USA > North Dakota > Stark County > Standard atlas of Stark County, North Dakota : including a plat book of the villages, cities and townships of the county, 1914 > Part 18
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An endorser, ga o rule, Is entitled to Immediale nolice In case the payor falls lo pay. This is the case In nearly all of the United Stales, as It has been a rule of the "law merchant" for many years, A few modifications, however, of the general "low mer- chapt" have been made by slatule In several of the Slates, relat- Ing lo negollable paper, In changing the endorser's Hlabllily by rendering his contract absolute instead of conditional, making ao- tice unnecessary unfess he suffers damage through want of It, or requiring a judgment to be first recovered before he con be held. In the absence, however, of statulory provisions of Ihts kind, and they exist only in a few of the States, It may be said that to hold endorsers they must have prompt notice of non-payment, and It may be said to be a general rule of the "Inw merchant" that all parties to negotiable paper as endorsers who are entitled lo notice are discharged by want of notice. The demand, notice and pro- test may be made according to the laws of the place where pay- able.
The term Protest Is applied to the official aet by an aullcorized person ( usually a Notary Public), whereby he affirms In a formal or prescribed manber In Writing that n certain bill, draft, check or other negotiable poper has been presented for acceptance or payment, as the case may be, and been refused. This, and the no- tice of the "Protest," which must be sent to all endorsers and parties 10 the paper is to notity them officially of Its fallure.
GUARANTY.
A "GUARANTOR" Is one who Is bound to another fer the fulfillment of a promise, or of an engagement, made by a thied party. This kind of contract Is very common, Ac- cording to the "statute of frauds" It must be In writing, and unless It is a sealed Instrument there must be a consideration to support It As a rule it Is not negotiable, so as to be caforced by the transferee as if it had been given to him by the gunrantor, but this depends upon the wording, ns, If It contains all the char- acteristics of a note payable to order or bearur. It will be held negotiable. A contraci of guaranty Is construed strictly, and If the liability of the principal be materially sarled by the act of the party guaranteed. witboul the consent of the guarantor, the guar- antor Is discharged. The guarantor Is also discharged If the llabil- Ity or obligation Is renewed, or extended by law or otherwise, un- less he in wrlung renews the comract. In the case of a bank Incorporated for twenty years, which was renewed for ten years more without change of officers, the courts held that the original sureties could not be held after the first term.
The guaranty can be enforced even Though the original debt cannot, as Is the case in becoming surety for the debt of a minor. A guarantor who pays the debt of the principal Is entitled to de- mand from the creditor all the securilles be holds, or of the hole or bond on which declares the debt; and. In some States, the cred- itor canaot fall back upon the guarantor until he has collected as much as possible from these securlies and exhausted legal remedies against the principal. If the debt or obligation be first Incurred and completed before the guaranty Is given, there must be a new consideration or the guaranty is vold.
A guaranty Is not binding unless the guarantor has notice of Its acceptance, but the law presumes this acceplance when the offer of guaranty ond acts of the party to whom It Is given, such as delivery of goods or extending credit are simultaneous. But an offer to guarantee a future operation does not bind the offerer unless he has such notice of the occeptoace as will afford him rea- sonable opportunity to make bimself safe. A creditor may give his debtor some Indulgence or accommodation witbout discharglag the guarantor, unless it should have the effect of prejudiclag the Interests of the guarantor, In which case he would be released. Generally a guarantor may, at any time, hay a debt and so, at once, have the right to proceed against the debtor. Where there has been fallure oa ths part of the principal and the guarantor is looked to, he must have reasonable notice-and notice Is decmed reasonable If it prevents the guarantor from suffering from the delay.
