Standard atlas of St. Clair County, Michigan : including a plat book of the villages, cities and townships of the county...farmers directory, reference business directory and departments devoted to general information / compiled and published by Geo. A. Ogle & Co.

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GENERAL -INFORMATION ON BANKING AND BUSINESS METHODS.

SUPPLEMENT VII.

I I

GENERAL INFORMATION
ON
RE LA TIONS BE TWEEN A BANK AND I TS CUS TOMERS.
IN business life there is no more complex or important relation than that
1which exists between the business men generally and the banks, and it
should be guarded with jealous care, so that both may retain the full confidence of the other. Business development in the United States has progressed with such gigantic strides that it has long since passed the stage
where it is even possible to carry on business without the agency of banks.
They are to-day a necessity in the transaction of business and malting exchianges. It has been said, and with a great deal of truth, that in the
present day the entire and sole object and result of business is the transfer
of credits on the books of the banking houses.; and that about the only use
to which money is put is in making small change or paying balances. Business,in the most general and comprehensive sense, is almost wholly carried,
on by the aid of banks with checks,drafts and exchange. And it will be seen
what a very important part the element of confidence plays in business
life, when it is remembered that every check or draft that changes hands,
implies the confidence on the part of the party receiving and accepting it,
that it will be honored at the bank when presented.
OPENING AN ACCOUNT,
THE FIRST STEP in the matter of becoming a depositor and customer of
a bank is the interview with the banker, either the President, or Cashier,
as the case may be If unknown to the banker it is necessary for some one
who is known to identify and vouch for the applicant as being honorable
and straightforward, for banks are compelled to be careful in this matter
as they subsequently must handle all the checks, drafts or exchanges that
the prospective customer employs i~n his business, so that while the business of an honest man is valuable to them and is appreciated, that of a
dishonest man is shunned by them as an element of risk and danger-the
same to them as to every one else with whom he deals.
The identification and reference, however, being satisfactory the prospective customer is given a pass book or account book, writes his signature
in a book kept for that purpose, is made known to the receiving and paying
tellers, makes his first deposit and is then a full fledged customer anti
depositor of the bank.
DEPOSITS.
rEPOSITS are made in the following manner: A "Deposit Tick-et" or "1 Deposit Blank" is furnished the customer, and he enters upon this a full
description of all the items which he desires entered to his credit, statinig
whether it is gold, silver or currency and making a separate entry for each
draft or check that lie deposits. In entering such items as drafts and checks
some banks require a separate entry for each item which willI show upon
what bank or at least what city or town each draft or check is drawn.
After having endorsed his name on the back of all checks and drafts he
hands the "Deposit Ticket," together with all the items named upon it, and
his Pass Book, to the receiving teller,who examines it, checks off the various
items to see that they are all there, and enteis the total amount to the
customer's credit in the "Pass Book;'" and it is also carried to his credit from
the Deposit Ticket onto the books of the bank. The <( Deposit Ticket" is an
important feature of the transaction, and the customer is required to fill
this out with ink. It bears his name and the (late and is carefully preserved for future reference by the bank to settle any dispute or difference
that may arise. As all men are liable to error the depositor, to prevent mistakes, should always see that the amount of the deposit is correctly entered
in his bool before leaving the bankf. If adeposit is made when acustomer
has not his "Pass Book" a duplicate ticket should be taken, and the amount
entered properly when next at the bank.
It will be seen from the above that all checks and drafts are entered to
the credit of the customer at the time he deposits them, the same as cash
items. The depositor, however, is held responsible for the non payment of
all checks, drafts and other items deposited as cash until payment has been
ascertained by the bank. The bank, however, must use due diligence in
attending to them within a reasonable time. If a check or draft is held
beyond a reasonable time and, meanwhile, the bank upon wNhich it is drawn
fails. the receiving bank would be compelled to lose it. What is a reasonable time, according to decisions of the courts. depends upon the circumstances and varies in different cases In cities, where they have a ClearingHouse, checks on othier city banks are expected to reach the Clearing-House
on the next day succeeding the time of the deposit; but as to checks and
drafts drawn upon other or distant cities, a reasonable time must be allowed
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concerning it, he must stand the loss. Suchecases very rarely, if ever, occur,
and it may safely be stated that in the absence of any special or unusual
conditions for all items~such as cbecks, drafts, etc., the banker only receives
them for collection for the account of thie depositor and therefor acts only
as hIls agent and as such is charged with using only due diligence in attending to the business.
DISCUN TS, LOANS, ETC.
TRE word "Discount" is applied to interest when it is deducted from the
Tamount at the time a loan is made-in other words, interest that is paid
in advance. It is the general rule of banks in makinig "sbort time'lloans to
customers to give credit for the amount of the loan, less the interest.
Many business men fail to obtain the full benefit that a bank can give
them, through hesitancy or diffidence in asking for a loanD; and in many instances will borrow of a neighboring business man and thus, frequently
embarass him, rather than go to tlhe banker, whose business it is to help
him through such times of need, when possible. This is "what banks are
established for largely, and they are always glad to "get their money out
and keep it out" provided they can be reasonably sure of its return. If an
applicant is unable to furnish reasonable. security, or is irresponsible or
unworthy he must necessarily be refused, but in securing money which he
cannot guarantee the return of, whether it be from a banker or another
business man lie does an injustice to the interests of business generally.
However, every business main in need of financial help, whether his needs
be great or little, should go to tlhe bank er first and submit the situation,
securities, etc. to him, as of all men he is by training the best judge and advisor in such matters. He may be compelled to decline to give the required
aid, but this refusal should never be taken as a personal matter, as it must
be remembered that he has other interests to serve and depositors, stockholders and directors to protect before following his own personal desires.
COLLECTIONS.
IN leaving notes or other items for collection the customer writes on the
back of each the words: " For Collection for Account of "> and places his
signature below it. Upon receipt of this, the proper officer or clerk of the
bank, will enter the items either in the back of the customer's "passbook"
or give a separate receipt as the case may be. When the bank receives
payment on the items the customer is notified and the amount is entered to
his credit both on his Pass book and on the books of the bank the same
as any other deposit. A banlcin receiving paper for collection acts only as
the agent of the customer and does not assume any responsibility beyond
due diligence on its part. All banks make collections either in or out of
the city where they are located for their customers at very moderate rates.
These items should always be left at the bank before they become due,so as

