ACCOMMODATION INDORSER. — Con.
An accommodation maker is liable to
the holder for value, notwithstand-
ing the knowledge of such holder,
that the party was an accommoda-
tion party, and an antecedent in-
debtedness of the accommodated

party to the holder constitutes a
valid consideration for the instru-
ment. 141a.

It is not fatal to a note that it is
made payable to order, without
naming any payee, but the holder
is authorized to fill in the name of
his indorser as payee, and where an
indorsee takes a note before ma-
turity and without notice, as col-
lateral security to an antecedent in-
debtedness, he is a bona fide holder
for value. 163a, No. 1045.
An accommodation indorser, who be-
ing notified two days before the ma-
turity of the note that the other in-
dorsers, one of whom was the payee,
and the maker would be unable to
pay the note, went to the bank and
purchased tue note, was an innocent
holder for value, notwithstanding
the fact that there were certain
matters contained in a written agree-
ment between the maker and the
payee, under the terms of which the
note had been given, the payee hav-
ing represented to the accommoda.
tion indorser that this was a con-
tract of sale, and even had the ac-
commodation indorser read this
agreement, there was nothing in it
which would invalidate his acting
upon the note as he did. 168a, No.
1048.

ACCOMODATION NOTE:

A subordinate officer of a trust company
was held liable on his note payable
to a trust company, which note was
made in a large amount as an ac-
commodation to the president of the
company, who was indebted to the
company. No. 1019, p. 94.

The purchaser for value of a promis.

sory note may recover of the ac-
commodation maker, although such
purchaser took the same as collat-
eral security for an antecedent in-
debtedness, and notwithstanding the
invalidity of the note between the
original and the immediate parties.
The Negotiable Instruments Law
provides that "an antecedent or
pre-existing indebtedness constitutes
value." No. 1037.

ACCOMMODATION PAPER.

Where a corporation issues a note for
the accommodation of another com-
pany, and restricts it use to col-

ACCOMMODATION PAPER- Cont'd.

lateral security, and it is after-
wards negotiated, the holder repre-
senting that he is the owner, and
the purchaser had notice that its
use was restricted, or sufficient
knowledge of the facts to put him
on inquiry, the purchaser is not a
bona fide holder. 160a, No. 1044.
The president of a bank, in order to
increase the reserve without in-
creasing the liabilities, executed his
personal note to another bank, the
proceeds of said note were placed
to the credit of the first bank.
The bank, from which the money
was borrowed, failed. In an action
by the president to offset the de-
posit against the note, he was not
allowed to do so, anu a judgment in
favor of the receiver of the bank
which failed, was directed against
the president upon his personal
note. 128a, No. 1032.

Delivery is necessary to the valid in-
ception of a note. Where an ac-
commodation indorser pays a prom-
issory note to a bona fide holder, he
becomes subrogated to the rights of
such holder and may sue the prior
parties on the note. In the absence
of proof of a contract to the con-
trary, parties on negotiable instru-
ments are liable to each other in
the order in which they have placed
their names upon the paper. 83a,
No. 1020.

ACCOUNTINGS:

A partnership agreement provided
that a partner should be allowed in-
terest on the capital contributed by
him. On the day that the partner-
ship terminated by limitations, a
statement on the books of the part-
nership showed the capital contrib
uted by one partner. Co-partners
on the said partners retiring,
formed a new partnership and used
the retiring partner's capital.
Held, that interest on the retiring
partner's capital was a proper al-
lowance by the referee in an ac-
counting proceeding. 105a, No.

1025.

ACCORD AND SATISFACTION:
Where a buyer of rubber sent a check,
in settlement of invoice of a certain
date and wrote a letter stating that
the seller's representative had war-
ranted that the rubber would not
shrink and that if it did shrink the
buyers were not to pay more than a
certain price, and that it had shrunk
and that this check was for the bal-
ance due the sellers, there had been

ACCORD AND SATISFACTION - Con.

no accord and satisfaction because
the check had not been sent in full
settlement of the matter in contro-
versy. 226a, No. 1064.

AGENCY.

