756. The Value of a note at its maturity is its face, if it does not bear interest; if the note is given with interest, its value at maturity is the face plus the interest for the time and grace.

REMARKS.-1.* Grace is given on all negotiable time paper unless" without grace" be specified. 2. In some States, as Minnesota, Pennsylvania, and others, drafts drawn payable at sight are entitled to days of grace, and should be accepted in the same form as time drafts; while in such States drafts payable on demand have no days of grace, and like the sight drafts of most of the States, are dishonored if not paid on demand. Other States, as New Jersey and Pennsylvania, have statutory requirements as to the phraseology of the note; as to include the phrase "without defalcation or discount," etc. In such matters State laws should be observed.

757. Notes given for months, have their maturity determined by adding to their date the full months, regardless of the number of days thereby included, and also the three days of grace.

758. Notes given for days have their maturity determined by counting on from their date the expressed time, plus three days of grace. This is done regardless of the number of months compassed by the days so counted.

759. In some States, the bank custom is to take discount for both the day of discount and the day of maturity, which is excessive.

REMARKS.-1. In general, the laws of the different States provide that, if a note matures on Sunday, it shall be paid on Saturday; if Saturday be a legal holiday, then the note shall be paid on Friday; but the laws of different States vary, and should be carefully studied and fully observed, in order to hold contingent parties responsible.

2. Notes maturing on a legal holiday must be paid on the day previous, if the legal holiday occurs on Monday, payment must be made on the preceding Saturday.

760. Banks, in many of the larger cities, loan money on tollateral securities, such as stocks, bonds, warehouse receipts, etc. Such loans, being made payable on demand, or on one day's notice, are termed "call loans" or "demand loans.” On such the interest is usually paid at the end of the time.

REMARK.-Variations in practice among banks, and at the same bank with different patrons, are very common and subject to no rule of law.

GENERAL REMARKS ON COMMERCIAL PAPER.

761. Commercial, or Negotiable Paper, includes promissory notes, drafts, or bills of exchange, checks, and bank bills, warehouse receipts, and certain other evidences of indebtedness; but notes and time drafts are the only two kinds entering largely into the operations of bank discount.

762. If there is no admixture of fraud in the transaction, any negotiable paper may be bought and sold at any price agreed upon by the parties, and the purchaser thus have full right of recovery.

763. The purchaser of a negotiable paper is protected in his right of recovery of its amount against all original and contingent parties thereto, if he can show three conditions:

1st. That he gave value for the paper.

*Days of grace have been abolished by statute in California, Connecticut, Georgia, Idaho, Illinois, Montana, New Jersey, New York, North Dakota, Oregon, Pennsylvania, Utah, Vermont. Wisconsin.

2d. 3d.

That he bought it before its maturity.

That he did not, at the time of its purchase, know of the existence of any

claim or condition affecting its validity.

Indorsements are made on notes for three purposes:

764.

1st.

3d.

To secure their payment.

To make a memorandum of a partial payment.

765. Persons indorsing for security or transfer are liable for the payment of the paper indorsed, unless the holder of the paper fails to demand payment of its maker at maturity, and, in case of its non-payment, gives the indorser or indorsers, within a reasonable time, notice of its dishonor by the maker.

766. If the dishonored paper be foreign-i. e., the parties to it being of different states or countries-to hold contingent parties, a formal notarial protest, mailed to the indorsers, is required by the laws of most States; but a verbal or other informal notice of dishonor is sufficient if the paper is domestic.

767. No demand notice or protest is necessary to hold the maker; he, being a principal debtor, is only released from his obligation by the outlawing of the note, or by his payment of it.

768. A Protest is a written, or partly written and partly printed, statement, made by a notary public, giving legal notice to the maker and indorsers of a note of its non-payment.

769. The laws governing negotiable paper are not uniform throughout the United States, and a careful observance of the laws of all the States wherein one does business is necessary to avoid risks of loss.