to give'the bank time-to g-ive an-abundant notice to the parties. If the customer de sires to make a "sight" or "time draft" upon a debtor, upon application the bank will furnish him with blank drafts.,STATEMENTS AND BALANCES.
f\FEW words concerning statements and balances will not be inapproprij^ate in this connection. Every customer of a bank should always and
without fail, once in each month. have his " Pass Book "1 balanced by the
banker. This rule should always be observed to correct any error that
might occur and avoid loss and complications. The amount of deposits is
added up a -,d a balance is struck by deducting the total amount of the custom er's checks which the bank has either paid or "accepted" (certified)
during the month. The cancelled checks are returned to the customer. If
any error is discovered it should be reported immediately to the bank so
that it may be investigated and rectified.
NEGO TIABLE PAPER.
fROBABLY the greatest factor in the business world of to-day is "'Negoti* able Paper," without which. it is not probable that business.development
could have assumed the vast proportions that it has reached in America;
and without which the business of the civilized world could not be carried
on. Tliis term includes avariety of instruments, such as promissory notes,
checks, drafts and bills of exchange. The bill of exchange is one of the
oldest forms of negotiable paper, and has been in use for a number of
centuries. The draft and check came into use at a much later day, and the
promissory note is a comparatively recent invention, and has very largely
taken the place of the bill of exchange as it was used in former times. The
most important attribute of promissory notes, bills of exchange, and other
instruments of the same class, which distinguish them from all other contracts, is their negotiability. This consists of two entirely distinct elements
or brancbes-first, the power of transferring the paper from one owner to
another, so that the assignee shall assume a complete title, and be able to
sue on it; second, the effect upon the rights of the parties produced by such
a transfer when made before maturity, in the regular course of business,
for a consideration to a purchaser in good faith, and without notice of any
defect or defense, whereby all defenses of the maker (with few exceptions)
are cut off, and the holder becomes absolutely entitled to recover.
A written order or promise may be perfectly valid as a contract; but it
will not be negotiable unless certain requisites are complied with. The
following requisites are indispensable: It must be written; must be signed;
it must be absolute, not depending upon any contingency; it must be to pay
monev in a certain amount or in an amount capable of being certain by
computation; the time of payment must be certain or such as will become
certain; but when no time is expressed the law implies that payment is due
immediately; and lastly, the order or promise must be accompanied by
words of negotiability-that is payable to a certain payee's order or to
bearer.
PROMISSORYrNO TES.
rCCORDING to the general " law merchant," unaffected by statute, a
l"promissory note is the written promise of a perso n, called the tk maker "
to pay a certai n sum of money at a certain time to a designated person termed
the 1t payee "1 or to his order or bearer. It must have all the requisites that
have been mentioned for negotiable paper, otherwise, if it fails in any of
these matters it becomes a contract, as it thus loses the element of negotia-%
bility. Contracts may be perfectly valid without all of these requisites, but
-they do not possess-the peculiar qualities -which belong to promissory notes.
It is customary in all promissory notes to write the words "1value received " but this is not absolutely essential, as a consideration and value
is implied in every note, draft, checkc, bill of exchange or endorsement. It
is the common law of both England and this country that no promise can be
enforced unless made for a consideration or sealed but negotiable instruments as a rule are an exception to this. Between the original parties a
want of consideration can be pleaded in defense and would operate to defeat a recovery. It would have the same eff-ect as between an endorser and
his endorsee, but this only applies to immediate parties or to those who
had notice of th-edefense or became holders of the pap~erafter maturity. It
may be stated as an almost invariable rule that no defense will operate to
defeat the recovery if the paper has been negotiated and passed into the
hands of an innocent purchaser, in the regular course of business, before
maturity and for value. The absence of any of these elements, however, will
allow a defense to be setup and will defeat recovery even in the hands of
third parties if it can be shown that there wvas either: a want of consideration, that it was obtained by duress, or fraud or circumvention, or larceny;
or that the consideration was illegal. In order to cut off these defenses
and give the holder the absolute right to recover, all of the conditions
named must be fulfilled. If lie purchases the note even one day after it
becomes due it is then subject to any defense or set off which the maker
may have against the original payee.
Demand of payment for a note must be made at the place where it is
payable at the time of maturity; if not paid. notice must immediately b e
g-iven to the endorsers, otherwise, in a majority of the States, all endorsements that are not qualified will be released. If a note is not dated it will

