CERTIFICATE OF DEPOSIT Baltimore, Sept. 1.19 Merchants National Bank $1000/m Received. on deposit from James Harrison One Thousands C Lister, Cashin 273. Certificate of deposit. A certificate of deposit is a receipt of a bank or banker for a certain sum of money received upon deposit. It is generally worded as a promissory note, payable to the depositor or to his order, or bearer, as shown in the preceding form. 274. Bank's liability. The bank's liability for the payment of its certificates of deposit is the same as the liability of maker of a note. The certificates of a bank circulate as freely and are received with as much confidence as the bills of a bank, and are regarded as cash in all mercantile affairs. They are usually made payable on demand, but not infrequently they are made payable at a certain time in the future. The transfer of a certificate of deposit is governed by the same rules which control other commercial paper. If payable to bearer it may be transferred by delivery, but if payable to order, must be endorsed. 275. Accommodation paper. When the acceptor of a draft or the maker of a note, though ostensibly the principal debtor, is in reality a mere surety for some other person, then such paper is an accommodation draft or note. The object of the person accommodating is to lend his name to some other person as a means of credit. A draws a draft on B, who accepts it to accommodate A. It is negotiated. This is an accommodation draft. Rule: The party who accommodates is in no way liable to the party accommodated. Thus, if A gives his note to B in order that B may raise some money on it, B could not recover of A, the maker, because of no consideration. But if the note goes into the hands of a third party, then A is liable, as maker, to such third party. That is, if B discounts the note at a bank, A cannot escape his liability as maker. If the person who accommodates, i.e., A, is compelled to pay, he can recover the amount, with all costs and charges, from the person accommodated, B. 276. Lost paper. Rule: By common law, no action could be brought to enable the owner of a lost draft or note to recover the amount due on it, because there is in such cases no provision in the law whereby the acceptor or maker could demand any indemnity of the owner of a lost draft or note in case such a paper got into the hands of a bona fide holder. But there are a few exceptions to that rule, which are founded on reason and justice. If the draft or note had been destroyed, or had been traced to the defendant, or if it were non-negotiable, or required the endorsement of the party losing it to render it negotiable, then the owner could recover, because there is, in such cases, no possibility of the instrument ever finding its way into the hands of a bona fide holder. 277. Provisions have been made by statute throughout the United States whereby the owner of a lost paper can recover in cases which do not fall within the above exceptions. Rule: The statute substantially provides that the party seeking to recover shall give the acceptor or maker a bond of indemnity which will secure him against loss. Suppose the draft or note were made payable to bearer, and happened to be lost or stolen from the holder, and found its way into the hand of a bona fide holder for value, then the new holder could lawfully claim payment. The maker, however, would not sustain any loss, because he can, by means of the bond of indemnity, reimburse himself from the party giving the bond. Illustration. Suppose C lost a note made payable to bearer, or order, and endorsed in blank. The note was found by D and sold to E, a bona fide holder, for value. At maturity C sues B, the maker. The court will require C to give B a bond of indemnity; thereupon B will be compelled to pay the amount, although the note is not surrendered to him. In a few days the bona fide holder presents the note to B for payment, who is required to pay it. B can, without loss to himself, pay the note the second time, because C will be required to reimburse him. The loss then falls upon C, the party who ought to bear it, because it was probably through his carelessness or neglect that the note was lost. When paper of this kind is lost an advertisement is sometimes put in the newspapers. Such a notice, however, does no good unless the party to whom the paper is offered has read or heard of the notice. 278. Bill of lading. A bill of lading is a written acknowledgment of the receipt of certain goods by a common carrier, who promises for a consideration to transport and deliver the same at a specified place to a person therein named or his order. It is both a receipt and a contract. In so far as the bill of lading admits of the character, quality or condition of the goods at the time they were received by the carrier, it, like all receipts, may be explained or contradicted by parol proof, but as respects the agreement to carry and deliver, it is a contract and may be construed according to its terms. 279. Assignment of. Bills of lading are usually so worded as to make them negotiable the same as other commercial paper. A bona fide endorsee becomes, as against all the world, the owner of the goods, free from any equities existing between the consignor of the goods and the consignee. Though one who has stolen a bill of lading cannot assign it so as to pass title to the merchandise, yet a bona fide assignee of one who has obtained such bill by fraud from the owner has good title against the owner as well as against third persons. Though the consignee should become insolvent without having paid for the goods, yet his assignment, made for a valuable consideration and without notice to the assignee that the goods were not paid for, has been held to pass them absolutely to the assignee and deprive the consignor of his right to recall the goods before. they were delivered, which, as against the original consignee, he might have exercised. Rule: If the assignee of the bill of lading knew that the consignee was insolvent, and assisted to defraud the consignor of the price of his goods, he stands in the same situation as the consignee, and the consignor retains his right to stop the goods in transitu. To illustrate further, we will suppose Smith & Co., of Richmond, ordered goods from Brown & Co., Chicago. The consignor, Brown & Co., sends the bill of lading to the consignee, Smith & Co. While the goods are en route Smith & Co. become insolvent. Brown & Co. may notify the carrier not to deliver the goods to the consignee. But if Smith & Co. had previously assigned the bill of lading to a bona fide purchaser, Brown & Co. would have no right to stop delivery. 280. Statute of Limitations. The meaning of Statute of Limitations is that legal rights should be asserted or enforced within a certain time, and if not so asserted within a stated time the right to enforce is lost. When the time is passed in which an action may be instituted the debt or other legal rights are said to be "outlawed" or "barred by Statute of Limitations." In Maryland, for instance, the Statute of Limitations for all contracts for the payment of money is three years. That is, if the debt be not collected within three years after it is due it will be outlawed and the debtor will no longer be under legal obligations to pay his creditor. The Statute of Limitations is a statute fixing a time within which actions must be brought. By the rule of the common law, one who had legal grounds of complaint against another might suit his own convenience as to when he would call upon the latter to answer. But this rule proved to be productive of very great inconvenience and, not infrequently, of great injustice. The states have, therefore, regulated by statute the time within which an action or suit at law may be instituted. The periods of limitation must be computed from the time the right to sue accrues. The length of the period varies according to the nature of the action or claim. For example, in New York an action on contract must be begun within six years; an action to recover damages for a personal injury resulting from negligence, within three years; libel, slander, assault, etc., two years; and still other actions must be commenced within one year. If the action is not begun within the period prescribed by law, the claim is said to be "outlawed." A statute defining the time within which an action must be commenced is known as a "statute of limitation." The time allowed a creditor to recover from his debtor varies in different states, as it is a statutory regulation. We therefore, submit the following: 281 TABLE OF LIMITATIONS The following table shows the laws of the various states in reference to the Statute of Limitations. |