770. It is lawful to compute and take interest for all three of the days of grace, although the debtor may thus lose the interest for one or two days by the fact that the note matures on Sunday or on a legal holiday.

771. Interest charges for time of transfer of notes to distant places for demand, and for the return of the remittance therefor, is a matter wholly of custom with banks, as is also an added charge or fee for services in relation to such demand and remittance.

772. Patrons of good standing at banks are often given credit for the face of interest bearing notes discounted.

773. When a note is discounted at a bank, the payee indorses it, thus making it payable to the bank; both maker and payee are then responsible to the bank for its payment.

774. Indorsements for transfer are at the same time indorsements for surety, unless made without recourse."

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775. Negotiable papers may be transferred:

1st. By indorsement in full-i. e., by the payee writing on the back of the note, in substance, as follows: "Pay to the order of John Doe, Richard Roe"

(payee). In which event Doe becomes the legal owner of the note,

and possesses a right to receive payment on it, or, in case of its non-payment at maturity, to sue and recover from the maker; and if he follows the statute law of the State as to demand and notice, he may recover, either jointly or severally, from either the maker, or from Roe, the indorser, as such indorser is also a surety.

2d. By indorsement "in blank"-i. e., by the payee writing, on the back of the note, simply his name. After this is done, the holder is presumed to be the owner, and he may, in case of default, recover by suit from the maker; and if he observes the requirement of the law of the place, he may also hold the indorser, as such indorser becomes a surety.

3d. By indorsement "without recourse "-i. e., by the payee writing, on the back of the note, in substance, "Pay John Doe, or order, without recourse to me, Richard Roe" (payee); or by writing simply "Without recourse, Richard Roe." A note so indorsed is fully transferred from the payee, but he rests under no obligation as to its payment.

776. The corresponding terms of Bank Discount and Percentage are as follows:

777.-To find the Discount and Proceeds, the Face of a Note, Time, and Rate Per Cent. of Discount, being given.

EXAMPLE.—Find the bank discount and proceeds of a note for $580, due in 63 days, at 6%.

EXPLANATION.-The bank discount of a note being its interest for the time plus grace, and the proceeds being the face of a note minus the bank discount, it is only necessary to compute the interest on the face for the full time to obtain the discount, and to subtract such discount from the face to find the proceeds; thus, $6.09 being the discount, $580, minus $6.09, equals $573.91, proceeds.

Rule.-Compute the interest for the time and rate, for the bank discount; and subtract this bank discount from the face of the note, to find the proceeds.

REMARK.-If the note is on interest, find the discount on the amount of the note at maturity.

EXAMPLES FOR PRACTICE.

778. 1. Find the bank discount and proceeds of a note for $750, due in 90 days, at 5%.

2. Find the bank discount and proceeds of a note for $286.50, due in 30 days, at 7%.

3. Find the bank discount and proceeds of a note for $1325, due in 60 days, at 10%.

4. What is the discount on a note for $1000, discounted at a bank for 23 days, at 7% ?

5. What are the proceeds of a 90-day note for $1000, discounted at a bank at 41% ?

6. I paid in cash $950 for an engine, and sold it the same day for $975, taking a 60-day note, which I discounted at a bank at 8%. What was my gain or loss?

1

7. Find the bank discount and proceeds of a note for $1240, dated Sept. 3, 1888, payable in 4 months, with interest at 6%, and discounted Nov. 1, 1888, at the same rate.

8.

What are the proceeds of a note for $1750, due in 63 days, bearing interest at 10%, and discounted at a bank at the same rate?

9. Find the maturity, term of discount, and proceeds of the following note: $286.00. Buffalo, N. Y., Oct. 25, 1888. Three months after date, I promise to pay to the order of Smith & Bro., Two Hundred Eighty-six Dollars, at the Erie County National Bank. Value received.

Discounted Jan. 1, 1889, at 6%.