A note, which is given for a valuable
consideration and indorsed before
maturity in good faith and which
the holder takes without notice of
any equitable defense, entitles the
holder to judgment and it is no de-
fense that one acting as agent for
the indorsee in negotiating the in-
dorsement knew there was a failure
of consideration. 155a, No. 1041.
The master of a sailing vessel drew
a draft to pay for certain obliga-
tions of the vessel for a voyage. The
owners of the vessel refused to
honor it on the ground that the
master had no authority to issue it.
The holders of the draft being un-
successful in a suit on the draft
were allowed to recover on the
theory of money had and received.
The owners could not retain the
benefits and refuse payment. 209a
If the authority of one partner to act
for another be definitely expressed
in a copartnership agreement and
the limitation of this authority is
known to a person dealing with the
firm, he is bound by it, although
it is the general rule of law that
members of trading copartnerships
have implied authority to pledge the
credit of the firm by the issuance of
negotiable instruments in further
ance of the copartnership business
and this authority may be assumed
by the person dealing with the firm;
but actual knowledge of the limita-
tions of the authority of one part-
ner to act for another is binding.
234a, No. 1066.
The doctrine that an agent disposing

of the property of his principal,
without authority, transfers no title
as against the principal, does not
apply to currency, or negotiable

instruments without restrictive in-
dorsement, where they have come
into the hands of a bona fide pur-
chaser for value, without notice.
It must be shown that he knowingly
partakes in the breach of trust, to
charge a third person as a party to
misappropriation of a trust fund.

251a.

AGENCY OF PARTNERS:

Partners are liable after dissolution
upon all obligations existing at the

AGENCY OF PARTNERS - Continued.
time of the dissolution. An admis-
sion by one partner, made after dis-
solution, of the existence of a debt,
not binding upon the other part-
ners. The agency of one partner to
act for another ceases upon disso-
lution. A promissory note made by
one partner for the debt of the firm
does not operate as payment and re-
lease another partner unless the
creditor agrees to accept it as pay-
ment and release the other partner.
227a, No. 1065.

AGENTS:

A bank was the holder for value of a
promissory note which had as an
accommodation indorser the signa-
ture of a corporation. The corpora-
tion pleaded that no consideration
passed to it and that its name was
indorsed without authority by its
manager as an accommodation; held
that this plea stated a good defense.
245a.

ALTERATION:

An alteration of a note by a payee,
which changes the place of payment,
is a material alteration and if it is
done without the knowledge or con-
sent of the maker and subsequent
to the execution by the makers, it
invalidates the note as against the
makers and a purchaser is put upon
inquiry, who takes a note with a
material alteration, apparent upon
its face, and where the note is pay-
able to an assignee. 213a, No.
1058.

An accommodation indorser was held
liable to a holder for value on a
note where through his carelessness
the note was left in such a condition
that it was easily altered, made to
read $375 instead of $75. 12a, No.
999, p. 7.

ASSIGNABILITY:

A bill of lading which has stamped
upon its face not negotiable unless
delivery is to be made to consignee
or order," is not negotiable in Min-
nesota, but it is assignable, and
where the railway company delivers
the goods represented by the bill of
lading without requiring the bill to
be produced, it does so at its peril.
No. 1034.

ASSIGNEE:

A note transferred to the cashier of a
bank, without the official designa-
tion added after the name of the
cashier is not an indorsement to the
bank, notwithstanding the provi-

The principal of law that knowledge
of the agent will be imputed to the
principal does not apply where the
agent is acting without the scope of
his authority or adversely to his
principal's interest. 206a.

AUTHORITY OF CORPORATE OFFI-
CERS:

In a suit by the second indorser of a
promissory note the maker cannot
set up the defense that the payee
and first indorser, which was a cor-
poration, was really not a corpora-
tion, and that the vice-president had
no authority to execute the corpora-
tion's indorsement. Furthermore, it
is unnecessary for the second in-
dorser who was a pledgee of certain
security, to look first to his secur-
ity, before suing the maker. 103a,

No. 1024.

BANKRUPTCY:

A trustee in bankruptcy stands in the
shoes of the bankrupt and where the
bankrupt had pledged certain prop-
erty, but there was in reality no
change of possession, and the pledgee
issued warehouse receipts, the hold-
ers of the warehouse receipts had
no equitable lien taking precedence
of the title of the trustee to such
property. 3a.

BANKS AND BANKING:

Creditors, who are also directors and

officers of an insolvent banking cor-
poration, where the insolvency is
due to their mismanagement and
neglect, were postponed as creditors
until debts of all other creditors had
been paid and said officers and di-
rectors were liable to creditors and
stockholders for loss occasioned by
their gross mismanagement and
neglect. No. 1016, p. 71.

