condition that the purchaser may use it for a certain length of time, and, if it is not adapted to the use he wishes to make of it, he may return it. If in such case the time is limited, and he fails to return it within the time, the sale is binding. And if a man sell goods w^ith the condi- tion that he may buy them back within a specified time, by paying a certain fixed price, and he neglects to buy them within m w 112 COMMERCIAL LAW ANI> BUSINESS FORMS. SALE OF PERSONAL PROPERTY. 113 ltd' SI 5 I- the time, he loses his right immediately upon the expiration thereof. 361. Disclosure of Certain Facts.— It is important to a business man to know what obligations devolve upon him in regard to disclosing facts in relation to the goods which are to be sold. The law holds him responsible for neglecting to dis- close certain facts in relation to the goods. If he were governed by the moral law he would make known to the purchaser every defect he had knowledge of. But the common law is not so exacting. Disclosures of defects, which are equally known by both parties, need not be made. Only material facts which are not known to the purchaser, and are not open to his observation, need to be disclosed. Defects which are equally open to both parties need not be disclosed; only such as the seller has knowl- edge of when the buyer has not. If misrepresentations are made knowingly to induce the vendee to purchase, it will be evidence of fraud, and the vendee may avoid the contract. So, also, if a seller was induced to make a sale by misrepresen- tations he may annul the contract. ^€i*2. Sale of Stoleu Goods.— A person may have the possession of goods without being the oicner. But no person can make a valid sale of the goods unless he is the owner, and if he be the owner, he may sell, although the goods are not in his possession. It follows, therefore, that no person can sell stolen goods so as to give a good title to the purchaser. Even where goods are sold at public auction the purchaser does not get any title if the goods were stolen, and the owner of the goods may take possession of them, if he can find them, not- withstanding they may be in the hands of an innocent purchaser. The law has gone so far as to make an auctioneer pay for goods which had been received and sold by him, without any knowl- edge of their having been stolen. There is an exception to this rule, however, in the case of money or negotiable paper which is transferable by delivery, either of which, if transferred after it is stolen or found, the holder, who takes it for value witliout knowledge of any wrong, will have a good title, and can hold it against the original owner. 363. Place of Delivery of Goods.— When there is no agreement as to the particular place of delivery, and no general custom regulating it, then the place where the goods are when sold is generally understood to be the place of delivery. But it has been held that, where a sale is to pay a debt, the property should be delivered at the residence of the creditor, or at his place of business. 364. Sale of '' Good- Will."— By good-will we mean a man's business, or the busiiiess of a firm, as distinguished from the stock in trade or capital. It is the reputation which has been made in and for the business, which, it is presumed, will continue to draw business, and induce old customers to continue doing business with the concern. In manufacturing and com- mercial business good-will is sometimes of great value. In general the party selling the good-wiU of his establishment binds himself not to again engage in the same business within the limits of the old business, or where it will render the good- will valueless, or seriously injure it. But, as there are many ways of avoiding such an agreement, the purchaser of the good-will should insist upon a contract which shall specify the amount he shall receive as damages if the seller becomes interested in a competing business. Frequently the good-wiU of a business is worth more than the stock in trade would be without it. 36.1. Delivery to a Third Person.— To be effective, the delivery of goods must be either to the vendee or to some person by him authorized to accept for him, A parol contract for the sale of goods for a price exceeding fifty dollars specified a carrier of them; but it was held that the carrier had no author- ity to accept them for the vendee, and that delivery to him did not satisfy the statute. So, upon the principle that a man can- not serve two masters, it has been held that a broker cannot act for both the seller and the buyer of goods, and deliver for the one and accept for the other, and so take the sale out of the statute. 366. Necessary Delirery.-The statute provides that the contract of sale mav be completed by a delivery of part or of — ' » t< ]14 COMMERCIAL LAW AND BUSINESS FOKMS. all the goods. It is important to know how small a part may be delivered and yet be sufficient. The delivery, whether of the whole or part, must be with the intention of transferring the right of possession to the whole from the vendor to the vendee. The vendee must accept with the intention of receiving it as owner. The rule is, that where a part only of the goods is delivered, it must be sufficiently large to lessen the quantity to be delivered. There may also be a symbolical delivery, as where grain is stored in an elevator, and a delivery order on the warehouseman is given to the purchaser and is accepted by the warehouse-keeper, or, where a stock of goods in a store is sold and the key to the store is delivered to the purchaser. ^67. Effect of Sale. — A valid sale transfers the owner- ship in the property from the vendor to the vendee; it, there- fore, follows that, if the ownership is not transferred, it is not a sale. The price is also transferred from the vendee to the vendor. But the vendee has no right to demand the transfer of the possession of the goods until he has paid the price, or ten- dered the full amount to the vendor. But if a credit is given, by tixing a future time at which the price may be paid, the vendee can then demand an immediate delivery of the goods. If no credit is given, the vendor, by delivering or offering to deliver, can demand the immediate payment of the price. And where the owner of goods offers to sell them at a certain price, and the other party accepts the offer, but refuses to pay, the owner may treat the sale as void. 5868. The Specific Property.— The sale cannot be com- pleted, nor the property be transferred, until the article con- tracted for is in the particular condition which the terms of the contract demand. If the contract specify a particular article in existence, or prescribe that the article be made of certain things, it cannot be satisfied by the delivery of a precisely similar thing, or of an article made of similar but not the identical things. A manufacturer's agreement to sell and deliver a set of furniture of a certain description at a future day, does not bind him to deliver any particular set of such furniture, ♦.houo-h he have one on hand at the time of the contract. l|N SALE OF PERSONAL PROPERTY. 115 ^69. Title to Goods Sold.— The ownership of goods sold does not pass under an executory contract until delivery. If the party who has agreed to sell refuses to deliver the goods, the buyer, whether he has paid the price or not, is not vested with the title to them, and his remedy is simply an action for damages for the breach of the contract. 270. Care of the Goods after Sale.— When the sale is perfected and the title has passed to the buyer, but the seller is yet to transmit the goods to the buyer, or keep them until called for, he is bound to take ordinary care of them, such as a man of ordinary prudence takes of his own, and is liable to the owner for any damages sustained through want of such care. 271. Bill of Parcels.— A bill of parcels, commonly called a " bill," and also called an " invoice," is a written list, or account, of goods, given by the seller to the buyer, describing the articles purchased, giving the value or price of each article, and extend- ing the figures into an item-column, for convenience in showing the whole amount. 272. Form No. 51. 1882. Messrs. ^. Buffalo, Jlc. ^^€^-a :^# -^c. ^. / laug^l nf MATTHEWS, NORTHRUP & CO., PUBLISHERS OF TEE JVEW SERIES BOOK-KEEPT.ya 50 100 200 300 100 200 Counting-IIoum Book-Keeping Cinnmercial Book-Keeping Common School Book-Keeping Elementary Book-Keeping . Sets Commercial Blanks . . Sets Common School Blanks Rec'd Payment, 116 COMMERCIAL LAW AND BUSINESS FORMS. 11 ^73. Bill of Sale. — A bill of sale is a formal written con- veyance of personal property. If the property is delivered when sold, or if part of the purchase money is paid, a written instrument is not necessary to make the conveyance binding, but it is convenient evidence of the transfer of title. But to pro- tect the interest of the purchaser against the creditors of the seller, the bill of sale is not sufficient of itself, there should also be a delivery of the property. If an actual and continued change of possession does not accompany the sale it is void as against the creditors of the seller and subsequent purchasers and mortgages in good faith, unless the buyer can show that his purchase was made in good faith, without intent to defraud, and that there was some good reason for leaving the property in the hands of the seller. Form No. 52. f 274. Bill of Sale. JvUOVU ;iU 2*1 Cn bxj these ^VCSCntSfT/^atdorwe, here give name of the person or persons of the frsy. "^arC, giving towfi, county and tState where such party resides) of the first part, for and in consideration of the sum of -lawful money of the United States, to- - in hand paid, at or before the ensealing and delivery of these presents, by (here insert name and residence of second party) - _ of the second part, the receipt whereof is hereby acknowledged^ ha bargained and sold, and by these prese7its do grant and con- vey, unto the said part of the secotid part, [his or their) executors, admiyiistrators and assigns, [here give a full and accurate de- scription of the property sold.). _ _ _ SALE OF PERSONAL PEOPERTY, To JtUUC unci to ^Olcl the same unto the said part of the second part, — _ executors, administrators and assigjis forever. A nd do for. „ _ heirs, executors and administrators, covenant and agree, to and with the said part of the second part, to warrant and defend the sale of the said property hereby sold unto the said part of the seco?id jyart, « executors, administrators atid assigns, agaitist all a7id every per- son and persons whomsoever. 117 %n ^ttnCBS mttereof, haveh^reunto ^^ hand and seal the- fjay of - "-**'* ^^*« y^<^r one thousand eight hundred and. SEALBD AND DELIVERED IN THE PRESENCE OF \ Signature. ss. STATE OF NEW- YORK, County of ^'' ^^''' day of. i^ (^^ year one thousand eight huiidred and hefore oie the subscriber, personally came. ' tome known to be the person"' de^s^edi in ^^^ within instrument, and ^.,/.„^ / i ^ that he executed the swne. " acknowledged Form No. 53. ars. Bill of Sale of a Horse, with Warranty. ^^}°^ f^}^ W^,^^; *y '''*««« lyresents, tliat I, (D. F.\ of the r ^ f 1.^^''^'"^}. 'i'^T'y "/ ^^^y^hoya, andkaU of Ohio I restock broker, of the first part, in co^isideration of one hundred dollarain money, and a note of one hundred Jd fifty doZrs rece^vedyrom (It. H.) lawyer, party of the second partftl TecZ whereof J hereby acknowledge, have bargained, sod, granUd and conveyed, and by these lyresents do bargain, sell grant and convey unto the said party of the second pan, hiseTcufofs adnnmstrators and assigns, one black horse, six yearsZTwih white right fore foot, known as Barney; to have and to hold the sanieunto the said party of the seconlpart, hUeZutorsadJt istratorsand assigns forever. And I do hereby warZuthelaid horse to be sound in every respect, and to be fre^e frZn^ytrTckf deirdth^:aiS !L '"lf!f l!"""r- /'"'^ ^o ^aJ^antand itfp^tr:^dt:st'wlzZer:'''' '"'' ^^^''^ ^ -<^ |tt Witness m\itXtat, I h^eunto set my hand and seal this., ^ay of. jgg Signature. A 118 COMMKRCIAL LAW AND BUSINESS FORMS. I fW6. Chattel Mortgage.— A chattel mortgage is a trans- fer of the title to chattels with or without possession, as security for a liability or a debt, upon condition that the transfer shall be void if the liability or debt be discharged or paid. If the debt is not paid at the time appointed, the mortgagee becomes absolute owner, and has a right to take the chattels into his own possession if they are not already in his possession, and his creditors likewise have a right to levy on the chattels as his property. But the mortgagor has the right to redeem the chattels from the mortgage, and this right can only be cut off by the mortgagee selling the property and applying the proceeds to the payment of the debt. But, unless the mortgage requires it, he is not bound to sell; he may hold the goods as owner, subject only to the mortgagor's right to redeem. And, when the goods are of sufficient value to pay the debt, his holding them may be regarded as payment. Form No. 54. •277. Chattel Mortgage. To all ta txTltam tltcsc 1!?vc6cnt6 shut! come: Know ye, that {here insert name o/\p'rst party, with town, eotmty and State) of the first part, being justly indebted to _ _(here name of second party , etc.) of the secoyid part in the sum of Dollars,upo7i {condition that if the said party of the first part shall, and do, icell, and t'ndy pay, etc.) have, for the purpose of securing the payment of the said debt, and the interest thereof, granted, bargained, sold and mortgaged, and by these presents do grant, bargain, stU and mortgage unto the said party of the second part, all and singular the goods, chattels and personal property mejitioyied aiid described in the following schedule, to wit: {here give afuU and accurate descrip- tion of the property,) To JtuUC itUd to Hotel the same and every part and parcel thereof, unto the said party of the second part forever. Provided always, and the condition of these presents is such, that if the said party of the first part pay to the said party of the second part the debt aforesaid, with the interest thereon from the date hereof, in the manner foUmcing, to loit : {here mention how and when it is to be paid) then these presents shall be void and of no effect; subject, however, to the provisions hereinafter ■J ^! id SALE OF PERSONAL PROi'EKTY. 119 contained ;- and the said party of the first part do hereby agree to pay the same accordingly] But if default be made in such imyment, or if the said jyarty of the second 2)^rt shall at any time deem in danger of losing the said debt, or any part thereof, by ddaying the collertion thereof until the expiration of the time above limited for tJte 2>ay' ment thereof, the said party of the second part hereby authorized to take possession of the said goods, chattels and per- sonal property, at any time, either before or after the eirpiration of the time aforesaid, and to sell the same, or so much thereof as may be necessary to satisfy the said dehf^ interest and reasonable expenses, after the like notice as is by lem required for Constables'' Sales, and to retain the sanie out of the ^yroceeds of mch sale; the overplus {if any) to belong to and to be returned to the said party of the first part. And it is understood and agreed that the stipulations aforesaid are to apply to and to bind the heirs, execu- tors and administrators of the resjjective jjarties, |n ?®lUnCSS (SSlTtCVCOf, the said party of the first part ha hereunto set hand and seal this (hiy of in the year one thouscmd eight hundreel and eighty In jmesence of Form No. 55. {Signature?^ 278. Short Form, Chattel Mortgage. JvUOXU all ^Etcn^ by these presents, that I, {C. D.) of — acknowledge myself to be indebted to {II. S.) of said in the sum of dollars with interest from this date {or from the _ day of 18 ,) and for the security of said sum I do hereby mortgage, and sell, and assign to the said {II. S.) all my property of every description, situate, lying, and being iii my store No Street in the Village of „ _.; aiid I do hereby authorize and empower the send [H. S.) to take possession of said property and effects, he to sell the same, and to appropriate the proceeds to tJie payment of such debt and interest. %\\ *S21ltlXC6S MlltCVCOf^ / have hereunto set my hanel and seal, at this. day of- IS . In presence of {Signature of Mortgagor) {Signature of witness.) m It 'if i m > i 120 commercial law and business forms. Form No. 56. 279. Cliattel Mortgage Renewal. Z-.... the _ Mortgagee named in the Mortgage^ of which the foregoing is a copy, do hereby give notice to all whom it may concern^ that there remains due to of the principal stim secured by said Mortgage, the siitn of. dollars and centSy and that interest, as such Mortgagee in the property included in said Mortgage, and ther^y and hereby claimed by ^is the sum of dollars and. cents, and the interest thereon from the day of 18 Dated the ^day of. .18 .Mortgagee, Form No. 57. 280. Chattel Mortgage Sale. By virtue of a Chattel Mortgage executed by to „ .dated the day of_ 18 . and fled in the office of the Clerk of the of. _ _ on the day of 18 , and upon which default has been made, I shall sell the property therein described and m,entioned, v iz : at Public Auction, at the Jn the o/-. on the day of 18 at o"^ clock in tJu noon of that day, ^ated at^ tlie. day of. 18 Mortgagee's Agent, % WARRANTY. -»-♦-•- 281. Sales With Warranty. — Sales with warranty are frequently made, and may be either general or special, express or implied. The maxim of the law in regard to buying is caveat emptor {let the buyer beware) ; that is, he must look out for his own interests, and examine carefully before he makes a pur- chase, as he cannot ahcays hold the seller as a guarantor. 282. A General Warranty.— A general warranty does not cover all defects. Such defects as are equally open to the observation and examination of both parties, or as are known to the purchaser, are not covered by a gerieral warranty. But the purchaser may relieve himself from all responsibility concern- ing defects, and all trouble of examining the goods, by requir- ing a general warranty against all defects. But if a defect is known to the purchaser it will not be considered as coming within the warranty. 283. An Express Warranty.— An express warranty may be any direct affirmation made by the seller in regard to the goods at the time they are sold, with that intent. But the vendor will not be bound beyond the express terms of the war- ranty. Nor will he be bound for representations made after the sale, for the reason that there is no consideration to support them. The warranty must operate as an inducement to the completion of the purchase to be effective. Declarations of opitiioii do not constitute a warranty, but if they are intended to, and have the effect of deceiving, the sale may be avoided on the ground of fraud. 284. Special Warranty.— When a particular thing is or- dered for a special purpose of a manufacturer, and it is fur- nished, the purchaser may hold the manufacturer responsible on 121 122 COMMERCIAL LAW AND BUSINESS FORMS. ' f an implied warranty that it is fit for the purpose for which it was ordered, and if it is not suitable for the purpose, and dam- age is sustained in consequence, the vendor will be liable for the damage. But where the purchaser himself selects the thing to be used, the vendor is not bound by any warranty. 285. Implied Warranty.— When a person sells personal property which he has in his possession at the time of sale, there is an implied warranty that he is the owner. But where prop- erty is sold which is not in possession of the vendor, there is no such implied warranty, unless he affirm that he is the owner. If, however, the situation or nature of the goods is such as to render an examination impracticable, there will be an implied warranty that they are merchantable. 286. Breach of Warranty.