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exchange, drawn for any amount which may be advanced to the letter-bearer. 18 In such a case the promisor will be bound and any person who takes a bill on the credit of the letter will have his remedy against the person upon whom the bill is drawn in the same manner and to the same extent as though the bill had been regularly presented and accepted. 19


$ 19. Bonds and coupons.

Bonds issued by the Federal government and by States, municipalities, corporations, and individuals have many of the attributes of commercial paper and are properly classified and treated as such. They are obligations issued to secure the payment of the sums named at the places and dates specified therein. They are generally drawn in negotiable form, are under seal, and pass by a mere delivery. They are sometimes issued with coupons connected therewith, which represent the interest due on the sums named in the bonds, and are payable at the times and places stated therein. Each coupon is in itself a separate instrument containing a distinct and independent promise to pay the sum named, and bears a closer analogy to a promissory note than does the bond. Coupon bonds payable to bearer possess all the qualities of negotiable paper.


It is not necessary that the holder of coupons, in order to recover on them, should own the bonds from which they

18. See Daniel on Negotiable In- Morris Canal & Bank. Co. v. Fisher, 9 struments (4th ed.), 8 1795.

N. J. Eq. 667, 64 Am. Dec. 423; Con19. Coolidge v. Payson, 2 Wheat. necticut Mut. L. Ins. Co. v. Cleve(U. S.) 66, 4 L. Ed. 185; Schimmel- land, C. & C. R. R. Co., 41 Barb. (N. pennich v. Bayard, 1 Pet. (U. S.) 264, Y.) 9. 7 L. Ed. 138; Townsley v. Sumrail, 2 The bond of a railroad corporation, Pet. (U. S.) 181, 7 L. Ed. 386; Boyce payable to A. B., or his assigns, is in v. Edwards, 4 Pet. (U. S.) 111, 7 L. Ed. the nature of commercial paper, nego799; Bayard v. Lathy, Fed. Cas. No. tiable by delivery under an assignment 1,131 ; Russell v. Wiggin, Fed. Cas. No. in blank, and is not a specialty, sub12,165; Cassel v. Dows, Fed. Cas. No. ject to equities between the corpora2,502; Kennedy v. Geddes, 8 Port. tion and the person named in the bond (Ala.) 263, 33 Am. Dec. 289; Second as the primary payee. Brainerd v. Nat. Bank v. Diefendorf, 90 Ill. 396; N. Y. & H. R. R. Co., 25 N. Y. 496. Beach v. State Bank, 2 Ind. 488; 21. Thompson v. County of Lee, 3 Vance v. Ward, Ky. 95; Scott v. Wall. (U. S.) 327, 18 L. Ed. 177; McLellan, 2 Me. 199; Wilson v. Cle- Mercer v. Hackett, 1 Wall. (U. S.) 83, ments, 3 Mass. 1; Banorgee v. Hovey, 17 L. Ed. 548; Gelpeke v. Dubuque, í 5 Mass. 11, 4 Am. Dec. 17; Woodward Wall. (U. S.) 175, 17 L. Ed. 520; v. Griffits-Marshall Co., 43 Minn. 260, New Albany, L. & C. Plankroad Co. v. 45 N. W. 433; Ulster County Bank v. Smith, 23 Ind. 353; Strauss v. United McFarline, 5 Hill (N. Y.), 432. Tel. Co., 164 Mass. 130, 41 N. E. 57;

20. Reid v. Bank of Mobile, 70 Ala. 'Mason v. Frick, 105 Pa. St. 162, 51 199; Carr v. Le Fevre, 27 Pa. St. Am. Rep. 191; Langston v. So. Car. R. 413; Craig v. Vicksburg, 31 Miss. 216; Co., 2 s. C. 248.

were detached.22

The coupons are drawn so that they can be separated from the bonds, and like the bonds are negotiable;23 and the owner of them can sue without the production of the bonds to which they were attached, or without being interested in them. 24 It has been held, however, in New York, that where coupons payable to bearer, refer to the bonds for the interest for which they are issued, and the bonds refer to the mortgage securing them, for conditions limiting or explaining them, the coupons are not negotiable.25


§ 20. Certificates of stock.

