Western liberal. (Lordsburg, N.M.) 1887-1919, 1914-08-14
NEGOTIABLE PAPER
BIlll Of Exchange, Bank Checks
and PrOmissOrY Notes.
IN s CLASS BY THEMSELVES.

Thsss coaVoaisua aubstisutss For
epeels. Which Aasy Pass From Hand
% Hard a. Readily As Coin, Differ
Radiealiy FcoU. othor Contracts.
We may speak truthfully Of the
strength Of paper. yet how hike para
dog 4 pOundsl From childhood we
haYs been accustOmed to take frequent
liber'sss VIA tn almsy material. to
fold and rend Il according to our light
est whim. and now TO speak Of 1t as
stranRi But strong II Is. and the bust
ness world Of America Is bound into a
cohesive whole by the fibers Of mil
lions OF notes, checks and drifts which
pledge the honor and credit Of its eIti-
Gems
In this brief article we shall attempt
to define three kinds OF commercial pa
per-bills of exchange. promissory
notes and bank checks-that are alt
business contracts. They are con
tracts, however, as to which business
convenience DEGREES that the form
Shall be Just as important as the sub
stnnce.
II am hiring Regan the contractor
TO build my house and we fall out over
our agreement the court will consider
every possible point connected with
the transaction In order to determine
what our mutual intentions really were.
But II employ Regan TO do the work
and give him a prOmissory note In
payment or his services. our rights. 30
far as that note ls concerned. are large
" determined by the exact form In
which I issued It. taken In connection
Of course With the subsequent indOrse-
ments-that IL. whatever written ad-
dltiOng were afterward made to It In
the course Of business.
The vital fenture OF bills Of exchange
or DRIFTS. as they are generally called
-pr0mlssory notes and bank checks IL
their negotiabiity-that Is to say. they
are a special class OF contracts which
are 50 framed and so favored by the
law that II certain rules are adhered to
they can be passed from man to man
quite rs freely and fur more cOnvsn
iently than actual cash
An ordindFy contract may be assign
ed OF transferred from one TO another.
Thus II l have agreed to furnish a
large factory with knitting machines
may assign my right to be paid for
doing 90 to BOgardus for q valuable
consideration Suppose, though, that
misrepreSented some important feature
OF my knitting machines to the Sue
cess Textile company. which ordered
them, aud after have transferred my
rights In the contract TO BOgardus they
find IL out Under such circumstances
the textile company can employ the de-
fense OF Misrepresentation against B0-
gardus just as readily as they could
into my shoes and is in no better posi-
ton than would bo had remained a
party to the contract
Now. this is just where drafts, notea
and bulls. or, as they are often called
collectively. negotiable instruments or
commercial paper. differ radically from
other contracts. While still in the
hands OF the original parties who gave
them birth they are subject to any de-
lenses which one may have against the
other, 30 that II CurEon gives a prom.
issory note for 500, due in sixty days,
to Plalsted and then finds that through
mutual dealings Plaisted really owes
him $500 he may at the end OF the six
ty days refuse to pay Plaisted the note
and demand instead $500 from him.
Suppose. however, that Piaisted has
meanwhile sold the note to Rangely.
who knows nothing Of his debt to Cur
Eon, can Curzon still set of Plaisted's
debt and refuse to pay Rangely the
nOte7 Undoubtedly he cannot do so.
Such a case illustrates the distin-
gushing characteristic Of commercial
paper. Like n bird which has flown
from the parent nest, It is freed from
any defenses which the original parties
70 II may have. just as soon as II has
been purchased. in good faith and for a
valuable consideration. by some third
person.
In every other form OF contract the
rule Is otherwise; land bears Its bur.
dens from owner to owner. the as
signed mortgage conveys no better title
to the purchaser than the assiRnOr had
TO give; but for the purely practical
reason that in trade there must bO
some convenient representative Of spe-
Gle. which may pass from hand to hand
as readily as actual coin. a general
agreement and strength OF custom
among merchants bred the three forms
OF credit paper-the bill of exchange,
the promlssory note aud the bank check
all OF which travel IN the words Of
great jurist. as cOuriers without lug
gage. and to all Of which an innocent
purchaser. for value. gets an absolutely
clear titIe.--saturday Evening Post