— The rule in regard to breach rf warranty seems to be that tho purchaser has no authority for feturning the property which he bought, unless there was an agreement under the warranty that he might do so; his only remedy being to sue for damages under the warranty. But where the vendor knows that a thiiig is ordered f(^r a special purpose, and it is not fit for that purpose, the buyer may return it, if he do so as soon as its unfitness is discovered. 287. Sales by Sample.— Where goods are sold by sample there is usually an implied warranty that the goods shall be as good as the sample. But the warranty does not apply to the quality of the sample, so as to make it just what it seems to be. All that the vendee can claim under the warranty is that the bulk shall be equal to the sample. But some sales which are made ly sample do not create an implied warranty. Tlie rule is, that if the bulk of the goods is fully exposed within the im- mediate reach of the purchaser, it devolves upon him to examine it, and if he fail to do so, he cannot recover, unless there be an express warranty. It is only where there is a mutual under- standing between the parties that they are dealing under a promise from the vendor that the bulk shall be as good as thfl sample, that an imj^lied warranty exists. ii ju |iN ll. WARRANTY, 123 288. Descriptive Bill of Sale.— There has been some difference of opinion as to whether a descriptive bill of sale constituted a warranty or not. A case is reported in Massa- chusetts where the bill of sale was as follows: "B. & Co. bought of F. M. & Co., two cases of Indigo:' But the discovery was made that it was mostly Prussian Blue instead of indigo. There was no charge of fraud, and the point was, does the bill of sale constitute a warranty ? It was held that it did. But in the sale of a horse, where a receipt was given, "Received of C. D. one hundred dollars for a black, six-year-old horse, war- ranted perfectly sound," it was held that the color did not form a part of the warranty, unless it were a wilful misrepresentation The courts of Pennsylvania hold that a bill of sale is a war- ranty of the kind of goods but not of the quality. A bill of sale describing the goods as ^^ superior, sweet-scented Kentucky leaf tobacco,'' was held by the court to be a warranty, only that It should be " Kentucky leaf tobacco," and that it did not war- rant the quality. But this seems to be at variance with deci- sions which have been made in other States. 289. Executory Contract Warranty.— W^hen goods are to be manufactured, or furnished for a particular purpose, there will be an implied warranty that the goods shall be adapted to the purpose for which they were ordered. One reason for this is that the purchaser has no opportunity to examine the o-oods when they are purchased. "^ 290. Warranty Against Latent Defects.— There will always be an implied warranty against latent defects when the vendor knows that the purchaser depends upon him instead of using his own judgment in relation to defects which were known or might be known to the seller, and where he could have guarded against the defects. Such implied warranty is grounded m the trust confided in the vendor by the vendee. %: G IT A R A X T Y. 301, A Ouaranty. — A guaranty is an undertaking to answer for the payment of some debt, or the performance of some duty, in case of the faihire of another liable for such pay- ment or performance. •20'2. The Essentials. — The essentials of the contract of guaranty arey^p'rst, the consideration/ second, ?i principal debtor/ and, third, the consent of the party to whom given, 39«l. Consideration. — The consideration is indispensable to the contract, and its analysis is the same as that of ordinary contracts, with the notable difference that the benefit or advan- tage to be derived from it, instead of being in favor of the guarantor, must accrue to the party in behalf of whom the promise is made. The guarantor need not, and generally does not, derive any benefit from the contract. When the original debt or duty is grounded upon a good consideration, it will support the promise of the guarantor if the promise was made at the same time, or before the original debt. But if the debt or duty had already been incurred there must be a new con- sideration to support the guarantor's promise. If there be a benefit to the person for whom the guaranty is given, or an injury to the party who is to receive it, it will be a sufficient consideration when the guaranty was given on account of it. !394. A Principal Debtor. — As the undertaking of the guarantor is conditional or accessorial, there must be a principal debtor to whose obligation the guarantor's contract must relate. The guaranty cannot be larger than the principal obligation, although it may be smaller. The guaranty of a debt for an in- fant or a married woman, which is at first accessorial, may be- come a principal debt on account of its not being enforceable at 124 .if VSi GUARANTY. 125 law against the original debtor, but may be enforced against the guarantor, and for this reason a guarantor is sometimes required Generally, however, the liability of the guarantor is measured by that of the principal. So when the liability of the debtor is lessened by the consent of the creditor, it generally lessens the guarantor's liability in the same ratio. «05. Consent of the Creditor.-The consent of the creditor to accept the guaranty must come to the knowledge of the guarantor or the contract will not be binding. An offer to become a guarantor is not legally binding unless the party to whom It IS offered signifies his acceptance. But there will be an implied acceptance if some act is done, on the strength of the guaranty, by the party to whom it is given at the time the offer was made. When the guaranty is absolute, no notice of acceptance is re- quired in New- York, unless it is requested. The following are common forms of guaranty; 390. FoEM Xo. 58. Buffalo, May 4th, 1882. In consideration that Mr. .1. Wells will supply the bearer, C. Monroe, with groceries not to exceed the value of twenty- five dollars, at thirty days credit, I agree to be responsible for the payment of the same. R. E. SLOAN. 397. Form No. 59. New-York, Ajiril 1st, 1882. Mr. O. P. GiBBS,— I am informed by C. Green, the bearer, that he is indebted to you to the amount of foity-four dollars which becomes due to-morrow. If you will give him an extension of time for the payment until the second day of May, I hereby guarantee the payment. DANIEL WEBB. ^98. Liability of Principal Varied.— Should the lia- bility of the principal be materially varied by the person to whom the guaranty is given, without the consent of the guar- ifSli M ]26 COMMKR( lAL LAW AND BUSINESS FORMS. antor, the liability of the latter would be terminated. If, for instance, Mr. Wells should supply C. Monroe with Jifty dollars worth of groceries, or Mr. Gibbs should extend the time three months, the guarantor would not be liable^ And where a party became surety for the faithful performance of the duties of a collector of taxes for a certain number of townships, and after the bond was signed, other townships were added, the Supreme Court of the United States held that the surety was not liable. So, also, where a person was surety for the faithful performance of the duties of a cashier in a partnership, under the firm-name of " Smith & Co.," consisting of four partners, and one of the partners went out of the firm, but the same business was con- tinued under the same name, and the cashier became a defaulter, it was held that the surety was not liable. 290. The Statute of Frauds.— This statute enacts that "No action shall be brought whereby to charge the defendant ipon any special promise to answer for the debt, default, or miscarriage of another person, unless the agreement upon which such action shall be broufjht, or some memorandum or note thereof shall be in writing, and signed by the party to be charged therewith, or some other person thereunto by him law- fully authorized." The general provisions of this act apply directly to the contract of guaranty. And where a person rode a horse to death without any permission from the owner, and A. verbal!} guaranteed to pay the owner a sum of money in satis- faction of the loss, on condition that suit should not be brought against the offender, it was held to be a promise within the statute, and therefore void. 300. Liability Renewed or Extended.— When the ob- ligation is extended by law, the guarantor will be discharged. As where a joint stock company was incorporated for a term of ten years, and was at the expiration of that time renewed for ten years more, and the same officers and business go on as before, the sureties to the bond for the faithful performance of the duties of the cashier were held not to be bound beyond the oricrinal time. But where a bond is given for the faithful per- formance of the duties of a city or county treasurer, as such. ;4 GUARANTY. 127 the bond continues in force through several administrations, unless the sureties are formally released, because the office never terminates. A guarantor cannot renounce his own liability. 301. Negotiability of Guaranty.— When a general guar- anty is made on the face of a note or draft, which is payable to the order of the payee or to bearer, it is negotiable with the note or draft, and goes with it, and is good in the hands of any payee. If, however, a person writes on the hack of a note, before delivery to the payee, his name in blank, his liability would not be the same in different States. In some he would be held liable as a surety, but in New- York he would be held as an indorser, and it would be the safer way in all such cases to notify such parties of the non-payment if it is not paid at maturity. 30a. Guaranty Strictly Construed.— The general rule in regard to the construction of a guaranty, is that it must never be extended by implication, and that the guarantor's liability is only equal to that of the principal, and is limited to the particu- lar transaction in regard to which it was assumed. If it is special, and relate to a particular person, he only can hold the guaran- tor liable, and he is not bound beyond a fair construction of the terms of the guaranty. And if the guaranty relate to a particular office, it embraces only such things as properly belonged to that office at the time the guaranty was given. As where a bond was given as security for a collector of customs, and after it was given 7iew duties were laid, and he was authorized to collect them, it was held that the bond did not extend to the new duties. But the guarantor will be bound for anything which can be fairly included within the terms of the contract. 303. Illustrations.— The following forms are given as illustrating the difference between a restricted and a continuing guaranty: 304. Form No. 60. " The object of the present letter is to request you, if con- venient, to furnish Messrs. H. with any sum they may want as far as $50,000. We shall hold ourselves answerable to you for the amount." Held not continuing. m Si i i;t 128 COMMERCIAL LAW AND BUSINESS FUKMS. :i05. Form No. 61. " I agree to be responsible for the price of goods purchased of you, either by note or account, at any time hereafter, to the amount of IllOO." Held to be a continuing guarantee to the extent of one hunroperty until the purchase price, or some charge or expense due upon it, is paid. It rests upon possession, and is the right to maintain it. If., therefore, the lien holder allows the goods to go out of his pos~ session, he loses the right. Liens may be either legal or equit- able. The seller of goods has a legal lien upon the goods sold for the purchase price, so long as they remain in his possession. A sale of goods implies that payment of the price should be made, and, unless a credit was agreed upon, the buyer cannot take the goods, nor sue for them until he tenders payment. The seller can retain the goods under the right of lien until tlie price is paid. If, however, the goods are sold on credit, the buyer may take possession at any time, but, if the goods are not taken until the payment becomes due, the seller's right of lien is revived. So, also, if before delivery of the goods the purchaser should become insolvent the right could be exercised by the vendor. 3*10. Delivery of Part.— The delivery of part of the goods does not destroy the right of lien on the remaining part. The rule is, that every part of the goods is subject to lien as long as it remains in the possession of the vendor. Even where the delivery of a part is held to be a delivery of the whole, it does not destroy the right. And, if a part of the purchase price has been paid, it does not interfere with the right of lien for the balance. The principal also has the right of lien on goods which are in the possession of his factor, or of a person who received them from the factor if he was notified of the claim. Where part of the goods have been delivered, the re- maining part may be held for the \chole debt. 132 M LIEN. 133 ;:i;i 3ar. An Eqnitable Lieu.— An equitable lien may be created when a thing is not in existence, but is expected soon to come into existence : as where a manufactory is leased, and the owner is to be secured tlie rent by a lien upon the articles to be manufactured, the lien to become operative as soon as the arti- cles are produced. The party who claims the right of lien is not the owner of the property upon which the right is to be exer- cised; the title is supposed to be vested in some other person. Liens may exist in equity without actual possession. 3*28. Lien of Agent.— An agent may have a lien upon the property of his princii>al which may be in his possession, and it may be either a general or a special lien. The general lien is the right to hold the property for the security of any claim he may have against the principal, while the special lien is for some charge or claim on the particular goods which are held. The claim may be for services rendered, or for expenses, or money advanced, or for a balance due on settlement. The lien may result from an agreement between the parties, or from the usacre of trade. The usage of trade gives factors a general lien for all claims which arise from the agency business, and so the agent has a hen for all liabilities incurred in relation to the ao-ency But if a consignment is made to an agent, wath particular in- structions to apply the proceeds resulting from the sales to the payment of a particular debt, he could not hold the money by right of lien to indemnify himself for a balance due from the principal. 3?J9. Lien of Mechanics.— In most of the States mechan- ics have a lien upon the property upon which they work to secure the payment of their w^ages. But there are certain limi- tations and requirements in regard to this right, concerninc- which the laws of the different States are not entirely uniform^ The time within which it may be exercised is limited, usually from thirty to ninety days. In some States the work must be done under a written contract, and a public record must be made of it. Some require a written notice to be given of the me- chanic's intention to exercise the right of lien. These conditions are required to protect the owners and purchasers of the prop- rH „S< i 134 COMMERCIAL LAW AND BUSINESS FORMS. w erty upon which the work lias been done from being defrauded. If, for instance, the time were unlimited, no person would be safe in buying property and paying for it, as he might be sub- jected to claims of any amount for work which had not been paid for by a previous owner. ;|:J0. Lieu of a Coiiuiiou Carrier.— The common carrier, by reason of his being under obligation to carry goods for any person who may offer them for carriage, is given the right of lien to secure the payment of the charges for carriage. His lien is of the nature of a pledge, and he may not only hold the goods for the charges upon them, but, if they are not paid, he may, after a reasonable time, give notice that the goods will be sold, and, if they are not redeemed, may sell a sufficient amount at auction to indemnify himself for the charges. 331. Lien of Bailees.— A bailee who performs labor and services upon the property of the bailor, and thereby changes its character and increases its value, is entitled to the right of lien to secure the payment of his charges. But it does not apply to cases where money and services have been expended upon the property, but no changes made in the property. The keeper of a boarding stable has no lien upon a horse for his keeping. But if the horse has been trained for trotting by direction of the owner, as well as kept, he has a lien for his charges 33*2. Lien of Innkeepers.— An inkeeper has a lien upon the luggage of his guests for the charges for their accommoda- tions. But he has no lien on luggage which is being kept for a person who is not a guest. Neither has he any lien on horses which are sent to the hotel for keeping by a person who is not a guest. 333. Termination of Lien.— As no lien can exist unless there is a debt or claim also existing at the same time, there- fore, if the debt or claim is paid, or a credit given, the lien is at once terminated. So, also, if the possession of the goods is voluntarily surrendered, the lien is terminated. The debt or claim must be due to the person who intends to exercise the riffht of lien, and not to another. If when a party has the right LIEN. 135 of lien he does not assert it, but claims to hold the property on some other ground, he will be considered to have waived liis right of lien. When a debt is secured by a lien upon prop- erty, if some different arrangement is made for paying the debt, the lien will be lost. A lien is immediately destroyed by giving a credit, and it makes no difference whether it was given by agreement between the parties, or by the usage of trade. 334. The Continuance of Lien.— A lien, when in full force, will continue until the debtor pays, or tenders payment to the creditor, or until the property is voluntarily given up by the party who has the right of lien. A delivery sufficient to pass the title of the property may be made without losing the right of lien, as where an entire contract of sale is made and, a por- tion of the goods have been delivered, the effect of which Mill be to transfer the title to the whole, but the right of lien on the balance will not be destroved. n COM^ION CARRIERS. -♦♦-•- JI35. Common Carrier.— A common carrier is a person who undertakes the carriage of goods from one place to another for any person %vho choses to employ him for a compensation. Express, steamboat, and railway companies, cartmen, canal-boat owners, and all persons whose business it is to carry goods for the public for hire, are common carriers. It is not necessary that the compensation should be a definite sum ; it may be according to the amount earned, based upon a scale of prices. But it must be when earned in the nature of a debt, recoverable at law, and not a mere gift. Carriers who make it their business to carry passengers are not considered as common carriers, and are not liable as such, except in respect to their baggage. There are three necessary elements to constitute a common carrier ; First, he must make a business of it ; second, he must carry for all people indifferently ; and, third, he carries for hire. 3:J0. Carries for All.— The common carrier carries for all who offer goods for transportation that come within the classes of goods which he is engaged in carrying. Thus he differs from one who carries only by special contract, and does not hold himself out to carry indiscriminately for the public. He is not obliged to carry goods that are dangerous nor such as are un- lawful. 337. Carries for Hire.— The common carrier acts upon the principle that the laborer is worthy of his hire, and charges a compensation for the services rendered, and for the risks in- curred in the transportation of the goods. Generally, he has no rii^ht to charge one person any more than another ratably. His charges may be regulated by custom, or by law% or by agree- ment between the parties. If he assume extraordinary risk, his charc^es may be correspondingly high. 136 i vh IS i-J COMMON CARRIERS. 