ten date is prinia facie evidence of the time of making. When a note falls
due on Sunday, or a legal holiday, it becomes payable the day previous. If
a sum is written at length in the body and also in figures at the corner
the written words control it. It destroys the negotiability of a -note to write
in the body of it any conditions or contingencies. A valuable consideration
is not alwa~ys money. It may be'either any gain or advantage to the promisor, or injury sustained by the promisee at the promisor's request, A previous 'debt, or a fluctuating- balance, or a debt due from a third person,
might be a valuable consideration. So is a, moral consideration, if founded
upon a previous legal consideration; as, where one promises to pay a debt
that is barred by limitation or byinfa~ncy. But amerely moral consideration
as one founded upon natural love and affection is no legal consideration.
No consideration is sufficient in law if it be. illegal in its nature, or if distinctly opposed to public policy. If a note is payable at a bank it is only
necessary to have the note at the bank at the stipulated time to constitute
a sufficient demand; and if there are no funds there to meet it, this is sufficient refusal.
DAYS Or GRACE.-In a great many States three "Days of Grace," as they
are termed, are allowed on negotiable instruments beyond the date set for
payment. This is not the universal rule, however, as the tendency of late
years has been toward doing away -with this custom, and a number of
States have already passed laws abolishing the "Days of Grace-" Where
the rule is in effect, however, and it is not specifically waived in the instrument the payor is entitled to the three days as fully as though it were so
stipulated, and the holder cannot enforce collection until the expiration of
three days after the date set for payment.
BILLS OF EXCHANGE.
THE "bill of exchange" is ay) open letter or order whereby one person re\ quests another to pay a third party (or order or bearer) a certain fixed
sum of money. They are of two kinds, the Inland and Foreign bills, the
names of which imply the difference between them. The three parties to
the bill are called the Drawer, Drawee and Payee. The bill must be presented to the Drawee and if he agrees to obey the order he "accepts" the
bill by writing the word "accepted" across its face and signs hIls name below it-and thus becomes the "Acceptor." The instrument is usually made
negotiable and the payee can transfer it to others by endorsement, which
method of transfer may go on indefinitely.
The following is a common form of an inland bill of exchange:
BILL, or EXCH-ANGE.
$600 CHICAGO, ILL., June 1, 1894..
Sixty days after sight pay to John Sims, or order, Six Hundred Dollars,
an~d charge same. to my account.
To HENRY HOLT & Co. JOHN DOE.
Boston, Mass.