Certificates of stock of corporations are not contracts or promises for the payment of money, but are rather the evidence of the holder's title to his share in the franchises and assets of the corporation of which he is a member.26

As Daniels says:

“A share in the capital stock of a corporation is not a debt, nor money, nor a security for money, but is a species of incorporeal personal property. Such certificates, being mere evidences of title,

22. Thompson v. County of Lee, 3 that effect, on the part of the party Wall. (U. S.) 83, 18 L. Ed. 177. issuing it, appears on the face thereof,

23. Ketchum v. Duncan, 96 U. S. unless authorized by legislative enact659, 24 L. Ed. 868; Johnson v. Stark ment. Myers v. York & C. R. Co., 43 County, 24 Ill. 75; International Im- Me. 232; Jackson v. York & C. R. Co., provement Fund Trustees v. Lewis, 34 48 Me. 147; Augusta Bank v. Augusta, Fla. 424, 16 South. 325, 43 Am. St. 49 Me. 507. Rep. 209; Evertsen v. National Bank, 25. McLelland v. Norfolk So. R. Co., 66 N. Y. 14, 23 Am. Rep. 9, affg. 4 110 N. Y. 469, 18 N. E. 237, 6 Am. St. Hun (N. Y.), 692; County of Beaver Rep. 397, 1 L. R. A. 299. v. Armstrong, 44 Pa. St. 63; Philadel- 26. Edwards on Notes and Bills, phia & R. R. R. Co. v. Smith, 105 Pa. p. 61. St. 195; Nashville v. First Nat. Bank,

27. Daniel on Negotiable Instru. 60 Tenn. 402.

ments (4th ed.), $ 1708a. See Allen 24. Thompson v. County of Lee, 3 v. Pegram, 16 Iowa, 173. Wall. U. S.) 83, 18 L. Ed. 177; Mason A share in capital stock is a species v. Frick, 105 Pa. St. 162, 51 Am. Rep. of incorporeal, intangible property, in 191.

the nature of a chose in action. VanWhere the bond on its face says that stone v. Goodwin, 42 Mo. App. 39. the interest is to be paid on presenta- And see generally the cases cited tion of the coupons annexed, it is in Century Digest (Vol. 12. “ Corporaequivalent to making the coupons pay- tions," & 166), among which are the able to bearer. Rockmuhl v. Pitts- following: burgh, Fed. Cas. No. 11,982. But

United States.— Tappan Merwhere the coupons are in the hands chants' Nat. Bank, 19 Wall. (U. S.) of a person who took them after ma- 490, 22 L. Ed. 189. turity, they are subject to all equi- California.- Mattingly v. Roach, 84 ties which properly attached to them Cal. 207, 23 Pac. 1117. in the hands of the first holder. Union Connecticut.- North v. Forest, 15 Bank v. New Orleans, Fed. Cas. No. Conn. 400. 14,351.

Indiana.- Seward v. City of Rising In Maine it has been held that a Sun, 79 Ind. 351. coupon disconnected from the bond is Kentucky.— Field v. Montlinan, 68 not negotiable, where no intention to Ky. 455.


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are not negotiable in the same sense as other commercial paper, and the assignee thereof takes them subject to all equities existing against the assignor.28 They are sometimes termed quasi-negotiable instruments; but this term does not define their nature and is unsatisfactory,29 although the customs of stockbrokers and bankers, the manner in which they are framed, and the method used to transfer them, give them some of the characteristics and effects of negotiable instruments. 30

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Pennsylvania.- McKeen v. North- Bank of the State, 45 Mo. 528; Watampton County, 49 Pa. St. 519, 88 Am. son v. Sidney F. Woody Co., 56 Mo. Dec. 515.

App. 145. 28. Chicago, R. I. & Pac. R. R. Co. In New York it has been held that v. Havard, 7 Wall. (U. S.) 392, 19 certificates of stock in a business corL. Ed. 117. In this case the court poration, indorsed in blank, do not pos. said: Written contracts are not sess the quality of complete negotianecessarily negotiable, simply because bility accorded to commercial paper, to by their terms they inure to the the extent of making a transfer to a benefit of the bearer. Doubtless the purchaser in good faith for value certificates of stock were assignable, equivalent to actual title, although and they would have been so if the there was no agency in the transferword “bearer” had been omitted, but rer, and the certificate had been lost they were not negotiable instruments without the fault of the true owner, or in the sense supposed by the appel- had been obtained by theft or robbery. lants. Holders might transfer them, Knox v. Eden Musee Co., 145 N. Y. but the assignees took them subject 441, 42 N. E. 998. to every equity in the hands of the original owner.”

