seem to constitute prima facie evidence that A purchased the house for residence purposes and not for re-sale, in which event, as above stated, the loss on the sale would not be deductible. In 1911, before A's death, B made demand for payment, payment was refused and suit brought. Could B recover? Answer: This instrument is a non-negotiable promissory note, lacking negotiability because it is not payable to order or to bearer. It contains a promise to pay money and acknowledges a consideration, namely, services rendered by B. It is therefore the written evidence of an ordinary simple contract. As no time is stated at which the maker promises to pay B the sum of $10,000, this sum is therefore payable on demand. B, having made demand and payment having been refused, can maintain his suit on this note and recover thereon. The words "and in the event of my death I direct the payment of this sum out of the funds of my estate" are mere surplusage and have no effect one way or the other on the contract contained in the preceding words of the note. Question 2. G, holding himself out as the representative of one Lieut. X, head of a navy tuberculosis camp, obtained from A a cheque for $100 to the order of Lieut. X as a contribution to the camp fund. Gendorsed the cheque with the name "Lieut. X" and obtained the cash thereon from B. A later ascertained that there was no such person as Lieut. X and that there was no such camp fund as was alleged by G. A therefore directed his bank to refuse payment of the cheque when presented. This direction the bank carried out. B thereupon brought action on the cheque to cover from A. Could he succeed? Answer: This check being payable to Lieut. X, and there being no such person, the check was payable to the order of a fictitious payee. Ordinarily a negotiable instrument payable to a fictitious person is payable to bearer and does not require indorsement to transfer title, title being transferable by mere delivery. In this case, however, A executed the check in the belief that the payee, Lieut. X, was an existing person. Section 9 (3) of the Negotiable Instruments Law, provides that an instrument is payable to bearer "when it is payable to the order of a fictitious person and such fact was known to the person making it so payable." In that A believed Lieut. X to be an existing person, it must be assumed that he intended the check to be transferred or cashed only by indorsement. There being no such person as the payee, Lieut. X, and the check not being bearer paper, there is no way in which it can be transferred at all. Furthermore the indorsement by G in the name of Lieut. X is a forgery. In either case, B could get no title and cannot recover in his action on the check against A. Question 3. What is the effect when a holder of a cheque procures its certification by the bank on which it is drawn? Answer: The effect is to discharge the drawer and all indorsers from liability thereon. "Where the holder of a check procures it to be accepted or certified, the drawer and all indorsers are discharged from liability thereon." (Negotiable Instruments Law, Section 188.) The effect as to the bank is to render it primarily liable on the check. (Section 187.) Question 4. A opened an account with the X Trust Company in November, 1919, by a deposit of $75,000. On December 29, 1919, the bank paid out of the account $5,000 on a cheque on which A's signature had been forged. On January 2, 1920, A receipted for a statement of the account by the bank and for 18 vouchers or canceled cheques attached thereto, one of which was the forged cheque. As A customarily delegated to his secretary the work of examining statements and keeping the cheque-book, the forgery was not immediately discovered. In March, 1921, the forgery was discovered by A through the report by the bank of an over-draft of the account. The bank refused to make good on the forged cheque and A sued. Did the bank have any defense? Answer: The general rule with reference to forged checks is that the bank is charged with knowledge of the genuine signatures of its depositors, and payments made by the bank on forged checks are made at its peril and cannot be charged against the depositor's account. The depositor, however, may under certain circumstances be estopped from holding the bank liable in such cases. Where, as is the general rule and as in the present case, the bank submits a monthly statement of his account to the depositor, it is the duty of the depositor to notify his bank within a reasonable time of any errors therein. The object of this is to give the bank the opportunity to rectify such errors and protect itself from loss. Here, the bank was not notified of the forgery until upwards of one year after the receipt by A of his December statement. The bank is therefore entitled to claim that its rights have been prejudiced and that it had been prevented from taking measures to apprehend the forger and endeavor to secure restitution. The fact that A delegated to his secretary the work of examining the bank statements and keeping his check-book, is of no avail as a defense to A. A is chargeable at law for the manner in which his secretary performed his duties. The bank is not liable and A must bear the loss. CONTRACTS Question 5. Under the Uniform Sales Law what remedies may the buyer invoke, at his election, for breach of warranty? Answer: Under Section 69 of the Uniform Sales Act, the buyer may at his election: (a) Accept or keep the goods and set up (c) Refuse to accept the goods, if the prop- |