A ncte dated on a legal holiday other than Sunday is valid. In New Jersey a contract, bill, note, or check drawn or made, accepted or delivered, on Sunday is void. In Massachusetts a note or check made on Sunday is void as between the original parties. In Connecticut, a defense to an action on a note made on Sunday will be good if the consideration is restored. Both Massachusetts and Connecticut protect the bona fide holder of a note made, accepted or drawn on Sunday. In New York a note dated and delivered on Sunday is valid. § 162. Consideration All negotiable paper is presumed to have been given for a valuable consideration, and everyone whose signature appears on it is presumed to have become a party for a valuable consideration. Any consideration that would support an ordinary contract will be sufficient. An existing debt would be a good consideration for a note or draft in settlement. Absence or failure of consideration is not a good defense against a holder in due course for value. If a gambling debt has been paid with a negotiable instrument, the maker can generally set up the defense of illegality only against the original party. In a few states, however, gambling contracts are absolutely void, and there the maker of such an instrument cannot be held, but the indorser can, inasmuch as an indorser warrants the legality of the instru inent. Anyone having a lien on a negotiable instrument, is a holder for value to the extent of his lien. § 163. Delivery A negotiable instrument is incomplete until delivery. If an incomplete instrument is completed and delivered without authority of the maker or drawer, it will not be valid unless it comes in due course to an innocent holder for value, in which case it will be presumed conclusively to be good. § 164. Rules of Construction 10. The instrument need not follow the language of this act, but any terms are sufficient which clearly indicate an intention to conform to the requirements hereof. § 17.-Where the language of the instrument is ambiguous, or there are omissions therein, the following rules of construction apply: 1. Where the sum payable is expressed in words and also in figures and there is a discrepancy between the two, the sum denoted by the words is the sum payable; but if the words are ambiguous or uncertain, references may be had to the figures to fix the amount; 2. Where the instrument provides for the payment of interest, without specifying the date from which interest is to run, the interest runs from the date of the instrument, and if the instrument is undated, from the issue thereof; 3. Where the instrument is not dated, it will be considered to be dated as of the time it was issued; 4. Where there is a conflict between the written and printed provisions of the instrument, the written provisions prevail; 5. Where the instrument is so ambiguous that there is doubt whether it is a bill or note, the holder may treat it as either at his election; 6. Where a signature is so placed upon the instrument that it is not clear in what capacity the person making the same intended to sign, he is to be deemed an indorser; 7. Where an instrument containing the words "I promise to pay" is signed by two or more persons, they are deemed to be jointly and severally liable thereon. § 165. Allowable Provisions § 5. An instrument which contains an order or promise to do any act in addition to the payment of money is not negotiable. But the negotiable character of an instrument otherwise negotiable is not affected by a provision which: I. Authorizes the sale of collateral securities in case the instrument be not paid at maturity; or 2. Authorizes a confession of judgment if the instrument be not paid at maturity; or 3. Waives the benefit of any law intended for the advantage or protection of the obligor; or 4. Gives the holder an election to require something to be done in lieu of payment of money. But nothing in this section shall validate any provision or stipulation otherwise illegal. § 166. Non-Essentials § 6. The validity and negotiable character of an instrument are not affected by the fact that: I. 2. It is not dated; or Does not specify the value given, or that any value has been given therefor; or 3. Does not specify the place where it is drawn or the place where it is payable; or 4. Bears a seal; or 5. Designates a particular kind of current money in which payment is to be made. But nothing in this section shall alter or repeal any statute requiring in certain cases the nature of the consideration to be stated in the instrument. I. 2. REVIEW QUESTIONS Give a succinct but clear idea of commercial paper. If the What are the five requirements for negotiable instruments? 3. How should an agent sign a note? 4. What effect has a minor's note? A minor's indorsement? 5. Would a note payable from "rents for March, 1919, from the maker's apartment house, No. 154 Clinton Avenue, Baltimore, Maryland," be negotiable? 6. Is a note payable in instalments good? Is a note good that adds costs of collection? 7. Would a note payable ninety days after the death of the maker be negotiable? What if it were payable ninety days after the payee came of age? 8. 9. 10. Is a note with no time expressed good? Is a note or a check invalidated if dated on a legal holiday? A affixes his signature to a blank paper and delivers it to B for the purpose of converting it into a negotiable note. B writes a larger amount and a shorter time than agreed on. Is A liable to a holder in due course without notice? II. C pays a note that apparently bears his signature as maker. Later he finds that the signature was forged. May he recover the money paid? State the principle. 12. A bank discounts a note having a genuine indorsement, but forged signature of maker. Who bears loss? 13. If in a note there is a conflict between words and figures as to sum payable, what prevails? As between printed words and written words which prevails? 14. Is it necessary that a note or a bill should contain the words "value received"? That it should be dated? 15. What provision can be made in a note as to the sale of collateral securities? What are "collateral securities"? CHAPTER XXVIII NEGOTIATION1 § 167. Method of Negotiation § 30.-An instrument is negotiated when it is transferred from one person to another in such manner as to constitute the transferee the holder thereof. If payable to bearer it is negotiated by delivery; if payable to order it is negotiated by the indorsement of the holder completed by delivery. § 31.-The indorsement must be written on the instrument itself or upon a paper attached thereto. The signature of the indorser, without additional words, is a sufficient indorsement. § 32. The indorsement must be an indorsement of the entire instrument. An indorsement, which purports to transfer to the indorsee a part only of the amount payable, or which purports to transfer the instrument to two or more indorsees severally, does not operate as a negotiation of the instrument. But where the instrument has been paid in part, it may be indorsed as to the residue. 168. The Indorser's Contract The contract of any one who indorses negotiable instruments is that he warrants to all subsequent holders in due 4. That the instrument is, at the time he indorses it, valid and subsisting. 1 For forms of indorsement, see Chapter CIII, Forms 36, 44. |