Iron County news. [volume] (Hurley, Wis.) 1913-1950, 1914-07-04
NEGOTIABLE PAPER
Bills of Exchange, Bank Checks
and PromisSory Notes.
IN A CLASS BY THEMSELVES.


Specie, Which May Pass From Hand
10 Hand as Readily as Coin. Differ
Radically From Other Contracts.
We may speak truthfully Of the
strength of paper, yet how IKE para
dox it soundsl From childhood we
have been accustomed TO take frequent
liberties with the fimsy material, 10
fold and rend It according 10 our light
est within, and now 70 speak OF IL as
strongl But strong it is, and the bust
ness world Of America is bound into a
cohesive whole by the fbers of mil
lions Of notes. checks and drafts which
pledge the honor and credit Of its clti-
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 all
business contracts. They are con
tracts however, as to which business
convenience DEGREES that the form
shall be just as important as the sub
stance.
Ii I am hiring Regan the contractor
20 build my 1ouse and we fall out over
our agreement the court will consider
every possible poilt connected with
the transaction in order to determine
what our mutual intention really We're
But If I employ Regain to do the work
and give him q promissory note in
payment Of his services, Our rights, 50
far as that note is concerned, are large
~ determined by the exact form In
which issued 1t. taken in connection
OF course with the subsequent ipd0rse-
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 aegotlabi,ity--tha is to say. they
are a special class Of contracts which
are SO framed and 50 favored by the
law that II certain rules are adhered 70
they can be passed from man 80 man
quite as freely and far more conyen-
iently than actual cash
An ordinary contract may he assign
ed or transferred from one 10 another
Thus If ! have agreed to furnish
large factory with anitting machines
may assign my right 20 be paid FER
doing 50 TO Bogardus for q valuable
consideration. Suppose, though. that I
mlsrepreseuted some important feature
of my knitting machines 70 the Sue
cess Textile company, which ordered
them, and after | have transferred my
rights In the contract 20 Bogardus they
find Il out, Under such circumstances
the textile company can employ the de-
Tense of misrepresentation against Bo-
gardus just a. 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 1 remained a
party 10 the contract.
Now this is just where drafts, notes
and bills, or. as they are often called
collectively. negot!ao Die Instruments or
commercial paper, di9er radically from
other contracts. While still In the
hands Of the original parties who gave
them birth they are subject to any de-
fenses which one may have against the
other. so that If Curzon gives q prem
issory note for 500, due In sixty days.
10 Plaisted and then finds that through
mutual dealings Plaisted really owes
him $500 he may az the end OF the six
~ days refuse 70 pay Plaisted the note
ANA demand instead $500 from him
Suppose, however, that Plaisted has
meanwhile sold the note to Rangely
who knows nothing Of his debt 20 Cur
gen. can CurZon still set eff Plaisteds
debt and refuse to pay Rangely the
note? Undoubtedly he cannot do so
Such a ease illustrates the distin-
gushing characteristic Of commercial
paper Like a bird which has aowu
from the parent nest ii is freed from
any defenscs which the original parties
10 Il may have just as soon as il has
been purchased IN good faith and for
valuable consideration, by some third
person
In every other forms Of contract the
rule is otherwise; land bears its bur,
deus from owner 10 owner, the as.
signed mortgage conveys no better title
20 the purchaser than the assignor had
to give; but fer the purely pracuca.
reason that In trade there must be
some convenient representative OF spe.
Gle, which may pass from hand 20 hand
as readily as actual coin, general
agreement and strength of custom
among merchants bred the three forms
OF credit paper-the bin OF exchange
the promissory note and the bank check
ali 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 Enthusiastically Evening Post.
Deceptive