Aberdeen herald. [volume] (Aberdeen, Chehalis County, W.T.) 1886-1917, 1914-06-23
NEGOTIABLE PAPER
Bills Of Exchange, Bank Checks
and Promissory Notes.
IN A CLASS By THEMSELVES.

These Convenient Substitutes For
Specie, Which May Pass From Hand
to Hand a. Readily a. Coin, Differ
Radically From Other Contraets.
We may speak truthfully of the
| strength Ut piper. yet how like para
dox 1t sounds: From childhood We
have been accustomed to take frequent
liberties with the hlmsy material, to
fold and rend 1t according to our light
est within. and now to spenk Of 1t as
strong! But strong It is. and the busi-
ness world Of America Is bound into
cohesive whole by the Hbers Of mil.
lions Of notes. checks and drafts which
pledge the honor and credit Of its cit1-
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 ali
business contracts They are con-
trncts. however. as to which business
convenience DEGREES that the form
shall be just as important as the sub
stance.
II am hiring RegaD 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 Uegan to do the work
and give him promissOry note in
payment OF his services. our rights. so
far as that note is concerned. are large
ly determined by the exact form in
which | issued it. taken In connection
OF course with the subsequent indOrse-
ments-th that Is. whatever written ad-
ditiOns We're afterward made to 1t in
the course of business
The vital feature Of bills Of exchange
or drafts. as they are generally called
-prnniSSory notes and bank checks Is
their egotiability-that Is to say, they
are Il special class of contracts which
are SO framed and so favored by the
/ law that II certain rules are adhered to
they can be passed from man to man
quite as freely and far more conven-
ieEtly than actual cash.
An ordinary contract may be assign
ed or transferred from one to another.
Thus If have agreed to furnish a
large factory with knitting machines
may assign my right to be paid for
doing so to Bogardus for valuable
consideration. Suppose. though. that
misrepresented some Important feature
of my knitting machines to the Sue
cess Textile company. which ordered
them. and after / have transferred my
rights in the contract to Bogardus they
find it out. Under such circumstances
the textile company can employ the de-
Tense of Misrepresentation against b.
gardus Just as readily as they could
against me. for he has simply stepped
into my shoes and Is in no better posi-.
tiOn than | would be had remained q
party to the contract
Now. this IL Just where drafts. notes
and bills. 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. so that II Curzon gives Il prom.
issory note for 500. due in sixty days,
to Plaisted 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 Plaisted has
meanwhile sold the note to Rangelv.
who knows nothing of his debt to Cur.
zon. can CurzOn still set of l'laisted's
debt and refuse to pay Rangely the
note? Undoubtedly he cannot do so.
Such case illustrates the distin.
gushing characteristic Of commercial
paper. Like n bird which has flown
from the parent nest. 1t Is freed from
any defenses which the original parties
to it may have. just as soon as 1t has
been purchased. In good faith and for
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 assignor had
to give; but for the purely practical
reason that in trade there must be
some convenient representative of spe-
Gle. which may pass from hand to hand
as readily as actual coin. general
agreement and strength of custom
among merchants bred the three forms
Of credit paper-the bill Of exchange.
the promissory note and the bank check
all Of which travel. in the words of Il
great jurist. as cOuriers without lug
gage. and to all of which an innocent
purchaser. for value. gets IN absolutely
clear Enthusiastically Evening Post.