9. Parties

Passing from the form of a note to the parties, it may be remarked that in order to bind those who enter into such engagements they must be legally competent. Not every one is legally competent to make and indorse negotiable paper. A minor can not make or indorse a note that will bind him. Yet he can by indorsing it transfer the title to the next holder, who would have the same rights against prior indorsees, if there were any, as though the minor was not in any way one of the parties.

See Craighead v. McLoney ,99 pa 211.

At common law a married woman can not sign promissory notes, but this right has been conferred on her in most states by statute. Her authority in them differs very considerably, and we can express the prevailing rule only in the most general way. She can give notes that will bind her and her property for all matters relating to her own interests as though she was unmarried, but her right to indorse is more restricted. If she is engaged in business and receives a note from a customer in payment for goods sold, or for her own use, and she indorses it for the purposes of having it discounted and using the money, she can be held on the indorsement; but if she indorses or guarantees the note of another for his benefit, so that he can raise money thereon, in many states, she is not liable. It may be added that almost everywhere the laws are construed very liberally in favor of married women who are engaged in business to enable them to obtain credit; also in favor of married women who have property to enable them to make contracts for its preservation, use, and sale.

10. Notes Are Often Made And Taken By Agents

Many questions have arisen concerning their authority to make them. A clerk in a store has no authority to borrow money and give notes therefor in his firm's name. An agent who is authorized to sell for cash can not take notes in payment. But the cashier or president of a bank can make such notes and indorsements as are within the general scope of the business, because they are the general executive officers, and represent the institution. They can accept a new note in settlement of an old one, or exchange securities for the accommodation of the makers or the benefit of the bank.

An agent, however, who lacks authority may nevertheless bind his principal if his conduct is ratified or approved. Agents are constantly doing things beyond their authority and without the knowledge of their principals, believing that their action will be approved by their superiors as soon as it is known. Again, ratification may occur in various ways. One of the most common and effective is to accept the benefit flowing from the agent's act, whatever it may be. If an agent should receive a note instead of cash in payment, and the money should be collected and retained by the principal, his ratification would be as complete as though he had expressly signified to his agent his approval. There is one important limitation to this principle relating to ratification. The principal is not bound by it unless he understands all that the agent has done. If he has taken a note outside his authority, and told his principal that the maker was a man of wealth and character, when he knows that his statemenl is false, his principal is not hound thereby, for the law presumes that he would not have ratified his agent's act had he told the truth. On the other hand, a principal who does not intend to ratify his agent's act, must repudiate it as soon as possible after learning what he has done.