It Is, In many cases, difficult to say- and upon It rests the ques- 1loa of legal labilily-whether the promise of one to pay for goods delivered to another is an original promise, as to pay for one's own goods, in which case It need not be in Writing ; or a promise to pay the debt or guranty the promise of him to whom the goods are delivered, In which case it must be in writing. The questica generally resolver itself into this: To whom did the seller give and was authorized to give credit? This Is a question of fact and not of law. If the books of the seller show that he charged them to the party to whom he delivered them, It Is almost Impossible for him to hold the other party for It, but If on the other hand It Is shown that he regarded the goods as being sold to the party whom it is desired to hold, but delivered them to daother parly and It Is so shown on his books. It la not regarded as a guaronly. but an original or collateral promise, and would make The party liable, In general, a guarantor of a biti or aote Is not entitled to such strict and exact nollce as an endorser Is entitled to, bul only such notice as shall gave him from actual loss, as he can not make the want of notice his defense unless hs can show that it was unreasonably withheld and that he suffered thereby. There Is a marked difference In the effect of a guaranly of the "payment." or of the "collection" of a debt. In the first case, the creditor can look to the guarantor at any time; In the latter, the creditor must exhaust bis legal remedies for collecting it
ACCOMMODATION OF PAPER.
A N accommodation bill or note Is one for which the acceptor or maker has received no consideration, but has lent his nams and credit to accommodate the drawer, payee or holder. He is bound to all other parties just as completely Is if there were a good consideration, for, If this was not the case, it would be of no value to the party accommodated. Hs Is not allowed to set up want of consideration as a defense as against any holder for value. But he is not beund to the party wbom ba thua Accommodates, no matter how the instrument may be drawn.
IDENTIFICATION.
T HE tere act of identifying a party or making him known to a banker carries with it no llabilily on the part of the party who thus performs It, unless It can be shown there was fraud or collusion. Customers of banks are frequently asked to identify and make known to their own bankers, strangera who deaire checks or drafts cashed or other accommodallons. In some cases a mere Introduction is all that Is necessary, but only because the banker relles upon the honor and integrity of his cus- tomer, knowing that an Improper person would not be Introduced, for in a case of this kind the benk assumes all the risk. Generally speaking, however, It is an almost Invariabls rule with bankers, Aa It should be, to require their custemer to endorse all dratis or checks which are honored for the str. kui
dormer becomes personally liable to the bank if any or all of the drafts or checks prove worthless.
An endorsement which In frequently made by partles who are asked to identify others is to merely indicate that they know the
party to be the payee named In the check or that the signature of The payee or parly Is correct. This Is done by writing the words "Signature O. K." under The party's nnme and signing It This has the effeet of guamoleeing that The party's name Is a written and That It Is his proper signature, it does not guaran- tee that the check or draft Is good or will be pahl, but merely as expressed, that the signalure is correct and The anty Hability as- sumed ts That he will pay the amount In case the algnainre proves a forgery, Many banks, however. will not accept papers endorsed this way and justly so, for It throws upon them the burden of the rirk.
RECEIPTS AND RELEASES.
XY acknowledgihent That a sum of money has been paid Is a receipt. A receipt which rends "In full" Though ad- mitted to be strong evidence Is by no nicans legally conclu- sive. If the party algning it can show an error or mistake, Il will be admitted In his favor. Receipts for money will be helt open lo examinatich, ond the party holding it must oblde The re- mults of such examinni lon-the great ohm of the law being lo nd- minister strict justice. A recelpi may be of different degrees of explicitness, as the word "Pald" or "Received Payment" written on n blII. A "retente" Is simply a form of receipt, but Is more bind- Ing upon The parlles, Inasmuch as, If properly drawn, under seal, for a consideration. It is a complete defense lo any action based on tho debts er clalnus so released. Hereln, refenses differ from receip!ยป. A reteare Is In the nature of n writien contract and therefore cannot be controlled or contrailleted by evidence, unless on the ground of fraud. But If IIs words are ambiguous, or may have either two or more meanings, evidence Is receivable to de- termine the meaning.
INFANTS AND MINORS.
T HE Incapacity of a person lo make a valld contract mny arise from several causes, and the fact of being an Infant, or minor, is ono of them. The general rule of law may be stated as being that the contract of an infant or milnor Is not always vold, bul Is vollable, and In many enses special exception Is inade, giving volldity to their contracis for necessa- ries. By being voldabte but not vold In Themselves, means that the infant has the right to disavow and annul the contract, elther before or within a reasonable time after he reaches his majority, He may do this by word only, but n mere acknowledgment that the debt exists Is not enough, and It must be substantially a new promise.
