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(2) “A statement of the transaction which gives rise to the instrument.
"But an order or promise to pay out of a particular fund is not unconditional."
A mere indication of a fund out of reimbursement may be made or an account to be debited does not make order or promise conditional. Bank of Kentucky v. Sanders, 3 A. K. Mar. 184; Early v. McCart, 2 Dana 414; Biesenthall v. Williams, 2 Duv. 329. Nor does the fact that the obligation is secured by a lien. Duncan v. Louisville, 13 Bush 278; McCarty v. Louisville Banking Co., 100 Ky, 4, 37 S. W. 144, 18 K. L. R. 569; Hargis v. Louisville Trust .Co., 30 S. W. 877, 17 K. L. R. 218. But an order or promise to pay out of a fund is conditional. Nichols' Adm'r. v. Davis, 1 Bibb 490; Mershon v. Withers, 1 Bibb 503; Curle v. Beers, 3 J. J. Mon. 170; Carlisle v. Dubree, 3 J. J. Mon. 542; Strader v. Bachelor, 9 B. Mon. 168. The rule is: “It is an essential quality of a good bill that it attach to itself the personal responsibility of the drawer, and be not drawn on the credit of any particular fund.” Nichols v. Davis supra. Of course the same rule applies to a promissory note, in which case the maker must be personally liable and not a particular fund. Or to put it in other words, does the note or bill
carry the personal liability of the maker or drawer or only the liability of a particular fund?
Of course a statement in the instrument of an illegal transaction would be notice thereof to every holder.
§ 4. What Is a Determinable Future Time.--"An instrument is payable at a determinable future time, within the meaning of this act, which is expressed to be payable:
(1) “At a fixed period after date or sight; or
(2) “On or before a fixed or determinable future time specified therein; or
(3) "On or at a fixed period after the occurrence of a specified event, which is certain to happen, though the time of happening be uncertain.
"An instrument payable upon a contingency is not negotiable, and the happening of the event does not cure the defect."
An instrument payable on a contingency is not negotiable. Nichols v. Davis, 1 Bibb 490; Strader v. Bachelor, 8 B. Mon. 168; Early v. McCart, 2 Dana 414.
§ 5. Provisions Affecting Negotiability.--"An instrument which contains an order or promise to do an act in addition to the payment of money is not negotiable; but the
negotiable character of an instrument otherwise negotiable is not affected by a provision which:
(1) "Authorizes the sale of collateral securities in case the instrument be not paid at maturity; or
(2) "Authorizes a confession of judgment if the instrument be not paid at maturity; or
(3) “Gives the holder an election to require something to be done in lieu of payment of money.
“But nothing in this section shall validate any provision or stipulation otherwise illegal."
As to vendor's and mortgage liens see note to Section 3.
While an authority to confess judgment, given before an action is instituted, is void in Kentucky (Ky. Stat. 416), yet such a provision in an instrument neither makes the instrument void, nor, by the very words of the above section, makes it non-negotiable. And here it may be said that this act, where it merely states that any particular provision in an instrument shall not affect its negotiability, does not make that valid which otherwise is illegal; nor on the other hand does a law, which makes certain contracts void, affect the negotiability of an instrument otherwise complete
and legal, except where it is denounced by a statute as void. See note to Section 57.
§ 6. Negotiable Character, When Not Affected.—"The validity and negotiable character of an instrument are not affected by the fact that:
(1) “It is not dated (Secs. 13, 14, 17); or
(2) “Does not specify the value given (Secs. 24, 190), or that any value has been given therefor; or
(3) "Does not specify the place where it is drawn or the place where it is payable (Secs. 13, 14); or
(4) "Bears a seal; or
(5) "Designates a particular kind of current money in which payment is to be made (Sec. 1, Sub. 2).
“But nothing in this section shall alter or repeal any statute requiring in certain cases the nature of the consideration to be stated in the instrument.”
The date is a material but not an essential part of a negotiable paper. Stout v. Cloud, 5 Litt. 205. As to particular kind of money, ser Hord v. Miller, 2 Duv. 103; Ledford v. Smith, 6 Bush 129; Glass v. Pullen, 6 Bush 346; Murray v. Meagher, 8 Bush 574.
As to statement of consideration, see note to Section 57 on “Peddlers' Notes."
§ 7. When Payable on Demand.—“An instrument is payable on demand:
(1) "Where it is expressed to be payable on demand, or at sight, or on presentation; or
(2) "In which no time for payment is ex
“Where an instrument is issued, accepted or endorsed when overdue, it is, as regards the person so issuing, accepting or endorsing it, payable on demand (Sec. 45)."
This abolishes former distinctions between paper payable at sight and on demand.
§ 8. When Payable to Order.—“The instrument is payable to order where it is drawn payable to the order of a specified person or to him or to his order. It may be drawn payable to the order of:
(1) “A payee who is not maker, drawer, or drawee; or
(2) "The drawer or maker; or
(4) "Two or more payees jointly (Sec. 41); or
(5) “One or some of several payees; or
(6) "The holder of an office for the time being.
"Where the instrument is payable to order, the payee must be named or otherwise indicated therein with reasonable certainty."
Payable to order of one or several payees.