Fig. 4. Certified Check.

126. Checks. A check is an order drawn on a bank or banker. It differs in some respects from an ordinary bill of exchange. It does not have to be presented for acceptance. It is presented for payment. It presupposes funds of the drawer in the hands of the bank or banker on which it is drawn. It is payable at any time after the date fixed for maturity. It need not be presented at maturity. The maker may recover damages for failure to present promptly if he is damaged thereby. For example, if A gives B his check on the X bank, and between the date for payment of the check and the time of presentment for payment by B, the bank fails, A may recover as damages from B, the amount of his loss by reason of B's failure to present the check promptly. No days of grace are allowed in the payment of checks. In this particular, they differ from ordinary bills of exchange.

127. Certification of Checks. By certification of a check is meant a written acknowledgment on checks by an officer or authorized agent of the bank that the check will be paid when presented. In Fig. 4 is shown a common form of certification.

The words accepted or certified, written on a check by an authorized officer or agent of a bank constitute a certification. If the holder of a check has it certified he elects to hold the bank, and thereby releases the maker and prior indorsers. If the maker procures the certification he is still liable thereon. When a check is certified, the bank charges it to the account of the maker, and it then becomes a debt of the bank, regardless of whether or not the maker has funds in the bank with which to meet it. This is the reason that a maker and prior indorsers of a check are released from liability thereon when a holder has it certified. By this act, the holder elects to rely upon the bank, rather than upon maker or indorsers.

128. Bonds. Bonds may be defined to be the promissory notes of corporations, private or governmental. They are made under the seal of the corporation issuing them. At common law, a seal destroyed the negotiability of an instrument. At the present time this is not true of bonds. Private corporations often secure their bonds by a mortgage on their entire property. This is accomplished by means of a mortgage called a trust deed. The mortgage is given to a trust company, or an individual, to be held for the common benefit of all the bond holders. It is not practicable to give each bond holder a mortgage. This would be inconvenient, and some bond holders could obtain preference over others. But one trust deed, covering all the assets held by a trustee for the benefit of all the bond holders, accomplishes the purpose.

Registered bonds are registered on the books of the corporation issuing them, and in case of transfer the transfer is noted on the books of the company. Other bonds contain coupons, or small promissory notes for certain amounts representing the installments of interest payable at certain times. These coupons may be cut from the bond and sold as promissory notes, or they may be cut at maturity and returned for payment.

No. 1.$1000.00
United States of America,
State of Ohio.

Know all men by these presents that the village of X, in the county of Cuyahoga and state of Ohio, acknowledges itself to owe, and for value received hereby promises to pay to bearer, the sum of $1000.00 in lawful money of the United States of America, on the second day of January, 1920, together with interest thereon at the rate of 5% per annum payable semi-annually on the second day of July, and second day of January of each year, as evidenced by the coupons hereto attached, until the principal sum is paid. Both principal and interest are payable at the City Trust Co., Cleveland, Ohio, on the presentation and surrender of this bond, and the coupons hereto attached as they respectively mature.