AGENCY.
T HERE are a few well.seltled and important rules of law governing the matter of agents and agency, which every business man should understand thoroughly. The relalton of principal and agent Implies that the principal nets by and through the agent A principal Is responsible for the nets of ibe agent only when he has actually given full authority to the agent, or when he has by his words, or his nets, nr both, caused or permitted the person with whom the agent deals to belleve him clothed with this authorlly. This Is a point which Is not always thoroughly understood, but Il is a welf-settled principle of faw. There are two kinds af agents-general and special. A general agent Is one authorized to represent his principal in all his bust- ness, or In all his business of o particular kind, and his power Is limited by the wayal scope and character of the business he Is empowered to tranzacl. If he is given out as the general agent, The principal is bound, even If the agent transcends his actual au- thority, but does not go beyond the naintal and usual scope of the business.
On the other hand, a special agent Is one authorized to do only a specifie thing, or a few specified things, or a specified line of work. If this special agent exceeds his authority, It may be staled as an almost Invartable rule that Ibe principal Is not beund, be- cause the party dealing with the agent must Inquire for himself and at his own perli, Inlo the exlent and limits of the authorily given to the agenl. Especially Is thh the case where The party knew that the agenl had been or was engaged In attending to a particular and specified line of work connecled with the business of the principal. The party, however, Is not bound by any special reservations or limitations made secrelly by the principal of which he bad no reasonable or casy means of having notice, The authority of an agent may be givea by the principal, by writing or oral, or may be Implied from certain acis. Thus, If a person puts his goods Into the custody of another whose business It Is to sell such goods, he authorizes the whole world to belleve thal this person has them for sale; and any person buying them honestly, In this beller, would hold them. If one, knowing that another had acted as his agent, does not disavow the authority as soon as he conveniently can, but lles by and permits a person to go and deal with tho supposed ageat, or lose an opportunity of Indemnifying himself, this Is an adoplion and confirmation of the acts of the agent.
A principal is bound by the acts of an agent even after the revocation of ils agency, If such revocation has not been made public or is unknown to the party dealing with the agent. An ngent can generally be held personally Ilable If he Transcends his authority ; but this is not the case If The party with whom he dealt knew that the authority was transcended.
ORIGIN AND HISTORY OF BANKING.
I N general, banks may be sald to be credit Instllutions or dealers In credit. John Jay Knox once sold that "lhe cx- changes of the modern world are barler, effected by the indl- rect agency of the credit eystem, and banks and bankers are the machinery by witch this Is done." Metallle money and Ita representative, the circulating aote, are only The small change of "Trade" employed In tice settlement of balances and small purchases and payments. This fact Is Illustrated by the operations of the New York clearing house, The exchanges have been about 800,000 mil- Ilons of dollars during the past thirty years, while the balances paid In money have only been about 36,000 millions, or about 4 per cent. of the amount of the settlementa.
It bas always been claimed that the buslaess of banking orlg- Inaied with the Venetian money chungera who disployed their Wares and money's on the streets and thus supplied those In need of change. According to the most eminent authorities the earliest banking Insiltution In Europe was the Bank of Venice, which was founded in 111", ond was based upon a forced loon of the govern- ment Funds deposited In It could be transferred lo others on the books of the bank at the pleasure of the owner, but they could not be withdrawn
The perpelual annulties of The Brillsh deht are handled In o very similar manner at the present day. The Bank of Venice was continued until 1797. In 1401, the Bank of Barcelona Was formed. At a pertod much carller Thua this, the Jewish money- dealers had Invented what was known as "foreign bills of ex- change," but it Is sald that this bank was the Arst institution that made a business of negolinting and handling them. The Bank of Genoa commenced opernlion In 1407 and for centuries was one of the principal banks of Europe. Il was the first to Issue circulating notes-which were passed only by endorsement, not belng payablo lo bearer.
The Bank of Hamburg, established In 1619, was a hank of both deposit and circulation based on fine sliver bars, This bank, liks nearly all of That carly time, had, as a principal object, the protec- tion of the people from worn, sweated, clipped and plugged colnt, or colns of certain empires that were reduced In standard valuc. The remedy generally adopted was to lock up lhe debased and depre- clated coins and circulate tho credit granted for them. Various other banks sprang Into existence throughont Europe, many of Them being powerful government agencies, and In many cases exerted a Wide Influence in shaping The destinles of empires.
