§3. A, in New-York, has $1,000 due him from B, in New Orleans. A draws an order on B for that sum, and C, who is going to New Orleans, pays A the money, takes the order, and receives his money again of B. Thus A is accommodated by receiving his debt against B, and O has avoided the risk of carrying the money from place to place. A, who draws the order, or bill, is called the drawer. B, to whom it is addressed, is the drawee; C, to whom it is made payable, is the payee. As the bill is payable to C, or his order, he may, by indorsment, direct the bill to be paid to D; in which case C becomes the indorser, and D, to whom the bill is indorsed, is called the indorsee or holder.
§4. If, when a bill is presented to the drawee, he agrees to pay it, he is said to accept the bill, and writes his acceptance upon it. An acceptance may, however, be by parol. The acceptor of a bill is the principal debtor; the drawer, the surety. The acceptor is bound, though he accepted without consideration, and for the sole accommodation of the drawer. But payment must be demanded on the last day of grace; and, if refused, notice of non-payment must be given to the drawer, as in the case of an indorsed promissory note. (Chap. LX, §15.)
§5. No precise time is fixed by law at which bills payable at sight or a certain number of days after sight, must be presented to the drawee for acceptance; though an unreasonable delay might discharge the drawer. A bill payable on a certain day after date, need not be presented before the day of payment, but if presented before due, and acceptance is refused, it is dishonored; and notice must be given immediately to the drawer. If a bill has been accepted, payment must be demanded of the acceptor, when the bill falls due; and if no place is appointed for payment, the demand must be made at his house or residence, or upon him personally.
§6. A check upon a bank, (Chap. XXIV, §3,) is another kind of negotiable paper. It partakes more of the nature of a bill of exchange than of a promissory note. It is not a direct promise to pay; but it is an undertaking, by the drawer, that the drawee shall accept and pay; and the drawer is answerable only when the drawee fails to pay. A check payable to bearer passes by delivery; and the bearer may sue on it as on an inland bill of exchange.
§7. When a foreign bill of exchange is to be presented for acceptance or payment, demand is usually made by a notary public; and in case of refusal, his certificate of the presentment of the bill and of the refusal, is legal proof of the fact in any court. This certificate is called protest, which means, for proof. A protest may be noted on the day of the demand; though it may be drawn up in form at a future period. Notaries are appointed in all towns and cities of commercial importance.
§8. A protest of an inland bill of exchange is not generally deemed necessary in this country; though it is the practice to have bills, drawn in one state on persons in another, protested by a notary. No protest is legal evidence in court, except in the case of a foreign bill. Yet it is expedient, in many cases of inland bills, to employ notaries when evidence is to be preserved, because they are easily found when wanted as witnesses. In some states, bills drawn in one state and payable in another, are deemed foreign bills; and their protest as such is required. Notes payable at banks are also protested for non-payment.
§9. Interest is a premium paid for the use of money, or a profit per cent, received for money lent, or on an unpaid demand. Thus a person lends $1,000 to another person, who pays for the use of it six per cent, a year, or $6 for every hundred, as interest. The rate of interest is fixed by a law of the state.
§10. The established lawful rates of interest in the several states are as follows: Six per cent, in all but the following: In New-York, Michigan, Wisconsin, Minnesota, seven per cent.; in Alabama and Texas eight per cent.; in Louisiana, five per cent.; bank interest six; in California, ten per cent. But there may be taken by special agreement, in Florida and Louisiana, eight per cent.; in Mississippi, Arkansas, Ohio, Missouri, Iowa, ten; in Texas and Wisconsin, twelve; in Minnesota and California, any rate. In Illinois and Michigan, for money loaned, it may be ten. In Mississippi, for the bona fide use of money eight per cent.
§11. A rate of interest beyond that which is established by law, is usury. Not only can no more be collected on any contract or obligation than the legal rate, but in most of the states there is some forfeiture for taking usurious interest. In a few, the obligation is void, and the payment of no part of the debt can be enforced by law; in others, twice or thrice the excess above the lawful interest is forfeited; and in some, only the excess paid can be recovered.