137 :I38. standing Offer to the Public.— The carrier con- tinually holds out to the public an offer to receive goods for ^transportation, and he has no right to refuse to take goods from any one if they come within the line of goods he carries, and he still has means of conveyance. If he refuses to accept goods when offered, except for the reason of inability to carry, or not being of the class of goods carried, he makes himself liable to an action for damages. If, however, the owner of the goods in- tend to bring an action for damages, he must tender to the carrier the charges for transportation, for the reason that the carrier is not legally bound to receive the goods unless the freight is prepaid. Nor is the carrier under obligation to re- ceive freight an indefinite length of time before he is ready to start upon its carriage. 339. Private Carrier.— A private carrier is one who makes special contracts for the transportation of goods for hire, or carries for certain individuals only, and has a right to refuse to carry for any others who may offer goods for conveyance. If his occupation is such that he has no right to refuse any per- son, then he is a common carrier. A mere carriage for hire, in any particular case where it is out of the usual line of his busi- ness, does n'ot make one a common carrier, unless there is an agreement between the parties that he shall assume the respon- sibility and liability of a common carrier. A private carrier is only liable as an ordinary bailee for hire, and is only responsible for ordinary diligence. 3 10. Liability of Common Carrier.— The liability of the common carrier begins as soon as the goods have been com- pletely delivered to him ; and the acceptance of the goods for transportation, at any place by the carrier, fixes his liability. An acceptance of some kind is indispensable to fix the liability; therefore, if the goods are in charge of the owner when lost| the carrier will not be liable. When the goods are fully ac- cepted by the carrier, he assumes the responsibility of an insurer, and is liable for all losses unless they happen from inevi- table accident, or from public enemies, or from perils of the sea or from what is called an act of God. " An act of God " means 138 COMMERCIAL LAW AND BUSINESS FORMS. COMMON CARRIERS. 13P If 1 ilHfci some act in which neither the carrier nor any other person had any direct and immediate agency. But a person may be a com- mon carrier in respect to some things, and a private carrier in respect to others ; thus, his principal business may be confined to carrying goods, yet at times he may carry a package of money for a friend or neighbor, and, in that event, he will only be responsible for want of ordinary care in relation to the money, while, if it were a part of his regular business, he would be liable as a common carrier. He is also liable for all losses which result from the acts of his own servants, even if he take every possible precaution to avoid such losses. If goods are lost, the presumption is, that it resulted from his carelessness, and he can only avoid liability, by proving that the loss came within one of the cases which exempts him from the liability. till. Acceptance of Goods. — The carrier's liability does not begin until the goods have been delivered to him or to his agent, and have been accepted. But the acceptance may be either actual or constructive. When the goods for carriage are left at the proper place, and the carrier is notified of the fact, it is a sufficient delivery to hold him responsible ; but not unless the carrier or his agent has knowledge of the fact of the goods being left. Generally, when the goods are delivered, the common carrier acknowledges the delivery and acceptance of the goods, by giving a receipt, as on following page. ai'S. Liability of Successive Coiiipaiiies.— A question of much importance frequently arises in regard to the liability for loss where there are successive companies of common car- riers over a continuous route of travel, but each a separate and independent company. For instance, goods are shipped froiu Buffalo, N. Y., to New Orleans, and there are, say, four separate railroad companies, and the goods are lost in the hands of the third company. Is the company which received the goods at Buffalo liable, or only the third company in whose hands they were lost? The statute law of New- York, passed in relation to railway carriers, makes the receiving com])any liable to the owner, and gives it the right to collect from the company which lost the goods. « a '~ c^ S. 2:. ^ J=^ i^- §^ ^ ^• f-v *> •^ te -^ ^ ^ ^ '^ a S *" L ^.^ ^ Ok » <^ f^ ^ C! <^ ^^ "'^ *»■ Co o a a !:» a"^ § ^ g ^ -- 5^2 c^t^2 ^ ^ < s^ «^ V <>^ <«^ >i Cfe r^ "^^ C) "* ^ s^i ^ -T "- S S^ a Co "? ,Cc , _ •^ O CI Oi 5 o ^ S ^ S *i '-•s?^. sag- 5^.o 5 <: c& > i § eg" a, 5> S5: ?s ^ B I 5T^ to a" i ^ C 140 COMMERCIAL LAW AND BUSINESS FORMS. umm ililHI 344. Care of Goods. — It has already been stated that the comraon carrier is an insurer of the safety of the goods. He must receive them at suitable times, and in a proper way, and at a suitable place. He is also bound to comply with such reason- able and suitable instructions as the owner may give, as where a package is marked " glass — with care — this side up," he is bound to comply with the directions. So, if a package is marked, " to be kept dry," the instructions must be followed ; the goods must be carried in the manner and position indicated by the notice. He must exercise more than ordinary care over the goods while in course of transportation ; he must take the best of care, not only during the carriage, but at intervals of stopping during the transportation, and until the goods are delivered. He must also provide suitable vehicles for the con- veyance of the goods, and keep them in proper repair, and must employ capable servants to take charge of them. Must not expose the goods to irai)roper danger ; and if he receive any reasonable and proper special instructions from the sender, and does not obey them, and the goods are lost, even by perils of the sea, he is bound to prove that the loss did not result from his disobedience of the instructions. 34»j. Restricted LiabiHty. — The strictness and the seve- rity of the liability to which the common carrier is held have caused many attempts to limit or restrict it. This has generally been attempted by giving notice to the owner ; for instance, as " all baggage is at the risk of the owner." The courts have held that such notice does not restrict the liability. But the carrier can make a special contract with the other party, in which he may restrict his common law liability as insurer of the goods, but he cannot escape them as bailee ; as such, he will be responsible for want of proper care. He may, however, limit his liability, by giving a general notice that the goods shall be delivered in some particular way, and that the value of the goods shall be made known, and that he will not be answerable for goods above a certain price, unless a higher price is j)aid for the carriage. The policy of the law is to hold the carrier strictly accountable for any neglect or loss to the goods carried. COMMON CARRIERS. 141 346. Termination of Liability.— The carrier's liability terminates when the goods are properly delivered at the place of destination to the consignee, at the specified time ; or, if no time is specified, within a reasonable time. The contract to deliver is sometimes suspended by an unavoidable obstacle, as the freezing up of a canal, but if the carrier has used all reasonable efforts to overcome the obstacle, the law will excuse him, and he may deliver when the canal is again open for navigation. 347. Place of Delivery. — The delivery may be made to the consignee at his place of business, or at a general ware- house, or on board a lighter, or on a wharf, or dock, if there is a well-established custom of that kind of delivery at the place, but notice must generally be sent previously to the consignee or owner. If any particular place for delivery is agreed upon, it must be at that place. If the consignee refuse to accept the goods, the carrier must take care of them, or have them stored in some suitable place for the owner. 348. Delivery to Right Person.— The carrier w411 not be discharged of his liability until the delivery is made to the right person, who is commonly the consignee. If delivered to any other person by mistake, the carrier will be responsible as for a conversion of the property. The delivery may be made per- sonally to the consignee, or to his authorized agent. If the con- signee is dead, or cannot be found after due diligence, then the carrier will be discharged from further liability by storing the goods with some proper person on the owner's account. 349. Warehouseman. — When the goods have been deliv- ered to a warehouseman the liability of the carrier ceases and that of the warehouseman begins. The latter is not liable as insurer, but only as bailee, and is only responsible for want of ordinary care. And even where the warehouse is owned by the carrier the effect of delivery is the same. 350. Person to Pay Freight.— The carrier may demand prepayment of charges for freight if he choose, but, in most cases, it is customary to carry the goods and collect the freight ,61 J 42 COMMERCIAL LAW AND UUSINJlSS FuKMS. from the consignee. If the consignee refuse to pay the freight, or price of freight, the carrier has two means of collecting' it: First, the carriage gives him a property interest in the goods which entitles him to the right of lien the same as if the goods were pledged to him as security for the payment of the freight • second, he has a right to bring an action in a court of law against the owner of the goods with whom he made the con- tract for the carriage, by proceeding against him personally. »51. Lien of Carrier.— This means the right to hold and keep possession of the goods carried until payment of the freight, and, when he is unable, after due diligence, to deliver the goods to the consignee, and deposits them in a warehouse, the deposit is subject to the lien. If the carrier claim to hold the goods for some other purpose than as security, he will lose his right of lien, and so he will if he voluntarily give up the goods for any reason. If he assume to own the goods, or ap- plies them to his own use, he is guilty of a conversion of them. If the freight is not paid within a reasonable length of time after it is due, and has been demanded, the carrier may apj)ly to a court of equity for a decree of sale, and the court will, on due proof, cause the goods to be sold and decree payment to the carrier after payment of the costs and expenses, and retain any surplus for the benefit of the owner. Unless expressly author- ized by the court, the carrier cannot buy the goods or any part of them at the sale. SHIPPING -»•» 3o^. Shipping. — The meaning of shipping as used here is the transportation of goods by water, whether carried upon the ocean, the lakes, rivers, or canals. The immense amount of transportation carried on by ships and boats of various kinds makes it important to understand the principles of law which relate to and govern the shipment and carriage of goods by water. The transportation of goods, whether by land or by water, usually comes within the scope of the common carrier, and is treated of generally under that head. The principal parties concerned in the transportation of goods by water are, first, the owners of ships or boats; and, second, the owners of the goods to be carried. 3o«t. Ship Owner. — The owner of a vessel does not always run it himself, nor is it always run in his interest as a common carrier. Frequently ships are let to other parties, who use them to carry goods for the public, and thus they become common carriers. When a ship is so let, or leased, it is said to be chartered, and the contract by which a ship is chartered is called the charter- party. This contract, or charter-party, is a written instrument (generally partly printed and partly written) by which the vessel, or part of it, is let or leased, either to the owner of the goods to be shipped, or to a middle man, who intends to carry the goods for the owner. The party who hires the vessel is called the charterer. 354. Owner of Goods.— The owner of goods to be shipped may charter the whole, or only a part of a vessel, as the case may be, and it may be for the season, or only for a particular voyage. If the whole ship is chartered for the season, the char- terer generally employs the ofiicers and the crew, and has the 143 ( 144 COMMEia lAL LAW AM) BUSINESS FORMS. fW entire control and responsibility of the vessel, and for the time is deemed the owner. But mucli of the sliii)i>ing by lake, river, and canal is carried on by season contracts, whereby the owners of boats covenant to run through the season between certain points, and carry all goods that may be specified in a bill of lading, with certain exceptions, at specified rates. :I55. Charter-Party.— The charter-party embraces a con- tract which is defined to be, " tliat by which an entire sliip, or some part thereof, is let to a mereliant, or some other person, for the conveyance of goods, on a determined voyage to one or more places." This instrument (the charter-party) is generally made by the owner of the vessel, but may be made by his authorzied agent, and is sometimes made by the master of the vessel. The terms of the charter-party are to be strictly en- forced, and cannot be varied by parol. A clause is generally inserted, exempting the owner from liability, when a portion of the vessel is chartered, provided he cannot fulfil his contract, by reason of circumstances over which he has no control. If the charter-party is for a single voyage, it generally provides that the ship shall be in good condition, and seaworthy, ready to sail on a specified day. It usually describes the voyage which is to be performed, and the time to be allowed for discharging the cargo, and stipulates the amount, or rate, to be paid for freight. 5loO. Oeiieral Ship.— When a ship is not chartered, but carries goods for the public generally, it is called a general shij). It is usual to advertise such ships as being open and ready for the transportation of freight. It offers to take goods for any one and every one, as far as it has capacity, without partiality. Such a ship is a common carrier, anart which ^ Jt < fi;, SHIPWNG. 147 was lost, pays its proper share towards making up the loss 10 bring any case within the rules of general average there must : First, be a necessity for the sacrifice; second, it must be a dehberate and voluntary act of the master of the ship ; and third, It must be for the ge,ieral good. When the necessary conditions have been fulfilled, the ship, freight, and cargo must contribute in their respective proportions to indemnify for the loss. A general average confers a lien upon the parcels of cargo, ship, etc., on which it is charged. »6a. Contributing Interests.— Not all the property at risk IS assessed; provisions are exempt, and wearing apparel and jewelry of passengers ; only freight-paying goods contribute. VV hen the settlement is made at the port of destination, the goods lost are estimated at their value there, and so with the contributing property; the ship is valued at what it was worth before it started, less the wear of the voyage. The custom is to make out a list of the articles that are to contribute, ineludinound. Authority may sometimes be implied from previous acts of the agent which have been sanctioned by the prmcipal, and which were of a similar nature. So, if an act be done with- out authority, and the principal, with knowledge of the fact, adopt it, by taking the benefit of it, he will be bound, and, in some instances, an adoi)tion may result from remaining silent, as where an agency really exists from some general relations, and the agent notifies the principal of some act done for him, it devolves upon the principal to express his dissent, or he will be bound by the agent's acts. 380. Kinds of Agency. — There are several kinds of agency, the first division of which is into special and general ; second, limited and unlimited ; third, /ae^or and broker. HSl. A Special Agency. — A special agency IS an agency to do a single act. But to limit the authority to a particular l)usiness does not make it a special agency; because it may be as general in relation to that particular business as if it were un limited in extent. Every person dealing with a special agent must ascertain what the extent of his authority is, and at his own risk 38^. General Agency. — A general agency consists of delegated authority to do anything about a particular business. The rule here is, that the principal is bound for all acts of the agent that come within the scojje of the business, or general authority vested in him. If an agent is appointed to sell goods, and instructed not to warrant them, but he nevertheless warrants them, the principal will not be bound by the warranty. But, if a person is authorized to sell and warrant, and warrants in a particular case in apposition to private instructions, the princi- pal will be bound by the warranty. •1^3. Limited Agency. — This division of agency is one in which the agent is bound by particular instructions, and applies to a general agent, restricting and limiting his authority. 384. Unlimited Agency.— An unlimited agency is applica- ble to a special agent, giving him authority to use any means he may find necessary to accomplish the thing to be done. tu" :i ih. AGENCY. 155 385. A Factor.— The commercial division of ao-ency is that of factor and broker. The factor is one who has the property of his principal in his own possession for sale. He is commonly called a commission merchant, and the goods received from the principal for s^le are called a consig^iment. If the agent accom- pany the cargo on a voyage, he is called a supercargo. A factor has the goods in his own possession, and may buy and sell ^oods in his own name without disclosing the name of his principal The factor has a special property in the goods or subject-matter of sale. The rule is, that a factor is always entitled to his com- missions if he has properly i^erformed his duty. But it is a question not well settled whether he can recover his commis- sions if the purchaser fails. This will depend much upon the usage and custom in the place where he is doing business. 380. A Broker.— A broker is one who is employed to negotiate sales between the buyer and the seller. He gets his pay for doing the business generally by chaiging so mudi per cent, on the value of the property negotiated, and it is called a commission or brokerage. He acts as a middle-man between the buyer and seller, and undertakes to bring about the exchanges of property, and, accordingly, as he makes a specialty of one kind of business or another, he is called a real estate broker, an exchange broker, a stock broker, etc. He does not have posses- sion of the goods or property which he negotiates, nor has he any authority to sell in his own name. Sometimes, however, the same person is both factor and broker. 387. Rules of Construction.— Formal written instru- ments are usually sti'ictly construed, and are to be so interpreted as not to exceed the authority given, or what is absolutely necessary to accomplish the object of the agency. Thus, a power to sell land does not confer authority to lease it, or 'to give permission to cut timber on the land, even though it should be done with a view of inducing a party to buy. But, if an agent is employed to get a bill discounted, which is payable to the order of his principal, he may indorse the principaf's name on the back, and the principal will be bound by such indorse- ment. Authority delegated by a written instrument is restricted 4 156 COMMERCIAL LAW AND BUSINESS FORMS. AGENCY. 