In 1694 The Bank of England was established, and there is no banking Institution In the world equal lo It In the management of national finances. The Bank of France was authorized In 1800. It is not a fiscal agent of the government as Is that of England. does not collect or Glaburse the revenues of the exchequer, but It creare, in the room or chicamung notes and other noceptances, have borno tho government infely through extraordinary needs.
It Is claimed that the first organized bank In the United States had its origin in the formation of n banking company without
chnrier Juno ISIh, 1780, by the chizena of Philadelphia, and frat nellon by Congress was lakon Juno 23, of The mme year, In refer- enco to this proposed isociation. Two years afterward a "per- petual charler" wns granled to the Bank of North America nl Philadelphia, in 1784 the Sinte ef Massachusalts Incorporated the Massachusetts Bank. Tho Bank of Now York was citartered In March, 1791, nlthough il had been doing business since 1784, under nrileles of association drawn by Alexander Hamilton. Most of theso Insillidlons nre still running and havo ficen converted Into na- lionnl banks, The Bank of the United States was organized In 1791. The most of tho stock was owned by the United Siales Gov- erminent but Inter the Governinent Interest was disposed of, and In 1843 tho bank fulled.
Slate banks were organized raphlly, and privalo banking firms sprang lolo existence and The business of banking assumed Keinenso proportions.
In 1563, the NATIONAL BANK SYSTEM Was adopted nnd In 1864 the National Bank Burenu of The Treasury Department was organ- Ized, The chief officer of which Is the conspiroller of The currency. In March, 1865, nn net was passed providing for a len per cent. Fax on notes of any person or Sinle bank Issueil for circuini ton, and making an exception of Nallonat banks. This had tho effect of lax- Ing the State bank circulation out of existence. As Ifie Nallonal banking system has proven one of The most eficient and sullsinelory mel hods the world has ever known, Il will be of Interest lo rovlew here some of Its principal features Under this act Nallonal benks may be organized by any number of persons not less Ihnn fivo. Not less Than one-third of the capital must he Invested In Unlled Stales bonds, upon which circulaling noles may be Issued cqual to 90 per cent. of Ikto par value of The bonds. These circuinting noles are re- celvable al par In the United States In all paymenla except for du- lies on Imports, Interest on the public debt and In redemption of the national currency. The National banks are required to keep a cer- tuin reserve; they are authorized to lonn money al the tale of In- lerest allowed in the various stales-when no role Is fixed by the jaws of The Slale, The banks may charge 7 per cent. Shareholders are held Individually Ilable, equably and ralably, for all debls of tho association lo the exicni of The amount of Fietr stock, In addition 10 The amount Invested Therein. The banks are required, before the declaration of a dividend, lo carry onc-tenth part of Their net profils of The preceding half year to a surpis fund until The samo shall amount to 20 per cent. of the capliol; and losses and bnd debly musi be dedueled from nel profis before nny dividend Is declared. A receiver may be appointed by the comptroller lo close up under his supervision The affairs of any national bank which shall full to keep good Ita Iawful money reserve or which may become insolvent. While there have been nallonal benk fallures, there has never been nny loss lo The people whatever on the circulation. A ault may ho brought for forfellure of the charter of a bank If the direclors shall knowingly vlotale The law; and In such cases They may be held llable In their Individual capnelly. There are other restrictions In the faw-such as, for instance, the prohibition ngninal lonning to any one berrower of more Then len per cent. of the capital ; or the holding of any real estale excepl such as Is required for banking purposes, or the granting of foans upon The security of the bank slock.
The nationni bank circulallon has been gradually growing less during The past len yenrs, as the United States bonds avallable are quoted so high above par and The rate of Interest so jow that there Is but Ihite profit to the banhs in It. All of the Slales havo laws regulating State banks and providing cerlain restrictions, but as the laws of The Various Slales are nol allhe it Is Impossible to give a general description of The motier That would apply to all the Sinles. The fows, however, provide for and require State bonke to held n cerlaln reserve, and at regular Intervals they mako full slalements as lo their condillon and their affalta are examined Inlo by certain State officials at frequent Intervals. The laws of all the Slales have reached o high degree of perfecilon In the method of reguinting and overseeing Slale banks, and the almost universal soundness and reliability of these Institutions reflect credit upon the laws under which They exisl.
