3. Notes, Bills Of Exchange, And Checks

The three kinds of negotiable paper that are best known in the commercial world are promissory notes, bills of exchange, and bank checks. A promissory note may be defined as a promise or agreement to pay a specific sum at the time therein limited, or on demand, or at sight, to a person named therein, or his order, or to bearer. No precise form of words is necessary; they are sufficient it they create an absolute promise to pay money. The person who promises to pay is called the maker; and the person who is to receive the money, the payee. A note payable to bearer can be transferred by delivery; if it is payable to order, it can be transferred by indorsement, which consists in writing the name of the person to whom it is payable across the back. The person who indorses is called the indorser; and the receiver, the indorsee. In all cases the owner is called the owner, or holder.

A bill of exchange may next be defined. Perhaps Byles's definition is as exact as any other; we know of no briefer. "It is an unconditional written order from A to B, directing B to pay C a certain sum of money therein named." The person who writes or draws the bill is called the drawer; the person to whom it is directed, the drawee; and after accepting, or agreeing to pay, the acceptor. The person to whom the bill is payable is called the payee. A bill which is payable only to the person therein named, is not transferable or negotiable; but if it is payable to him, or to his order, it may be negotiated. When this is done the payee becomes the indorser, and the person who receives it the indorsee.

In their general form a promissory note and bill of exchange arc quite different. To every bill there are three parties, - the drawer, drawee, and payee, while there are only two parties to a promissory note, - the maker and payee. Again, the acceptor of a bill, or person who agrees to pay it, is the real or primary debtor; but the form of a note is so changed by transferring it to a third person that it is very similar to a bill. The indorser then resembles the drawer; the maker, the acceptor; and the indorsee, the payee.

Hills of exchange are divided into two kinds, - foreign and inland. A foreign bill is drawn in one country and payable in another; an inland bill is drawn and payable in the same country. The several states of the Union are regarded as foreign in drawing bills. If the drawer and drawee of a bill reside in Pennsylvania, and the bill is payable in New York, it is foreign; but if the drawer and payee reside in Pennsylvania and the drawee in New York, it is an inland bill. The states in winch the parties live should always appear by the instrument, as the courts can not always inter their residence from the name of the city, town, or other place mentioned Lastly, a bank check may be defined. An eminent law writer has furnished this definition, "A check is .a brief draft or order on a bank or banking house, directing it to pay a certain sum of money" It resembles a bill of exchange, and is usually drawn payable either to bearer or to the order of some person. Indeed, it is so nearly like a bill that, in some states, when it is not paid the same steps must be taken to preserve the liability of the parties as are taken with a bill of exchange