157 i >i to such acts as are plainly incident to the main object to be secured. An auctioneer, as such, has no authority to bind the owner of goods which he sells by a guaranty. When the lan- guage by which the authority was given is susceptible of differ- ent meaning by which the agent was misled, and adopted a course not designed by the principal, yet he will be bound, because he occasioned the mistake. 388. What Strangers are Governed By. — Strangers who deal with a special agent are under obligations to ascertain just what authority has been vested in the agent, and what is the extent of his agency. The mere fact of his being a special agent shows that his agency is limited, and is sufficient notice to put those who deal with him on their guard. But in a general agency it is different. Here third persons have a right to be governed by the acts of the parties, and not by any private understanding, or arrangement, between the principal and agent. Whatever authority is conferred upon a general agent by the public declarations or acts of the principal he will be bound by, so far as strangers are governed in their dealings with the agent, bv those declarations and acts. The authority which is dele- gated to the agent by the principal is largely influenced and sometimes superseded by that which he allows him to assume. But the principal is only bound by such representations in re- gard to the subject-matter as the agent makes in his character as agent. Thus his statements as to the quality of goods, when he is selling, will be binding upon the principal, but if made at any other time when not engaged in the agency business, they would not be binding. 389. Specific Instructions. — When the agent receives specific instructions from the principal, he must faithfully com- ply if they are not unlawful, except when some unforseen circumstance arises which would change the intentions of the principal, or render it impossible. The rule is, that every loss which is the result of non-compliance with the principal's orders, must be borne by the agent ; but, if there be any profit, it belongs to the principal. A slight and unimportant deviation from the instructions will not make the agent liable if the prin- cipal object is attained. For instance, if an agent is instructed to buy goods at a limited price, and he should pay more, but save enough on freight to make it up, he would be excused, ^ut where no particular instructions are given, the agent must conform to the usage of trade, or the custom of the place, with reference to his particular agency. And where a consignee is instructed to sell goods, he has a right to sell on credit if that is the general custom of the place. But if he is authorized to sell, he has no right to barter the goods off nor to pledge them. 390. Accounts and Touchers.— The agent is bound to keep correct accounts and vouchers of all transactions relating to the agency business, and if through his neglect to do so there should be any loss or damage, he will be liable to the prin- cipal. And, if his accounts are not kept correctly so as to form a proper basis upon which to reckon, he will not be entitled to any commission. Whatever profit is made by an agent in the course of his agency business belongs to the principal, whether it is a direct profit or only incidental ; and no agent has a right to ap- propriate to his own use any share of the profit, even if it is incidental, as the interest on the principal's capital, notwith- standing it should seem to be justified by usage. The law looks upon such usage as a usage of fraud. 391. Separate Property.— The agent must keep the prop- erty intrusted to him by the principal entirely separate from his own. If he carelessly mix his own property with that of the principal the law will consider it all the property of the principal. So, all money belonging to the agency should be deposited in the name of the principal, and if the agent deposit it in his own name, without anything to distinguish it from his own, and the bank should fail, the agent would be liable for the loss. 392. Authority to Receive Money.— A person can safely pay money to an agent when the principal has authorized him to do so. But the authority of an agent to receive money due to the principal on a written instrument ought to be accom- panied by the instrument, so that the payment may be indorsed J* 4k : 158 COMMERCIAL LAW AND BUSINESS FORMS. f-i i or, if it be in full, the instrument be given up. Where goods have been purchased of a factor the purchaser has a right to pay hiiu, unless the principal notifies the buyer not to pay the agent. The general rule is, that a broker, by reason of not having the goods in possession which he sells, is not authorized to receive money. ]>ut where the ])rincipal is not known, he may bind by receiving payment, because he then takes the j)lace of the principal. So, also, custom and usage will sometimes justify a person in paying a broker. And where an agent is authorized to receive money, a tender to him is the same as if made to the principal. 30^. Del ( redere Coiiimissious. — When it is the custom to sell goods on credit, the factor sometimes guarantees the sale, provided the principal agree to allow him a larger per- centage of commission than is usual. lie is then said to receive a del credere commission. In case the ])urchaser does not pay, the agent then becomes personally liable. 5101. Tiolatioii of Duty. — If losses occur in consequence of violation of duty by negligence or misconduct, the agent will be liable to his principal; as where an agent knowingly deposits goods in an improper place, and they are destroyed by lire, he would be liable for the loss. So, if an agent neglect to procure insurance when he is instructed by his principal to in- sure, or when it is the custom of the place to insure, he will be held liable. But where a person receives an order to buy twenty-five shares of Kew-York Central Railroad stock, and he goes into the market and finds only ten shares for sale, which he buys, and then is unable to buy any more, the principal will be bound for the purchase of the ten shares, because it was the best the agent could do under the circumstances. 305. Duties of Ageut. — Every agent is presumed to pos- sess a reasonable amount of skill, and is bound to exercise ordi- nary diligence about the trust he is to perform. The skill required is such as persons of an average capacity bring into requisition in their own matters of business. Ordinary diligence is that which persons of common prudence use in their own 1 • ai* i AGENCY. 159 affairs. An agent is not only bound to obey the specific in- structions of his principal, but he is also bound to obey in- cidental orders when he has undertaken to perform duties out of which the incidental orders naturally come. As where the agent receives a consignment of goods, with instructions to sell, and nothing is said about insurance. If it is the custom to Insure it is his duty to secure insurance; or if he sells goods for the principal, and takes notes in payment, he must present the notes for payment on the day of maturity, and, if not paid, must have them properly protested, and notices sent, or he will be person- ally liable. The consignor of goods generally has the power to control the sales, except when the consignee has advanced money, or incurred liability, on account of the consignment, in which case he may control it until he is reimbursed. But the consignor can in such case again secure control, by offering to pay the charges. :i96. Liability of Agent.— An agent is sometimes liable for a larger sum than the amount of money advanced by his principal, and the interest thereon. If he receive an order, with money, from his principal, directing him to purchase a particu- lar kind of goods, and he wilfully convert the money to his own use, and the goods rapidly increase in value, he is liable for the increased value, as well as the principal and interest. He is also liable for losses sustained by reason of his neglect or want of due diligence in the execution of his trust. So, also, he is liable to the principal for any damages which he has had to pay to third persons for injury to their property, caused by the act of the agent while in the performance of the agency business. But where an agent is expressly directed to do an act, and its performance would not result in any legal benefit to the principal, there will be no liability if he neglect it. There will be no liability when there arises an unforseen necessity, which was not expected by the parties, nor where a strict com- pliance has become impossible by reason of peculiar circum- stances; or if the subject-matter of his agency be founded in illegality or fraud, or contravene the princii)les of i)ublic policy. In any case there must be both an injury and a wrong in order to sustain an action. V II ¥^ 4 •,.'• I 160 V COMMERCIAL LAW AND BUSINESS Fl>RMS. ;it>7. All Adverse Party.— The law does not permit an agent to defeat a trust that he has accepted, by becoming an adverse party to his principal. If he is appointed to sell goods, he cannot buy the same goods, either for himself or for a third person. The agent cannot do his full duty to the principal when he is engaged in transactions which conflict with the interests of the principal. 398. Agent, a "Bailee.— An agent who has property belong- ing to his principal in his possession, occupies the position of a bailee for hire, and must take as much care of the goods as a person of common prudence would take of his own property. If he is i^uilty of neglect he will be liable to the principal. Where loss is sustained by the principal in consequence of neglect to notify him of material facts of interest to him, the agent will be re- sponsible. :I09. AVlieil Account for Price.— Generally an agent is not under obligation to account for the price of goods he has sold until he has received the money from the purchaser. But there are a few exceptions to this rule; first, where he has im- ])roperly sold the goods on credit, or where he has given a longer credit than his instructions or custom warranted; second, where his own neglect was the cause of the payment being delayed. 400. Personal Liability.— An agent generally avoids personal liability when he makes the contract in the name of the principal and under his authority; but there are some ex- ceptions: first, he makes himself liable if the principal is not known; second, if there is no responsible principal, except public agents who are known to contract for the government, and are not, therefore, liable; third, when the contract is made expressly his own; and, fourth, where he exceeds his authority. An agent is always liable when he binds himself by a formal engagement. And so, also, if the principal is not bound by reason of the agent's exceeding his authority, he himself will be bound. An agent is liable to his principal only, for neglect or noTi-performance of duty, and not to third persons. He is. ii ill » 1 Hi*r AGENCY. 161 however, liable to third persons for wrongful acts, and it makes no difference whether the principal authorizes him to do the act or not, because he is not obliged to do an unlawful or wrongful act. If an agent refuses to deliver goods to a rightful owner, ie will not be liable for conversion of the property, provided he truly places the refusal upon the ground that he has no author- ity to do so from his principal. 401. Rights of the Agent.— An agent is an employee, or bailee, who works for hire, and he is entitled to his wages when his trust is faithfully performed. His principal right, therefore, is to receive his wages by way of commission, tlie amount of which may be determined by agreement between the parties, or by custom of the place, or by a jury. To secure the payment of the commission, the agent is given the right of lien on the property in his possession, and also the right to insure the property for his own benefit. An agent is also entitled to be re-imbursed for costs and damages, which, without fault of his, he has been obliged to pay in relation to the agency. 403. Kights of Principals.— The principal being bound by the contracts and acts of the agent, when done within the scope of the agency, has reciprocal rights against third persons, corresponding with his own liabilities. The principal may! therefore, sue third persons, when they are responsible, on their contracts made within the agency business. 403. Liability of Principal.— The principal is liable to third persons for the negligence or unskilfulness of the agent when he is acting in fulfillment of the agency business, even if he is not under. his immediate direction. But to hold the prin- cipal responsible for the act of the agent, it must be shown that It was done during the performance of the agency business, and not while he was about his own business. So, also, if the agent wilfully occasion damage to the property of 1 third person, the principal is not liable. 404. Wrong Expressly Commanded .-If the principal expressly commands a wrong to be done, or gives orders which •i I , ! 11 162 COMMERCIAL LAW AND BUSINESS FORMS. cannot be carried out without perpetrating a wrong upon third persons, he will be held liable. The general principle is, that for all torts, frauds, misfeasances and defaults of the agent, done in the regular course of the agency business, the principal is liable, whether he participated in it or not, provided it were not a wilful act of the agent. The agent is liable equally with the princ'i})al for all wrongs do^e by him by command of his principal. I0»>. Sul)-A£:oiits. — The agent has no power to appoint sub-agents, or to delegate his own powers, unless expressly au- thorized by the principal, or unless the nature and usages of the business require or justify it. Sometimes, where a business is vast or greatly extended, an agent is appointed, with power to create sub-agents in various places, and for various purposes, and with various powers. 400. Representations of Agents. — The principal is liable for representations made by his agent, provided they are con- nected with and accompany the act, and are used as explaining or qualifying it, and provided, also, the act itself comes within the agency business. 407. Xotice to Airont. — A notice to an agent is generally considered notice to the principal, but to have that effect it must liave relation to the agency business, and come within its scope. It must also be at the time he is acting as agent in relation to the very thing about which the notice is given. When notice is given to the cashier of a bank in his official capacity, it is considered notice to the bank. And if knowledge is acquired by an agent in the course of his business, it operates the same as if it were the knowledge of his principal. The rule as to the sufficiency of notice is : " That whatever is notice enough to excite attention and put the party upon his guard, and call for inquiry, is notice of everything to which such inquiry might have led. That when a person has sufficient information to lead him to a fact, he shall be deemed conversant of it." 108. Purchases >rado by Agent. — The principal's lia- bility may be affected in several ways by purchases made by his K- AGENCY. 163 agent: First when the goods are bought expressly in the princi- pal 8 name, he only is liable ; second, the person selling the goods, and knowing the principal, may prefer to trust the accent and having elected to do so, he cannot afterwards charge" the prmcpa ; third, where an agent buys without disclosing his principal, the seller may resort to either. If an agent represent himself as prmcipal when buying goods, the vendor, not know- ing that he IS acting as agent, will have the same rights against him as if he were principal. 6 fe ^t 409. Delivery to an Agent—When the vendor delivers goods to the general agent of the principal for whom they were purchased, the title of the property passes from the vendor to the pnncipal, and cut. off the right of stoppage in transitu. iiut If the goods are delivered to a common carrier to be con- dest'royed ''""'''' ''' "^'^ '' '''^^^^' '' "^* ^^ "^ 410. Money Paid by Agent.-The money paid by the a^ent can be ^ back by the principal if it has bee'n paK mistake, or if the consideration has failed, or if the money w^s aSd'tr'^'^V^r '^" " '^^"^' ^^ '' '' -- fraudufently applied to some illegal purpose for which the agent had no right to use it. ii^iiu 411. Dissolution of Agency.-Tl.ere are three ways in which an agency may be dissolved: First, by a relocation of the power of the agent by the principal ; second, by a renuneia- tton of power by the agent ; third, by operation of law. 413. Revocation.-If the principal's authority has not been executed .n any part, he may revoke it at any time, pro- vided U W.11 work no injury to the agent. But if the authority be guen for a valuable consideration, or if an interest be cou- pled w.th u, or .f it form part of a security, it cannot be revoked unless there is an express agreement that it shall be ^vocable But .f the agency has already begun and cannol be separated mto parts without injury to the agent, the princi- pal cannot revoke his authority without making himself liable to mdemnify the agent for all loss he will sustain. m ' 164 OOMMERCIAL LAW AND BUSINESS FORMS. ^1S« How Done. — The principal may revoke his authority by a public and formal declaration, or by a written or verbal, announcement to the agent, or it may be implied from the acts of the principal, as where he puts hindrances in the way of the agent to prevent his performance, or where he appoints another to do the very acts which were to be done. So far as the agent is concerned, the revocation takes effect from the time he re- ceives notice thereof. 11 1. Renunciation.— The agent can renounce the author- ity of the principal at any time, but not without making himself liable to the principal for all the damages and losses he sustains in consequence of the renunciation, except where it is a gratui- tous and purely voluntary agency. 415, Operation of Law.— An agency may be terminated by operation of law : First, by lapse of time, as where it was created for a year and the year expires ; second, by change in the condition of either party, producing incapacity to act, such as insanity, or bankruptcy, or the death of either party, or by an extinction of the business concerning which the agency was established. Where the authority is terminated by the death of the principal, all the acts of the agent are generally void which are done after the death, even if they are done in good faith and in ignorance of the event. To this rule there is an exception where the authority is couple*! with an interest, in which Case it may be continued in the name of the agent. 116. Written Contract by Agent.— When a written con- tract is made by an agent for his principal, who is known, it should be stated in the body of the contract sufficiently clear to signify that it is his, and should be signed with the name of the principal, and not with the agent's name alone. If an ao-ent is directed to get a note discounted at the bank which is payable to his principal or order, he has implied authority to indorse it in the principal's name, and should sign his own name under as agent. A person may bind himself by any mark that he may see fit to adopt as a substitute for his name, if he does it with the intention of being bound. AGENCY. 165 Form No. 69. 