The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-07-25
BILLS, NOTES AND CHECKS.

BILLS, NOTES AND CHECKS.
Changes in the Law of Mercantile Pa
per in Some States.
New York Evening Post.
In line with a plan for the general cod-
1cation of substantive law which has been
pursued in this State for number OF years,
the last Legislature passed a statute en-
bodying the law of negotiable instruments.
The same law has been made a statute in
New Jersey, Connecticut and Colorado has
been favorably reported in Michigan and
Florida, and attempts to procure its enact
ment have been or will be made in score
of other States The law was drafted by
member of the New York bar, under the di-
rection of a commission to promote uni
formity of legislation in the United states,
composed of representatives from twenty
nine States.
Before the law reached it's present form
it was submitted to jurists in this country
and in England for criticism and sugges-
ton. Although conflicting rules in CONNER
cial law, the diversities being due 10 a dill
ferent Interpretation of the law merchant,
the common source, are slight as compared
with those in matrimonial law for example,
the statute will prove a source or con-
venience and satisfaction in the business
for a Jersey man Will not, for instance, De
compelled in case any question over the
transaction arises to employ counsel learned
in the law of both States to solve the mat
ter. Heretofore one suing on a note might
be held by a federal court to be holder
State, he would be nonsulted on the same
state of facts Formerly. one collecting a
forged check and paying the proceeds 10 the
forger might be liable to the party paying
in one State and go free of liability IN an
other.
The law as enacted contains S31 sections,
covering thirty pages. 1t defines negotiable
paper, nOnnegotiable paper, the terms used
in transactions concerning commercial pa
per- and the rights and liabilities of the
Various parties making, holding indors-
ing bills, notes and checks. AS under ou1
present statute, days of grace are gone
away with, but when maturity falls on sun
day or a holiday, the time is extended
through the following day.
1t provides that an instrument is not ne
gotiable which contains an order or prom
Use to do anything in addition to the pay
ment of money, save where it authorizes
the sale of collateral, or a confession OF
judgment, or valves the DEMENT'S or any
law intended for the protection of the OBJ
Igor, or gives the holder an election to re-
quire something to be done IN lieu or pay
ing money. The sum payable is certain
within the definition of negotiability.
though it is to be paid with interest or IN
installments, with or without the proViso
that in default of any payment OF interest
or of installment the whole shall be
come due with exchange at a flxed or the
current rate or with costs of collection
and attorneys fee.
Where an instrument is wanting in any
important particular, a person IN posses
sion of it has a prima facie authority 70
fill up blanks. An Endorsement by cor
poration or an infant passes the property
pacity the infant or the corporation may
incur no liability. forged signature or
one made without authority is entirely In
operative, unless the party is estopped
from setting up the forgery or want of
authority.
The signature of any party may be made
however by a duly authorized agent, and
no particular form Of appointment is neces-
sary, but the authority may be established
as in any case of agency Where one signs
a note and adds to his signature words
showing that he acts for principal, or in
a representative caDac1ty' he is not labie
on the instrument Il he had authority, but
the mere addition of words describing him
as an agent, without disclosing the prin-
cipal, does not exempt him from personal
liability. 1t is thought that the statute
thus changes the former rule; that one
signing agent without authority is not
liable on the instrument, but must be sued
for the damages resulting from breach
of his implied warranty of authority
existing debt constitutes value abrogates
the rule formerly applied in this State
that one who takes note in payment of
value as againSI a maker or indorser, and
substitutes the federal rule.
The most important change is one as to
the liability of indorsers which will apply
to disputes between banks growing out of
forged or raised paper. One negotiating a
paper by delivery or by a qualified indorse-
ment-i e., by adding the words without
recourse" or for collection only''-war-
rants that the instrument is genuine, and
in ali respects what it purports to be- that
he has a good title. that all prior parties
had capacity to contract. and that he has
no knowledge of any fact impairing it's
lidity or rendering it valueless. For breach
of any of these warranties an action would
therefore lie against bank which had col
lected a bad draft even though 1T had paid
the money over in good faith. A bank,
therefore, which in good faith handles pa
per as a collecting agent for a rouge does
so at it's own risk. In this State the law
had been previously laid down that an in
dorsement for collection does not imply
guarantee of the genuinenesS of all proceed
ing Endorsements. 4 general indorser war
rants besides the things above referred to-
ing at the time of his Endorsement and
that in case of due presentment and dis
honor he will pay the amount to a holder
or a subsequent indorser who has been
compelled to pay.
A less rational change in the law is that
which makes it necessary for the holder
of a. note due op demand to present it TO
order to hold an indorser. The statute
makes the usage of trade and the facts OF
the particular case the criterion by which
to determine what is a reasonable time
but the precedents hold that reasonable
time cannot exceed twenty-four or forty
eight hours. that is the shortest period
within which the holder can act. The pres
ent rule in the State that the indorser is
rot released for the holders neglect to
make demand within any particular time
was adopted because of the unreasouab BILE
ness of the Neutrality-suspicious. rule, which
was plainly in most cases contrary to the
intent of the parties. The statute evident
The law does not become operative. until
Oct l. but paper made now and maturing
after Oct. l will be governed by its provi-
sions.