When a check is certified by a bank the bank becomes primarily liable to pay it without notice of its non-payment, and when the holder of a check thus obtains its certification by the bank, the drawer of the check and previous indorsers are released from liability, and the holder looks to the bank for payment.
A bona-fide holder of a negotiable instrument, that is, a party who takes an instrument regular on its face, before its maturity, pays value for it and has no knowledge of any defenses to it, is entitled to hold the party primarily liable responsible for its payment, despite any defenses he may have against the party to whom he gave it, except such as rendered the instrument void in its inception. Thus, if the maker of a note received no value for it, or was induced to issue it through fraud or imposition, that does not defeat the right of a bona-fide holder to compel its payment from him.
The dates and amounts of partial payments on a note, before it is finally paid in full, are placed on the back.
The place of payment, if not mentioned, is at the maker’s place of business or residence, during reasonable business hours.
If a note or a check received in payment of a debt is dishonored, the debt revives.
Ignorance of the law does not excuse anyone. No contract is good unless there be a consideration. No consideration is good that is illegal.
The maker of an accommodation note is not bound to the person accommodated; but he is bound to any other person receiving the note for value.
BANK DISCOUNT
The sum charged by a bank for cashing a note or time draft is called bank discount. This discount is the simple interest, paid in advance, for the number of days the note has to run. Wholesale business houses usually sell goods on time and take notes from the retailers in payment. These notes are not often for a longer period than three months. Some are placed in the banks for collection, others are discounted. When a note is discounted at a bank the payee indorses it, making it payable to the bank. Both maker and payee are then responsible to the bank for its payment. If the note is drawing interest the discount is reckoned on and deducted from the amount due at maturity. Most notes discounted at banks do not draw interest. The time in bank discount is always the number of days from the date of discounting to the date of maturity.