417. Power of Attorney, ^txaxir atl ptctt bij tlicsc grcscnts^ TViat (i, John Jones, of the City of New- York and State of New - York) have made, constituted and appointed, and by THESE PRESENTS do make, constitute and ajypoint ( William U. Prentice, of the same place, my) true and lawful attorney for (me) and in {my) name, place and stead to (ask, demand, sue for, collect and give acquittance for all sum^s of money, debts and demands whatsoever, lohich are or shall be due, owing or belong- ing to me, to exercise the general control and supervision over all my lands, tenements and hereditaments ifi the City of Chicago or State of Illinois or elsewhere. With power to rent, lease; collect rents, keep uj) insurance, pay moneys and collect mo7ieysfor me. To grant, bargain and sell any real estate owned by me for such price and on such terms as to him shall seem meet, and for me and in my name to make, execute and acknowledge good and sufficient deeds and conveyances for the same,) giviiig and granting unto {my) said attorney full jyower and authority to do and perform all and every act and thing whatso- ever requisite and necessary to be done in and about the premises, as fully to all intents and purposes as {l)might or could do if jyrsonally present, with full power of substitution and revocatio?i, hereby ratifying and eonfrni ing all that (tny) said attorney or (his) substitute shall lawfully do or cause to be done by virtue thereof %Xi Wi\\\XtSS UaTieVJCOf, (/) have hereunto set my hand and seal, the {twenty -fftli) day of {September) one thousand eight hundred and {eighty-three). Sealed and Delivered in the Presence of ■^ttitrd ^tatfisi of g^mcrira, ) STATE OF NEW-YORK, \ ss. CITY OF NEW- YORK. ) BE IT KNO WN, That on the {twenty-fifth) day of {Sej^em- ber one thousand eight hundred aiid eighty-three) before me personally appeared {John Jones) above named, who {is) to me perso7iaUy knoicn to be the 2)erso7i described in and who executed the above Letter of Attorney, and acknowledged the same to be {his) free act and deed IN TESTIMONY WHEREOF, I have hereunto subscribed my name, the day and year last above written. '-a^^ cj^-a^€d. Jin the printed Forms the words enclosed in parenthesis would be written.] * { ♦ k ' Wf \ ^i\ ; I, I r ^f It t 1 I 4 I 1- !| ! IC'J COMMERCIAL LAW AND BUSINESS FORMS. Form No. 70. 4tl8. Agreement to Sell Manufactory, Stock and Good-Will. ^lliS ;Agt*CCIttCnt^ made the 5th day of September, 1882, between Iloswell Goodman, of Chicaf/o, III., and Duncan J3eU of the same city, witnesseth : That the said Iloswell Goodm.an, for the consideration hereinafter specified, agrees to sell to the said Duncan Dell, and the said Duncan Dell agrees to buy of the said Roswell Goodman, all the machinery and appurtenances whatsoever belonging thereto, and all the stock of furniture and lumber on hand \ch ether manufactured or in course of construc- tion, ar^d cdl material of whatsoever kind and nature used or to be used in or about said m.anufactory, now occupied by the said Doswell Goodman, on the corner of Indiana and Randolph /Streets, and also the good-will of the business heretofore carried on there, by the said Roswell Goodman. IN CONSIDERATION THEREOF, the said Duncan Dell agrees to pay to the said Rosicell Goodman twenty five, thousand dollars on the first day of October, 1SS2, and give his note for twenty five thousand dollars, payable one year after date, the haid note to be indorsed by Geo. C. Wells, and to be further secured by a chattel mortgage on all tlie machinery co}itained in and used about said manufactory. And the said Roswell Good- man furtJier covenants and agrees to and icith tJie said Duncan Dell that he tcill not at any time hereafter engage directly or indirectly or concern himself in carrying on or conducting the business of manufacturing furniture, either as principal, agent or servant, within 07ie hundred miles of the City of Chicago. And it is expressly understood and agreed to, that the stipula- tions aforesaid are to apply to, and to bind the luirs, executors ajid administrators of the respective parties,' and iti case of failure the parties bind themselves each unto the other in the swn of ten thousand dollars as liquidated damages to be paid by the Jailing party. IN WITNESS WHEREOF, we have this tenth day of August, 16S2. affixed our hands and seals. -adu^^ u^i-c^i^n ^t-tz-n / Dy ^^Aiz-p^ G4^c^. Aliens. — Aliens are not disabled from doing business, and may enter into partnership if they are alien friends. But in time of war, alien enemies are disqualified for entering into partnership with each other. 436. Married Women. — Married women are bv common law disqualified from forming a partnership, yet by statute in some of the States the common law has been chanired, and women may make contracts which relate to the business they may be carrying on, or such as relate to their own property. 437. Duration of Partnerships. — Partnerships may be formed for a single adventure, for a term of years, for life, or for an indefinite period of time. If no specified time is fixed for its continuance, it is subject to the mutual pleasure of the partners, and may be dissolved at any time by the withdrawal of one of the partners. When a specified time is fixed, it is presumed to run until the time expires. But the law does not presume that the partnership will continue after the death of PARTNERSHIP. 173 eithvi of the partners. And if it is so intended by the partners, it must be provided for in the articles of agreement. 438. Relations of Partnership.— A partnership when created is like an artificial person, it is a legal entity possessing rights, and subject to liability the same as an individual. It is, as it were, another person, brought into commercial and legal relations with the individual partners, and with the public gen- erally. The partnership agreement generally specifies what the partnership stock shall consist of. It may be only profits, as where A. owns goods, and B. & C. unite their efforts with his in selling the goods, and share in the profits, without having any interest in the goods. The agreement should always specify the amount of interest each partner has in the capital stock, and also the proportionate share they each shall have of the profits. If the division of profits is not fixed by agreement, the law presumes that each partner is entitled to an equal proportion. 439. Relations of Partners,— Each individual partner has relations with his co-partners, and with the partnership, and also with third persons. In ordinary partnerships each partner has a joint interest in the partnership stock, and each can convey to a third person the title of the whole stock. So, also, may each partner create any amount of indebtedness on account of the partnershij), and give notes, or accept drafts, to any amount, in the name of the partnership, for the payment of which not only will the partnership property be liable, but also the individual property of each partner. In general, partners cannot bring an action at law against each other for anything done, or omitted, in the partnership affairs, during the continuance of the partner- ship. Every person who becomes a partner impliedly promises to do all he can to promote the interests of the business, but if one partner takes all the responsibility, and does all the work, while another neglects his duties, he cannot recover any reward for the extra services, unless there was a previous agreement to that effect. 440. Relations of Third Persons.— Third persons have dealings with both the partners and the partnership. Their 1 I* s' i mf^ f.- r ►4: 174 COMMERCIAL LAW AND BUSINESS FORMS. dealings with the partners may be entirely independent of the partnership, so, also, their dealings with the partnership may be quite independent of the partners. Third persons are presumed to know what the partnership business is, and wliat contracts they have a right to make. If a third person has a claim against one of the partners of a firm, he cannot receive partner- ship goods in payment of the debt, unless by the consent of all the partners, without making himself liable to the partnership, even if he is ignorant of its being partnership property. But a partner has a right to compound a debt of a third person, and the partnership will be bound. So he may give a debtor time by taking his note, payable in the future for a book account already due, and so preclude the partnership from suing until the note is due. 441. Powers of Partners.— We have already seen that/^ each partner may create debts in the name of the partnershij>( to any amount. He is the accredited agent of all the ])artners^' and may enter into any engagements or contracts in the ordi- nary trade and business of the firm, and on its behalf, such as " buying and selling, or pledging goods, or by paying or receiv- ing, or borrowing moneys, or by drawing, or negotiating, or in- dorsing, or accepting bills of exchange, and giving promissory notes and checks, and other negotiable securities, or by procur- ing insurance for the firm, or by doing any other acts, which are incident or appropriate to such trade or business, according to the common course and usages thereof." Indeed, there is scarcely any limit to the indebtedness which a partner may create against the firm. .; 44*2. 31ode of Binding.— Ordinarily a partner can only bind the firm by simple contract. lie cannot bind the other partners by giving a deed, or by contracts under sea/, unless au- thority has been expressly given him under seal by the other parties. There is, however, an exception to this rule, which is found in the right which a partner has in legally releasing a partnership debt under seal. 413. In Name of Partnership.— Generally, in order to bind the firm, the contract must be in the firm-name, as well as i-. PARTNERSHIP. IVo for the benefit of the firm. ]>ut there are some exceptions to this rule, and if the contract is made in the name of one of the partners, for and in behalf of the firm, and for its benefit, the partnership will be bound. So, also, where drafts drawn upon the firm have been accepted in the name of one partner and paid by the firm, it will be liable for other acceptances of the same nature. But where a contract is made for the benefit and in the name of one of the partners, the partner alone wdll be Jiable. 444. On Account of Partnership.— It is not only neces- sary that the contract be in the ?i«me of the firm, but it must also be on account of the partnership. That is, it must be within the scope of the partnership business. For instance, if a partnership were organized to carry on a dry-goods business, and one of the partners should go outside and purchase grain for speculation without the consent of the other partners, and give notes in the name of the partnersliip in payment, such notes could not be enforced against the partnership. But if the pur- chase be of things which might be called for or used in the business at some time, but not at present necessary, the firm would be bound by the contract. It is sometimes difficult to decide just what acts or engagements may be deemed to come within the scope of the business. 445. Good Faith of Third Person.— Not only is it] necessary that the contract be made in the name and in behalf [ of the firm, but the third person, who deals with the partner- ship, must deal in good faith. If he knew the partner had no authority to act for the partnership, or had good reason to sup- pose he was not authorized, the firm will not be bound by the contract. But where the transaction comes within the scope of the partnership business, and the contract is signed by the part- ner in the firm-name, and the third party deals in good faith, the partnership will be bound, even though the partner intended to defraud his co-partners. 446. Contract Jointly and Severally Binding.— Each cf the partners, as well as all of them, is bound by a contract is :?S\ I ^fi ■ l« '1 ■ ,i t I; ♦ i I* I i!* i iS' u. 176 COMMERCIAL LAW AM) BUSINESS FORMS. of the partnership, although all of them must be united in suing U or being sued upon it. Their joint property in the partnership ' is liable for the tirni debt, and so, also, is the separate property of each partner liable to be taken in payment of the debt. And this may briuix about a conflict between creditors in case the partnership should become insolvent. In such case the part- nership creditor must first look to the partnership property for indemnity before seizing the partner's property. And the part- ner's creditor looks to the partner's property before he can apply ^ the firm's property. 447, Retiriiis^ Partner's Liability. — Every partner is liable for the debts contracted by the firm prior to his retire- ment. A dormant partner is not liable for partnership debts and contracts made before he retired, provided he is not known as a partner; but if he is known only to a few persons, those few must be notified of his retirement from the firm, or he will still be liable to them. An ostensible, or real partner, will be liable to all persons who have dealt with the firm, for all debts and contracts until such persons have notice of his retirement. This results from the principle, "that where one of two innocent per- sons must suffer from ij^ivincc a credit, he who has misled the confidence of the other, and has been the cause of the credit, either by his representations, or his negligence, or his fraud, ought to suffer, instead of the other." And if a real partner retires from the partnership, and leave his name on the sign, he will be liable. The usual notices given on retirement of a partner is to send a special notice to all the parties who have had dealings with the firm, and to insert a notice in one or more newspapers. When a partnership is dissolved by the death of one of the partners, or by operation of law, no notice is required, yet it is customary even then to give notice, and in any case it may be considered a judicious precaution. 448. Dissolution of Partnership. — A partnership may be dissolved: First, by mutual agreement ; second, by expiror lion of time ; third, by insolvency / fourth, by acts of partners ; fifth, by com.pletion of bus mess ; sixth, hy mar riar/e ; seventh, by death; eighth, by insanify ; ninth, by decree of court. PARTNERSHIP. 177 449. By Mutual Consent.— Any partnership, whether it is for a limited period, or at will, may at any time be dissolved by the mutual consent of all the partners. Such a dissolution, as between the parties, and as to third persons who have received notice thereof, will be held in equity perfect and complete. 450. By Expiration of Time.— When a partnership agreement provides that it shall terminate after the expiration of a specified time, it is terminated at that time by the terms of the contract. It cannot be presumed to exist by their consent after the period fixed. If, however, the partners, instead of taking measures to wind up their affairs, continue to carry on the business, the partnership is continued indefinitely under the original agreement. 451. By Insolvency.— The insolvency of one of the part- ners will produce dissolution, because he is divested of his prop- erty, which passes into the hands of an assignee, who has entire control of it; and the assignee is not obliged to become a part- ner, nor are the partners obliged to admit him as such. 45*1. By Act of Partner.— It has been held that a partner > may renounce the partnership, whether it be for a fixed period, or is a partnership at will, provided he does it in good faith, and for a reasonable cause, and at a reasonable time, and in a reason- able manner. 453. By Completion of Business.— As where two per- sons should jointly purchase a ship to be employed by them for their mutual profit, as partners, and the ship should be totally lost. Or where two or three persons agree to sell goods on joint account for their mutual benefit and profit, and the goods are all sold and proceeds divided. 454. By Marriage.— At common law the marriage of a female partner will work a dissolution of the partnership, for the reason that the marriage creates a positive personal incapac- ity on her part to bind herself by any contract. fj! ill I n i i i I I 178 COMMERCIAL LAW AND BUSINESS FORMS. 455. T?V Poatli.— The death of one of the partners will work a dissohition of tlie partnershii>, no matter how many part- ners there may be. The reason is said to be that " the personal qualities, diligence, skill, and superintendence of each of the partners are presumed to enter into and constitute a material consideration with all the other partners for engaging in the partnership," Therefore, the other partners ought not to be bound to continue without a new agreement. 456. By Insanity.— Insanity is not a sufficient cause for a dissolution if it is temporary, or if it be an occasional malady, or accidental illness; but, if it be long continued, and incurable, it will be a sufficient reason. 457. By Decree of Conrt.— A court of equity may some- times decree a dissolution on the ground of gross misconduct, or fraud, or violation of duty, of one of the partners. But for trivial neglect, or departure from duty, it will not interfere. 458. Consequences of Dissolution.— Immediately upon the dissolution of the partnen^liip the power of any one of the partners to bind the firm ceases. The relations of the parties as partners are at an end. They are no longer joint tenants in the capital stock, but are tenants in common. One of the con- seqnences of a dissolution is the necessity of promptly closmg up the partnership business, and disposing of the effects of the partnership. If the partners are not able to agree upon a divi- sion of the effects, then there is no other way but to sell them at a public auction and divide the proceeds, in order to get at an equal and just division of the property. FoKM Xo. 71. 459. Articles of Copartnership. Tills AC(VCCmCUt '^'QXxt\\CSSCt\XfThaton(hel5fh ' day of December A. D., 1SS2, Jo^ph Ailams, Daricin Coleman, and Henry Sexton, all of the City of Detroit, Michigan, agree to form, and do form, a copartnership for the term of five years, to commence on the first day of January A, D., 1883, for the PARTNERSHIP. 119 purpose of carrying on the business of manufacturing flour and buying and selling grain and feed, which said business is to be carried on in the City of Detroit, in the mill known as the " Globe Mill;' on the following terms and conditions, to the faith- ful performance of which the said parties do hereby mutually engage and bind themselves : The style and name of the copart- nership shall be " The Globe Mill Cor The capital stock of said copartnership shall be one hundred thousand dollars, and shall be contributed by the said parties in the proportion followiyig, viz. : The said Joseph Adams shall contribute the sum of forty thou- sand dollars, the said Darwin Coleman shall contribute the sum of thirty -three thousand dollars, and the said Henry Sexton shall contribute the sum of twenty-seven thousand dollars, to the said capital stock, to be used, employed and expended in the support and management of said business, to the mutual benefit and advantage of said parties. The said parties shall do their, and each of their, best endeav- ors, and shall generally, and at all times, exert themselves for the joint interest, profit, benefit and advantage of the copartnership. The particular duties of the said parties to the said copartner- ship business shall be a^ follows: The said Joseph Adams shall make all tJm purchases and all sales and have a general sujyervis- ion of the busi?iess of the copartnership ; the said Darwin Cole- man shall have charge of the office and counting-rooni of the said copartnership and their books of account, and shall have the custody of the copartnership's money and funds, and shall receive and 2my out the x>artner ship moiieys and have the general direction and management of the financial transactions of said business; the said Henry Sexton shall have the immediate super- intendence, maiiagement and direction of the practical operation of said MiU and of the work done by said copartnership. All gains, profits and increase that shall come, grow or arise from or by means of the business of said copartnership shall be divided betioeen tJw said parties in the proportion which the amount of capital stock contributed by each partner respectively as above specified shall bear to the whole amount of said Capital Stock, and all losses that shall happen to the said business shall be bom^ and paid by the said copartners in a like proportion. ••J \\ 1 ; 180 COMMERCIAL LAW AND BUSINESS FORMS. 