CHECKfS.
f\CHECK on a bank is one form of an "Inland Bill of EMxchange,"1 but there
f^is some slight difference in the liability of the parties to it. A check
requires no acceptance, as a bank is bouind to pay the checks of its depositors while still in possession-of their funds, and the drawer of a check having
funds on deposit has an action for damage for refusal to honor his checlk,
under such circumstances, on the ground of an implied obligation to pay
checks according to the usual course of business. Checks are usually
drawn payable immediately, but they may be made payable at a future
day, and in this case their resemblance to a bill of exchange is very close.
As stated, a check requires n o acceptance, so far as payment or liability of
the drawer is concerned, but it creates no obligation against a bank in
favor of tlhe holder until acceptance. When accepted by the bank tlhe word
"Accepted" is stamped on its face with the signature of tlhe banker. It is
then said to be certified and thiereaf ter the bank is liable to the holder.
As soon as the check is "certified" the amount is charged against the
account of the "drawer" the same as if paid, and it is considered paid so
far as the "drawer" is concerned.
The drawer of a check is not a surety in the same sense as is the drawer
of a bill of exchange, but is the principal debtor like the maker of a note. lie
cannot complain of any delay in the presentment, for it is an absolute appropriation to the holder of so much money, in the hands of the bank, and
there it may lie at the holder's pleasure. The delay, however, is at the
holder's risk, and if the bank should fail after he could have got his money
the loss is his. If, before he presents the check, the bank pays out all the
money of the drawer, then he may look to the drawer for payment. If the
holder of a check transfer.3 it to another he has the right to expect that it
will be presented for payment within a reasonable time. He has the right
to expect that it will either be presented the next day or started to the
point on which it is drawn.' If it is held beyond a reasonable time and aW
loss is occasioned thereby, the party responsible for the delay must bear
the loss. If a bank pays a forged check it is so far its own loss that it cannot charge the money to the depositor whose name was forged. But it is
entitled to recover the money from the party who presented it. If it pay a
check of which the amount has been falsely and fraudulently increased, it
can charge the drawer only with the original amount, provided the drawer
himself has not caused. or facilitated the f orgery by carelessly writing it or
leaving it in such hands as to make the forgery or alteration easy. In some
of the States the Supreme Court has decided in cases -where checks were
" raised" that the drawer must bear the loss as they had failed to take reasonable precaution to prevent it. Perforating-and cuttingimachines are on the
market which make it almost impossible to raise or alter the amounts so
as to avoid detection, and the tendency of the decisions is to regard the use
of these as only a reasonable precaution on the part of check drawers to
save their bank from trouble and loss. Some, however, adopt the plan of
writing the amount in red ink across their signature.
If many persons, not partners, join in a deposit they must join in a
check. If a payee's name is misspelled or wrong in a check, the. usual plan
is to endorse it first exactly as it appears and then sign the name correctly.
There is no settled rule as to how checks should be drawn. In nearly all
the cities it is an almost invariable rule to make them payable "to order"
so as to require the endorsement of the payee; but in smaller towns many
check drawers make them payable "to bearer," in which case they require
no endorsement, and if lost or stolen may cause Joss-as whoever presents
such a check at the bank is entitled to payment.
DRAFTS.
DRAFT is a form of an ct inland bill of exchange." The two forms of bills
f^of exchange usually called 11drafts "1 are the bank draft (or exchange)
and the "t sight or time draft," The bank draft is, to all intents and purposes, the same as a cheek, but the term is usually applied to "' checks "1
drawn by one bank upon funds which it may have in some other bank,
termed its " correspondent." A draft is but very seldom made payable to
bearer, it being almost an invariable rule to make them payable to a certain payee or order, They are negotiable and can be transferred indefinitely by endorsement. If a draft is lost or stolen, by applying'to the bank
that issued it, the payment can be stopped, and after the expiration of
thirty days a duplicate will be issued.
The " Sight Draft"1 or "1Time Draft," in which case it reads to pay after
a certain number of days, is a very common method of making collections
to-day by creditors, and it serves the double purpose of being- an order to
pay to a bank or third party, and is also a receipt to the debtor. It is Sim.
ple in its wording, the following being a general form:,
$10o CHICAGO, JUNE 1, 1894.
At sight (or so many days after sight as the case may be) pay to the
order of ---- Bank One Thousand Dollars and charge to my account.
To GEo. SIMS, NEW YOnK, NT. Y. JOHN SIMS.
FNDORSEMENTS.
7"HE signature of any payee or holder on the back of any cheek, draft,
note, bill of exchange or other negotiable instrument is termed his 1'en