THOMAS BROWN, JR.

10. Find the maturity, term of discount, and proceeds of the following Lote: $800.00. Cleveland, O., Jan. 31, 1888. One month after date, without grace, we promise to pay to the order of Hale & Bly, Eight Hundred Dollars, with interest at 5 per cent. Value received.

Discounted Feb. 10, 1888, at 10%.

HART & COLE.

11. Find the maturity, term of discount, and proceeds of the following note. $660.90. Albany, N. Y., May 5, 1888. Ninety days after date, I promise to pay to the order of H. H. Douglas, Six Hundred Sixty and Dollars, with interest. Value received.

Discounted June 1, 1888, at 5%.

CLAYTON 8. MEYERS.

12. Find the maturity, term of discount, and proceeds of the following note: $2400.00. St. Paul, Minn., Aug. 31, 1888. Six months after date, we promise to pay to the order of John W. Bell, Two Thousand Four Hundred Dollars, with interest at 8 per cent. after one month. Value received.

Discounted Sept. 5, 1888, at 8%.

OLIVER & JONES.

REMARKS.-1. If discount be required on a basis of 365 days for the year, compute the discount first on a basis of 360 days, and from the discount so obtained, subtract of itself. 2. The following three examples are to be worked on a discount basis of 365 days.

:

13. Paul Harmon's bank account is overdrawn $3596.11; he now discounts, at 6% a 90-day note for $450; a 60-day note for $1754.81; a 30-day note for $851.95 ; a 20-day note for $345.25; a 10-day note for $100; proceeds of all to his credit at the bank. What is the condition of his bank account after he receives these credits?

14. Swick & Sons' bank account is overdrawn $11546.19; they now discount, at 6% a 90-day note for $3975.21; a 60-day note for $5514.25; a 30-day note for $1546.19; a 20-day note for $2546.85; proceeds of all to their credit at the bank. What is the condition of their bank account after they receive credit as above? 15. Philo Perkins & Co.'s bank account is overdrawn $12,916.47; they now discount, at 6%: a 90-day note for $2428.40; a 60-day note for $6311.25; a 30-day note for $1120.50; a 20-day note for $4500; a 10-day note for $1550.50; Proceeds of all to their credit at the bank. What is the condition of their bank account after they receive the above credits?

779. To find the Face of a Note, the Proceeds, Time, and Rate Per Cent. of Discount, being given.

EXAMPLE.-What must be the face of a note, payable in 60 days, that, when discounted at 6%, the proceeds may be $573.91 ?

Rule.-Divide the proceeds of the note by the proceeds of one dollar for the given rate and time.

REMARK.-If the note be interest-bearing, find the proceeds of one dollar of such note, and proceed as above.

EXAMPLES FOR PRACTICE.

780. 1. What must be the face of a 90-day note that will give $315.04 proceeds, when discounted at 6% ?

2. What face of a 30-day note, discounted at 7%, will give $1241.98 proceeds? 3. Wishing to borrow $900 of a bank, for what sum must my 90-day note be drawn, to obtain the required amount, discount being at 10%?

4. Having bought goods to the amount of $2431.80 cash, I gave my 60-day note in settlement. If discount be at 7%, what should have been the face of the note ?

5. What must be the face of a note dated Aug. 16, 1888, and payable 6 months after date, that when discounted at a bank Oct. 1, 1888, at 6%, it will bring $2100.55 proceeds?

6. A note dated Sept. 1, 1888, payable in 90 days, with interest at 71%, was discounted 21 days after date, at 10%. If the proceeds were $690.42, what must have been the face?

7. You have $328.40 to your credit at the bank; you give your check for $936.20, after which you discount a 30-day note for $425.40, proceeds to your credit at the bank; you also discount a 90-day note made by II. C. Davis, proceeds to your credit; you now find yourself indebted to the bank $12.37. If discount be at 6% what must have been the face of the Davis note?