1^ if i- I 1 . -«J 4 And it is further agreed^ by and between the said parties^ that there shall be had and kept at all times, during the continua^ice of their copartnership, perfect, just and true books of account wherein shall be eritered and set down as well all money by said partners or either of them received or expended in and about said business, as also all grain commodities and merchandise bought or sold by them or either of them by reason or on account of said business and all other matters and things whatsoever to the said business, arid the management thereof in any wise belongifig; ichich said books shall be used in common between the said co- partners, so tJuit either of them may have access thereto without any interruption or hindrajice of the other. And also the said copartners once in each year during the continuance of said co- partnership {to-wit on the first day of January once in each year), or more often if necessary, shall make, yield and render each to the other a true, just and perfect inventory and account of all the profits and increase by them or either of them made, and of all loss by them or either of thetn sustained, and also of all payments, receipts and disbursements and of all other things by them made, received, disbursed, acted or suffered in their said copartnership and business, and the same accounts being so tnade they shall and will clear and adjust, pay and deliver each to the other at the time their just share of the profits so made as afore- said. And the said parties hereby mutually covenant and agree to and with each other that during the continuance of the said copartnership no chattel mortgage, bill of sale, assignment or other transfer shall be made of their interest or of any part of the interest of either in the property or business of said firm, without the consent of the others. IN WITNESS Whereof, The said parties to these presents have hereunto set their hands and seals this fifteenth day of De- cember, 1882, €imd / d-Le^ntzn 7 -e-^'ii^'^^t. AGREEMENTS FOR PERSONAL SERVICES. + ■', ■*♦»• 460. Services and Wages. — Every employee or servant is the agent of the principal who employs him, and the law re- lating to principal and agent will generally be applicable to all those cases where personal services are rendered for wages. All agreements to work for a salary or a specified compensation, come under the same general principles, and are, in fact, a hiring of personal services for a compensation. If there be a special agreement that the services sliall be given for a specified length of time, at a given price, then the contract must be complied with. But if the hiring be general, without any special agree- ment as to the time, then it is usually considered to be for one year. And if the servant or employee continue to serve in the same capacity more than a year, without any new agreement, there is an implied contract for another year. 461, Domestic Servants. — In most cases with domestic servants the time is regulated by the custom of paying the wages periodically, as iceekly wages or monthly wages, in which case, if there be no definite understanding about time, it will be only a weekly or monthly hiring, and if the services are con- tinued, it will be a succession of weekly or monthly hirings, and at the end of each week or month, as the case may be, either the employer or the employee may terminate the contract, but it is customary for the party who w' shes the contract terminated to give notice to the other party some days or weeks before such termination. 46*3, Wages or Compensation.— When a person engages or employs the services of another, there is always an express or implied promise to pay for such services. Where there is no agreement as to the amount of compensation to be paid, the rule 181 1 m m 182 COMMERCIAL LAW AND BUSINESS rORMS. I •! ■ i i. • . Im •I , iV U f . • r i ; I , I I is that the employer must pay what it is customary for others to pay for the same kind of services, or what such services are really worth. Generally the wages are not due the employee until the w^ork is completed, or the time for which he was hired is completed, unless there w^as an agreement to pay in advance, • or unless the payment is regulated by well-established custom. Where services are rendered without any agreement as to price, the employer must generally pay what the services are worth, unless there are circumstances which show that the service was to be gratuitous, as where a person does something for a rela- tive. 46JI. Necessary Skill.— Skill is frequently an important element in the performance of services w^hich are to be ren- dered. The party who engages to do anything must bring to his undertaking the necessary amount of skill for the employ- ment which he undertakes. If his services are professional, as a surgeon, he must bring to bear " that amount of skill and knowledge, which the leading authorities have pronounced as the result of their researches and experience, up to the time, or within a reasonable time, before the issue or question to be de- termined." If a mechanic undertake to make a thing for a par- ticular purpose, and it is not suitable for the purpose, he cannot collect anything for his wages. But it is only ordinary skill that can be required of a domestic servant. 464. Ordinary Care. — Where the labor or service is to be performed about property, the employee is bound to take ordi- nary care of the property; that is, as much care as a man of common prudence would take of his own property. And if by neglect of such care the property is injured, he will be liable to the employer for damages. 46o. Rights and Duties of Employer.— Where the agreement is that the services shall continue for a year, at a stipulated price, the employer is bound to continue his engage- ment to pay for the full year, and if he discharges the employee before the expiration of the year he will generally be held liable for the wages, and the measure of wages or damages woulc^ be AGREEMENTS FOR PERSONAL SERVICES. 183 the full amount of salary or wages agreed upon, unless it should be reduced by his proving that the employee had earned, or might have earned, money in the same or some other business. Where there is no agreement as to the amount of wages to be paid, the employer must pay what such services are worth. An employer is not bound to provide medical attendance for an em- ployee in case he is ill. 466. Rights and Duties of Employees.— The employee is bound to perform the service he engaged to do, and if he en- gaged for a specified time, he is bound to continue the whole time, and if he leave before the expiration of the time he is not entitled to any compensation for the services rendered. If he hire for a month, and leaves at the expiration of three weeks, he is not entitled to any wages for the three weeks. Or, if he engage for a year, with the understanding that the wages are to be paid at the close, without any provision for terminating the contract before the expiration of the year, and leave at the end of eleven months, he will not be entitled to any wages. And so if one work by the job, and undertake to do a certain piece of work for a certain price, he is not entitled to any compensation until the job is completed. But if he undertake a job, and is doing it properly, and is discharged before it is completed, he is entitled to the whole price. The employee is bound to obey all just and reasonable commands of the employer, and to do all his proper work with diligence and care. If he disobey a just and reasonable command, which comes within the scope of his em- ployment, it will be a sufficient reason for his discharge. If the employer refuse to give his permission to the employee's being absent for a time, he will not be justified in leaving,' except for some extraordinary circumstance. 467. Lien for Services.— We have already seen under the general subject of lien that a mechanic or other person who does work upon property, which he has in his possession, may hold the property by right of lien to secure payment for such services. Thus, a blacksmith has the right of lien on a horse for his shoeing, and a shoemaker who works up material furnished by his employer into shoes has a lien upon the shoes for his wages. v: ♦' ; I ,1 i \ <■« I .1 i. ir 'I irh 184 COMMERCIAL LAW AND BUSINESS FORMS. 468. Termination of Serviees.-Where the Wring is for a definite period of time, either party may terminate the con- tract when the time expires, without giving any notice o the otlier. And where the agreement is for a specihc time, but be fore the expiration of the time the contract is disso ved by mutual agreement between the parties the employee will be en- titled to his wages up to the time of such dissolution. If he employer has good reason for discharging the employee, he need not state the reason. But for the convenience, and as a matter of justice to both parties, it is generally better to notify each other of the intent to terminate the contract. Form No. 72. .|«0. Contract for Hirini; a Laborer. TTt-lS AOVCCinCnt uuukttds first day of January, 1883, between P (I ■ J? }, I ■: \ \ » I t ' 1 204 COMMERCIAL LAW AND BUSINESS FORMS. of men are so well defined in these commandments as to render little other law necessary if their precepts were conscientiously regarde\ti note or bill of exchange, what effect does it have upon the debt ? What must the party hold- ing such paper do when it becomes due? If paper is taken as payment and dishonored, how is the debt affected ? 40. If a note of a third person is received by the creditor of his own choice, how will it be considered ? What if the debtor indorsed the note and it is not paid ? IIow if the creditor received the paper as security and it is not paid ? 41. Is a receipt proof of payment? How may it be set aside ? What exception is it to the general rule ? 42. What is accord ? What effect does accord without satis- faction have upon a contract? What may the parties do with- out its operating as a defense ? 43. What is arbitrament? IIow can parties submit their dif- ferences to arbitration ? Where an award has been made, what can be done ? 44. What effect does pendency of another action have? What is a good defense to a suit brought for the same cause ? 45. What is a release? Is any particular form of words necessary ? IIow may it be made ? IIow may verbal contracts be released ? What do written contracts require ? What may a release be for ? What effect does a release of the principal of a debt have ? What effect tlie release of one of several joint debtors ? IIow when given to one of several joint creditors ? In how many ways may a releasee result from operation of law ? 46. What is a tender ? What is the effect of a legal tender before suit is commenced? As soon as suit is commenced, what must be done to make the tender good ? By whom may a ten- der be made? What amount must it be? May it be condi- tional ? What must it be made in ? Are national bank bills a leml tender ? 47. How may common law be changed ? What are the laws enacted by the legislatures of the States called? Are the QUESTIONS FOR REVIEW. 5 statute laws of the States uniform? What effect has the atatute of limitations ? May a person waive the right to plead it as a defense ? How many years does it usually run ? What does it do to the debt ? When does it begin to run ? When, on a note payable on demand ? When, on a conditional promise ? IIow affected by the absence of debtor from the State ? What will renew a debt after it is outlawed ? What is the effect of a payment ? What if made by one of the joint makers ? 48. What is a set-off ? How was this defense created ? IIow must a debt be, to be used as a set-off ? Can a debt, due from one of the partners, be set-off against a debt owing to the part- nership ? If a person is sued as administrator, can he ai)ply a debt due to himself as a set-off ? 49. What is recoupment, and how did it originate ? What is the illustration ? 50. What is the subject-matter of business form No. 1 ? What does the party of the second part agree to do ? How and when does he agree to do it ? What does the party of the first part agree to do ? How do they bind themselves ? 51. What is the contract embraced in form No. 2 ? What is the express condition ? What does the party of the first part agree to do ? What if the payments are not made as specified ? Why is a seal necessary ? 52. What is the contract under form No. 3 ? What does the party of the first part agree to do? What the party of the second part ? What condition is inserted ? 53. What is the subject-matter of business form No. 4 ? What does the first party agree to do ? When does the second party agree to pay ? 54. What does the party of the first part agree to do in busi- ness form No. 5 ? How does the second party agree to pay ? What security is to be given ? Hoav is the title to be conveyed ? NEGOTIABLE PAPER 55. What does the term negotiable paper embrace ? What is the promissory note ? What are bills of exchange used for ? What should every person be familiar with ? !•! It ' -■V r} r: i i m I Hi 6 COMMERCIAL LAW AND BUSINESS FORMS. 66. What did the needs of commerce give rise to? "What preceded the use of money? What did commerce require to facilitate trade? At what early period was negotiable paper probably used ? 57. What is the peculiarity of negotiable paper? IIow can it be transferred ? What particular words are generally used to make it transferable ? If order and bearer are both omitted in the body of negotiable paper, what effect does it have ? What does the statute laws of some States require? Mention some of the requirements. 58. What constitutes negotiable paper? Is any particular form of words necessary ? What has been held sufficient ? What must the promise be for? How must the amount be? May there be any contingencies ? Is a promise to pay on the arrival of a boat sufficient ? IIow if it be payable after the death of a person ? 59. What is a negotiable promissory note? What does its value and importance depend chiefly upon ? Give illustrations of how notes may be made negotiable. How might notes be written ? How should thov be written ? 60. To whom is the maker of a note or the acceptor of a draft first liable? To whom may they be liable afterwards? What are the two classes of persons called ? May the liability of the maker sometimes be s^^reater to one holder than it miffht have been to another? What is the explanation for this? 61. What does the law sometimes give subsequent parties? What is the note in the hands of the payee ? Why may one person collect a note when another could not ? What is a per- son supposed not to know if he take a note before maturity ? May an innocent holder transfer and give a good title ? 62. How must a subsequent party receive paper to get a good title ? May accommodation paper be taken with knowledge and yet be good ? Will receiving paper before maturity remedy all defects ? What kind of defects are overcome by transfer ? 63. Is negotiable paper ever transferred after maturity? Does it have the same effect as if transferred before? What if it remain in the hands of the original payee until maturity? W^hat then happens to it ? QUESTIONS FOR REVIEW. 7 64. How many w^ays are there generally of transferring ? If payable to order what must be done ? When payable to bearer how may it be transferred ? May a payee indorse a bill if pay- able to bearer ? What will be the effect ? 65. Why is the date an important part of a note or draft ? In computing time, is the day of date counted ? If the date is omitted is the paper void ? What must the holder do in such case? What does date mean? 06, How must the time be in negotiable paper ? At what time may paper be payable ? If no time is specified, when is it payable ? 67. What is important about person in negotiable paper? Where should the name of the person to whom it is payable ap- pear? What other name should appear in the note? What must the maker be competent to do? How may persons be incompetent to make negotiable paper? What has legis- lation done in some States? Can an unmarried woman make contracts ? 68. IIow should the amount be specified, and how expressed ? Where there is a discrepancy in the amoimt expressed by words and figures, which governs ? What example as to ambiguous words ? 69. Is a contract good without a consideration? What is a promissory note? May a note which was given without con- sideration afterwards become good? May a note which was lost or stolen be good in the hands of the holder ? In whose hands would it not be good, and in whose would it be good ? 70. Is any particular form of words necessary in a note? What must it conform to ? Is the mere acknowledgment of a debt sufficient to constitute a note ? Is a promise to pay in merchandise a promissory note ? What example of the rejec- tion of the word not ? 71. What does form No. 6 illustrate? What is the wording of this form ? Is it negotiable or not ? What makes it nego- tiable ? 72. What is form No. 7 ? How does it differ from No. 6 .? Is it negotiable ? Why not ? How could it be made negotiable : By whom can the latter be collected ? 1' i-l 8 COMMERCIAL LAW AND BUSINESS FORMS. QUESTIONS FOR REVIEW. 9 73. Who is the payee to a note or draft ? Wlio is the payee in form No. 6 ? Who in No. 7 ? What is the payee some- times called ? Is the payee's name always expressed in the face of the paper ? What may the holder do when a note is payable to bearer only ? 74. What is the person called who is responsible for the pay- ment of a note ? Who is the maker in form No. 6 ? Who in form No. 7? What does the maker bind himself to do? Need he pay it before maturity ? If a note is paid before maturity and not taken up may the maker be obliged to pay it again ? 75. What is a due bill ? Is it for money or goods ? When may it be payable ? What is it similar to when payable in money ? How is a due bill written ? 76 and 77. How does form No. 8 differ from form No. 9 ? 78. What is a draft ? How many persons are there to a draft ? IIow does it differ from a note ? 70. What is a bill of exchange ? How many kinds of bills of exchange are there ? What are they ? By what other names are they known ? 80. What is an inland bill ? What drafts are inland bills ? 81. What is a foreign bill ? Why are they called foreign ? How are foreisrn bills distinijuished from inland? What are foreign bills used for ? What can be done if a foreign bill is lost ? What precaution is taken ? 82. Is any particular form of words necessary in a draft ? How does the form of a draft differ from a note ? 83. What is the wording of form No. 10? 84. What are the two kinds of parties to a draft called ? Who are the original parties to a note ? Who are the original parties to a draft? Who is the drawer in form No. 10? AVho is the drawee ? Who is the payee ? AVho are the original parties^ in the draft ? Who may be the subsequent parties ? 85. Why are notes and drafts numbered ? Where is the num- ber usually placed ? What do merchants have ? How are the numbers kept ? 86. What is the theory of drawing a draft? Are drafts ever drawn when tlie drawee is not indebted to tlie drawer ? 87. In what different ways may a person be liable on negotia- ble paper ? When is a person absolutely liable ? When is he conditionally liable ? What illustration ? Is the drawee liable before he accepts ? 88. When a draft is first written up, what is it? Is it neces- sary that it be accepted if payable at sight ? Why is there a difference in different States? W^here a draft is made payable after sight, what is necessary to be done ? IIow does the drawee accept ? When he accepts a draft, what does it imply ? Is it necessary to have a draft accepted when it is payable after date ? If the drawee wants time to decide whether he will accept or not, what may be done ? Suppose he refuse to return the bill ? What is an acceptance in effect ? 