dorsement."1 It simply means the placing of the name of the holder, or
payee, on the back of the instrument, thus indicating that, for a consideration, lie has relinquished his title to it, and in the absence of any condition or qualification expressed in the endorsement, it implies that the endorser will see that the instrument is paid in case it is not tak en tip by the
maker or payor. Where the instrument is made payable to "bearer," as to
"John Sims or bearer," no endorsement is necessary to pass tlhe title-it
passes with delivery and any holder may collect or sue upon it the same as
if he were the payee named therein. In a case of this kind if any holder endorses the instrument, the law is construed strictly against him, and, as it
wa,& not necessary for him to endorse to pass title, the law presumes in the
absence of a positive qualification that his endorsement was made for the
purpose of indicating that he would pay it, if the payor failed to do so.
Where several payees are named in the instrument it must bear the endorsement of all of them to pass the title and make one transfer of it. In
this c-ase, however, their liability as endorsers is joint, not several. But
where two or more holders endorse one after the other in making a transfer
from one to the other their liability is several, not joint.
Every check, draft, bill of exchange, note or other negotiable instrument which is made payable to a certain "payee or order'1' must bear the
endorsement of the party named, to pass the title, and even in cases where
they are made payable to "bearer" it is generally customary for the party
to whom a transfer is made to require the person from whom he, secures it
to place his endorsement thereon.
There are'several kinds of endorsement which should be mentioned in
this connections The first is the "blank endorsement," or "endorsement in
blank," in making which the payee simply places his signature on the back
of the instrument, without condition or qualification of any kind. This
passes the title to the instrument, and, from that time on, it becomes payable to bearer, and the title passes with deliver', until some subsequent
holder sees fit to limit it by making it payable to some other payee, or
places some other qualification or condition in the endorsement. When a
negotiable instrument bearing a " blank endorsement," has. once been put
into circulation, any subsequent holder of it has the right to limit or restrict
it by writing the conditions over his own endorsement, or, by writing-over
the endorsement of the original payee, words making- it payable to himself
or some other party, lt or order." This point has been decided by the
supreme courts of several of the States.
The endorsement may be restricted or' qualified in a number of ways.
One, which is called a "full endorsement," is very common in the business
world. It is simply the act of the payee named making it payable to, some
other certain payee or order. To do this, the endorser writes on the back of
the instrument, the directions, as: " Pay to John Sims, or order,': and places
his signature below it. This does not limit his liability as anendorser,, but
the title to the instrument must thereafter pass through John Sims, and it;
must bear his endorsement before it will be paid or honored.

I I

Entered according to Act of Con-ress, in the year 1894,. by GEo. A. OGLE & Co., in the office of the Librarian of Congress, at Washington, D. 0