The Hartford republican. (Hartford, Ky.) 18??-1926, 1914-07-10
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 as Readily as Coin. Differ
Radically From Other Contracts.

specie, winch May Pass FROM HdnC
to Hand as Readily as Coin. DHe'
Radically From Other Contracts.
We may speak truthfully of the
strength of paper. yet how like a para
doX II sounds. From childhood ",
have been accustomed TO take frequent
liberties with the himSy material "a
fold and rend it according to our light
est whim.\ and now to speak of IL as
strong! But strong ii is. and the husi.
hess world 90 America is bound into Il
cohesive whole 10y the tibers of mil.
lions of notes. checks and drafts which
pledge the honor and credit Of its citi.
Zens.
! 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 at!
tracts, however. as to which business
convenience DEGREES that the form
shall be just as important as the sub
stance
If l am hiring Regain 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 We're.
But If | employ Regain 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-that is, whatever written ad
ditions were afterward made to it in
the course of business.
The vital feature Of bills of exchange
or drafts, as they are generally called
-promissOry notes and bank checks is
their negotiability-that is to say, they
ere 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-
iently than actual cash.
An ordinary contract may be assign
ed or transferred from one to another.
Thus IL have agreed to furnish
large factory with knitting machines
may assign my right to be paid for
doing so to Bogardus for valuable
consideration. Suppose, though, that I
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 II 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-
ton than | would be had l remained a
party to the contract
Now, this Is 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 If Curzon gives II prom
issory note for 500. due i'm sixty days.
TO Plaisted and then finds that through
mutual dealings Plaisted really owes
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 off paiSted'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 bird which has flown
from the parent nest it is freed from
any defenses which the original parties
TO 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 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 u
great jurist. ms couriers without lug
gage. and to all Of which an Innocent
purchaser. for value. gets an absolutely
clear Enthusiastically Evening Post.