89. Are acceptances always uniform in form? What does the statute of New-York require ? How may the acceptance be ? What effect has a conditional acceptance ? 90. What is the wording^ in form No. 11 ? Who is the drawer, the drawee, and the payee ? 91. When the j^ayee receives a draft payable after sight what should he do ? By whom must it be presented ? To whom must it be presented ? When drawn on a partnership, to whom may it be presented ? If drawn on two persons who are not partners, to whom should it be presented ? What time during the day should a draft be presented? Where should it be presented ? Is the holder obliged to receive a conditional acceptance ? 92. What is a draft called when the drawee refuses to accept ? What is the duty of the holder immediately after a bill is dis- honored ? By whom should the protest be made ? What could be done if a notary public could not be found ? What is the custom with banks? On what day must the protest be made? If the protest is not made out in proper time, what is the result ? 93. What is a protest of a note or draft ? What is accom- plished by it ? How and by whom must it be made ? By whom may it be made if a notary public cannot be found ? 94. What kind of negotiable paper is represented in form No. 1 2 ? Why was it necessary to have it protested ? Was Andrews absolutely, or conditionally, liable before the protest ^ •||, tik- :f ! I ,1 ' f •I t ■l 10 COMMERCIAL LAW AND BUSINESS FORMS. 95. What is the instrument called which is illustrated in form No. 13 ? Is it a written or a partly printed instrument? What are its principal objects ? By whom is it executed ? By what is it evidenced ? 96. What is next to be done as soon as the protest is made out ? To whom should notice be sent ? To whom is notice sent in this instance ? What other parties would often need to be notified ? 97. AVhat is the form of notice sent ? How should it gener- ally be sent ? By whom is it usually sent ? 98. What may be done immediately after the bill is protested and notice sent? What is an acceptance for honor? For whose honor may it be accepted ? 99. How is it accepted for honor ? Who accepts this draft, and for whose honor ? Is Mr. Miller's acceptance an absolute promise ro pay, or is it only conditional? What must the holder do after such an acceptance ? Is the holder obliged to receive an acceptance for honor ? To whom must it be presented for pay- ment at maturity? If the party upon whom it was drawn does not pay it at maturity, what must be done ? 100. In cities what is required of a person who wishes to be- come a depositor in a bank ? Where his references are satisfac- tory, what is he then requested to do ? What is the object of writing his name in the signature book ? What is done in cases of partnerships? 101. Is there more than one way of depositing money? What does the depositor receive when he makes a deijosit ? 102. What is the convenience of a bank-book ? What is gen- erally printed across the top of this book? Are the deposits entered on the right-hand or left-hand page of the bank-book ? Who makes these entries? What does such an entry show? AVhen a person makes a deposit of money, what does he fill out ? When a note is left with a bank for collection, what is generally done with it? After it is collected, what is done? Do business men generally consider it necessary to keep an account with the bank in their regular books ? \Yhat is all that is necessary ? 103. When a check is paid by the bank, is it at once charged QUESTIONS FOR REVIEW. 11 up on the depositor's bank-book ? When" are paid checks en- tered on the depositor's bank-book ? When they have all been entered in the bank-book at a particular time, what is then done ? When does the depositor receive back his paid checks ? 104. What is a deposit ticket? What is its convenience? What has it printed on it ? By whom is it furnished ? What double purpose does it serve ? 105. Describe the form and wording of the deposit ticket. By whom is it filled up ? To whom is it given, and by whom is it kept ? 106. What is a bank check? Is it negotiable? Is any par- ticular form of words necessary ? When paid at bank what is done with it ? How often are checks usually charged up in the depositor's bank-book? Are checks usually made payable to order, or to bearer ? Are they drawn on time, or payable at sight ? Do they ever need acceptance ? What is the difference whether a check is made payable to order, or to the bearer ? What record should be kept of checks ? 107. How does the check which is illustrated in form No. 16 read? 108. How does a check serve the purpose of a receipt ? What is the custom of banks in regard to the indorsement of checks ? When paid checks are returned to the depositor, when do they answer the purpose of vouchers ? What is the indorsement of the payee evidence of ? 109. What is the presumption when a check is drawn ? Does it always prove true ? Do business men ever draw checks when they have not enough money in bank to meet them ? What in such cases do they generally expect to do ? Why is it not safe to take checks from strangers ? How may a business man pro- tect himself when a check is offered him by a stranger ? How is a check certified ? By whom is it certified ? When certified, what is the effect ? What is certifying similar to ? 110. What is the wording of form No. 17 ? What is written across its face ? Why is it written in red ink ? 111. When checks are received by business men what are they usually called ? When a check is received on account of a debt, and is not paid when presented at bank, is the debt can- H n * rt H ,»■■ r ft PI 12 COMMERCIAL LAW AXD BUSINESS FORMS. QUESTIONS FOR REVIEW. 13 i» 1 I 1 i 4 ■* i i I I * I celled? Suppose the holder were guilty of negligence in pre scnting the check for paymcmt, who bears the loss? When is a check evidence of payment ? 112. What responsibility rests upon the teller of a bank in respect to checks ? If a bank })ays a forged check can it recover from the person whose name was forged ? Can a forged check be ratified by the person Avhose name was forged ? 113. What is a raised check? If a bank pay a raised check how much can be charged to the drawer ? What should persons writing up checks be careful to do ? 114. When are checks payable? IIow long after a check is received can a person safely hold it ? If a bank fail after a check is drawn what determines which person shall lose it? Upon what day should a check be dated ? Is a check good when it is dated ahead ? 115. What is a certificate of deposit? Can checks be drawn against certificates of deposit? What is the convenience of certificates of deposit? 116. What is the wording of form Xo. 18 ? By what officer of the bank is it signed ? When is it payable ? What must the holder do when it is presented for payment ? 1 1 7. What is a teller's check ? What is the theory of such a check ? Is a teller's check negotiable ? Is the bank liable for a teller's check ? 118. What is a special deposit? AVhere a special deposit is made has the bank any right to use the money ? 1 1 9. What is a stock certificate ? By whom is a certificate of bank stock signed? What amount does each share generally represent ? 120. IIow is form No. 19 worded? IIow many shares are represented in this certificate? What is the value of eacli share ? 121. How are the directors of a bank chosen? IIow are the votes regulated ? When the owner of stock cannot attend an election what may he do? 122. AVhat is the wording of form No. 20 the appointment authorizing A. P. Wright to act aa proxy? By whom is it siojned ? 123. How may stock in a bank be transferred? May it be transferred by an agent ? • 124. What is the wording of form No. 21? What does it authorize the ai^ent to do ? ' 1 25. What is a foreign bill of exchange ? How are they usually drawn ? In what currency are they generally payable ? Why are they drawn in sets ? What is the custom with banks at the present time ? Do foreign bills differ in principle from inland bills? 126 and 127. How are the two drafts illustrated in forms Nos. 22 and 23 worded, so that if both* reached their destination only one need be paid ? 128. By whom must the protest of a foreign bill be made, and by whom the notice given ? Does the law require tha'^ inland bills be protested by a notary public ? What is the custom with banks and business men in regard to protesting ? W^hat is the object of protesting? When must the protest be made, and when must notice be sent ? 129. What is business paper ? What is business paper founded upon ? In whose hands is it good ? 130. What is accommodation paper? "WTiat illustration is given of such paper ? May accommodation paper become busi- ness paper ? What illustration of accommodation paper becom- ing good and valuable business paper? 131. Are the w^ords "value received" indispensable in negoti- able paper ? What does the law presume in relation to value ? Where is the burden of proof ? When these words are used what do they mean ? 132. What words are required to make paper negotiable ? TYhat is the difference bet^veen order and bearer ? When cannot paper be transferred without indorsement ? What difference does it make in regard to transferring paper which has been lost or stolen whether it be payable to order or bearer ? 133. May a note be signed by more than one person? What is a note called when signed by one person only ? What is it called when signed by two or more persons ? 134. May individual notes be written in more than one form? In relation to what may they differ? -i! r i ' i : i A It f i 1. ..» I f 1 J I . 14 COMilEECIAL LAW AND BUSINESS FORMS. 135. What is the wording of form No. 24? Who is the payee ? Who is the maker ? 136. What determines whether a note is a joint or a joint and several note*? 137. What is the wording of the note given in form No. 25 ? Is it a joint or joint and several note ? Is there anything in it to indicate that one of the makers only could be made to pay it? 138. Which is the safer for the holder, a joint note, or one which is joint and several ? 139. What is the wording of form No. 26, and how does it differ from the preceding form ? 140. How does the wording of form No. 27 differ from the one immediately preceding ? Why is this a joint note ? 141. When a note is signed in the partnership name, what is it, jomt or several.? Does it make any material difference whether It IS worded " I promise to pay," or " we promise to pay " ? When a note is written we jointly or severally promise, how is the word or to be construed ? When cannot a note signed in the firm-name be collected ? When may such a note be collected ? 142. AYlien does not a note draw interest ? When does it draw interest ? Would either of the preceding notes draw in- terest before maturity ? 143. What is an indorsement? What purpose does an in- dorsement serve ? What gives negotiable paper its chief value ? How does the payee transfer his title to another ? Are indorse- ments generally made before or after maturity? When the payee has indorsed a note what is he called? What is the person called to whom it is delivered ? 144. What are the effects of an indorsement? What contract does the payee make, and with whom, when he indorses a note or draft ? 145. What is the implied obligation on the part of every en- dorser ? What is the first subject of guaranty ? What is the second, third, fourth, fifth ? Is a person who is not of legal age made liable by an indorsement ? 146. How many different kinds of indorsements are men- tioned ? Which are most commonly used ? Does each serve some particular j)urpose ? QUESTIONS FOR REVIEW. 15 147. What is a blank indorsement ? Where should the name be written ? Why is it called a hlayik indorsement ? How may a note or draft be transferred so long as it remains indorsed in blank ? What objection may there be to a blank indorsement ? What might an innocent holder do ? How may the holder of such paper protect himself? What may be write above the name ? Which end of a note should be uppermost when it is indorsed ? 148. What is a full indorsement? What does a full indorse- ment do ? Is it commonly used ? If a note which is indorsed in full be lost can a person receiving it from the thief get a good title to it ? Where should indorsements always be made ? 149. How are the blank and full indorsements illustrated ? 150. How is the note given in form No. 28 termed in order to make the indorsements ? Who should indorse this note ? 151. What kind of indorsement does form No. 29 illustrate? What is written on the back ? How far from the upper end is the name written ? 152. What kind of indorsement is illustrated in form No. 30? How is it worded and arranged ? 153. What is a general indorsement ? What words should be omitted from the full indorsement to make it a general indorse- ment ? What would be the effect of omitting these words in the body of the note ? How is a general indorsement construed ? 154. AVbat is a qualified indorsement ? Does such an indorse- ment transfer title without the indorser incurring any liability ? What words are used ? What is this indorsement called ? 155. What kind of negotiable paper is illustrated in form No. 31 ? Who is the proper person to indorse it ? 156. What kind of indorsement is illustrated in form No. 32? How is it written? How does it differ from the full indorsement ? 157. How is the qualified indorsement worded? What is the object of this indorsement ? 158. What is a conditional indorsement? What kind of con- dition may it be ? If upon a condition precedent, and the event happen, what is the result ? Is the original character of paper affected by a conditional indorsement ? 16 COMMERCIAL LAW AXD BUSINESS FORMS. QUESTIONS FOR REVIEW. 17 i J t SI i il 1 1 ^f i ■ i M •I r-. .tf |i f ( I 1 ' lit 159. What is a restrictive indorsement ? Does the omission of^ the words or.ler and bearer in an indorsement restrict ? What must it contain ? 160. What form of paper is ilhistrated in No. 34? 161. How is the conditional indorsement in form No. 35 worded ? 162. How is the restrictive indorsement made ? Wliat parti- cular word makes it restrictive ? 163. When may negotiable paper be transferred ? WTiat dif- ference does it make whether it be transferred before or after maturity? How does a person take a bill before maturity? What does he take it free from ? 1 64. What is the effect upon negotiable paper if it be not trans- ferred until after maturity ? Is any defect in the paper removed by an indorsement after maturity? Does accommodation paper become business paper by being indorsed after maturity ? 165. What beside indorsement is required to transfer the title to paper ? When may an indorsement be withdrawn ? 166. When cannot paper be transferred without indorsement? When may it be ? May paper which is indorsed in blank or payable to bearer be indorsed ? What is the limit of indorse- ment? If the first indorsement remain blank what effect has subsequent indorsements ? 167. AMiat is the necessity of protesting? If the holder fail to get the paper protested what will be the consequence ? Is it necessary to have a bill protested for non-acceptance ? To whom is an indorser liable ? To whom may he look for indemnity ? What does the security depend upon ? What distinction is made between foreign and inland bills ? What is the custom with business men ? 168. What must be done as soon as the protest is made out? To whom must notice be sent ? How soon must it be sent ? What should each indorser do on receiving notice ? When is it not necessary ? Should the notice be in writing or verbal ? 169. By whom must the notice be sent ? What should the notice contain and what describe ? May a person who is not the holder send the notice ? AVhen notice is sent by mail, how soon must it be deposited in the post-office ? If there be delay in de- livering, will the notice be good ? 170. When is a person liable on negotiable paper without notice ? 171. How did days of grace originate? Are days of grace uniform in number in all places ? What is the rule of law con- cerning days of grace ? How many days of grace are allowed in the United States ? If a note is made payable on the first day of the month, when does it become due ? If the third day of grace come on Sunday, when is the paper due ? If the third day of grace fall on Sunday, and the second day be a holiday, when does it fall due ? How are the davs of errace to be counted ? When are days of grace added to the original time ? Are days of grace allowed on sight paper? Mention some States where they are allowed on such paper, and some where they are not. Are there any States in which days of grace are abolished ? 172. What is meant by the maturity of paper? What does its maturity depend upon? What day is excluded in the com- putation of time ? If paper is dated on the first day of a month, and made payable in one month, when is it due ? Are days of grace considered part of the original time ? Are thirty days and a month equivalent terms ? In regard to negotiable paper, what does a month mean ? What illustration is given ? 173. When should paper be presented for payment? If it be not presented on that very day, what will be the consequence ? Will the maker of the note and the acceptor of the draft still be liable? How if it were presented the day before maturity? What does the law enforce ? Is negligence ever tolerated ? 1 74. AVhen paper is payable at a bank, what must be done ? What is a sufficient presentation? If paper is made payable without specifying any particular place, what must be done ? If the maker or acceptor has changed his residence, what should be done ? What if the residence cannot be ascertained ? 175. When a note is dishonored by want of payment, how soon must it be protested ? 1 76. Is there any peculiarity in the wording of the note in form No. 37 ? What is its wordinor? 177. How many times has this note been transferred? How many different kinds of indorsement have been used? What are the several kinds called ? (3*) MIMHI .. ,1 } J \ 1 t i 1 ; li m ': 1 'i! . H I 1 ' ! I ^ 1^ .4 f 4 « »i ■ '- i * C . I H '■ fi- le COMMERCIAL LAW AND BUSINESS FORMS. 178. Where was the protest ilhistrated in form No. 39 made? Does it differ materially from the preceding one made in Buffalo, N. Y. ? Do the forms differ in different States? Enumerate some of the expenses for protesting. Is it any dishonor to have one's paper protested ? To whom should notices be sent in tliis instance ? How soon must they be sent ? 179. May there be such a thing as an accommodation draft ? What illustration is given ? 180. If the indorser's name be forged, does the holder get any title ? Can a person have or transfer any title in paper which violates law ? 181. When is want of consideration a good defense? When is it sufficient to prove that it is accommodation paper ? When is it no defense ? 182. Can the holder of negotiable paper which has been lost or stolen collect ? What can the loser do to protect himself ? Can the owner of a lost note collect it at maturity ? 183. When may the holder of paper demand payment before maturity? 184. What is it important to know in regard to State laws? If a note is made payable in another State than that in which it is made, by the laws of which State is it governed ? What illus- tration is given ? What is the rule in law in regard to a contract which is not valid in the State where made? If a marriage contract is valid where it is made may it be invalid in another State ? What is the rule in regard to real estate ? 185. If while paper is held by a bank as collateral security it fall due, and the bank fail to have it protested, who is the loser ? 