BANKS AND BANKING - Continued.
A subordinate officer of a trust company
was held liable on his note payable
to the trust company, which note
was made in a large amount as an
accommodation to the president of
the company, who was indebted to
the company. No. 1019, p. 94.
Where a depositor of a bank deposits
the check of another depositor
drawn upon the same bank, and the
accounts of both depositors are
overdrawn at that time, and the
bank credits the amount of the
check to the account of the one
depositing it, both upon the pass
book of the depositor and the ledger
of the bank, and the bank discovers
later in the day that the account of
the drawer is overdrawn, the bank
may charge the check back to the
account of the depositor, the payee,
and it does not necessarily, by re-
ceiving the check and marking it
paid, receive the same as cash, but
received it for collection. 153a, No.
1040.

A bank is presumed to know the sig
nature of its depositors. But where
the depositor so negligently draws a
check that it can be easily altered,
the bank is not liable to the de-
positor and drawer for the difference
between the amount of the check as
originally drawn and the amount to
which it has been raised. A bank,
however, if the check has not been
negligently drawn, is liable to the
depositor if it is raised. 157a, No.
1042.

A bank which, in order to deceive a
bank examiner, discounts the note
of the president of another bank and
places the proceeds to the credit of
his bank in a special account not
subject to check, held not liable to
the receiver of such other bank as
for a conversion, because the presi
dent drew his check on the other
bank and deposited it to his credit
in his own bank and by correspond-
ing check removed certain notes ob-
jected to by the bank examiner.
230a.

The liability of a bank, with which a
check is deposited for collection, for
negligence in not collecting it, and
not giving notice of non-payment
until after the bank on which it was
drawn suspended payment because
of insolvency, is limited to the
amount which the depositor will
lose by reason of such negligence
and the depositor must allege and
prove his actual damages. 269a,
No. 1072.

BANKS AND BANKING—Continued.

Relation of a bank and depositor is
that of debtor and creditor. A de-
posit of moneys belonging to a
mother in joint names of mother
and her son does not create the son
the owner of the deposit on the
death of the mother, unless a dona-
tive purpose on the part of the
mother is shown. 254a.
The penalty for usury as against
State banks and private bankers in
the State of New York is the same
as that provided by Congress en-
forceable against national banks,
viz., a forfeiture of the interest and
twice the amount of the interest
may be recovered by the person
paying it, provided the action is
brought within two years. In New
York promissory notes void for
usury as between the original par-
ties, are enforceable when discovered
by a State bank for value before
maturity. 61a.

The president of a bank, in order to
increase the reserve without increas-
ing the liabilities, executed his per-
sonal note to another bank, the
proceeds of said note were placed to
the credit of the first bank. The
bank, from which the money was
borrowed, failed. In an action by
the president to offset the deposit
against the note, he was not allowed
to do so, and a judgment in favor
of the receiver of the bank which
failed, was directed against the
president upon his personal note.
128a, No. 1032.

Trust funds deposited in a bank do
not constitute a general lien on as-
sets superior to that of general cred-
itors. It must be shown that the
receiver or person having charge of
the assets of an insolvent bank has
in his hands some of the trust funds

or property purchased by such
funds, or into which such funds
have been changed or invested. No.
1036.

The indorsement of a bill of lading to
a bank and the delivery to it of a
sight draft transferred the title of
the property represented by the bill
to the bank, as against an attach-
ing creditor of the indorser of the
bill. 113a, No. 1028.

BILLS AND NOTES:

An accommodation indorser was held
liable to a holder for value on a
note where through his carelessness
the note was left in such a condition

BILLS AND NOTES-- Continued.

that it was easily altered, made to
read $375 instead of $75. 12a, No.
999, p. 7.

A note payable on demand, at a speci-
fied place, is due forthwith and the
plaintiff need not prove any demand.
35a.

A creditor received the check of a
debtor, residing in a distant town,
on October 4. The check was de-
posited by the creditor with his
home bank, and forwarded by it to
the bank upon which it was drawn.
The latter bank did not acknowledge
its receipt, and on October 15 failed.
No inquiries were made by the cred-
itor or his bank why the check was
not acknowledged. Held, that the
creditor must bear the loss as dili-
gence has not been used in present-
ing the check for payment. 14a,
No. 1001, p. 11.

An indorsee of a negotiable promissory
note, taken as collateral security for
a loan, made simultaneously, is a
holder for value, and is not affected
by any defenses which might be set
up by the maker against the payee,
provided he had no notice of them,
and the note was taken before its
maturity. 11a, No. 998, p. 5.
Executors have no power to bind the
estate which they represent, by the
contract of indorsement, and where
the executor took up from a bank
the note executed by his testator,
after its maturity, and transferred
it to another, the indorsement of the
testator was thereupon terminated.
27a, No. 1009, p. 40.

