OBLIGATIONS OF PARTIES 13 the drawee needs only to write transversely across the face of the bill, "Accepted," and sign his name. If it is a time bill reading, say, "Thirty days after sight," it is necessary also to add the date of acceptance, so that the day of maturity may be determined. It is a great deal more convenient for the holder of the bill if the place of payment is added. The most used form of acceptance is: Accepted, October 1, 1923 The Traders Exchange Bank The Alcova Company By John Harris, Treasurer If the drawer or holder of a check desires it to be accepted, the proper officer of the bank does so by writing or stamping "Accepted," "Certified," or "Good," transversely across the face, and signing it. A common form of certification is "Good when properly indorsed." Such a check is a "certified check" and as acceptor the bank is liable for its payment when the holder demands (see 62). It implies that the signature is good and that the drawer has sufficient funds. It implies nothing as to the body of the check, or the indorsements. If the check has been raised the bank is not responsible. When accepted a bill of exchange is similar to a promissory note. It is a promise to pay and is called an "acceptance" (see 139-140). 20. What each party to a note or bill agrees to do. The person who signs a promissory note agrees without any conditions whatever to pay the note when it is due. The owner of the note can even sue the maker for the amount of the note on the due date and win without ever having presented it for payment. The maker also must pay interest from the date due until the date paid and the costs the suit for collection, if there is a suit. Of course if the note bears interest, interest must be paid from the date of the note to the date of payment. The person who signs a bill of exchange expects the person on whom it is drawn to accept and pay it. He hopes never to see the bill again, but in drawing it he promises to pay if it is not accepted, or if it is not paid, provided certain conditions are performed. If it is a time bill, it must be duly presented for acceptance and if acceptance is refused, immediate notice thereof must be given the drawer, and if it is necessary for evidence the failure to accept must be protested (see 25-27). If it is a sight bill or an accepted time bill, it must be duly presented for payment. If it is not paid, immediate notice must be given the drawer, and if required by law, a formal protest must be made. The person who signs a check does a little more than he who signs a regular bill of exchange. He agrees to make it good to the holder, even if the holder fails to present it to the bank for payment within a reasonable time, unless he is damaged by the delay. Even in the event of damage the drawer pays the difference between the face of the check and the amount of the damage (see 64). If Long gives Adams his check for $1000 and Adams, taking it to the bank upon which it is drawn, chooses to have it certified rather than paid, taking the bank's promise in preference to the money, Adams thereby releases Long from all liability. If Long gets the check certified before he delivers it to Adams, Long is still liable for its payment, if the bank should fail. The person on whom a bill of exchange is drawn can accept it or not according to his obligation, or even contrary to his obligation, but if he accepts the order, his promise is similar to that of the maker of a note. He is bound to pay according to the terms of the acceptance. INDORSEMENTS 15 In his acceptance he may vary the bill, if the holder is willing; otherwise to modify is to decline. Should the drawer and indorsers of the bill not consent to the modification, they are released from liability. In accepting a bill of exchange, the acceptor, as the drawee is now called, agrees not only to pay it, but he guarantees the signature of the drawer, admits the existence of the payee, and is absolutely responsible (see 139). 21. The sale of notes and bills. Negotiable paper is payable either to order or to bearer. If a check, draft, bill of exchange, or note, is payable to the order of a person, the title can be transferred to another party by indorsing it and then delivering it to that party. The indorsement or assignment of an infant or a corporation passes title even when from want of capacity neither incurs any liability. If the instrument is payable to bearer or if it has already been indorsed in blank (see 22), another person becomes owner when the bearer delivers it to that person. Negotiable paper is indorsed by placing one's signature, with or without direction as to payment, crosswise upon the back of the instrument, starting about one inch from the left end, or upon a paper (called an allonge) attached to the instrument. 22. Indorsements. Just the signature of the holder is a good indorsement, but the owner usually wishes to specify the person to whom he delivers it, or he may desire to qualify his liability for payment, reserve title to himself, waive some legal formalities or lay down conditions of payment. (1) The usual form of indorsement called "special" or in full" states the person to whom payment is to be made, and no other person except upon his indorsement can get payment. John Johnson and a company of which he is the treasurer would indorse as follows (see 57): Pay to the order of John Johnson Pay to the order of By John Johnson, Treasurer (2) If it is desired to make a note, bill, or check payable to the bearer, only the signature of the holder is used, as John Johnson The Alcova Co. This form is "indorsement in blank." It gives the transferee the right to add above the signature any restrictions he may want to make, provided they are not inconsistent with the contract; or he may make it a special indorsement. (3) The transferor impliedly warrants the instrument he sells to be what it purports to be, but he may relieve himself of liability for payment (if the instrument is genuine) by using the words " without recourse" before his signature, as follows: Without recourse Without recourse The Alcova Co. Above the without recourse may be written "Pay to the order of B. B. Blank," as in (1). This form is the "qualified indorsement." (4) The holder of a check, bill, or note, may wish (a) to restrict payment to a single person, thus prohibiting its further negotiation, (b) to constitute some bank as his agent for its collection, so that ownership will never pass to the bank, or (c) to denote the indorsee as a trustee for some other person. All these are restrictive indorsements (see 59), and illustrations follow in the above order: (a) Pay only to Smith Jenkins Pay to Smith Jenkins only By John Johnson, Treasurer SECONDARY LIABILITY (b) Pay to the order of The Traders' Exchange Bank For collection and credit John Johnson (c) Pay to the order of 17 Pay to the order of By John Johnson, Treasurer (5) The holder may wish to waive his rights to certain legal formalities as to the presentation of the paper for acceptance and payment, and notice thereof sufficient to render him liable for payment in case those primarily liable fail to pay (see 20, 24). The phrase "waiving protest is held to include waiver of presentment, notice, and protest. "Waiving notice" means only what it says and both presentment and protest (the latter if necessary) are required to hold the indorser (see 25, 27). One of the phrases may be written above any other form of indorsement. (6) Indorsement may be made subject to the fulfillment of some condition. The person required to pay the instrument does so upon demand without regard to the condition, but the one to whom it has been so indorsed is compelled to see that it is performed. The transfer of title to paper may continue indefinitely by indorsement, unless some indorser writes "Pay to the order of only." Then negotiability ceases. The omission of the words or order" from an indorsement does not restrict its negotiability. Paper payable to the order of two or more persons requires the indorsement of all of the persons, unless the persons are partners, or one person possesses the legal authority to indorse for all. 23. Secondary liability. The maker of a note is first responsible for its payment. The drawee who has become the acceptor of a bill of exchange is primarily liable for |