This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 481.— Two partners in a trading firm wish to borrow a sum for use in their business, and give the bank a promissory note signed by both individually and made payable to the order of the bank. Would it afford the bank any greater security to have the note made to the order of the firm and endorsed by the firm to the bank?
Answer.—We assume the note is given by the parties jointly and not jointly and severally. If the two partners who give the note constitute the firm, their joint promise to pay gives the bank the same recourse as if the note were signed in the firm's name, but not a claim which, in the event of bankruptcy, would rank on their individual estates in competition with their individual creditors. If there were other partners the bank's position as holder of a note by two only would not be satisfactory, as it is not the obligation of the firm.
It is customary to require the note in such a case to be made by the firm and endorsed by the partners individually, and such a practice has undoubted advantages.