The Negotiable Instruments law pro-
vides that an accommodation in-
dorser of a check is liable to the
holder for value, notwithstanding
the fact that the holder knew that
the indorser was an accommodation
party. A bank which deducted from
the accommodation indorser's ac-
count the amount of a raised check,
has properly deducted the difference
between the original amount and the
amount to which the check was
raised, but should not deduct the
original amount of the check.
No. 1010, p. 42.

31a,

The extension of the time of payment
of a promissory note discharges the
sureties, who had no knowledge of
such extension, and did not consent
to it. Parol evidence could be in-
troduced to show that the two in-
dividuals who signed the note were
sureties, although apparently joint
makers. la, No. 996, p. 1.

BILLS AND NOTES - Continued.

The transferee and holder of a draft
is not an innocent holder for value
where it is shown that in considera-
tion for the draft it extended credit
to the drawer, and parted with no
money or other thing of value. 18a,
No. 1003, p. 22.

The payment of interest on over-due
instalments of interest does not con-
stitute usury. The debtor can avoid
such interest on interest by paying
the interest when due. A note and
mortgage executed at the same time
in one transaction, and the mortgage
referring to the note, they should be
considered together in determining
their meaning and effect. 32a, No.
1011, p. 44.

The Negotiable Instruments Law pro-
vides that a note must be payable

to bearer or order to make it ne-
gotiable, and where it is not so made
payable, an innocent purchaser for
value, before maturity, cannot re-
cover in case there was no considera-
tion passing from the original payee
to the maker. An equitable defense
may be set up by the maker as
against such holder. 16a, No. 1002,
p. 15.

The bank is a bona fide holder of a
note given for indebtedness to the
bank where it applies the proceeds
of the note as a credit to the debtor
and surrenders bills of lading
pledged as collateral, and where the
bank refuses to accept a renewal
note, acceptance is not shown by the
fact that the bank attached to the
original note the renewal note, at
the time of making demand, so that
both could be restored to the maker
on payment. 22a, No. 1005, p. 32.
The drawees of a draft had previously
written the bank cashing the draft
that they would honor a certain
drawer's draft for $1,000 on hogs or
cattle and should he want more have
him "phone" and they would try to
handle his stock. Held, there was
no obligation to honor any draft of
the drawer except one for price of
stock shipped by drawer. 26a, No.
1008, p. 37.

The Negotiable Instruments Law pro-
vides that every holder is deemed
prima facie to be a holder in due
course, but when it is shown the
title of any person who has nego-
tiated the instrument was defective,
the burden is on the holder to prove
that he or some other person under
whom he claims acquired the title
as a holder in due course. No. 1018,
p. 92.

BILLS AND NOTES-Continued.
The treasurer of a corporation has no
authority by virtue of his office to
execute the corporation's note, and
where a note was accepted under
circumstances which should have
put the holder on inquiry as to the
unauthorized act, the holder is not
a bona fide holder against the cor-
poration. No. 1017, p. 82.

Under the laws of the State of Mis-
souri a note payable "with collec-
tion," is not negotiable, for the
reason that it is not payable in a
certain sum of money; the fact that
collection charges are to be added,
makes the sum uncertain. 25a, No.
1007, p. 36.

Under the laws of Kentucky, in 1902,
a note payable at an incorporated
bank of that State, indorsed to and
discounted by the bank, was placed
upon the same footing as a foreign
I bill of exchange. Indorsers of
foreign bills of exchange were liable
jointly with the maker. A note con-
tained the clause, "Indorsers waive
protest, notice of protest, and all
legal diligence to enforce collection."
It was held that the indorsers were
liable to the bank, the holder, even
though the bank had sued them
without giving them notice of pro-
test, and had not used diligence in
enforcing its judgment against the
maker. 24a, No. 1006, p. 34.
Where a person not otherwise a party
to a promissory note places his sig-
nature thereon in blank before de-
livery, he is liable as indorser to
the payee, and subsequent parties,
and if the note is payable on de-
mand, and not presented for pay-
ment within a reasonable time, he
is released as an indorser. 10a, No.
997, p. 4.

Where the second indorser agreed to
indemnify the first indorser from
loss on a promissory note in con-
sideration of the second indorser's
receiving from the maker of the note
personal property, it was held that
this was not a contract within the
statute of frauds to answer for the
debt of another, and that the Ne-
gotiable Instruments Law applied,
and parol evidence might be intro-
duced to show the agreement be-
tween successive indorsers as to
their liability on the note. 20a, No.
1004, p. 26.

Where a note was not payable at a
certain bank, and a letter was
written to the maker, before ma-
turity, that the note could be paid
at the bank at its maturity, and the