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246. What is the law regarding the consideration for the contract made by a guarantor or surety?

When the contract of guaranty is made at the same time as the principal contract, the same consideration will support both contracts; when the contract of guaranty, called a collateral contract, is made subsequently, a new consideration will generally be necessary, but this new consideration is often only a nominal one.

247. What is the right of contribution between cosureties?

It is the right which one surety, who has paid all the debt or more than his share of it, has to recover from cosureties an amount sufficient to equalize the burden. This right may be exercised even though the sureties did not know of each other's liability at the time they entered into the contract.

248. What is the right of subrogation?

Subrogation is the substitution of one person in the place of another, the person substituted succeeding to the rights, claims and securities of the one for whom he is substituted.

249. When and against whom has the surety the right of subrogation?

When the surety is compelled to pay the instrument, he can demand all the securities held by the holder and he acquires the right to enforce them against the principal debtor. The surety has all the rights of the holder against the principal whose debt he pays.

Other Instruments. 250. What is a certificate of deposit?

It is a certificate issued by a bank to a person who deposits money for a short time for safe keeping, but who does not wish to become a regular depositor. It contains the bank's promise to pay the specified sum on the return of the instrument properly indorsed.

251. What is the nature of this certificate?

It is very much like a promissory note. It will be negotiable if drawn in proper form. It may contain a clause regulating the paying of interest on the loan. Checks can not be drawn against the deposit, and banks will generaily refuse to pay part of the certificate. These certificates are usually payable on demand but may be drawn payable some time after date.

252. What is a cashier's, check?

It is a check in ordinary form drawn by a cashier or teller in his official capacity upon his own bank. It is usually drawn in favor of the one who deposits money in order to procure the check. It is as good as a certified check and is often used in making remittances. It may be used instead of a certificate of deposit, and it is usually negotiable in form.

253. What is a bank draft?

A bank draft is simply a bank's order or check on another bank called its correspondent. It is used in making remit. tances, and is governed by the same laws as other drafts or bills of exchange.

254. What is a bill of lading? It is a written statement given by a carrier to the shipper of goods, acknowledging the receipt of the goods for transportation, and it also contains a promise that the goods will be delivered in good order. It is often called a shipping receipt.

255. How many bills of lading are usually made out for each shipment?

Three; one is given to the shipper, one is retained by the common carrier and one is sent to the consignee. The three bills should be identical, but in case of any variance, the shipper's copy is considered the correct one.

256. What use may be made of the bill of lading?

In some cases, bills of lading are taken to represent the goods actually shipped and a transfer of the bill is equivalent to a delivery of the goods themselves. They are not negotiable in the fullest sense, though they may be assigned or they may be transferred by indorsement and delivery. The bona fide purchaser, however, can not claim the goods from the true owner, where the bill was lost by him or stolen from him as he could in the case of a lost or stolen note. They are said to be quasi-negotiable.

257. What is the effect of a bill of exchange attached to a bill of lading?

The consignee is expected to accept the bill if a time bill

or to pay it if on demand. He gets no valid title to the goods until this is done. This draft may be negotiated.

258. What is a letter of credit?

It is a letter generally written by some prominent banker giving the person to whom it is addressed the authority to draw upon him for such amounts as he needs until the specified sum is reached.

259. What is the use of this letter of credit?

It is much used by travelers as it saves the necessity of carrying large sums of money. By presenting this letter at some bank in the country where he may wish money, he can get such sum as he may require and the bank which pays will indorse the amount on the letter and charge to the account of the bank or banker who issued the letter. The letter then amounts to an acceptance in advance and furnishes us with an example of a collateral acceptance.

260. What is a due bill?

It is a written acknowledgment of a debt. It may be payable in money or in goods and is non-negotiable. But when payable in money, there may be added to it a promise to pay to the creditor's order, or to him or to bearer, making it equivalent to a promissory note and it is then negotiable

261. What is the status of an "i. 0. u.?”

It is simply an acknowledgment of a debt and is nonnegotiable.

262. Are coupon bonds negotiable?

When coupon bonds have interest certificates attached, these certificates are usually payable to bearer, and, when they mature, they may be clipped from the bonds and negotiated.

263. How is a certificate of stock regarded ?

It is considered quasi-negotiable. The one who buys the stock is subject to any lien the company may have on the stock, even though he knew nothing of the lien.

264. How are express money orders or post office money orders regarded?

They are usually negotiable, but post office money orders. can be transferred but once.

THE LAW OF ACCOUNTS

on

"Good faith does not allow us to demand twice the payment for

the same thing." 1. What is an account?

An account is a collection of or more debits and credits under the same name.

2. What is the need of books of account?

Books of account usually have records of transactions in the regular order of their occurrence under their proper dates. They thus furnish good evidence in case of dispute and avoid also the probability of transactions being entirely forgotten.

3. What book is taken as evidence of the correctness of a transaction?

The book in which the transaction is first recorded, commonly called the book of original entry. Before this book is accepted in evidence it may be necessary to prove that it is the book of original entry and that the entries therein are complete and accurate and that they were made at or about the time when the transaction occurred.

4. What is the necessity for the rule admitting books of original entry as evidence?

For the purpose of enforcing the collection of just demands and the recognition of matters of fact to which account book entries point.

5. What preliminary or suppletory proof is essential to the introduction of books of account in evidence?

In New York and in some other states it must be first proven (1) that the party had no clerk, (2) that some of the articles charged had been delivered, (3) that the books produced are the account books of the party, and (4) that he keeps fair and honest accounts, of which proof must be made by persons who have dealt with him and have settled from those books.

In other states, books kept wholly by bookkeepers who could not remember anything about their entries, except that they were made in the usual course of business, are admissible.

Entries by deceased persons, made in the due course of business and pursuant to their ordinary duties, are admissible in evidence.

6. In what manner is the integrity of the books shown?

By calling at least two witnesses who have dealt with the owner and settled from the books in question.

7. Should the entries in the books be corroborated by other evidence?

They should be by the testimony of the party who made them, if he is living and can be called.

8. Can a book of original entry be made up from other sources as memoranda on slips of paper, etc.?

If such records be transferred within a reasonable time to some book for the purpose of having a permanent record, this book is regarded as a book of original entry and would be the proper book to submit in evidence.

9. What is the objection to submitting other books than those of original entry as evidence?

Mistakes and inaccuracies may occur in the transfer of accounts and time or intention may create changes in books other than those of original entry. As a result of this courts prefer to admit as evidence records made when the transactions were fresh in the mind of the contracting parties and these entries are found usually only in books of original entry.

10. What sort of record will be permitted as evidence and what will be excluded?

Any record of an actual transaction that has been executed may be introduced, while the record of something yet to be done, something not yet executed, will not be accepted as evidence.

II. In what manner must an account arise if it is to be proved by the books of the business?

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