CLEARING HOUSE.
THE Clearing-House Is The place where the exchanges of the the banks are made In all the principal cities of the world. The clearing-house system wna Arst established In London obout the beginning of the present century. Il was first In- troduced Into this country by the banks of The elly of New York organizing an nasociation, under the name of the New York Clear- Ing-House, which commenced operallons Oct. 11. 1853. At Ihnt time It conslated of fifty-two banks, bul Ave nf them were soon closed because of Inabilily lo meet lis requirements. Clearing Houses bavo since been established in nearly oll of the principal cliles of tha continent.
In all ellles a bank receives large amounts of bills and checks on other hanka, so that ol the close of each day's business every bank hay, In its drawers, varlous sums thus due It by other banks. It ts, In Ilke manner, Ilself The debtor of olher banks, which have during The day received Ils bills and checks drawn upon It. Prior to the establishment of the clearlag houso It was necessary for each bank, every morning, to make up lis account with every other bank. and fo zend Ijs porler or agent to present the bills ond checks so revelved to the debtor banks for payment. The balances were adjurted by payments In gold, which became so laborious, danger- ous ano complicaled Ihnl the balances wero sellled only weekly In- stead of dally-a plan that resufled In great risk and evif. This
was obylated by the clearing-house system, through which the set- tlemenis are fo simultaneously and quickly chfecled Ihat in New York lhe Transactions In ono single day have amounted to over $300,000,000, In adjusting which the exchanges were fetlled In The space of an hour. Besides saving a vast amount of work, book- keeping and expense, It enahled the banka by united aid to strengthen each other In thnes of excitement and financial panle.
The following Is The manner In which the settlemente are mado in about all the clenring-houses of Ihts country . The clearlug-room Is provided with a continuous line of desks, one for each bank that Is n member of The association, each desk benrine che name and number of the bank. Each bank Is represented every morning, at the hour fixed for settlement, by two clerks, one n messenger who
brings with him the checks, drafts, elc., That his bank has received during the day previous upon the other banks-called The "ex- changes," nnd these are assorted for cach hank and placed In en- velopes. On The oniside of each envelope la a slip on which aro Ilsied the amounts of the vorlons llems which Il contains. Tho mes- sengers take their places In a line outsido lhe row of desks, ench op- posile the desk assigned lo his bank, while at cach desk is a clerk with s sheet containing The names of all the banks In the snme order as the decks, with The aggregate amounts which his bank's messenger has against each bank. Just previous to the hour fixed for making the exchanges the monager laltes his position and calls Ihs house lo order. At a signal the bell rings and ench messenger moves forward to the desk next to his own and delivers tho en- velope containing tlte checks, etc., for the bank represented at that desk In The clerk at that desk, together with a printed list of the banka In the same order, with tho amount opposite each hank. Tho clerk receiving || signs and returns It to the messenger, who tm- medlalefy passes on to the next desk; then lo the next, and so on until he has made a complete circull and has ngain reached tho desk of his own bank-Ifie starting point. All The other messen- gers moving in the same manner, cach messenger has, by this meang, vislled every bank and delivered lo each everything his bank held for II, taking a recelpl for the same; nnd at The anme time each bank has received all the exchanges that every other bank had against It. This operation, even In the greatest clearing-houses, only consumes from ten to fifteen mlaules,
This enables the banks to know at once the exact balance for or oghinat il, as the clerks Immediately enter from tho slips on their own sheets Ike aggregate amount from cach bank, and tho differ- enco between The total amount brought by them, which at once mowi ory purenice due to or from the clearing house to each bank. This is reported to their banks, and the balance in paid to or drawn from the clearing house, thus at once settling the accounta between oll the banks. Tho lists aro "proved" carefully and cortaln fines are lald for all errors, tardiness, etc.
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