29. Daniel on Negotiable InstruCiting Mechanics'

ments (4th ed.), $ 1708; Lewis on Bank v. Railroad Co., 13 N. Y. 599.

Stocks, $ 82. Usages of stockbrokers to the con

30. While corporation stock certifitrary, notwithstanding, a certificate of shares of stock is not a negotiable in cates do not possess all the qualities strument. East Birmingham Land Co. of commercial paper, they do possess v. Dennis, 85 Ala. 565, 5 South. some of them, and innocent parties 317, 7 Am. St. Rep. 73, 2 L. R. A. 836. dealing in them will be protected upon See generally Sherwood v. Meadow analogous principles, and, in a proper Valley Min. Co., 50 Cal. 412; Bridge- case, will be entitled to compel recogport Bank v. N. Y. & N. H. R. R. Co., nition as stockholders, where power ex30 Conn. 231; Hall v. Rose Hill & ists to issue new certificates, or to inEvanston Road Co., 70 I11. 673; Clark demnity if there is not. Jarvis v. v. American Coal Co., 86 Iowa, 436, 53 Manhattan Beach Co., 148 N. Y. 652, N. W. 291, 17 L. R. A. 557; State v. 43 N. E. 68.


Parties and Their Capacity.

A. INCAPACITY OF PARTIES. $ 21. General Statement.

a. Early restriction on parties.
b. Power to contract.

§ 22. Infants.

a. Validity of contracts.
b. Obligation of persons dealing with infants.
c. Contracts for necessaries.
d. Commercial paper of infants.
e. Note or bill for necessaries.
f. Rights of infant as payee and indorsee.
g. Ratification after infant becomes of age.

h. What constitutes ratification. § 23. Persons of Unsound Mind.

a. In general.
b. Presumption of sanity; notice.
c. Contracts for necessaries.
d. Bills and notes by persons of unsound mind.
e. Indorsement by insane person; rights of innocent holder.

§ 24. Intoxicated Persons.

a. Contracts generally.

b. Promissory notes and bills of exchange. $ 25. Married Women.

a. Under the common law.
b. Enabling statutes.
c. Bills and notes of married women generally.
d. Indorsement by married women.
e. Reduction into possession.
f. Joint notes of husband and wife.

& 26. Alien Enemies.

B. PERSONS ACTING IN FIDUCIARY CAPACITY. § 27. Executors and Administrators.

a. In general.
b. Bills and notes by executors and administrators.

$ 37. Executors and Administrators - continued.

c. Rights of executors and administrators as to bills and notes of

d. Indorsement by executor or administrator.
e. Presentment for payment, notices, etc.
f. Acts of one of two or more executors.

g. Note due from administrator or executor. 1 28. Trustees, Guardians, Committees, etc.


a. In general.
b. Authority to make notes and accept bills.
c. Liability of person signing as agent.

(1) Statutory provision.
(2) Liability in general.
(3) How representative capacity to be indicated.
(4) Disclosure of name of principal in body of instrument.

(5) Parol evidence admissible to show intent.
d. Signature by procuration; effect of.
e. Liability of agent indorsing negotiable paper, or drawing bill of


f. Negotiable instruments by public agents. $ 30. Partners.

a. In general; what constitutes a partnership.
b. Authority of one partner to execute commercial paper in name of

c. Presumption in favor of validity of partnership paper executed by

one partner.
d. Commercial paper of trading and nontrading partnerships.
e. Rights of bona fide holder.
f. Signing firm name for accommodation or security.
g. Negotiable paper in payment of individual debts of partner.
h. Partnership paper in name of individual member.
i. Commercial paper given by partner for use of firm.
j. Liability of dormant partner.
k. Effect of dissolution.

1. Notice of dishonor; presentment. $31. Corporations.

a. Power to execute commercial paper.
b. Defense of ultra vires.
c. Power to make or indorse for accommodation.
d. Presumption in favor of validity of corporation paper.
e. Power of officers to issue commercial paper.
f. Power of officers to transfer commercial paper.
5. Form of notes and bills by corporations; form of indorsement.

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