186. When negotiable paper is transferred by a debtor to a creditor on account, what important question may sometimes arise ? When so transferred does it operate as payment ? What is the rule in the State of New-York in regard to paper so trans- ferred ? What is an important consideration when a receipt is given for such paper ? 187. How is the receipt in form No. 40 worded ? Would this receipt operate to make the transfer of the paper discharge the debt ? QUESTION'S FOR REVIEW. 19 188. How does the receipt in form No. 41 differ from tlie preceding one ? Would the effect upon the debt be the same ? 189. Are bank notes negotiable paper? How do they differ from ordinary paper ? AVhat are bank notes called ? How are thev transferable ? 190. What bank was the first organized in the United States? What was the condition of the finances at that time ? What was the prmcipal circulating medium ? 191. What amount of continental money was put in circulation ? What was the ultimate value of this currency ? 192. What currency was used before the national banks were organized ? How were State banks regulated ? How was bank currency secured in New- York State ? 193. At what time was the National Currency Bank Bill passed by Congress? When was the First National Bank Cur- rency issued? How are national bank bills secured? What amount of bonds is each national bank required to deposit? What are national bank bills a legal tender for? What is each bank designated as a depositary required to do ? What effect have these regulations on the national currency ? Are national bank bills a legal tender for private debts ? Are they generally accepted in payment of private debts ? 194. AVhat does form No. 42 illustrate ? What is the wording of a national bank bill ? 195. What is the wording printed on the back of a national bank bill ? 196. What are legal tender notes? How is the coinage of money and the regulation of its value controlled ? What power is vested in Congress ? What is legal tender money ? What are legal tender bills commonly called ? When were the first legal tender notes issued ? 197. What is the wording of a legal tender note? 198. What is the wording on the back of a treasury note ? 199. What is a letter of credit ? For what purpose is it used ? What convenience to a person is it ? What risk does he avoid by a letter of credit? 200. What is the wording of the letter of credit illustrated in form No, 46 ? I msf SSS 20 COMMERCIAL LA>V AND BUSINESS FORMS. QUESTIONS FOE REVIEW. 21 iV: , •I -i 1 if- ■S-4 I ,.! ' ij;r ■ i tti" ! 201. How does an inland letter of credit differ from a foreign one? Are the general characteristics about the same? 202. AVhat does form No. 47 represent? To whom is the credit to he given ? 203. To whom is the letter illustrated in form No. 48 sent? For what purpose is the signature of the bearer of the preceding letter signed to this ? 204. What do shipping merchants sometimes do ? IIow is the money obtained to pay for the grain ? By whom is the bill of lading made out ? In whose name is it made ? What is the bill of ladincr used for ? 205. What is a bill of lading? For how much property was this bill of lading made ? AVliere does the i)ro])crty go to under the bill of lading? How does this bill become security to the bank ? How is it indorsed ? If made out in the name of the shipper and indorsed and delivered to the bank what is the effect of it? 206. Who has the control of the wheat as soon as the bill of lad- ing is delivered to the bank ? What does the bank require the shipper to do in addition to assigning the bill of lading? 207. To whom must the consignee pay the proceeds from the sales of the wheat ? 208. What is the effect of a payment of a debt in counterfeit money ? 209. What is a contract of debt? AVhat are the parties to such a contract called ? What does the buyer become where goods are sold and not paid for? What does the seller become ? 210. What is the duty of the debtor? What should he do when a note is due on a particular day ? When are national bank notes a good tender ? 211. What is the duty of the creditor when the debtor pays according to agreement ? Where the debtor and creditor meet and balance up their accounts, by deducting from the debt some demand of the debtor, what effect does it have ? If other prop- erty than money is taken by the creditor does it operate as pay- ment to that extent ? Has the debtor a right to tender a larger amount than the debt ? When the debt is in the form of necfo- jiable paper can the creditor safely wait for the debtor to pay ? 212. What is a general depositor in a bank which becomes Insolvent ? What is the relation between a bank and a depositor? Where money remains in bank indefinitely without change what may be the result ? 213. What does oral mean? When applied to evidence what does it mean ? 214. What is the meaning of ^>aroZ when used with reference to agreements ? What is parol evidence ? 215. What is a receipt? By whom is it executed and for what may it be used ? What kind of evidence is a receipt ? If a receipt is written in full of a specified debt how is it considered ? Has a person a right to demand a receipt as a condition of pay- in c^ a debt? 210. What is the legal meaning of a seal ? What is a written instrument to which a seal is aftixed called ? AVhat is the signifi- cance of a notarial seal ? 217. What is the meaning of a specialty in law ? If a written instrument is sealed what is it called? Is it ever called a specialty if it be not sealed ? 218. What illustration is given of an impersonal payee? What must negotiable paper have to indicate a payee? Where a check is made payable to cash or order how is it held ? 219. What illustration is given of a promise to accept a draft ? 220. What is the illustration of checks which were post-dated ? If one party failed to pay is that a reason why the other should not be a honafide holder ? 221. What defense was offered to a suit brought in Indiana on a note where the signature Avas obtained by fraud? How- did the court hold ? 222. Where a note was placed in an agent's hands for collec- tion and wrongfully converted to the agent's own use, and was sold under an execution against him, did the purchaser get a good title ? 223. If the principal maker of a note die is the holder bound to notify the surety that it is not paid ? 224. Where a note was made payable for a certain sum named, with a blank per cent, in attorney's commissions, was it held negotiable or not ? \\ i.Ki'- ' t! Hi I 1 1 \ I »i i r I i ; ! I ! 1^ f •%?' I k'. " 22 COMMERCIAL JLAW AND BL'SINESS FORMS. 225. What instance of immaterial alteration of note? 226. When is a person liable to a bank on accommodation paper ? 227. What illustration is given to show that a note signed by a vestryman of a church is not a note of the church or corpora- tion ? 228. What illustration is given of the transfer of notes as a gift just before death ? 229. What rate of interest does a note drau- after it is due ? 230. Is the fact that a note was bought for about one-half of its face value sufficient to put a purchaser on inquiry as to con- sideration ? 231. What is the wording of the order drawn by J. B. Randall on John H. Erck ? Why was this order held to be not absolute ? 232. What is the peculiarity of the statutes of Indiana in regard to negotiable notes ? Why was the note here mentioned held to be void ? 233. What instance is mentioned of a note being given which was held to be void on account of illegal consideration ? 234. What illustration is given of want of due diligence in giving notice of protest ? 235. What particulars in relation to the circumstances are given of a man going to a bank to collect a certificate of deposit ? 236. When a note is written " I promise to pay," and is signed by two persons, what kin;ponsibility ? How lonor are goods at the risk of the seller ? When does the seller's risk terminate? 258. What is continued possession of the vendor presumptive QUESTIONS FOR REVIEW, 25 evidence of ? What is the presumption where goods are not delivered after a sale ? If such goods are sold to another person and delivered does he get a good title ? 259. What is the difference between an entire sale, and one which is severable ? What illustration is given of a contract which is entire and one which is severable ? How may a con- tract which was entire be made severable ? 260. What are conditional sales ? What if the party fail to pay at the specified time ? Can a conditional buyer transfer the title by sale ? When goods are sold on trial Jiow long may they be kept ? What if the buyer fail to return them ? If a man sell with condition that he may buy the goods back within a speci- fied time when does the option expire ? 261. What facts must the vendor make known to the pur- chaser ? What facts need he not make known ? What would the moral law require of him ? If misrepresentations induce the vendee to buy can he get any redress ? 262. May a person have the possession of goods without bein<' the owner? Can he make a valid sale without bein<:^ the owner? Can stolen goods be sold so as to give a good title ? When may a person get a good title to goods although they may have been stolen ? 263. When there is no agreement as to the place of delivery of goods sold, where should they generally be delivered? Where a sale is to pay a debt where should the delivery be ? 264. What is " good-will ?" In what kinds of business is good- will often of great value ? What should the party selling the " good-will " be required to do ? 265. How must delivery of goods be, to be good? Is de- -livery to a carrier a good delivery to the vendee ? Can a broker deliver for one party and accept for another? 266. How small a portion of the goods sold may be delivered to make 'it a complete delivery ? How must the vendee accept ? What peculiar kinds of delivery are there ? 267. What does a valid sale do? What if the ownership be not transferred? Can the vendee demand the goods until he pay the price ? If no credit be given how can the vendor de- mand the price ? Where the offer to sell at a certain price is Accepted, but the vendee refuses to pay, what may the vendor do ? i r I I L i i\ •>■ I t I 4' i ' 4 ><^> « i I 26 COMMERCIAL LAW AND BUSINESS FORMS. 268. What is required as to the property in order to complete the sale ? If the contract specify a particular article in existence, may any similar article be delivered ?' 269. When does the ownership of goods sold pass in executory contracts? If the party who agreed to sell refuses to deliver what remedy has the buyer ? 270. What care must the vendor take of the goods after they are sold ? What will he be liable for ? 271. What is a "bill of parcels" and what is it frequently called? ^ 272. What is the arrangement of the bill here given? How are the items arranjred ? 273. What is a bill of sale? Is a bill of sale necessary when the property is delivered or part or all of the price is paid ? Is it convenient as evidence of transfer of title? What must be done to protect the purchaser against creditors ? If an actual and continued change of possession does not accompany the sale what will be the consequence ? 274. What is the wording of form Xo. 52 ? Why is it sealed and witnessed ? 275. What is tlic contract given in form No. 53? What purpose does the bill of sale serve? What is the object of the warranty? What is the wording of the contract ? 276. What is a chattel mortgage? If the debt is not paid at the time agreed upon what may the mortgagee do ? What right has the mortgagor ? When is the mortgagee bound to sell ? 277. What is the form and wording of the chattel morturpose ? What is a reason for this ? e- it 2S COMMERCIAL LAW AND BUSINESS FORMS. QUESTIONS FOR REVIEW. 29 I ' ll 290. When the veiKlor knows that the buyer depends upon him, instead of using his own judgment in regard to latent defects will tliere be an implied warranty ? What is such implied Avar- ranty grounded upon ? GUAEAXTY. 291. What is a sruarantv? 292. How many essentials are there to a guaranty? What are they ? 293. AVhat notable difference in regard to the consideration in guaranty ? Need the guarantor derive any benefit from the contract? When must the promise be made to be binding? What will be a sufhcient consideration ? 294. Must there be a principal debtor ? Can the guaranty be larger than the principal debt ? :\ray it be smaller? IIow may a guaranty become a principal debt? By what is the guaranty usually measured? If the liability of the principal debtor is lessened what effect will it have on the surety ? 295. What is necessary to make the contract bindir^g? When does an offer to become guarantor become legally binding ? AVhen will there be an implied acceptance? When is no notice of acceptance required ? 296. What is the wording of form Xo. 58? 297. What is the wording of form Xo. 59? 298. If the liability of the principal is varied without the consent of the guarantor, what would be the consequence? What if Mr. Wells should supply :Mr. ^lonroe with fifty dollars, worth of groceries? What example of a collector of taxes? What of a cashier for a partnership ? 299. What is the clause quoted from the statute of frauds in relation to guaranty ? What instance of a guaranty in relation to a horse ? 300. If the obligation is extended by law what effect will it have on the guarantor? What illustration of a joint stock com- pany ? What of a bond given for a City or County Treasurer ? Can a guarantor renounce his liability ? 301. Is a general guaranty negotiable with a note or draft when made on its face ? How if a person write his name across the back of a note before it is delivered, is the liability the same in all the States ? How would such a person be considered in New- York ? 302. What is the general rule in regard to the construction of a guaranty ? Who only can hold the guarantor liable when it relates to a particular person ? If it relate to a particular office what does it embrace? What illustration? What will the guarantor be bound for ? 303. What are the following forms given to illustrate ? 304. What is the wording of form Xo. 60 ? Is it a continuing guaranty ? 305. Is the guaranty given in form Xo. 61 a limited or a continuing guaranty ? 306. What is the wordinnr of form Xo. 62 ? Is it a continuing- guaranty ? 307. What is the substance of form Xo. 63, is it continuing? What is it restricted to ? 308. When does the liability of the guarantor commence ? What if the debt be illegal ? What else will release the guaran- tor? 309. What right has the creditor against the surety other than to proceed against him for the debt ? 310. What implied agreement is there on the part of the creditor ? What is he bound to show ? For what reasons may the guarantor be discharged ? 311. When will want of notice discharge the guarantor? 312. When will expiration of time discharge the guaran- tor ? How can he be discharged when the time is not limited ? In what other ways may he be discharged by expiration of time? 313. -What kind of alteration of contract will discharge the surety ? If the principal debtor is discharged, or the time ex- tended, what effect will it have on the guarantor ? 314. What will release of the principal do? May release of the principal sometimes be inferred ? Does a release of the guar- antor release the principal ? 315. What will a merger of the debt in a higher security do ? What illustration ? % % I! 30 if COMMERCIAL LAW AXD BUSINESS FORMS. I|i i i 316. If the creditor give more time to the debtor without eon- sent of the surety, what effect will it have upon the liability of the guarantor ? , 317. What will concealment of something material from the guarantor do ? What illustration ? 318. In what peculiar way may the liability of the guarantor sometimes be extinguished ? 319. What may the guarantor sometimes demand of the creditor ? May he make this demand if he did not know there were any securities at the time he became guarantor? 320. When only has the guarantor any claim against the prin- cipal debtor ? What may he do as soon as the debt becomes due ? 321. What may a co-surety do if he pay more than his share of the debt ? 322. What does the guaranty in form No. 64 relate to ? 323. AVhen a guaranty is for the collectibility of paper, at what time would the guarantor become liable ? 324. In the guaranty given in form No. 66 at what time could an action be brought against the guarantor ? LIEX. 325. What is lien ? Upon what does it rest ? If the holder of the lien allows the goods to go out of his hands what will be the result ? What are the different kinds of lien ? IIow long does the seller of goods have the right of lien ? W^hat does a sale of goods imply ? If goods are sold on credit what may the buyer do ? If before delivery the buyer becomes insolvent, what may the seller do ? 326. Will a delivery of part of the goods destroy the right of lien ? What is the rule ? If a part of the price be paid, will it destroy the lien ? Has the vendor any right of lieu while the goods are in the hands of his factor? 327. How can an equitable lien be created ? What illustration ? Is it the owner of the property who has the right of lien ? How may liens exist in equity ? 328. May an agent have the right of lien on the i)roperty of his principal ? What is the general lien ? What may the claim be for ? What may the lien result from ? What does the usage QUESTIOXS FOR REVIEW. 31 of trade give the factors ? When a consignment is made to an agent, with particular instructions to apply the proceeds to a i)ar- ticular debt, can he hold the proceeds by right of lien of a bal- ance of account ? 329. What lien do mechanics generally have ? What limita- tions to their right in some States ? Under what kind of contract must the work be done in some States to give them the rif»-ht? Why are these conditions required ? What consequences might follow if the time were unlimited ? 330. What is the common carrier's lieu founded upon ? What is it of the nature of ? What may he do after a reasonable time ? 331. Upon what ground are bailees entitled to lien ? Does it apply to cases where money and services have been expended upon the property but no changes made in it ? Has the keeper of a boarding stable a lien for the keeping of horses ? What might give him a lien ? . 332. What lien has an inn-keeper? Has he a lien on baggage left by a person who is not a guest ? 333. What will terminate a lien ? To whom must the debt or claim be due in order that the lien may hold ? If a party have the right of lien but claims to hold the goods for some other reason how will it affect the lien ? In what other ways may a lien be terminated ? 334. How long will a lien continue ? Can a delivery be made to pass the title without losing the right of lien ? COMMO^^ CAEEIEE. 335. What is a common carrier? What may the compensa- tion be ? Are passenger carriers considered common carriers ? What are the elements of a common carrier ? 336. Is the common carrier under obligation to carry for the public generally ? What kind of goods may he refuse ? ^ 337. What does the common carrier charge for? Has he any right to charge one person more than another? How mav his charges be regulated ? What if he assume extraordinary risk ? 338. \\Tiat standing offer does he make to the public ? Is he liable if he refuse to accept goods except for good reason ? 32 COMMERCIAL LAW AND BUSINESS FOKMS. QUESTIONS FOR REVIEW. 33 II 1 f ll ' » TTIiat must the owner of the goods do if he intend to hring an action for damages ? At what times need not the carrier receive goods ? 330. How and for Avliom dtx^s a private carrier carry goods? When does he become a common carrier ? Does a mere carriatre for hire make one a common carrier? What is the liability of a private carrier ? 340. When does the liability of the common carrier be^rin? What fixes his liability ? What is indispensable to fix his liabil- ity? What resjwnsibility does he assume as soon as the goods are fully accepted ? For what kind of losses is he not liable? May a person be a common carrier and a private carrier at the same time ? Is he liable for losses occasione