as fifty per cent? When must the transfer be made to be fully within the provisions of the law merchant? How may one receive paper after maturity and still have a good claim against a set-off? 1. In M N B v. H, 33 Minn. 40, the plaintiff sent for collection to one, Luce, its agent, certain notes indorsed as follows: "For collection account of Merchants' National Bank, St. Paul." Before their maturity Luce transferred them by indorsement to the defendant in payment of his own private debt. It was held that the defendant receiving them with the above indorsement uncanceled, and without making any inquiry, acquired them not merely negligently but in bad faith and could not protect himself as a bona fide purchaser against the plaintiff's superior right. To be a bona fide holder one must take paper without notice, either actual or constructive, of any fraud, defect of title, or illegality of consideration in the transferrer's hands. 2. In the 42d S. W. Rep. 1055, a certain note, which was one of a series of five and so mentioned on the face of the note, was transferred before maturity to one who knew that one of the notes of the series was past due and unpaid. It was held that the purchaser of the first mentioned certain note took it subject to the offset and defenses of the maker. 3. In M. R. Burr. 452, a bank note was stolen and came to the hands of the plaintiff, and he was held entitled to it. The Court of K. B. considered bank notes as cash, which passed as money in the way of business; and the holder, in that case, came by the note, for a full and valuable consideration, by giving money in exchange for it, in the usual course of business, and without notice of the robbery, and on those considerations he was entitled to the amount of the note. 4. In 3 G v. Burr. 1516; 1 Black, Rep. 785, a bill of exchange, payable to bearer, was lost, and the finder paid it to a grocer, for teas, and took the change. The Court laid stress on the facts that the holder came by the bill bona fide, and in the course of trade, and for a full and fair consideration, and that though he and the real owner were equally innocent, yet he was to be preferred for the sake of commerce and confidence in negotiable paper. 215. Introduction. Business necessity has contrived and put into use a number of contracts that are sometimes classed as quasi-negotiable. These contracts have not been afforded full negotiability largely because business necessity does not require it. The chief ones are letters of credit, bonds, warehouse receipts, and bills of lading. 216. Letters of Credit. A letter of credit is an instrument somewhat similar to a draft. It is payable at the convenience of the purchaser, and in the currency of the country where payable, but it is not primarily for negotiation. It is largely used by travelers. 1. How Used. For example, A wishes to travel in Europe. To take the currency (gold) of this country would subject him to the inconvenience of carrying it, to say nothing of liability to loss. Again, if required to change this currency to the currency of the country where he happens to be traveling, he would be charged with the exchange each time. Instead of doing this, he goes to his banker, before leaving home, and buys a letter of £1000X CIRCULAR LETTER OF CREDIT Ts Credit is in force until No gi25. £1,000 # Ste June 1st 1913. N. B. The bearer is advised to keep the list of correspondents apart from the Letter of Credit to prevent their being credit. This letter is directed to, and payable at different banks in the several countries he intends to visit. In the course of his journey and as he desires to use the money, he presents this letter at a specified bank and asks for a certain sum of money. The payment will be indorsed on this letter, and from this each subsequent bank can readily determine the balance due. 217. Traveler's Check. At the present time it is quite customary for the traveler to make use of drafts for small amounts which he procures from his bankers or from express companies. These are generally known as travelers' checks. They are less formal than the letter of credit. These checks are negotiable. When paid they are paid in full. 218. Bonds. A bond is an obligation in form and effect similar to an ordinary promissory note, but it differs in that the bond is under seal and under the law merchant is not negotiable. Its transfer is governed by statutory enactment, and according to the wording of the bond is negotiable or non-negotiable. Bonds are chiefly issued in case of money borrowed by a municipality or by a corporation. It is customary to provide a fund for the STATE OF IOWA JAI CITY RAILWAY COMPANY MORTGAGE FIVE PER CENT GOLD BOND The Tri-City Railway Company, a corporation duly organized and existing under the laws of the State of Iowa (hereinafter called the Company), for value received, promises to pay so she bearer, or in case of registration, to the registered holder hereof, the sum of ONE THOUSAND DOLLARS ($1000) in gold coin of the United States of America, of or equal to the present standard of weight and fineness, on the first day of September: AD. 1922, and also interest thereon in the meantime, from the first day of September AP. 1902, at the rate. of five (5) per cent per annum: payable semi annually in like gold coin, on the first days of March and September in each year upon the presentation and surrender of the annexed coupons as they severally become due, as the office of the German Trust Company, in the City of Davenport, State of Iowa. It is greed by the holder of this bond that no recourse shall be had for the payment of principu interest y Stockholicer or Director the Company, eishyously or through the Comp by virtue of any statufe or by the enforcement of assessmentomoshenise. This and is one of a series of two thousand (2000) bends numbered consecesively from one (1) to swo shows00, both live each of the denomination One Thousand Dollars 1000 and of the same date tenor and effect, and all equally secured by the Mergage of Dad of trust of even date hereth dely executed and delivered by the Company and conveying to man that Ompany of the sa Datenhor Jowa Buste all the remper except ce unimproved land in Set Cowa, particularly derbed in said Morgage personal property, property rights! ordinances, and franchises now held oned and which may hereafter be degued by the said This shall pass by delivery of transfer on bot kept for that puremat the office of said Gean Trust Company Registrar. After a registration of ownership as to the principal thereof, nosed hereon, no transfer shall be valid except upon said books unless the last preceding transfer be so she bearer. The coupons hereto annexed shall, in all cases, be payable to bearer, whether the bond isself is registered, or not!. This bond shall continue subject so registration, and to transfer so bearer at option of the holder. Each registration shall be evidenced by the memoranda of the Trustee upon the back hereof. This bond shall not be valid and obligatory unless authenticated by certificate endorsed hereon by said German Trust Company, Trustee, that it is one of the bonds secured by the aforesaid Mortgage or Deed of Trust. SEAL In Witness Whereof the Tri City Railway Company has caused shis bond so be signed by its President or Vice President and Secretary, and its corporate seal to be to red, and a fac simile signature of its Secretary to be impressed upon compons hereto annexed, on this first day of September 1902. Tri-City Railway Company. Attest: By Secretary COBERT FIDLAR & CHAMBERS LITHO DAVENPORT WA SBW MB Willey President |